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OFFON

MADISON TECHNOLOGIES INC.

(MDEX)
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MADISON TECHNOLOGIES INC. : Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant, Unregistered Sale of Equity Securities, Changes in Control or Registrant, Change in Directors or Principal Officers (form 8-K)

02/23/2021 | 05:28pm EST

Item 1.01. Entry into a Material Definitive Agreement.




Share Exchange Agreement


On February 16, 2021, Madison Technologies Inc., a Nevada corporation (the "Company") entered into a Share Exchange Agreement (the "Share Exchange Agreement") with Sovryn Holdings, Inc. ("Sovryn") and the holders (the "Sovryn Shareholders") of Sovryn's issued and outstanding shares of common stock, par value $0.0001 per share ("Sovryn Common Shares"), pursuant to which the Shareholders exchanged 100% of the outstanding Sovryn Common Shares, for (i) 100 shares of series B preferred stock, par value $0.001 per share ("Series B Preferred Stock"), of the Company which was transferred by Jeffrey Canouse, the Company's controlling shareholder and existing Chief Executive Officer (the "Controlling Shareholder"), to the designee of Sovryn and (ii) 1,000 shares of series E convertible preferred stock, par value $0.001 per share of Sovryn ("Series E Preferred Stock," and together with Series B Preferred Stock, the "Preferred Exchange Shares," and the foregoing exchange of Sovryn Common Shares for Preferred Exchange Shares being the "Equity Exchange").

Upon the effectiveness of an amendment to our Articles of Incorporation to increase the Company's authorized common stock, par value $0.0001 per share, from 500,000,000 shares to 7,000,000,000 shares, all shares of Series E Preferred Stock issued to the Shareholders shall automatically convert into approximately 2,305,000,000 shares of common stock of the Company ("Shareholder Approval"). The Series E Convertible Preferred Stock votes on an as-converted basis with the common stock prior to their conversion. The Series E Preferred Stock shall represent approximately 59% of the fully-diluted shares of common stock of the Company after the closing of the transactions contemplated by the Securities Purchase Agreement (as defined below).

The foregoing description of the Share Exchange Agreement and Series E Preferred Stock does not purport to be a complete description of the rights and obligations of the parties thereunder and is qualified in its entirety by reference to the full text of such agreements, copies of which will be filed as exhibits to the Company's annual report on Form 10-K for the fiscal year ended December 31, 2020.




Share Transfer Agreement



Immediately prior to the closing of, and as a condition to, the Share Exchange Agreement, the Company entered into a Share Transfer Agreement (the "Share Transfer Agreement"), pursuant to which the Controlling Shareholder transferred all of the shares of Series B Preferred Stock held by him to an entity controlled by Philip Falcone, the Company's new chief executive officer. The Series B Preferred Stock entitles the holder thereof to majority voting control of the Company by virtue of the 51% super voting rights attributed to the holder of the Series B Preferred Stock. The Controlling Shareholder owned all 100 Shares of Series B Preferred Stock, entitling him to 51% of the aggregate votes taken by shareholders of any class on all matters being voted upon.

The foregoing description of the Share Transfer Agreement with the Controlling Shareholder does not purport to be a complete description of the rights and obligations of the parties thereunder and is qualified in its entirety by reference to the full text of such agreements, copies of which will be filed as exhibits to the Company's annual report on Form 10-K for the fiscal year ended December 31, 2020.

Exchange Agreements with Holders of Convertible Notes and Series A Convertible Preferred Stock

Immediately prior to the closing of the Share Exchange Agreement, we entered into Exchange Agreements (the "Convertible Note Exchange Agreements") with the holders of our outstanding $764,000 principal amount of convertible notes (the "Convertible Notes"). Pursuant to Convertible Note Exchange Agreements, the holders of the Convertible Notes were issued, in exchange for their Convertible Notes, a total of 230,000 shares of our newly-designated Series D Convertible Preferred Stock. Our new Series D Convertible Preferred Stock is convertible into common stock at a ratio of 1,000 shares of common stock for each share of preferred stock held. Immediately prior to the closing of the Share Exchange Agreement, we entered into Exchange Agreements (the "Preferred Stock Exchange Agreements" and together with the Convertible Note Exchange Agreements, the "Exchange Agreements") with the holders of our outstanding series A convertible preferred stock (the "Series A Preferred Stock"). Pursuant to the Preferred Stock Exchange Agreements, the holders of the Series A Convertible Preferred Stock were issued, in exchange for their Series A Preferred Stock, options to purchase a majority of the outstanding shares of common stock of a newly to be formed wholly owned subsidiary of the Company.

The foregoing description of the Exchange Agreements and the Series D Convertible Preferred Stock does not purport to be a complete description of the rights and obligations of the parties thereunder and is qualified in its entirety by reference to the full text of such agreements, copies of which will be filed as exhibits to the Company's annual report on Form 10-K for the fiscal year ended December 31, 2020.



Secured Note Financing


On February 17, 2021, we entered into a securities purchase agreement with funds affiliated with Arena Investors LP (the "Investors") pursuant to which we pursuant to which it issued convertible notes in an aggregate principal amount of $16.5 million for an aggregate purchase price of $15 million (collectively, the "Notes"). In connection with the issuance of the Notes, we issued to the Investors warrants to purchase an aggregate of 192,073,017 shares of Common . . .

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an

           Off-Balance Sheet Arrangement of a Registrant.



Information concerning the Company's issuance of the Notes pursuant to the Purchase Agreement set forth in Item 1.01 above is hereby incorporated into this Item 2.03 by reference.

Item 3.02. Unregistered Sales of Equity Securities.

Information concerning the Company's issuance of (i) Series D Preferred Stock pursuant to the Exchange Agreements as set forth in Item 1.01 above, (ii) Series E Preferred Stock pursuant to the Share Exchange Agreement as set forth in Item 1.01 above and (ii) Notes, Warrants and Series F Preferred Stock pursuant to the Purchase Agreement as set forth in Item 1.01 above, is hereby incorporated into this Item 3.02 by reference.

The securities issued and sold is this transaction were not registered under the Securities Act, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 3(a)(9) or Section 4(a)(2) under the Securities Act and Regulation D promulgated thereunder and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering. The Investors are an "accredited investor" as such term is defined in Regulation D promulgated under the Securities Act. This Current Report shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall such securities be offered or sold in the United States absent registration or an applicable exemption from the registration requirements and certificates evidencing such shares contain a legend stating the same.

Item 5.01. Changes in Control of Registrant.

As result of the issuance of the transfer of the Series B Preferred Stock and the issuance of the shares of Series E Preferred Stock pursuant to the Share Exchange Agreement, a change in control of the Company occurred on February 16, 2021. Under the terms of the Share Exchange Agreement, Sovryn has appointed two (2) members of the Board of Directors of the Company as discussed in Item 5.02 below. The appointment of these members is subject to compliance with Rule 14f-1 under the Exchange Act.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors;

           Appointment of Certain Officers; Compensatory Arrangements of Certain
           Officers.



Concurrently with the closing of the Asset Purchase Agreement, the Board of Directors of the Company appointed the Chief Executive Officer of Sovryn, Phil Falcone, to serve as the Company's new Chief Executive Officer and member of the Board of Directors, Henry Turner shall be appointed as Chief Technology Officer and Chief Operating Officer of the Company, and Warren Zenna as a member of the Board of Directors of the Company, subject to compliance with Rule 14f-1 under the Exchange Act. In addition, Jeffrey Canouse, resigned from his position as Chief Executive Officer of the Company, effective immediately, was appointed Chief Compliance Officer and Secretary of the Company and will continue to serve the Company as a member of the Board of Directors. Effective ten (10) days after mailing to shareholders of a Schedule 14f-1 regarding the proposed changes in the Company's Board of Directors, Jeffrey Canouse will resign as a director of the Company and Warren Zenna will become a director of the Company.

Mr. Falcone does not have any family relationship with any director, executive officer or person nominated or chosen by us to become a director or executive officer. There is no understanding or arrangement between Mr. Falcone and any other person pursuant to which Mr. Falcone was selected as an executive officer. There are no transactions in which Mr. Falcone has an interest requiring disclosure under Item 404(a) of Regulation S-K.

Mr. Falcone is the Chief Investment Officer and Chief Executive Officer of Harbinger Capital, and is the Chief Investment Officer of other Harbinger Capital-affiliated funds. Mr. Falcone co-founded the funds affiliated with Harbinger Capital in 2001.Mr. Falcone served as a director of HC2 Holdings, Inc. (NYSE: HCHC), a diversified holding company ("HC2"), from January 2014 until July 2020, as President and CEO of HC2 from May 2014 to June 2020 and as Chairman of the Board of HC2 from May 2014 until April 2020. Mr. Falcone served as a director, Chairman of the Board and Chief Executive Officer of HRG Group, Inc. (f/k/a Harbinger Group Inc., "HRG") from July 2009 to November 2014. From July 2009 to July 2011, Mr. Falcone also served as the President of HRG. Mr. Falcone has over two decades of experience in leveraged finance, distressed debt and special situations. Prior to joining the predecessor of Harbinger Capital, Mr. Falcone served as Head of High Yield trading for Barclays Capital. From 1998 to 2000, he managed the Barclays High Yield and Distressed trading operations. Mr. Falcone held a similar position with Gleacher Natwest, Inc., from 1997 to 1998. Mr. Falcone began his career in 1985, trading high yield and distressed securities at Kidder, Peabody & Co. Mr. Falcone served as a member of the board of directors of Inseego Corp. (NASDAQ: INSG), a provider of intelligent wireless solutions for the worldwide mobile communications market from 1994 through August 2018, as its Chairman of the Board from May 2017 through August 2018, and as a member of its Audit Committee from June 2017 through August 2018. Mr. Falcone received an A.B. in Economics from Harvard University.

© Edgar Online, source Glimpses

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Financials (USD)
Sales 2020 0,00 M - -
Net income 2020 -0,91 M - -
Net Debt 2020 0,56 M - -
P/E ratio 2020 -6,10x
Yield 2020 -
Capitalization 122 M 122 M -
EV / Sales 2019 241x
EV / Sales 2020 5 288x
Nbr of Employees -
Free-Float 99,6%
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Income Statement Evolution
Managers and Directors
Philip Alan Falcone Chief Executive Officer & Director
Henry Turner Chief Operating & Technology Officer
Jeffrey M. Canouse Secretary & Compliance Officer
Warren Zenna Director
Walter Hoelzel Marketing Manager
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