UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14C
(Rule
14c-101)
SCHEDULE
14C INFORMATION
Information
Statement Pursuant to Section 14(c) of the
Securities
Exchange Act of 1934
(Amendment
No. )
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Filed
by the Registrant ☒
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Filed
by a Party other than the Registrant ☐
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Check
the appropriate box:
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Preliminary
Information Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule 14c-5(d)(2))
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Definitive
Information Statement
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MADISON
TECHNOLOGIES, INC.
(Name
of Registrant as Specified in its Charter)
Payment
of Filing Fee (Check the appropriate box):
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No
fee required.
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Fee
computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
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(1)
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Title
of each class of securities to which transactions applies:
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Aggregate
number of securities to which transactions applies:
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Per
unit price or other underlying value of transactions computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4)
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Proposed
maximum aggregate value of transactions:
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Total
fee paid:
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Fee
paid previously with preliminary materials.
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Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11 (a) (2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount
Previously Paid:
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Form,
Schedule or Registration Statement No.:
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Date
Filed:
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MADISON
TECHNOLOGIES, INC.
450
Park Avenue, 30th Floor
New
York, NY 10022
NOTICE
OF ACTION TO BE TAKEN WITHOUT A MEETING
To
our Stockholders:
The
purpose of this Information Statement is to notify our stockholders that on August 23, 2021, the Board of Directors (the “Board”)
of Madison Technologies, Inc., a Nevada corporation (the “Company” “we,” “us”
or “our”), and the holders of at least a majority of our outstanding voting powe, voting together as a single class
in accordance with their respective voting rights (the “Majority Stockholders”), each adopted resolutions by written
consent, to approve an amendment to our articles of incorporation, as amended (as amended, the “Articles of Incorporation”)
to effect a reverse stock split (the “Reverse Split”) of our common stock at a ratio of 1-for-25 (the “Action”).
The Reverse Split will be effected by filing a Certificate of Change to the Articles of Incorporation (the “Amendment”)
with the Secretary of State of the State of Nevada.
The
enclosed Information Statement is being furnished to holders of shares of our common stock and outstanding shares of preferred stock
(“Preferred Stock”), as of the close of business on August 23, 2021 (the “Record Date”).
The
enclosed Information Statement is being furnished to you to inform you that the Action has been approved by the stockholders holding
a majority of voting power with respect to the Action and the approval of the Action will become effective 20 days after the mailing
of this information statement when we file the Amendment with the Secretary of State of the State of Nevada. For the avoidance of doubt,
the Amendment will not be filed with the Secretary of State of the State of Nevada on a date that is earlier than 20 days after this
Information Statement is first mailed to our stockholders. Additionally, the Reverse Split is subject to FINRA approval, of which there
are no assurances when and if FINRA will provide such approval.
This
Information Statement also constitutes notice under the Nevada Revised Statutes that the Action was approved by the written consent of
the Majority Stockholders. The Board is not soliciting your proxy in connection with the adoption of these resolutions and proxies are
not requested from stockholders. You are urged to read the Information Statement in its entirety for a description of the Action taken
by the Majority Stockholders.
The
enclosed Information Statement will be mailed on or about November 23, 2021 to stockholders of record on the Record Date.
WE
ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. NO VOTE OR OTHER ACTIONS OF THE COMPANY’S STOCKHOLDERS
IS REQUIRED IN CONNECTION WITH THIS INFORMATION STATEMENT.
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By
Order of the Board of Directors,
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/s/
Philip A. Falcone
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Philip
A. Falcone
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Chief
Executive Officer
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November
18 , 2021
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MADISON
TECHNOLOGIES, INC.
450
Park Avenue, 30th Floor
New
York, NY 10022
INFORMATION
STATEMENT PURSUANT TO SECTION 14(C)
OF
THE SECURITIES EXCHANGE ACT OF 1934
This
Information Statement is to notify our stockholders that on August 23, 2021, the Board of Directors (the “Board”)
of Madison Technologies, Inc., a Nevada corporation (the “Company” “we,” “us”
or “our”), and the holders of at least a majority of our outstanding voting power, voting together as a single class
in accordance with their respective voting rights (the “Majority Stockholders”), each adopted resolutions by written
consent, to approve an amendment to our articles of incorporation, as amended (as amended, the “Articles of Incorporation”)
to effect a reverse stock split (the “Reverse Split”) of our common stock at a ratio of 1-for-25 (the “Actions”).
The Reverse Split will be effected by filing a Certificate of Change to the Articles of Incorporation (the “Amendment”)
with the Secretary of State of the State of Nevada.
The
enclosed Information Statement is being furnished to holders of shares of our common stock as of the close of business on August 23,
2021, the record date set in connection with this Information Statement (the “Record Date”), pursuant to the Nevada
Revised Statutes (the “NRS”) and our Bylaws (the “Bylaws”).
Vote
Required
Under
Nevada law, our Certificate of Incorporation and Bylaws, approval of stockholders holding shares representing no less than the majority
of voting power with respect to the Actions (inclusive of holders of outstanding shares of common stock entitled to vote, or outstanding
shares of Preferred Stock entitled to vote on an as converted basis or otherwise, voting together as a single class) is entitled to approve
the Action.
As
of the Record Date, our authorized capitalization consisted of 500,000,000 shares of Common Stock, of which 23,472,565 shares of Common
Stock were issued and outstanding, 50,000,000 shares of preferred stock, par value $0.001 per share, of which 236,600 are issued and
outstanding. Of the Preferred Stock that is outstanding, 100,000 shares have been designated as Series A Convertible Preferred Stock,
of which 0 shares of Series A Convertible Preferred Stock were issued and outstanding, 100 shares has been designated as Series B Preferred
Stock, of which 100 shares of Series B Preferred Stock were issued and outstanding, 10,000 shares have been designated as Series C Convertible
Preferred Stock, of which 0 shares of Series C Convertible Preferred Stock were issued and outstanding, 230,000 shares has been designated
as Series D Preferred Stock, of which 230,000 shares of Series D Preferred Stock were issued and outstanding,1,000 shares have been designated
as Series E Convertible Preferred Stock, of which 1,000 shares of Series E Convertible Preferred Stock were issued and outstanding, 1,000
shares has been designated as Series F Preferred Stock, of which 1,000 shares of Series F Preferred Stock were issued and outstanding,
and 4,600 shares has been designated as Series G Preferred Stock, of which 4,600 shares of Series G Preferred Stock were issued and outstanding.
Holders
of our common stock are entitled to one vote for each share on all matters to be voted on by our shareholders. Holders of our common
stock have no cumulative voting rights. They are entitled to share ratably in any dividends that may be declared from time to time by
the Board of Directors in its discretion from funds legally available for dividends. Holders of our common stock have no preemptive rights
to purchase our common stock.
Our
Series B Preferred Stock has the right to vote together with the holders of the Common Stock, as a single class, upon all matters submitted
to holders of Common Stock for a vote. The shares of Series B Preferred Stock will carry a number of votes equal to 51% (representing
majority voting power) of all voting shares of every class, including 51% of all of the issued and outstanding shares of common stock
on the date of any shareholder vote, such that the holders of Series B Preferred Stock shall always possess the majority of voting rights,
and shall always out vote all holders of Common Stock. Holders of our Series D Preferred Stock and Series F Preferred Stock do not have
voting rights. Holders of our Series E Preferred Stock and Series G Preferred Stock vote on an as converted basis.
The
FFO I Trust, the holder of 100 shares of Series B Preferred Stock and 400 shares of Series E Convertible Preferred Stock, the FFO II
Trust, the holder of 400 shares of Series E Convertible Preferred Stock, KORR Value, LP, the holder of 200 shares of Series E Convertible
Preferred Stock, and Jeff Canouse, the holder of 6,177,000 shares of common stock, held the authority to votes cast, which constitute
in excess of fifty percent (50%) of the Company’s outstanding voting power and have voted in favor of the proposals herein.
Effective
Date of Actions by Written Consent of Majority Stockholders
Pursuant
to Rule 14c-2 promulgated under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), the earliest
date that the corporate Actions being taken pursuant to the written consent of the Majority Stockholders can become effective is 20 days
after the first mailing or other delivery of this Information Statement. After the foregoing 20-day period, we plan to file the Amendment
with the Secretary of State of the State of Nevada, which filing will result in the Reverse Split becoming effective. Additionally, the
Reverse Split is subject to FINRA approval, of which there are no assurances when and if FINRA will provide such approval. We recommend
that you read this Information Statement in its entirety for a full description of the Action.
No
Appraisal Rights
Neither
Nevada law, including the NRS, nor our Articles of Incorporation provide for dissenter’s rights of appraisal, and the Company will
not independently provide our stockholders with any such rights, in connection with Actions discussed in this Information Statement.
Interests
of Certain Persons
No
person who has been a director or officer of the Company at any time since the beginning of the last fiscal year has any substantial
interest, direct or indirect, in any matter discussed in this Information Statement which differs from that of other stockholders of
the Company.
Costs
of the Information Statement
We
are mailing this Information Statement and will bear the costs associated therewith. We are not making any solicitations. We will request
brokerage houses, nominees, custodians, fiduciaries and other like parties to forward this Information Statement to the beneficial owners
of our common stock and Preferred Stock held of record by them, and will reimburse such persons for their reasonable charges and expenses
in connection therewith.
REVERSE
STOCK SPLIT
Our
Board and the Majority Stockholders approved the Reverse Split, which will be effected by filing the Amendment with the Secretary of
State of the State of Nevada substantially in the form set forth on Appendix A. Our Board is authorized to effect the Reverse
Split at a ratio of 1-for-25.
Our
Board reserves the right to elect to abandon the Reverse Split if it determines, in its sole discretion, that the Reverse Split is no
longer in the best interests of the Company and its stockholders.
Reasons
to Effect a Reverse Split
Our
common stock is currently quoted on the OTCQB Venture market, one of the OTC Markets Group over-the-counter markets, which is not a national
securities exchange. In connection with our financing activities, our Board intends to apply for the listing of our common stock on the
NASDAQ Stock Market (“NASDAQ”) or a similar national stock exchange. One of the key requirements for initial listing
on NASDAQ is that our common stock must meet certain minimum bid price requirements, which requirements our common stock currently does
not meet. The Reverse Split is intended, in part, to help the Company meet the minimum bid price requirements for a potential up-listing
on NASDAQ.
If
our common stock is listed on NASDAQ, the liquidity of our common stock and coverage of our company by security analysts and media could
be increased, which could result in higher prices for our common stock than might otherwise prevail while our common stock traded on
the OTCQB, lowered spreads between the bid and asked prices for our common stock and lower transaction costs inherent in trading such
shares. Additionally, certain investors will only purchase securities that are listed on a national securities exchange. As a result,
a listing on NASDAQ may increase our ability to raise funds through the issuance of our common stock or other securities convertible
into our common stock in the future from a larger pool of potential investors.
Although
we believe that the Reverse Split would, at least initially, allow us to meet minimum bid price requirements for initial listing on NASDAQ,
the effect of the Reverse Split on the price of our common stock cannot be predicted with any certainty, and the history of similar reverse
stock splits for companies in similar circumstances is varied. As a result, there can be no assurance that:
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price of our common stock would rise in proportion to the reduction in the number of shares of our common stock outstanding following
the Reverse Split;
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even
if the Reverse Split is initially successful in raising the price of our common stock, we would be successful in maintaining the
minimum bid price of our common stock above the levels needed to achieve, and maintain, listing on NASDAQ for any extended period
of time;
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even
if the price of our common stock satisfies the minimum bid price requirements for initial listing on NASDAQ, that we would be able
to meet, or continue to meet, the other initial and continued listing standards for NASDAQ;
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even
if we are able to meet all initial standards for NASDAQ that we will be approved for listing; or
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if
we achieve listing of our common stock on NASDAQ, that our common stock would not be delisted by NASDAQ for failure to meet other
continued listing standards in the future.
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Moreover,
while it is the current intent of our Board to apply for listing of our common stock on NASDAQ, there can be no assurance that the Board
will not later decide that pursuing such listing is not in the best interests of the Company and its stockholders.
Additionally,
even though a Reverse Split, by itself, would not impact the Company’s assets or prospects, the Reverse Split could be followed
by a decrease in the aggregate market value of our common stock. The price of our common stock will also continue be based also on other
factors that are unrelated to the number of shares outstanding, including our future performance.
Our
Board believes that a higher share price for our common stock could also help generate investor interest in the Company. At its currently
low price, our common stock may not appeal to brokerage firms that are reluctant to recommend lower priced securities to their clients,
and analysts at many such firms do not monitor the trading activity or otherwise provide coverage of lower priced stocks. Many investment
funds may also be reluctant to invest in lower priced stocks and some potential investors may be prohibited from investing “penny
stocks” (as discussed in more detail below). Investors may also be dissuaded from purchasing lower priced stocks because the brokerage
commissions, as a percentage of the total transaction, tend to be higher for such stocks. Furthermore, various regulations and policies
restrict the ability of stockholders to borrow against or “margin” low-priced stock and declines in the stock price below
certain levels may trigger unexpected margin calls.
Notwithstanding
the foregoing, the liquidity of our common stock may be adversely affected by the Reverse Split as a result of fewer shares of common
stock being outstanding after giving effect to the Reverse Split. However, the Board believes that the anticipated higher bid price will
reduce, to some extent, the negative effects on the liquidity and marketability of the common stock inherent in some of the policies
and practices of institutional investors and brokerage houses described above.
Our
common stock is also currently deemed to be a “penny stock” (as defined in Rule 3a51-1 under the Exchange Act) and subject
to the penny stock rules of the Exchange Act specified in rules 15g-1 through 15g-100. Such rules require broker-dealers, before effecting
transaction in a penny stock, to meet certain additional disclosure requirements to their customers. The additional burdens imposed upon
broker-dealers by such requirements can discourage broker-dealers from making a market, seeking or generating interest in our common
stock and otherwise effecting transaction in our common stock, which can limit the market liquidity of our common stock and the ability
of investors to trade our common stock.
Moreover,
The Financial Industry Regulatory Authority (“FINRA”) has adopted rules that require a broker-dealer to have reasonable
grounds for believing that the investment is suitable for that customer before recommending an investment to a customer. Under interpretations
of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least
some customers. Thus, the FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common
stock, which may also limit which the market liquidity of our common stock and the ability of investors to trade our common stock.
If
we are able to increase the price of our common stock through implementation of the Reverse Split (and, subsequently, achieve listing
of our common stock on NASDAQ), our common stock may no longer be deemed a penny stock, or be considered speculatively low priced for
purposes of FINRA Rules, and the burdens and limitations described above may be lifted.
Potential
Effects of the Proposed Reverse Split
General
Upon
effectiveness of the Reverse Split, our outstanding common stock will be combined, such that every 25 shares of existing common stock
will be combined into one new share of common stock. As of the date of this Information Statement, the Company had 1,563,990,027 shares
of our common stock outstanding, against a total of 6,000,000,000 authorized shares. As a result, the Reverse Split, will decrease the
Company’s issued and outstanding shares of common stock to approximately 62.5 million shares (without giving effect to the treatment
of fractional shares).
Except
for adjustments that may result from the treatment of fractional shares as described below, each stockholder will hold the same percentage
of the Company’s issued and outstanding common stock immediately following the Reverse Split as such stockholder holds immediately
prior to the Reverse Split. The Reverse Split will affect all holders of our common stock uniformly and will not affect any stockholder’s
percentage ownership interest in the Company or proportionate voting power (subject to the treatment of fractional shares). The Amendment
will also not change the terms of our common stock or outstanding preferred stock, which will continue to have the same voting rights
and rights to dividends and distributions and will be identical in all other respects to the common stock currently outstanding. Our
common stock will also remain duly authorized, fully paid and non-assessable.
Impact
on Shares of Common Stock Available for Future Issuance
Currently,
we are authorized to issue up to 6,000,000,000 shares of common stock, of which 1,563,990,027 shares were outstanding as of the date
of the mailing of this Information Statement. In connection with the Reverse Split, our Board has determined to keep the total number
of authorized shares of common stock the same under our Articles of Incorporation after giving effect to the Reverse Split. As a result,
we will have the ability to issue a greater percentage of our common stock in relation to our outstanding shares after the Reverse Split
than we currently have.
The
additional shares of common stock authorized for issuance would have the same rights and privileges under our Articles of Incorporation
as the shares of common stock currently authorized for issuance. Holders of the Company’s common stock do not have preemptive rights
to subscribe for and purchase any new or additional issues of common stock or securities convertible into common stock.
Our
Board believes that the availability of additional authorized shares of common stock is in the best interests of the Company and its
stockholders and will provide us with additional flexibility, including having shares available for issuance for such corporate purposes
as the Board may determine in its discretion, including, without limitation:
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exercise
or conversion of securities convertible into, or exercisable for, shares of common stock (including the outstanding Preferred Stock,
convertible notes and debentures, warrants, options and other convertible securities);
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investment
opportunities;
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stock
dividends or other distributions;
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issuance
in connection with compensation arrangements, including pursuant to future equity compensation plans; and
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future
financings and other corporate purposes.
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Although
the Company is actively discussing financing alternatives which may result in the issuance of additional shares of common stock, the
Company has no such plans, proposals, or arrangements, written or otherwise, at this time to issue any of the newly available authorized
shares of common stock (except shares of common stock that may be issued upon conversion or exercise of outstanding Preferred Stock,
convertible notes and debentures, warrants, options and other convertible securities).
No
further stockholder approval is required to issue any additional shares of common stock. Any issuance of additional shares of common
stock could have the effect of diluting any future earnings per share and book value per share of the outstanding shares of our common
stock, and such additional shares could be used to dilute the stock ownership or voting rights of a person seeking to obtain control
of the Company.
Anti-Takeover
Effects
Although
not designed or intended for such purposes, the overall effect of keeping the number of our authorized shares of common stock the same
under our Certificate of Incorporation after giving effect to the Reverse Split could be to enable our Board to render more difficult
or discourage an attempt to obtain control of the Company that may be favored by a majority of stockholders and/or that may provide an
above market premium to our stockholders, since the additional shares could be issued to purchasers who support our Board and are opposed
to a takeover.
Our
Board’s determination to keep the number of our authorized shares of common stock the same under our Articles of Incorporation
after giving effect to the Reverse Split is not prompted by any specific effort or perceived threat of takeover. We are not currently
aware of any pending or proposed transaction involving a change of control. Nor is the change in authorized shares of common stock a
plan by the Board or management to adopt a series of amendments to the Company’s certificate of incorporation or Bylaws to institute
an anti-takeover provision. The Company does not have any plans or proposals to adopt other provisions or enter into other arrangements
that may have material anti-takeover consequences.
Potential
Odd Lots
The
Reverse Split could result in some stockholders holding less than 100 shares of common stock and as a consequence may incur greater costs
associated with selling such shares. Brokerage commissions and other costs of transaction in odd lots may be higher, particularly on
a per-share basis than the cost of transaction in even multiples of 100 shares.
Accounting
Matters
The
Reverse Split would not affect the par value of our common stock, which will remain $0.001 per share of common stock. As a result, upon
effectiveness of the Reverse Split, the stated capital on our balance sheet attributable to the common stock will be reduced in proportion
to the fractions by which the number of shares of common stock are reduced, and the additional paid-in capital account shall be credited
with the amount by which the stated capital is reduced. The per share net income or loss and net book value of our common stock will
be retroactively increased for each period because there will be fewer shares of our common stock outstanding.
No
Going Private Transactions
The
Reverse Split is not intended as a “going private transactions” within the meaning of Rule 13e-3 under the Exchange Act.
Effect
on Convertible Securities
Upon
effectiveness of the Reverse Split, all outstanding securities convertible and/or exercisable into shares of our common stock, including
any convertible notes, preferred stock and warrants (the “Common Stock Equivalents”) will be adjusted to reflect the
Reverse Split. The number of shares of common stock that the holders of Common Stock Equivalents may acquire upon the conversion and/or
exercise of their Common Stock Equivalents may decrease, and the conversion and/or exercise prices of such Common Stock Equivalents will
increase, in proportion to the fractions by which the number of shares of common stock underlying such Common Stock Equivalents are reduced
as a result of the Reverse Split, resulting in the same aggregate price being required to be paid as would have been paid immediately
preceding the Reverse Split.
Registration
and Trading of our Common Stock
Our
common stock is currently registered under Section 12(g) of the Exchange Act, and we are subject to periodic reporting and other requirements
of the Exchange Act. The Reverse Split will not affect the registration of our common stock under the Exchange Act or our obligation
to publicly file financial and other information with the Securities and Exchange Commission (the “SEC”). Our common
stock will begin trading on a post-split basis after the Effective Time (as defined below). We will announce the Effective Time and timing
for post-split trading to commence in a press release at the time of implementation. In connection with the Reverse Split, the Company’s
CUSIP number (which is an identifier used by participants in the securities industry to identify our common stock) will change to a number
that will also be announced in such press release.
Effectiveness
of Amendment
The
Reverse Split will be effective upon filing of the Amendment with the Secretary of State of the State of Nevada or such other time as
specified in such Amendment (the “Effective Time”) without any Actions on the part of our stockholders and without
regard to the date that any stock certificates representing the stock prior to the Reverse Split are physically surrendered. For the
avoidance of doubt, the Amendment will not be filed with the Secretary of State of the State of Nevada on a date that is earlier than
20 days after this Information Statement is first mailed to our stockholders. The Amendment will be in substantially the form attached
to this Information Statement as Appendix A.
Exchange
of Book-Entry Shares
Upon
effectiveness of the Reverse Split, stockholders whose shares are uncertificated and held in “street name” with a broker
or other nominee, either as direct or beneficial owners, will have their holdings automatically exchanged by their brokers to give effect
to the Reverse Split. In addition, stockholders whose shares are held in book-entry form on the books of our transfer agent, Pacific
Stock Transfer, will have their holdings automatically exchanged by Pacific Stock Transfer to give effect to the Reverse Split. Pacific
Stock Transfer will issue new statements of holdings following such exchange upon request.
Shares
held in Certificate Form
Once
we implement the Reverse Split, the share certificates representing the shares of Common Stock will continue to be valid. In the future,
new share certificates will be issued reflecting the Reverse Split, but this in no way will affect the validity of your current share
certificates. The Reverse Split will occur without any further action on the part of our shareholders. After the Effective Date each
share certificate representing the shares prior to the Reverse Split will be deemed to represent the number of shares shown on the certificate,
divided by 25. Certificates representing the shares after the Reverse Split will be issued in due course as share certificates representing
shares prior to the Reverse Split are tendered for exchange or transfer to our transfer agent. We request that shareholders do not send
in any of their stock certificates at this time. As applicable, new share certificates evidencing new shares following the Reverse Split
that are issued in exchange for share certificates issued prior to the Reverse Split representing old shares that are restricted shares
will contain the same restrictive legend as on the old certificates.
Fractional
Shares
Stockholders
will not receive fractional post-Reverse Split shares in connection with the Reverse Split. Instead, all shares will be rounded up to
the next whole share.
Plans
for Newly Available Shares of Common Stock
We
presently have no specific plans, nor have we entered into any agreements, arrangements or understandings with respect to the shares
of authorized Common Stock that will become available for issuance as a result of the Reverse Split.
Federal
Income Tax Consequences of the Reverse Split
The
following discussion is a general summary of certain U.S. federal income tax consequences of the Reverse Split to the holders of our
common stock and/or Preferred Stock and does not describe all of the income tax consequences that may be relevant to U.S. Holders (as
defined herein) in light of their particular circumstances, including alternative minimum tax and Medicare contribution tax consequences.
This discussion applies only to holders of common stock and/or Preferred Stock who hold such common stock and/or Preferred Stock as capital
assets for U.S. federal income tax purposes.
This
discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), administrative pronouncements,
judicial decisions and final, temporary and proposed Treasury regulations each as in effect on the date hereof, all of which are subject
to change (possibly with retroactive effect) and to differing interpretations. This discussion is for general information purposes only
and the tax treatment of a stockholder may vary depending upon the particular facts and circumstances of such stockholder. In addition,
this discussion does not address all aspects of U.S. federal income taxation that may be relevant to holders in light of their particular
circumstances or to holders who may be subject to special tax treatment, including without limitation, holders who are brokers or dealers
in securities, regulated investment companies, real estate investment trusts, traders in securities that use a mark-to-market method
of tax accounting, persons other than U.S. Holders, U.S. Holders whose functional currency is not the U.S. dollar, insurance companies,
tax-exempt or governmental organizations, banks, financial institutions, U.S. Holders that hold our stock through a non-U.S. entity or
non-U.S. account, or through an individual retirement or other tax-deferred account, U.S. holders who hold stock as part of a hedge,
straddle, wash sale, conversion or constructive sale, or other integrated transactions, U.S. Holders that use the accrual method of accounting
that are required to include certain amounts in income no later than the time such amounts are reflected on certain financial statements,
U.S. expatriates (as defined in the Code), S corporations, partnerships or other pass-through entities for U.S. federal income tax purposes
or a person that holds our stock through such entities, or U.S. Holders who acquired the common stock and/or Preferred Stock pursuant
to the exercise of compensatory stock options or otherwise as compensation.
The
following discussion also does not address the tax consequences of the Reverse Split under foreign, state or local tax laws, or under
any U.S. federal tax laws relating to taxes other than U.S. federal income taxes (such as estate and gift taxes). Accordingly, each stockholder
should consult his or her tax advisor to determine the particular tax consequences to him or her of a reverse stock split, including
the application and effect of U.S. federal, state, local and/or foreign income tax and other laws.
This
disclosure applies to you if you are a U.S. Holder. You are a “U.S. Holder” if, for U.S. federal income tax purposes, you
are a beneficial owner of our common stock or Preferred Stock that is:
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a
citizen or individual resident of the United States, as defined for U.S. federal income tax purposes;
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a
corporation (including any entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under
the laws of the United States, any state therein or the District of Columbia;
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an
estate the income of which is subject to U.S. federal income taxation regardless of its source; or
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a
trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one
or more U.S. persons has the authority to control all substantial decisions of the trust or (ii) it has a valid election in place
under applicable Treasury regulations to be treated as a U.S. person.
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If
an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds our stock, the tax treatment of the partnership
and a partner in such partnership generally will depend on the status of the partner and the activities of the partnership. Such partner
or partnership should consult its own tax advisor as to its tax consequences of the Reverse Split.
This
summary of certain U.S. federal income tax consequences is for general information only and is not tax advice. Each beneficial owner
of our common stock or Preferred Stock is urged to consult its own tax advisor with respect to the application of U.S. federal income
tax laws to its particular situation, as well as any tax consequences arising under the U.S. federal estate or gift tax laws or the Medicare
tax on net investment income, or under the laws of any state, local, foreign or other taxing jurisdiction or under any applicable tax
treaty.
Generally,
a reverse stock split will not result in the recognition of gain or loss by a U.S. Holder of shares of our common stock for U.S. federal
income tax purposes. The aggregate adjusted basis of the new shares of common stock will be the same as the aggregate adjusted basis
of the common stock exchanged for such new shares. The holding period of the post-Reverse Split shares of the common stock resulting
from implementation of the Reverse Split generally will include the stockholder’s respective holding periods for the pre-Reverse
Split shares of common stock.
The
tax discussion set forth above is included for general information only. U.S. Holders should consult with their own tax advisors to determine
their particular tax consequences with respect to the Offers, including the applicability and effect of state, local and non-U.S. tax
laws.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth, as of the date of this prospectus, information regarding beneficial ownership of our capital stock by:
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each
person, or group of affiliated persons, known by us to be the beneficial owner of 5% or more of any class of our voting securities;
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each
of our current directors and nominees;
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each
of our current named executive officers; and
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all
current directors and named executive officers as a group.
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Beneficial
ownership is determined according to the rules of the SEC. Beneficial ownership means that a person has or shares voting or investment
power of a security and includes any securities that person or group has the right to acquire within 60 days after the measurement date.
This table is based on information supplied by officers, directors and principal shareholders. Except as otherwise indicated, we believe
that each of the beneficial owners of the common stock listed below, based on the information such beneficial owner has given to us,
has sole investment and voting power with respect to such beneficial owner’s shares, except where community property laws may apply.
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Name and Address of Beneficial Owner
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Common
Stock
Beneficial
Ownership
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Percent
of
Class(1)
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Series B
Convertible
Preferred
Stock
Beneficial
Ownership
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Percent
of
Class(2)
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Series E-1
Convertible
Preferred
Stock
Beneficial
Ownership
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Percent
of
Class(3)
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Named Executive Officers and Directors:
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Philip A. Falcone(4)
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2,577,106,126
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78.9
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%
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100
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100
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%
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922,000
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80
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%
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Warren Zenna
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-
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-
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-
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-
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-
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-
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Jeffrey Canouse
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6,177,000
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*
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-
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-
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-
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-
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Henry Turner
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-
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-
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-
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-
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-
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-
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All executive officers and directors as a group (four persons)
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2,583,283,126
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-
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-
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-
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-
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-
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Other 5% Shareholders:
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FFO I Trust(5)
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897,555,556
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44.3
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100
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100
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%
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461,000
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40
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%
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FFO II Trust(6)
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897,555,556
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44.3
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-
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0
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461,000
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40
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%
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KORR Value, LP(7)
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448,277,777
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25.0
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-
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-
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230,500
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20
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%
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Arena Special Opportunities Partners I, LP(8)
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129,265,140
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8.26
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*Less
than one percent
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(1)
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Except
as otherwise indicated, the persons named in this table have sole voting and investment power with respect to all shares of common
stock shown as beneficially owned by them, subject to community property laws where applicable and to the information contained in
the footnotes to this table. Unless otherwise indicated, the address of the beneficial owner is Madison Technologies, Inc., 450 Park
Avenue, 30th Floor, New York, NY 10022.
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(2)
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Series
B Convertible Preferred Stock has the right to vote together with the holders of the common stock, as a single class, upon all matters
submitted to holders of common stock for a vote. The shares of Series B Preferred Stock will carry a number of votes equal to 51%
(representing majority voting power) of all voting shares of every class, including 51% of all of the issued and outstanding shares
of common stock on the date of any shareholder vote, such that the holders of Series B Preferred Stock shall always possess the majority
of voting rights, and shall always out vote all holders of common stock.
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(3)
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Each
share of Series E-1 Convertible Preferred Stock is convertible into 1,000 shares of common stock, and is entitled to vote on an as
converted basis until conversion.
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(4)
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Includes
(i) 436,555,556 shares of common stock, (ii) 100 shares of Series B Preferred Stock held by FFO 1 Trust, and (iii) 461,500 shares
of Series E-1 Convertible Preferred Stock held by each of FFO 1 Trust and FFO 2 Trust. Philip A. Falcone, the Chief Executive Officer
and a director of the Company, as a trustee of the FFO I Trust, has the sole voting and shared dispositive power over the shares
held by the FFO I Trust, and Lisa Falcone, the wife of Mr. Falcone, as the trustee of the FFO 2 Trust, has shared voting and dispositive
power over the shares held by the FFO 2 Trust.
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(5)
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Philip
A. Falcone, the Chief Executive Officer and a director of the Company, as trustee of the FFO I Trust, has the sole voting and shared
dispositive power over the shares held by the FFO I Trust. The address for the FFO I Trust is c/o Harbinger Capital, 430 Park Avenue,
30th Floor, New York, NY 10022.
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(6)
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Includes
461,000 shares of Series E-1 preferred stock. Lisa Falcone, the wife of Philip A. Falcone, the Chief Executive Officer and a
director of the Company. As the trustee of the FFO II Trust, Lisa Falcone has shared voting and dispositive power over the shares
held by the FFO II Trust. The address for each the FFO II Trust is c/o Harbinger Capital, 430 Park Avenue, 30th Floor, New York,
NY 10022.
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(7)
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Includes
230,500 shares of Series E-1 preferred stock. Kenneth Orr is the president of KORR Value, LP, and in such capacity, may be deemed
to have voting and dispositive power with respect to such shares. KORR Value, LP and Mr. Orr disclaim beneficial ownership of such
shares, except to the extent of their pecuniary interest therein.
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(8)
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Consists
of shares of Common Stock held by Arena Special Opportunities Partners I, LP (“Partners Fund”). Does not include shares
of common stock issuable upon conversion of the Notes and/or exercise of the Warrants which are subject to the ownership blocker.
Arena Investors, LP is the investment adviser of, and may be deemed to beneficially own securities owned by the Partners Fund (the
“Investment Advisor”). Arena Special Opportunities Partners (Onshore) GP, LLC is the general partner of, and may be deemed
to beneficially own securities owned by, Partners Fund. Arena Investors GP, LLC is the general partner of, and may be deemed to beneficially
own securities owned by the Investment Advisor. By virtue of his position as the chief executive officer of the general partner of
the entity and the Investment Manager, Daniel Zwirn may be deemed to beneficially own securities owned by this selling shareholder.
Each of Mr. Zwirn, the Investment Advisor and the managing member share voting and disposal power over the shares held by the entity
described above. Each of the persons set forth above other than applicable entity holding such shares disclaims beneficial ownership
of the shares beneficially owned by such entity and this disclosure shall not be construed as an admission that any such person or
entity is the beneficial owner of any such securities. The address for the entities set forth above is 405 Lexington Avenue, 59th
Floor, New York, New York 10174.
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ADDITIONAL
INFORMATION
Householding
Matters
If
you and one or more stockholders share the same address, it is possible that only one Information Statement was delivered to your address.
Any registered stockholder who wishes to receive a separate copy of the Information Statement at the same address now or in the future
may mail a request to receive separate copies to the Company at 450 Park Avenue, 30th Floor, New York, NY 10022, or call the Company
at (212) 339-5888, and the Company will promptly deliver the Information Statement to you upon your request. Stockholders who received
multiple copies of this Information Statement at a shared address and who wish to receive a single copy may direct their request to the
same address.
Available
Information
Please
read all the sections of this Information Statement carefully. The Company is subject to the reporting and informational requirements
of the Exchange Act and in accordance therewith, files reports, proxy statements and other information with the SEC. These reports, proxy
statements and other information filed by the Company with the SEC may be inspected without charge at the SEC’s Public Reference
Room at 100 F Street, N.E., Washington, DC 20549. Copies of this material also may be obtained from the SEC at prescribed rates. The
SEC’s EDGAR reporting system can also be accessed directly at www.sec.gov.
FORWARD-LOOKING
STATEMENTS
This
Information Statement may contain certain “forward-looking” statements as such term is defined by the U.S. Securities and
Exchange Commission in its rules, regulations and releases, which represent our expectations or beliefs, including but not limited to,
statements concerning our operations, economic performance, financial condition, growth and acquisition strategies, investments, and
future operational plans. For this purpose, any statements contained herein that are not statements of historical fact may be deemed
to be forward-looking statements. Without limiting the generality of the foregoing, words such as “may,” “will,”
“expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,”
“might,” or “continue” or the negative or other variations thereof or comparable terminology are intended to
identify forward-looking statements. These statements, by their nature, involve substantial risks and uncertainties, certain of which
are beyond our control, and actual results may differ materially depending on a variety of important factors, including uncertainty related
to acquisitions, governmental regulation, managing and maintaining growth, volatility of stock prices and any other factors discussed
in this and other of our filings with the Securities and Exchange Commission.
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|
By
Order of the Board of Directors,
|
|
|
|
|
|
/s/
Philip A. Falcone
|
|
|
Philip
A. Falcone
|
|
|
Chief
Executive Officer
|
|
|
November
18, 2021
|
Appendix
A
Form
of Certificate of Change
Madison Technologies (CE) (USOTC:MDEX)
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From Oct 2024 to Nov 2024
Madison Technologies (CE) (USOTC:MDEX)
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From Nov 2023 to Nov 2024
