United states
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| quarterly report under section 13 0r 15(d) of the securities exchange act of 1934 |
For
the quarterly period ended
| transition report under section 13 0r 15(d) of the securities exchange act of 1934 |
For the transition period from ________________________ to _______________________
Commission
file number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
| (Registrant’s telephone number, including area code) |
| n/a |
| (Former name, former address and former fiscal year, if changed since last report) |
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (s. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company in Rule 12b-2 of the Exchange Act.
| Larger accelerated filer | ☐ | Accelerated filer | ☐ |
| ☐ | Smaller reporting company | ||
| (Do not check if a smaller reporting company) |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐
Yes ☒
Applicable only to corporate issuers
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.
| Class | Outstanding at November 10, 2022 | |
| Common Stock - $0.001 par value |
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 2 |
MADISON TECHNOLOGIES INC.
INTERIM Financial Statements
SEPTEMBER 30, 2022 and 2021
(unaudited)
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 3 |
MADISON TECHNOLOGIES INC.
(UNAUDITED)
TABLE OF Contents
| CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | |
| Balance Sheets | 4 |
| Statements of Operations | 5 |
| Statements of Stockholders’ Deficit | 6 |
| Statements of Cash Flows | 7 |
| Notes to the Financial Statements | 8-29 |
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 4 |
MADISON TECHNOLOGIES INC.
condensed consolidated Balance Sheets
(Unaudited)
| September 30, 2022 | December 31, 2021 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivables, net | ||||||||
| Note receivables | ||||||||
| Due (to) from related party | ( | ) | ||||||
| Intangible assets, net | ||||||||
| Equipment, net | ||||||||
| Investments | ||||||||
| Operating lease right-of-use assets, net | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Derivative liability | ||||||||
| Current portion of lease liabilities | ||||||||
| Promissory notes | ||||||||
| Convertible notes payable | ||||||||
| Interest payable on senior secured notes | ||||||||
| Long term portion of lease liability obligations | ||||||||
| Long term convertible notes, net of discount | ||||||||
| Total liabilities | ||||||||
| Preferred Shares - Series C, $ par value; | ||||||||
| Preferred Shares - Series D, $ par value; convertible, stated value $ | ||||||||
| Preferred Shares - Series E, $ par value; convertible, stated value $ | ||||||||
| Preferred Shares - Series E-1, $par value; convertible, stated value $ | ||||||||
| Preferred Shares - Series F, $ par value; convertible, stated value $ | ||||||||
| Preferred Shares - Series G, $ par value; convertible, stated value $ | ||||||||
| Preferred Shares – Series H, $ par value; convertible, stated value $ | ||||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Capital Stock: | ||||||||
| Preferred Shares – shares authorized, $par value Preferred Shares - Series A, $ par value; | ||||||||
| Preferred Shares - Series B, $ par value; shares designated, shares issued and outstanding, September 30, 2022 and December 31, 2021, respectively | ||||||||
| Common Shares - $ par value; shares authorized shares issued and outstanding, September 30, 2022 and December 31, 2021, respectively | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 5 |
MADISON TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS of Operations
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Television operations | ||||||||||||||||
| Amortization of intangible assets | ( | ) | ||||||||||||||
| Professional fees | ||||||||||||||||
| Loss on asset disposals | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss before other expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Loss from continuing operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income (loss) from discontinued operations | ( | ) | ||||||||||||||
| Net loss and comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share-Basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Average number of shares of common stock outstanding | ||||||||||||||||
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 6 |
MADISON TECHNOLOGIES INC.
CONDENSED CONSOLIDATED StatementS of stockholders’ DEFICIT
(Unaudited)
| Additional | ||||||||||||||||||||||||
| Common | Preferred | Paid In | Accumulated | |||||||||||||||||||||
| Shares | Amount | Stock | Capital | Deficit | Total | |||||||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, September 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Additional | ||||||||||||||||||||||||
| Common | Preferred | Paid In | Accumulated | |||||||||||||||||||||
| Shares | Amount | Stock | Capital | Deficit | Total | |||||||||||||||||||
| Balance, December 31, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Cancellation of Series A Preferred | - | ( | ) | |||||||||||||||||||||
| Common issued for Series B Preferred transfer | ( | ) | ||||||||||||||||||||||
| Conversion of debt to Series D Preferred | - | |||||||||||||||||||||||
| Series E Preferred issued for assets | - | |||||||||||||||||||||||
| Series G Preferred issued for subscriptions sold | - | |||||||||||||||||||||||
| Equity portion on convertible debt issued | - | |||||||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, September 30, 2021 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 7 |
MADISON TECHNOLOGIES INC.
CONDENSED CONSOLIDATED StatementS of cash flows
(unaudited)
| For the Nine Months Ended | ||||||||
| September 30, 2022 | September 30, 2021 | |||||||
| Cash Flows from operating activities: | ||||||||
| Net loss for the period | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
| Amortized interest | ||||||||
| Amortization | ||||||||
| Fair value of Warrant issued for services | ||||||||
| Foreign exchange on notes payable | ||||||||
| Loss on disposal of assets | ||||||||
| Changes in assets and liabilities: | ||||||||
| Accounts payable and accruals | ||||||||
| Payment of lease liability | ( | ) | ||||||
| Accounts receivable | ( | ) | ||||||
| Due from related party | ( | ) | ||||||
| Prepaid expenses | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from investing activities: | ||||||||
| Purchases of equipment, intangible assets and goodwill | ( | ) | ( | ) | ||||
| Funds advanced for note receivable | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash Flows from financing activities: | ||||||||
| Proceeds from convertible and subordinate notes sold | $ | $ | ||||||
| Shares subscribed but not issued | ||||||||
| Net cash provided by financing activities | ||||||||
| Net (decrease) increase in cash | ( | ) | ||||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE | ||||||||
| Interest paid | $ | $ | ||||||
| Taxes paid | $ | $ | ||||||
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 8 |
MADISON TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 2022
Note 1 Nature of Operations
Our Company was incorporated on June 15, 1998 in the State of Nevada, USA and our common shares are publicly traded on the OTC Markets OTCQB.
We, through our wholly-owned subsidiary, Sovryn Holdings, Inc. (“Sovryn”) acquired three un-affiliated Class A/LPTV TV. Each licensed TV station can broadcast between 10 and 12 channels over-the-air, 24 hours per day/7 days per week. In 2021, we generated revenue by leasing channels to third parties on KNLA/KNET, a Class A television station in Los Angeles, KVVV, a low power television station in Houston and KYMU-LD, a low power television station in Seattle.
On
November 15, 2021, we sold our wholly owned subsidiary, CZJ License Inc. for $
During August 2021, our shareholders approved to amend and restate our Articles of Incorporation to increase our authorized common stock from shares to shares.
Note 2 Going Concern
The
accompanying consolidated financial statements have been prepared assuming we will continue as a going concern, which contemplates the
recoverability of assets and the satisfaction of liabilities in the normal course of business. For the year ended December 31, 2021,
we incurred a net loss of $
Note 3 Summary of Significant Accounting Policies
Use of estimates
The preparation of the consolidated interim financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Actual results could differ from those estimates.
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 9 |
Consolidation
The accompanying consolidated financial statements include the accounts of our wholly owned subsidiaries, Sovryn Holdings Inc. and CZJ License Inc. CZJ License Inc. was consolidated up until it was sold on November 15, 2021. All the intercompany balances and transactions have been eliminated in the consolidation. During the year ended December 31, 2021, the operations of CZJ License Inc. were consolidated into our operation and were designated as discontinued.
Interim Reporting
While the information presented in the accompanying interim three month financial statements is unaudited, it includes all adjustments, which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in accordance with accounting principles generally accepted in the United States of America. These interim financial statements follow the same accounting policies and methods of their application as the Company’s December 31, 2021 annual financial statements. All adjustments are of a normal recurring nature. It is suggested that these interim financial statements be read in conjunction with the Company’s December 31, 2021 annual financial statements. Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that can be expected for the year ended December 31, 2022.
Segment reporting
We use “the management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by our chief operating decision maker for making operating decisions and assessing performance as the source for determining our reportable segments. Our chief operating decision maker is our chief executive officer, who reviews operating results to make decisions about allocating resources and assessing our entire performance. We did not report any segment information since we primarily generates sales from its television stations.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation.
Revenue recognition
We adopted the ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). We recognize revenue when we transfer promised services to the customer. The performance obligation is the monthly services rendered. We have one main revenue source which is leasing of television station channels. Accordingly, we recognize revenue when services are provided as time passes the customers have access to utilize the channel. These revenues are billed in advance, arrears and/or are prepaid. The performance obligation is the monthly services rendered. At the moment, we have one main revenue source which is leasing of television channels. Where there is a leasing contract for channels, we bill monthly for our services as rendered. Where there is no contract, the revenue is recognized as provided.
We recognize revenue in accordance with ASC 606 using the following 5 steps to identify revenues:
| ● | identify the contract with a customer; |
| ● | identify the performance obligations in the contract; |
| ● | determine the transaction price; |
| ● | allocate the transaction price to performance obligations in the contract; and |
| ● | recognize revenue as the performance obligation is satisfied. |
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 10 |
Advances from Client’s deposits are contract liabilities with customers that represent our obligation to either transfer goods or services in the future, or refund the amount received. Where possible, we obtain retainers to lessen our risk of non-payment by our customers. Advances from Client’s deposits are recognized as revenue as we meet specified performance obligations as detailed in the contract.
Accounts receivables
Trade
accounts receivable are stated at the amount we expect to collect. Management considers the following factors when determining the collectability
of specific customer accounts: customer credit worthiness, past transaction history, current economic industry trends and changes in
customer payment terms. Past due balances over 90 days and other higher risk amounts are reviewed individually for collectability. Based
on the management’s assessment, we provide for estimated uncollectible amounts through a charge to earnings and a credit to a valuation
allowance. Balances that remain outstanding after we have used reasonable collection efforts are written off through a charge to the
valuation allowance and a credit to accounts receivable. As of September 30, 2022, our allowance for doubtful accounts receivable was
$
Operating leases
In February 2016, the FASB issued ASU 2016-02, Leases (“Topic 842”). The new standard establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. For leases with an initial term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the term of the lease. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition. Similarly, lessors will be required to classify leases as sales-type, finance or operating, with classification affecting the pattern of income recognition. Classification for both lessees and lessors will be based on an assessment of whether risks and rewards as well as substantive control have been transferred through a lease contract. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. We adopted the new standard April 19, 2021. We have elected not to recognize lease assets and lease liabilities for leases with an initial term of 12 months or less.
Intangible assets
Intangible assets are non-monetary identifiable assets, controlled by us that will produce future economic benefits, based on reasonable and supportable assumptions about conditions that will exist over the life of the asset. An intangible asset that does not meet these attributes will be recognized as an expense when it is incurred. Intangible assets that do, are capitalized and initially measured at cost. Those with a determinable life will be amortized on a systematic basis over their future economic life. Those with an indefinite useful life shall not be amortized until its useful life is determined to be longer indefinite. An intangible asset subject to amortization shall be periodically reviewed for impairment. A recoverability test will be performed and, if applicable, unscheduled amortization is considered.
License agreements have been capitalized, recorded at cost and amortized over the life of the contracts. They will be amortized over the life of the license to which it supports.
Equipment
Equipment represents purchases made for assets, whose useful life was determined to be greater than one year. The assets are initially recorded at cost and depreciated over their estimated useful lives.
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 11 |
Website development costs
We recognized the costs associated with developing a website in accordance with ASC 350-50 “Website Development Cost”. The website development costs are divided into three stages, planning, development and production. The development stage can further be classified as application and infrastructure development, graphics development and content development. In short, website development cost for internal use should be capitalized except content input and data conversion costs in content development stage.
Costs associated with the website consist primarily of website development costs paid to third party. These capitalized costs will be amortized based on their estimated useful life over three years upon the website becoming operational. Internal costs related to the development of website content will be charged to operations as incurred. Website development costs related to the customers are charged to cost of sales.
Impairment of Long-Lived Assets
In accordance with the provisions of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as plant and equipment and intangible assets we hold and use are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.
Concentration of credit risk
We place our cash and cash equivalents with a high credit quality financial institution. We maintain United States Dollars. We minimize its credit risks associated with cash by periodically evaluating the credit quality of its primary financial institution.
Financial instruments
Our financial instruments consist principally of cash, accounts payable, accrued liabilities and notes payable. The carrying amounts of such financial instruments in the accompanying financial statements approximate their fair values due to their relatively short-term nature or the underlying terms are consistent with market terms. It is the management’s opinion that we are not exposed to any significant currency or credit risks arising from these financial instruments.
Fair value measurements
We follow the guidelines in ASC Topic 820 “Fair Value Measurements and Disclosures”. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions and credit risk.
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 12 |
We apply the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. All financial instruments approximate their fair value.
| Level 1 — Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets. | |
| Level 2 — Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities | |
| Level 3—inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. |
Convertible Notes with Fixed Rate Conversion Options
We may enter into convertible notes, some of which contain, predominantly, fixed rate conversion features, whereby the outstanding principal and accrued interest may be converted by the holder, into common shares at a fixed discount to the market price of the common stock at the time of conversion. This results in a fair value of the convertible note being equal to a fixed monetary amount. We record the convertible note liability at its fixed monetary amount by measuring and recording a premium, as applicable, on the Note date with a charge to interest expense in accordance with ASC 480 - “Distinguishing Liabilities from Equity”.
Derivative Liabilities
We have certain financial instruments that are derivatives or contain embedded derivatives. We evaluate all our financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 810-10-05-4 and 815-40. This accounting treatment requires that the carrying amount of any derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with us, the change in the fair value during the period is recorded as either other income or expense. Upon conversion, exercise or repayment, the respective derivative liability is marked to fair value at the conversion, repayment or exercise date and then the related fair value amount is reclassified to other income or expense as part of gain or loss on extinguishment.
Net Loss Per Share
Basic
loss per share is calculated by dividing the loss attributable to stockholders by the weighted-average number of shares outstanding for
the period. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common
stock were exercised or converted into common stock or resulted in the issuance of common stock that shared in our earnings (loss). Diluted
loss per share is computed by dividing the loss available to stockholders by the weighted average number of shares outstanding for the
period and dilutive potential shares outstanding unless such dilutive potential shares would result in anti-dilution. As of September
30, 2022, no options were outstanding and warrants were outstanding and exercisable. Additionally, as of September 30, 2022,
the outstanding principal balance, including accrued interest of the third-party convertible debt, totaled $
| September 30, 2022 | September 30, 2021 | |||||||
| Warrants | ||||||||
| Convertible Preferred Stock | ||||||||
| Convertible debt | ||||||||
| Total | ||||||||
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 13 |
Business Combinations
In accordance with ASC 805-10, “Business Combinations”, we account for all business combinations using the acquisition method of accounting. Under this method, assets and liabilities, including any remaining non-controlling interests, are recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets acquired, net of liabilities assumed, and non-controlling interests is recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities, or non-controlling interests made subsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Any cost or equity method interest that we hold in the acquired company prior to the acquisition is re-measured to fair value at acquisition with a resulting gain or loss recognized in income for the difference between fair value and the existing book value. Results of operations of the acquired entity are included in our results from the date of the acquisition onward and include amortization expense arising from acquired tangible and intangible assets.
Credit losses
In June 2016, the FASB issued ASU 326, “Financial Instruments – Credit Losses”. The ASU sets forth a “current expected credit loss” (CECL) model which requires us to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. Recently, the FASB issued the final ASU to delay adoption for smaller reporting companies to calendar year 2023. We are currently assessing the impact of the adoption of this ASU on its financial statements.
Related Party Transactions
We follow FASB ASC subtopic 850-10, “Related Party Transactions”, for the identification of related parties and disclosure of related party transactions.
Pursuant to ASC 850-10-20, related parties include: a) our affiliates; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit sharing trusts that are managed by or under the trusteeship of management; d) our principal owners; e) our management; f) other parties with which we may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
Material related party transactions are required to be disclosed in the consolidated financial statements, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which statements of operation are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which statements of operations are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 14 |
Discontinued operations
Discontinued operations are components of an entity that either have been disposed or abandoned or is classified as held for sale. Additionally, in order to qualify as a discontinued operation, the disposal or abandonment must represent a strategic shift that has or will have a major effect on an entity’s operations and financial results.
Income taxes
We follow the guideline under ASC Topic 740 Income Taxes. “Accounting for Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Due to the uncertainty regarding our future profitability, the future tax benefits of its losses have been fully reserved.
Recently Issued Accounting Pronouncements
We adopt new pronouncements relating to generally accepted accounting principles applicable to us as they are issued, which may be in advance of their effective date.
In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). The new ASU addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options. This amendment is effective for all entities, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact this new guidance will have on its financial statements
We do not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.
Note 4 Notes Receivable
| September 30, 2022 | December 31, 2021 | |||||||
| Secured note – Top Dog Productions Inc. | $ | $ | ||||||
| Convertible note – ZA Group | ||||||||
| Prepaid expenses | ||||||||
| Accrued interest | ||||||||
| $ | $ | |||||||
On
September 9, 2021, we entered into a secured one-year promissory note with Top Dog Productions Inc. We agreed to lend an aggregate principal
sum of up to $
On
November 15, 2021, we entered into a $
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 15 |
Note 5 - Intangible Assets
Our
Federal Communication Commission Licenses (“FCC”) and domain name are considered indefinite-lived intangible assets that
are not amortized, but instead are tested at least annually for impairment. The Market Advantage intangible asset is being amortized
on a straight-line basis over 94 months from the acquisition date. Amortization expense for the three months ended September 30, 2022
and 2021 was $
| September 30, 2022 | ||||||||||||
| Cost | Amortization | Net | ||||||||||
| Domain Name | $ | $ | $ | |||||||||
| Market Advantage | ||||||||||||
| FCC Licenses | ||||||||||||
| $ | $ | $ | ||||||||||
Future amortization expense of the intangible assets is as follows:
For the Twelve Months Ending September 30, | ||||
| 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Thereafter | ||||
| Total | $ | |||
Note 6 Goodwill
As of September 31, 2022, we carry goodwill for the following television station asset purchases made in 2021:
| KNLA - KNET acquisition | $ | |||
| KVVV acquisition | ||||
| KYMU acquisition | ||||
| Total | $ |
Note 7 Equipment
Useful Life | Cost | Accumulated Depreciation | Net | |||||||||||
| Transmitter | $ | $ | ( | ) | $ | |||||||||
| Antenna | ( | ) | ||||||||||||
| Tech Equipment | ( | ) | ||||||||||||
| Office Equipment | ( | ) | ||||||||||||
| Microwave | ( | ) | ||||||||||||
| $ | $ | ( | ) | $ | ||||||||||
Depreciation
expense was $
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 16 |
Note 8 Right of Use Assets
We
have six operating leases ranging from a period of
| Term | Accumulated | |||||||||||||||
| (in months) | Amount | Amortization | Net | |||||||||||||
| Tower Lease 1 | $ | $ | $ | |||||||||||||
| Tower lease - 2 | ||||||||||||||||
| Tower lease - 3 | ||||||||||||||||
| Generator lease | ||||||||||||||||
| Studio lease - 1 | ||||||||||||||||
| Studio lease - 2 | ||||||||||||||||
| $ | $ | $ | ||||||||||||||
The
remaining lease liability at September 30, 2022 was $
| 2022 | $ | |||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| Remaining | ||||
| Lease obligations, net | ||||
| Amount representing interest | ||||
| Less current portion | ||||
| Non-current lease obligation | $ |
Note 9 Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities as of December 31 are summarized below:
| September 30, 2022 | December 31. 2021 | |||||||
| Accounts payable | $ | $ | ||||||
| Customer deposits | ||||||||
| Accrued expenses | ||||||||
| Accrued interest | ||||||||
| Total | $ | $ | ||||||
On
June 10, 2022, we entered into an agreement with a third party pursuant to which we received $
On
July 28, 2022, we entered into an agreement with a third party pursuant to which we received $
On
September 13, 2022, we entered into an agreement with a third party pursuant to which we received $
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 17 |
Note 10 Securities Exchange Agreements
Sovryn Holdings, Inc.
We entered into a Securities Exchange Agreement on February 16, 2021 with Sovryn, a Delaware corporation and acquired % of the shares of Sovryn in exchange for i) shares of our Series B Preferred Stock to be transferred by Jeffrey Canouse, our CEO at the time, to a designee of Sovryn and ii) shares of Series E Preferred Stock. Upon the effectiveness of an amendment to out Articles of Incorporation to increase our authorized common stock, from par value $ to par value $ per share, from shares to shares, all shares of Series E Preferred Stock issued to the shareholders shall automatically convert into approximately shares of our Common Stock. The Series E Preferred Stock votes on an as-converted basis with our Common Stock prior to their conversion. The Series E Preferred Stock represented approximately % of the fully diluted shares of our Common Stock after the closing of the transactions contemplated by the Securities Purchase Agreement. The valuation for the Preferred Series E shares was determined to be $ based on the market value of our shares we exchanged at the date the transaction. The transaction was recorded as an asset purchase and we recorded goodwill of $which was based on the market value of our shares exchanged at the date of the transaction.
Note 11 Asset Purchase
On
April 19, 2021, pursuant to a February 17, 2021 asset purchase agreement, Sovryn paid a total of $
The following table shows the estimated fair values of the Los Angeles Stations’ assets acquired and liabilities assumed at the April 19, 2021 purchase date:
| ASSETS ACQUIRED | ||||
| Transmitter equipment | $ | |||
| Technical equipment | ||||
| Antenna systems | ||||
| Microwave equipment | ||||
| Total tangible assets acquired | ||||
| Total liabilities assumed | ||||
| NET TANGIBLE ASSETS ACQUIRED | $ | |||
| INTANGIBLE ASSETS ACQUIRED | ||||
| FCC licenses | ||||
| Goodwill | ||||
| INTANGIBLE ASSETS ACQUIRED | ||||
| NET ASSETS ACQUIRED | $ |
On
June 1, 2021, pursuant to a March 14, 2021 an asset purchase agreement, Sovryn paid a total of $
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 18 |
The following table shows the estimated fair values of the Houston Station’s assets acquired and liabilities assumed at the June 1, 2021 purchase date:
| ASSETS ACQUIRED | ||||
| Transmitter equipment | $ | |||
| Technical equipment | ||||
| Antenna systems | ||||
| Furniture and equipment | ||||
| Total tangible assets acquired | ||||
| Total liabilities assumed | ||||
| NET TANGIBLE ASSETS ACQUIRED | $ | |||
| INTANGIBLE ASSETS ACQUIRED | ||||
| FCC licenses | ||||
| Transmitter site leasehold | ||||
| Goodwill | ||||
| INTANGIBLE ASSETS ACQUIRED | ||||
| NET ASSETS ACQUIRED | $ |
On
September 24, 2021, pursuant to a March 29, 2021 an asset purchase agreement, Sovryn paid a total of $
The following table shows the estimated fair values of the Seattle Station’s assets acquired and liabilities assumed at the September 24, 2021 purchase date:
| ASSETS ACQUIRED | ||||
| Transmitter equipment | $ | |||
| Technical equipment | ||||
| Antenna systems | ||||
| Microwave equipment | ||||
| Total tangible assets acquired | ||||
| Total liabilities assumed | ||||
| NET TANGIBLE ASSETS ACQUIRED | $ | |||
| Goodwill | ||||
| INTANGIBLE ASSETS ACQUIRED | ||||
| FCC licenses | ||||
| Goodwill | ||||
| INTANGIBLE ASSETS ACQUIRED | ||||
| NET ASSETS ACQUIRED | $ |
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 19 |
Note 12 Note Payable
On
December 28, 2021, we sold a $
On
January 14, 2022, we sold an unsecured $
On
January 14, 2022, we sold an unsecured $
On
April 27, 2022, we sold a $
Note 13 Convertible Notes Payable
Our convertible notes payable are as follows as of:
| September 30, 2022 | December 31, 2021 | |||||||||
| Senior Secured | [a] | $ | $ | |||||||
| Series 1 | [b] | |||||||||
| Series 2 | [c] | |||||||||
| Series 3 | [d] | |||||||||
| Series 4 | [e] | |||||||||
| Series 5 | [f] | |||||||||
| Series 6 | [g] | |||||||||
| Less current portion | ||||||||||
| Long term portion | $ | $ | ||||||||
| [a] |
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 20 |
The
Notes have a term of thirty-six months and mature on February 17, 2024, unless earlier converted.
On September 24, 2021, the Company and the Investors amended the Notes and related closing documents, by executing the Limited Waiver and First Amendment the closing documents (“the amendment”). The amendment also waived specified events of default. The Notes are henceforth convertible at any time, at the holder’s option, into shares of our Common Stock at a price of $per share, subject to default event adjustment. Notwithstanding the foregoing, at any time during the continuance of any Event of Default, the Conversion price in effect shall be equal to the alternate conversion price. If at any time the conversion price as determined hereunder for any conversion would be less than the par value of the Common Stock, then at the sole discretion of the Holder, the conversion price hereunder may equal such par value for such conversion and the conversion amount for such conversion may be increased to include Additional Principal, where Additional Principal means such additional amount to be added to the principal amount of this Note to the extent necessary to cause the number of conversion shares issuable upon such conversion to equal the same number of conversion shares as would have been issued had the conversion price not been adjusted by the Holder to the par value price, subject to certain beneficial ownership limitations (with a maximum ownership limit of 9.99%). The conversion price is also subject to adjustment due to certain events, including stock dividends, stock splits and in connection with our issuance of our Common Stock or common stock equivalents at an effective price per share lower than the conversion price then in effect. We may not redeem the Notes.
As
part of the agreement with the Investors, we issued
The Investors have contractually agreed to restrict their ability to exercise the Warrants and convert the Notes such that the number of shares of our Common Stock held by the Investors and their affiliates after such conversion or exercise does not exceed 9.99% of our then issued and outstanding shares of Common Stock.
| [b] | Series 1:
|
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 21 |
| [c] | Series 2:
On
January 14, 2022, we sold one of our shareholders a $
On
February 17, 2022, we sold a $ |
| [d] | Series 3:
|
| [e] | Series 4:
On
June 24, 2022, we sold a convertible subordinate note totaling $ |
| [f] | Series 5:
On
May 5, 2022, we sold an $ |
| [g] | Series 6:
|
On
February 17, 2022, we sold a $
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 22 |
Note 14 Related Party
We
entered into a consulting agreement with Warren Zenna of Zenna Consulting Group to provide oversight of marketing and communications
services. The agreement commenced March 1, 2021 and ended on July 31, 2021. We paid Zenna Consulting Group $
Effective
January 1, 2022, we entered into a management consulting agreement with GreenRock LLC, a company controlled by Philip Falcone, for a
period of one year ending December 31, 2022, under which we provide monthly remuneration of $
During
the three months ended September 30, 2022, our Chief Executive Officer advanced us funds for our operations and as of September 30, 2022,
we owed $
On
April 7, 2021, we issued shares of our Common Stock to Mr. Canouse in exchange for transferring his shares of our Series
B Preferred Stock to FFO1 Irrevocable Trust, an entity controlled by Mr. Falcone, our CEO and Chairman of our Board of Directors. The
shares were valued at $
Note 15 Mezzanine Equity
We account for certain of our Preferred Stock in accordance with the guidance in ASC Topic 480, Distinguishing Liabilities from Equity. Based on this guidance, preferred stock that is conditionally redeemable is classified as temporary or “mezzanine” equity. Accordingly, the various Series of Preferred Stock, which is subject to conditional redemption, is presented at redemption value as mezzanine equity outside of the stockholders’ equity section of the consolidated balance sheets
Preferred Shares
Series A Preferred Stock
On February 16, 2021, we cancelled all the Preferred Series A shares. In exchange, the holders of Series A Preferred shares received one-year option agreements to purchase shares of our wholly owned subsidiary at the time, CZJ License, Inc. at $ per share for up to shares. The option agreement expired without being exercised.
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 23 |
Series C Preferred Stock
There
are designated and authorized Series C Preferred Stock.
Series D Preferred Stock
There
are designated and authorized Series D Preferred Stock with a
On
February 16, 2021, we settled $
Series E Preferred Stock
On
February 16, 2021, we issued shares of Series E Preferred Stock to acquire Sovryn that we valued at $
On
September 16, 2021, the holders of our Series E Preferred Stock entered into an Exchange Agreement with us whereby on October 11, 2021,
the Series E Preferred shares were exchanged for Series E-1 Preferred shares and shares of Common Stock.
We valued the exchange at the same $
Series E-1 Preferred Stock
There are designated and authorized Series E-1 Preferred Stock that we issued on October 11, 2021 in exchange for our Series E Preferred Stock. At September 30, 2022 and December 31, 2021, Preferred Series E-1 shares remain outstanding. Each share of Series E-1 Preferred Stock may be converted to common shares.
Series F Preferred Stock
There
are designated and authorized Series F Preferred Stock. On February 17, 2021, we issued the Investors shares of Series F
Preferred Stock that convert into shares of Common Stock, which we valued at $
Series G Preferred Stock
We
received $ in subscriptions for of Series G Preferred Shares that we valued at $
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 24 |
Series H Preferred Stock
On
November 11, 2021, pursuant to an Exchange Agreement that we entered into with the Investors, of our Common shares held by
the Investors were exchanged for shares of our Series H Preferred Stock and we cancelled the
Note 16 Shareholders’ Equity
Preferred Stock
As of September 30, 2022 and December 31, 2021, we are authorized to issue shares of $ par value Preferred Stock, with designations, voting, and other rights and preferences to be determined by our Board of Directors of which remain available for designation and issuance.
Series B Preferred Stock
There
are designated and authorized Series B Preferred Stock.
On
July 17, 2020, Series B Preferred Stock were issued pursuant to the License Agreement. The Series B Preferred Stock was valued at
par at $.
On February 17, 2021, the Series B Preferred Stock were transferred from Mr. Canouse (our former director and CEO), to FFO1 Irrevocable Trust, a company Mr. Falcone (our director and CEO) is the trustee and has the voting and dispositive power.
At September 30, 2022 and December 31, 2021, there were Series B Preferred shares outstanding, respectively.
Common Stock
In August 14, 2021, our shareholders approved an increase in authorized Common Stock to from , which became effective the same day. As of September 30, 2022 and December 31, 2021 there were , and , shares outstanding, respectively.
Our
Board of Directors and majority stockholder approved the decision to not move forward with a reverse stock split ratio of
Warrants
On
February 17, 2021, we issued
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 25 |
On
December 28, 2021, we entered into a promissory note payable and provided
The Warrants issued are loan incentives. The value was allocated to the warrants based on fair value on the date of the grant as determined using the Black-Scholes option pricing model.
For the nine months ended September 30, 2022, a summary of our warrant activity is as follows:
| Number of Warrants | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (Years) | Weighted- Average Grant- Date Fair Value | Aggregate Intrinsic Value | ||||||||||||||||
| Outstanding and exercisable at January 1, 2022 | $ | $ | $ | |||||||||||||||||
| - | ||||||||||||||||||||
| Issued | $ | $ | ||||||||||||||||||
| Exercised | ||||||||||||||||||||
| Expired | ||||||||||||||||||||
| Outstanding and exercisable at September, 2022 | $ | $ | $ | |||||||||||||||||
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 26 |
Note 17 Discontinued Operations
On February 16, 2021, we cancelled all the Series A Preferred Stock shares and offered their holder’s option agreements to purchase up to shares of CZJ License, Inc., our wholly owned subsidiary at the time, at an option price of $ per share. The option agreements are exercisable for a period of one year from the date of issuance and were not exercised.
On
November 15, 2021,
At November 15, 2021, CZJ License Inc.’s accounts were eliminated from the consolidated financial statements. All expenses incurred by CZJ License Inc. up to November 15, 2021 have been disclosed as discontinued operations. The previous year’s assets, liabilities and expenses have been similarly classified for comparative purposes.
| Assets | ||||||||
| Prepaid Expenses | $ | $ | ||||||
| Website | ||||||||
| Intangible Assets - License | ||||||||
| Liabilities | ||||||||
| Accounts Payable & Accrued | ||||||||
| Expenses | ||||||||
| Amortization | ||||||||
| Selling, general and administrative | ||||||||
| Professional fees | ||||||||
| - | ||||||||
| $ | $ |
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 27 |
Note 18 Commitments
On
September 28, 2020, we entered into a one-year renewable employment agreement with Mr. Canouse, our Chief Executive Officer at the time.
In the three months ended September 31, 2022 and 2021, Mr. Canouse received $
On
February 17, 2021, we sold the Investors $
On
October 20, 2021, we entered into a Stock Acquisition Agreement with Top Dog Productions Inc., Jay Blumenfield and Anthony Marsh whereby
we will acquire all of the shares of Top Dog Productions Inc., and in exchange, we will pay the purchase price of
On
January 12, 2022, we entered into a consulting agreement with EF Hutton as a lead underwriter. The agreement is for one year and we may
terminate the agreement on or after 270th day with 30-days written notice. EF Hutton may terminate the agreement on or after
120 days from execution of the agreement. EF Hutton agrees to provide underwriting the sale of up to $20 million of securities. In return,
In
January 2022, we entered into a six-month consulting agreement with a third party to provide strategic and business services relating
to the blockchain project that we amended in February 2022. The first two months are payable at $
In
February 2022, we entered into a consulting agreement to establish, launch, manage, operate and produce a 24/7 broadcast network devoted
to cryptocurrency, NFT, Web3 and blockchain technology. In consideration for the wide range and scope of work, we agreed to pay the consultant
a fee in the aggregate of $
In
February 2022, we entered into a consulting agreement with a third party to provide corporate marketing strategy, creation and development
of content for distribution, market development, communications, products and growth. The agreement ends the earlier of September 30,
2022 or when an executed Employment Agreement is signed with us. Upon execution of the consulting agreement, we paid the consultant $
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 28 |
In
March 2022, we entered into a six-month service agreement for press releases, campaigns and social media advertisings. The service fee
is $
Note 19 Income Taxes
Income tax recovery differs from that which would be expected from applying the effective tax rates to the net income (loss) as follows:
| September 30, 2022 | September 30, 2021 | |||||||
| Net loss for the nine-month period | $ | ( | ) | $ | ( | ) | ||
| Statutory and effective tax rates | % | % | ||||||
| Income taxes expenses (recovery) at the effective rate | $ | ( | ) | $ | ( | ) | ||
| Effect of change in tax rates | ||||||||
| Permanent differences | ||||||||
| Valuation allowance | ||||||||
| Income tax expense and income tax liability | $ | $ | ||||||
As of September 30, 2022 and December 31, 2021 the tax effect of the temporary timing differences that give rise to significant components of deferred income tax asset are noted below. A valuation allowance has been recorded as management believes it is more likely than not that the deferred income tax asset will not be realized.
| September 30, 2022 | December 31, 2021 | |||||||
| Tax loss carried forward | $ | $ | ||||||
| Deferred tax assets | $ | $ | ||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Deferred taxes recognized | $ | $ | ||||||
Tax
losses of approximately $
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 29 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
The following discussion of our financial condition, changes in financial condition and results of operations for the three and nine months ended September 30, 2022 should be read in conjunction with our unaudited condensed consolidated financial statements and related notes for the three and nine months ended September 30, 2021.
Forward Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements that have been made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations, estimates, and projections about DLT Resolutions’ industry, management’s beliefs, and certain assumptions made by management. Forward-looking statements include our expectations regarding product, services, and maintenance revenue, annual savings associated with the organizational changes effected in prior years, and short- and long-term cash needs. In some cases, words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “estimates,” variations of these words, and similar expressions are intended to identify forward-looking statements. In addition, statements about the potential effects of the COVID-19 pandemic on the Company’s businesses, results of operations and financial condition may constitute forward-looking statements. The statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed or forecasted in any forward-looking statements. Risks and uncertainties of our business include those set forth in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on August 26, 2022, under “Item 1A. Risk Factors” as well as additional risks described in this Form 10-Q. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. However, readers should carefully review the risk factors set forth in other reports or documents we file from time to time with the Securities and Exchange Commission, particularly the Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K.
GENERAL
Madison Technologies Inc. (“Madison”) is a Nevada corporation that was incorporated on June 15, 1998.
We, through our wholly-owned subsidiary, Sovryn Holdings, Inc. (“Sovryn”) acquired three un-affiliated Class A/LPTV TV. Each licensed TV station can broadcast between 10 and 12 channels over-the-air, 24 hours per day/7 days per week. We generated revenue by leasing channels to third parties on KNLA/KNET, a Class A television station in Los Angeles, KVVV, a low power television station in Houston and KYMU-LD, a low power television station in Seattle.
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 30 |
RESULTS OF OPERATIONS
Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
Three months ended September 30, 2022 and 2021
Revenues
Net Revenues increased to $485,497 for the three months ended September 30, 2022 from $464,028 for the three months ended September 30, 2021. The increase resulted from the acquisition of the KYMU television station in September 2021 and operated throughout the three months ended September 30, 2022. We anticipate 2022 Net Revenues will increase compared to 2021 Net Revenues as a result a full year of operating the television stations acquired during 2021 and the launch of BLOCKCHAIN.TV in 2022.
Amortization
Amortization increased to $80,993 for the three months ended September 30, 2022 from ($57,437) for the three months ended September 30, 2021. The increase in amortization expense resulted from the reduction in the estimated fair values of amortizable tangible and intangible television station assets as determined by an independent valuation in 2021, which also resulted in a one-time retroactive reduction in amortization expense recognized in the three months ended September 30, 2021.
Selling, general and administrative fees
Selling, general and administrative fees increased to $272,533 for the three months ended September 30, 2022 from $198,567 for the three months ended September 30, 2021. The increase was primarily the result of increase personnel expenses we incurred in three months ended September 30, 2022 as we added personnel for the launch of BLOCKCHAIN.TV and to perform administrative duties that had been outsourced and incurred professional fees.
Television operations
Television operation expenses are $85,800 and $74,889 for the three months ended September 30, 2022 and 2021. The expenses are direct costs of operating the television stations we acquired in 2021.
Professional Fees
Professional fees decreased to $416,019 for the three months ended September 30, 2022 from $741,296 for the three months ended September 30, 2021. The decrease was primarily the result of an increase in the legal and accounting expense associated with the 2021 acquisitions of television stations, the financing associated with those acquisitions, management fees and, the expense associated with regulatory filings for the SEC, including the Form S1 Registration in 2021.
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 31 |
Interest Expense
Interest expense decreased to $1,520,742 for the three months ended September 30, 2022 from $1,927,580 for the three months ended September 30, 2021. The decrease resulted from the costs of financings associated with the acquisitions of television stations and development of BLOCKCHAIN.TV that had amortization periods that expired prior to the three months ended September 30, 2022.
Discontinued Operations
Our income from discontinued operations was $0 and $32,722 for the three months ended September 30, 2022 and 2021, respectively. On November 15, 2021, we sold our subsidiary, CZJ License Inc. and designated its operations as discontinued. The previous year’s assets, liabilities and expenses have been similarly classified for comparative purposes.
Net Loss
Net Loss decreased to $1,880,556 for the three months ended September 30, 2022, from $2,405,292 for the three months ended September 30, 2021. The decrease was primarily the result of $406,838 decrease in interest expense for debt instruments we issued in 2021 and the $325,277 decrease in professional fees. Net Loss on a basic and diluted basis of $0.001 per share for the three months ended September 30, 2022, based on 1,599,095,027 weighted average shares outstanding, as compared to a Net Loss of $0.096 per share for the three months ended September 30, 2021, based on 24,972,565 weighted average shares outstanding. The increase in weighted average shares outstanding relates primarily to issuances of 192,073,017 shares to the Investors on October 11, 2021 in connection with the $16,500,000 Notes we sold, the 1,091,388,889 shares we issued on October 11, 2021 to Preferred Series E-1 holders in pursuant to an Exchange Agreement and the 255,555,556 shares we issued on November 2, 2021 in exchange for 4,600 shares of our Series G Preferred Stock.
Nine months ended September 30, 2022 and 2021
Revenues
Net Revenues increased to $1,431,762 for the nine months ended September 30, 2022 from $760,053 for the nine months ended September 30, 2021. The increase resulted from the acquisitions of television stations in 2021 and the revenues generated by the lease agreements held by those stations. We anticipate 2022 Net Revenues will increase compared to 2021 Net Revenues as a result a full year of operating the television stations acquired during 2021 and the launch of BLOCKCHAIN.TV in 2022.
Amortization
Amortization increased to $242,481 for the nine months ended September 30, 2022 from $177,006 for the nine months ended September 30, 2021. The increase in amortization expense resulted from having the amortizable tangible and intangible television station assets for the entire nine-month period in 2022 as compared to 2021 when the assets were acquired at different times during the 2021 nine-month period.
Selling, general and administrative fees
Selling, general and administrative fees decreased to $753,378 for the nine months ended September 30, 2022 from $433,025 for the nine months ended September 30, 2021. The increase was primarily the result of increase personnel expenses we incurred in nine months ended September 30, 2022 as we added personnel for the launch of BLOCKCHAIN.TV and to perform administrative duties that had been outsourced and incurred professional fees.
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 32 |
Television operations
Television operation expenses are $257,483 and $178,869 for the nine months ended September 30, 2022 and 2021. The expenses are direct costs of operating the television stations we acquired in 2021. The increase in expense resulted from operating the television station assets for the entire nine-month period in 2022 as compared to 2021 when the assets were acquired at different times during the 2021 nine-month period.
Professional Fees
Professional Fees increased to $2,556,767 for the nine months ended September 30, 2022 from $1,745,592 for the nine months ended September 30, 2021. The increase was primarily the result of an increase in professional engaged to assist with development of our business and preparations for the launch of BLOCKCHAIN.TV in 2022. In 2021, professional fees were primarily legal and accounting expenses associated with the acquisitions of television stations, the financing associated with those acquisitions, management fees and, the expense associated with regulatory filings for the SEC, including the Form S1 Registration.
Loss on asset disposals
Our loss on asset disposals was $52,668 and $17,417 for the nine months ended September 30, 2022 and 2021. Our initial objective was to create one the largest, most comprehensive, state of the art OTA content distribution platforms to capitalize on the changing media and distribution landscape and on the growing OTA viewership in the U.S. We are exploring more capital efficient and technology centric alternatives to its planned station acquisition distribution platform. While there is no guarantee that it will be successful with this alternative approach, we have determined that it will postpone further capital expenditures on acquisitions and as a result, the planned acquisitions have been terminated and future acquisition plans have been put on hold while we evaluate this alternative approach. As a result, we recognized a $52,668 of loss from disposition of OTA assets.
Interest Expense
Interest expense increased to $4,547,497 for the nine months ended September 30, 2022 from $3,129,983 for the nine months ended September 30, 2022. The $1,417,514 increase resulted from having a higher amount of outstanding financings associated with the acquisition of television stations and development of BLOCKCHAIN.TV and having the $16,500,000 Notes outstanding for the entire nine-month period in 2022.
Discontinued Operations
Our loss from discontinued operations was $0 and $40,323 for the nine months ended September 31, 2022 and 2021, respectively. On November 15, 2021, we sold our subsidiary, CZJ License Inc. and designated its operations as discontinued. The previous year’s assets, liabilities and expenses have been similarly classified for comparative purposes.
Net Loss
Net Loss increased to $6,949,431 for the nine months ended September 30, 2022 from $4,961,892 for the nine months ended September 30, 2021. The increase was primarily the result of the $1,417,514 increase in interest expense and $806,175 increase in professional fees. Net Loss on a basic and diluted basis of $0.004 per share for the nine months ended September 30, 2022, based on 1,599,095,027 weighted average shares outstanding, as compared to a Net Loss of $0.203 per share for the nine months ended September 30, 2021, based on 24,439,598 weighted average shares outstanding. The increase in weighted average shares outstanding relates primarily to issuances of 192,073,017 shares to the Investors on October 11, 2021 in connection with the $16,500,000 Notes we sold, the 1,091,388,889 shares we issued on October 11, 2021 to Preferred Series E-1 holders in pursuant to an Exchange Agreement and the 255,555,556 shares we issued on November 2, 2021 in exchange for 4,600 shares of our Series G Preferred Stock.
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 33 |
Liquidity and Capital Resources
Cash and Working Capital
As at September 30, 2022, we had $8,804 in cash and a $9,866,871 working capital deficit, compared to cash of $55,656 and working capital deficit of $4,373,271 as at December 31, 2021.
We will require additional capital to meet our long-term operating requirements. We have not yet made the $0.4 million interest payments on the Notes held by Arena Partners LC that were due on April 1, 2022 and July 1, 2022, and as a result, under the Note terms, the interest rate is 20.0% per annum. We are currently in discussions with Arena Capital LP, on a plan of forbearance; however, there is no assurance that we will be successful in completion of a plan, which may disrupt our operations and result in a restructuring of obligations.
We expect to raise additional capital through the sale of equity and/or debt securities; however, there is no assurance that we will be successful at raising additional capital in the future. If our plans are not achieved and/or if significant unanticipated events occur, we may have to further modify our business plan, which may require us to raise additional capital. As of September 30, 2022, our principal source of liquidity was our cash, which totaled $22,543. Historically, our principal sources of cash have included proceeds from the sale of common stock and preferred stock and related party loans. Our principal uses of cash have included cash used in operations, to make acquisitions and to pay interest on our Notes. We expect that the principal uses of cash in the future will be for continuing operations associated with rolling out the business plan and for interest payments.
Net Cash Used in Operating Activities
We used cash of $1,342,369 in operating activities during nine months ended September 30, 2022 compared to cash used of $4,182,398 in operating activities during the previous year’s nine-month period. The increase was primarily the result of increase in expenses associated with the build out and roll out of our business plan.
Net Cash Used in Investing Activities
We used cash of $156,483 in investing activities during the nine months ended September 30, 2022 compared to cash used of $14,462,531 in investing activities during the previous year’s nine-month period. The decrease was the result of the 2021 purchases of the television station assets that did not recur in 2022.
Net Cash Provided by Financing Activities
Net cash flows provided by financing activities of $1,452,000 for the nine months ended September 30, 2022 were from the proceeds of subordinated notes payable and Warrants that we sold to investors, compared to $20,830,000 of cash provided by financing activities during the previous fiscal year that we generated from the Arena financing in February 2021 and sales of subscriptions to purchase our Common Stock.
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 34 |
Off-balance Sheet Arrangements
We have no off-balance sheet arrangements including arrangements that would affect its liquidity, capital resources, market risk support and credit risk support or other benefits.
Going Concern
The independent auditors’ reports accompanying our December 31, 2021 and 2020 financial statements contain an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared assuming that we will continue as a going concern, which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.
Future Financings
Management anticipates continuing to rely on equity sales of our Common Stock in order to continue to fund our business operations. Issuances of additional Common Stock will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our Common Stock or arrange for debt or other financing to fund our planned activities.
Material Commitments for Capital Expenditures
We had no contingencies or long-term commitments at September 30, 2022.
Tabular Disclosure of Contractual Obligations
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item.
Critical Accounting Policies
We follow certain significant accounting policies when preparing our consolidated financial statements. A complete summary of these policies is included in Note 1 of Notes to Consolidated Financial Statements. Certain of the policies require management to make significant and subjective estimates or assumptions that may deviate from actual results. In particular, management makes estimates regarding the useful life of long-lived assets related to depreciation and amortization expense, estimates regarding fair value of our reporting units and future cash flows with respect to assessing potential impairment of both long-lived assets and goodwill and estimates of expense related to our debt and equity instruments. Each of these estimates is discussed in greater detail in the following discussion.
Long-Lived Assets, Depreciation and Amortization Expense and Valuation
We review the carrying value of long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of an asset, or related asset group, may not be recoverable from estimated future undiscounted cash flows. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset or asset group to estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. In 2021, we recognized that we would not complete the acquisition of the TV station assets of W27EB and KPHE TV and we wrote off $1,150,000 in deposits paid to sellers of those assets. In the nine months ended September 30, 2022, we wrote off an additional $52,668 in TV station assets.
Goodwill Valuation
Management performed the annual goodwill and indefinite-lived intangible assets impairment assessments as of December 31, 2021 and concluded that our goodwill for the Sovryn acquisition was impaired as of that date. Goodwill and indefinite lived assets are tested annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. We follow a two-step process for testing impairment. First, the fair value of each reporting unit is compared to its carrying value to determine whether an indication of impairment exists. If impairment is indicated, then the fair value of the reporting unit’s goodwill is determined by allocating the unit’s fair value of its assets and liabilities (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination. The amount of impairment for goodwill is measured as the excess of its carrying value over its implied fair value.
Derivative Liabilities
We have certain financial instruments that are derivatives or contain embedded derivatives. We evaluate all of our financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 810-10-05-4 and 815-40. This accounting treatment requires that the carrying amount of any derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with us, the change in the fair value during the period is recorded as either other income or expense. Upon conversion, exercise or repayment, the respective derivative liability is marked to fair value at the conversion, repayment or exercise date and then the related fair value amount is reclassified to other income or expense as part of gain or loss on extinguishment.
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 35 |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this annual report on Form 10-K, an evaluation was carried out by our management, with the participation of our Chief Executive Officer, who also serves as our Principal Financial and Accounting Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”) as of December 31, 2021. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer, to allow timely decisions regarding required disclosures.
Based on that evaluation, our management concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were not effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the SEC rules and forms and that such information was accumulated or communicated to management to allow timely decisions regarding required disclosure. In particular, we identified material weaknesses in internal control over financial reporting, as discussed below.
Management’s Report on Internal Controls over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as required by Sarbanes-Oxley (SOX) Section 404 A. Our internal control over financial reporting is a process designed under the supervision of our Chief Executive Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that:
| ● | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; | |
| ● | provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the Board of Directors; and | |
| ● | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 36 |
Management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control –Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). As a result of this assessment, management identified material weaknesses in internal control over financial reporting.
A material weakness is a control deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The matters involving internal controls and procedures that management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee and lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (4) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified and communicated to management in connection with the preparation and audit of our financial statements as of December 31, 2021 and the preparation of our 2021 quarterly financial statements.
As a result of the material weakness in internal control over financial reporting described above, management has concluded that, as of September 30, 2022, our internal control over financial reporting was not effective based on the criteria in Internal Control – Integrated Framework issued by COSO.
Management believes that the material weaknesses set forth in items (2), (3) and (4) above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and lack of a majority of outside directors on our board of directors caused and continues to cause an ineffective oversight in the establishment and monitoring of the required internal controls over financial reporting.
We are committed to improving its financial organization. As part of this commitment and when funds are available, we will create a position to segregate duties consistent with control objectives and will increase its personnel resources and technical accounting expertise within the accounting function by: (i) appointing one or more outside directors to its board of directors who will also be appointed to our audit committee, resulting in a fully functioning audit committee that will undertake the oversight in the establishment and monitoring of required internal controls over financial reporting; and (ii) preparing and implementing sufficient written policies and checklists that will set forth procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.
Management believes that the appointment of one or more outside directors, who will also be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board. In addition, management believes that preparing and implementing sufficient written policies and checklists will remedy the following material weaknesses: (i) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (ii) ineffective controls over period end financial close and reporting processes. Further, management believes that the hiring of additional personnel who have the technical expertise and knowledge will result proper segregation of duties and provide more checks and balances within the department. Additional personnel will also provide the cross training needed to support our internal controls if personnel turn-over issues within the department occur. This, coupled with the appointment of additional outside directors, is designed to greatly decrease any control and procedure issues we may encounter in the future.
Management will continue to monitor and evaluate the effectiveness of our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.
Our independent auditors have not issued an attestation report on management’s assessment of our internal control over financial reporting. As a result, this quarterly report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. We are not required to have, nor have we, engaged our independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to the temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this quarterly report.
Changes in Internal Controls over Financial Reporting
There were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended September 30, 2022, that materially affected, or are reasonably likely to materially affect, Madison’s internal control over financial reporting.
Limitations on the Effectiveness of Controls and Procedures
Management, including our President and Chief Financial Officer, does not expect that Madison’s controls and procedures will prevent all potential error and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 37 |
Part II – Other Information
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 1A. RISK FACTORS
Madison is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the quarter of the fiscal year covered by this report, (i) Madison did not modify the instruments defining the rights of its shareholders, (ii) no rights of any shareholders were limited or qualified by any other class of securities, and (iii) Madison did not sell any unregistered equity securities, except as follows:
On March 1, 2022, we granted a Warrant to Mr. Zenna, our Director, to purchase up to 500,000 shares of our Common Stock at $0.025 per share.
In 2022, we sold a total of $1,632,500 of notes payable, some of which are convertible into our Common Stock at fixed prices, and we issued certain noteholders, Warrants to purchase an aggregate of 17,350,000 shares of our Common Stock, on a cashless exercise basis, at prices ranging from $0.02 to $0.10 per share.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
We have not yet made the $453,750 million interest payments on the senior secured Notes held by Arena Partners LP that were due on April 1, 2022, July 1, 2022 and October 1, 2022, and we are currently in discussions with Arena Capital LP on a plan of forbearance.
ITEM 4. MINE SAFETY DISCLOSURES
No report required.
ITEM 5. OTHER INFORMATION
No report required.
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 38 |
ITEM 6. EXHIBITS
| (a) | Index to and Description of Exhibits |
All Exhibits required to be filed with the Form 10-Q are included in this quarterly report or incorporated by reference to Madison’s previous filings with the SEC, which can be found in their entirety at the SEC website at www.sec.gov under SEC File Number 000-51302.
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| Form 10-Q – Q2 | Madison Technologies Inc. | Page 39 |
Signatures
In accordance with the requirements of the Securities Exchange Act of 1934, Madison Technologies, Inc. has caused this report to be signed on its behalf by the undersigned duly authorized person.
| Madison Technologies, Inc. | ||
| Dated: November 14, 2022 | By: | /s/ Philip Falcone |
| Name: | Philip Falcone | |
| Title: | President | |
| (Principal Executive Officer) | ||
Exhibit 31.1
madison Technologies, Inc.
CERTIFICATIONS PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, Philip Falcone, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarter ending September 30, 2022 of Madison Technologies, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: November 14, 2022 | |
| /s/ Philip Falcone | |
| Philip Falcone | |
| President |
Exhibit 31.2
madison Technologies, Inc.
CERTIFICATIONS PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, Philip Falcone, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarter ending September 30, 2022 of Madison Technologies, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: November 14, 2022 | |
| /s/ Philip Falcone | |
| Philip Falcone | |
| Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Madison Technologies, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Philip Falcone, President, President of the Company and a member of the Board of Directors, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| /s/ Philip Falcone | |
| Philip Falcone | |
| President | |
| November 14, 2022 |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Madison Technologies, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Philip Falcone, Chief Financial Officer of the Company and a member of the Board of Directors, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| /s/ Philip Falcone | |
| Philip Falcone | |
| Chief Financial Officer | |
| November 14, 2022 |
Cover - shares |
9 Months Ended | |
|---|---|---|
Sep. 30, 2022 |
Nov. 10, 2022 |
|
| Cover [Abstract] | ||
| Document Type | 10-Q | |
| Amendment Flag | false | |
| Document Quarterly Report | true | |
| Document Transition Report | false | |
| Document Period End Date | Sep. 30, 2022 | |
| Document Fiscal Period Focus | Q3 | |
| Document Fiscal Year Focus | 2022 | |
| Current Fiscal Year End Date | --12-31 | |
| Entity File Number | 000-51302 | |
| Entity Registrant Name | Madison Technologies Inc. | |
| Entity Central Index Key | 0001318268 | |
| Entity Tax Identification Number | 85-2151785 | |
| Entity Incorporation, State or Country Code | NV | |
| Entity Address, Address Line One | 61 East 80th Street | |
| Entity Address, City or Town | New York | |
| Entity Address, State or Province | NY | |
| Entity Address, Postal Zip Code | 10075 | |
| City Area Code | (212) | |
| Local Phone Number | 518-4177 | |
| Entity Current Reporting Status | Yes | |
| Entity Interactive Data Current | Yes | |
| Entity Filer Category | Non-accelerated Filer | |
| Entity Small Business | true | |
| Entity Emerging Growth Company | false | |
| Entity Shell Company | false | |
| Entity Common Stock, Shares Outstanding | 1,599,095,027 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Income Statement [Abstract] | ||||
| Revenues | $ 485,497 | $ 464,028 | $ 1,431,762 | $ 760,053 |
| Operating Expenses | ||||
| Selling, general and administrative | 272,533 | 198,567 | 753,378 | 433,025 |
| Television operations | 85,800 | 74,889 | 257,483 | 178,869 |
| Amortization of intangible assets | 80,993 | (57,437) | 242,481 | 177,006 |
| Professional fees | 416,019 | 741,296 | 2,556,767 | 1,745,592 |
| Loss on asset disposals | 17,147 | 52,668 | 17,147 | |
| Total operating expenses | 855,345 | 974,462 | 3,862,777 | 2,551,639 |
| Loss before other expense | (369,848) | (510,434) | (2,431,015) | (1,791,586) |
| Other income (expense) | ||||
| Interest income | 10,034 | 29,081 | ||
| Interest expense | (1,520,742) | (1,927,580) | (4,547,497) | (3,129,983) |
| Total non operating expense | (1,510,708) | (1,927,580) | (4,518,416) | (3,129,983) |
| Loss from continuing operations | (1,880,556) | (2,438,014) | (6,949,431) | (4,921,569) |
| Income (loss) from discontinued operations | 32,722 | (40,323) | ||
| Net loss and comprehensive loss | $ (1,880,556) | $ (2,405,292) | $ (6,949,431) | $ (4,961,892) |
| Net loss per share-Basic and diluted | $ (0.001) | $ (0.096) | $ (0.004) | $ (0.203) |
| Average number of shares of common stock outstanding | 1,599,095,027 | 24,972,565 | 1,599,095,027 | 24,439,598 |
Nature of Operations |
9 Months Ended |
|---|---|
Sep. 30, 2022 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Nature of Operations | Note 1 Nature of Operations
Our Company was incorporated on June 15, 1998 in the State of Nevada, USA and our common shares are publicly traded on the OTC Markets OTCQB.
We, through our wholly-owned subsidiary, Sovryn Holdings, Inc. (“Sovryn”) acquired three un-affiliated Class A/LPTV TV. Each licensed TV station can broadcast between 10 and 12 channels over-the-air, 24 hours per day/7 days per week. In 2021, we generated revenue by leasing channels to third parties on KNLA/KNET, a Class A television station in Los Angeles, KVVV, a low power television station in Houston and KYMU-LD, a low power television station in Seattle.
On November 15, 2021, we sold our wholly owned subsidiary, CZJ License Inc. for $250,000.
During August 2021, our shareholders approved to amend and restate our Articles of Incorporation to increase our authorized common stock from shares to shares.
|
Going Concern |
9 Months Ended |
|---|---|
Sep. 30, 2022 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Going Concern | Note 2 Going Concern
The accompanying consolidated financial statements have been prepared assuming we will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. For the year ended December 31, 2021, we incurred a net loss of $14,262,579 and had a working capital deficit and an accumulated deficit of $4,373,271 and $15,747,021, respectively, at December 31, 2021. We have not yet made the $0.4 million interest payments on the Notes held by Arena Partners LP that were due on April 1, 2022, July 1, 2022 and October 1, 2022, and we are currently in discussions with Arena Capital LP on a plan of forbearance. It is management’s opinion that these matters raise substantial doubt about our ability to continue as a going concern for a period of twelve months from the issuance date of this report. Our ability to continue as a going concern is dependent upon management’s ability to obtain a plan of forbearance, further implement our business plan and raise additional capital as needed from the sales of stock or debt. The accompanying consolidated financial statements do not include any adjustments that might be required should we be unable to continue as a going concern.
|
Summary of Significant Accounting Policies |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies | Note 3 Summary of Significant Accounting Policies
Use of estimates
The preparation of the consolidated interim financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Actual results could differ from those estimates.
Consolidation
The accompanying consolidated financial statements include the accounts of our wholly owned subsidiaries, Sovryn Holdings Inc. and CZJ License Inc. CZJ License Inc. was consolidated up until it was sold on November 15, 2021. All the intercompany balances and transactions have been eliminated in the consolidation. During the year ended December 31, 2021, the operations of CZJ License Inc. were consolidated into our operation and were designated as discontinued.
Interim Reporting
While the information presented in the accompanying interim three month financial statements is unaudited, it includes all adjustments, which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in accordance with accounting principles generally accepted in the United States of America. These interim financial statements follow the same accounting policies and methods of their application as the Company’s December 31, 2021 annual financial statements. All adjustments are of a normal recurring nature. It is suggested that these interim financial statements be read in conjunction with the Company’s December 31, 2021 annual financial statements. Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that can be expected for the year ended December 31, 2022.
Segment reporting
We use “the management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by our chief operating decision maker for making operating decisions and assessing performance as the source for determining our reportable segments. Our chief operating decision maker is our chief executive officer, who reviews operating results to make decisions about allocating resources and assessing our entire performance. We did not report any segment information since we primarily generates sales from its television stations.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation.
Revenue recognition
We adopted the ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). We recognize revenue when we transfer promised services to the customer. The performance obligation is the monthly services rendered. We have one main revenue source which is leasing of television station channels. Accordingly, we recognize revenue when services are provided as time passes the customers have access to utilize the channel. These revenues are billed in advance, arrears and/or are prepaid. The performance obligation is the monthly services rendered. At the moment, we have one main revenue source which is leasing of television channels. Where there is a leasing contract for channels, we bill monthly for our services as rendered. Where there is no contract, the revenue is recognized as provided.
We recognize revenue in accordance with ASC 606 using the following 5 steps to identify revenues:
Advances from Client’s deposits are contract liabilities with customers that represent our obligation to either transfer goods or services in the future, or refund the amount received. Where possible, we obtain retainers to lessen our risk of non-payment by our customers. Advances from Client’s deposits are recognized as revenue as we meet specified performance obligations as detailed in the contract.
Accounts receivables
Trade accounts receivable are stated at the amount we expect to collect. Management considers the following factors when determining the collectability of specific customer accounts: customer credit worthiness, past transaction history, current economic industry trends and changes in customer payment terms. Past due balances over 90 days and other higher risk amounts are reviewed individually for collectability. Based on the management’s assessment, we provide for estimated uncollectible amounts through a charge to earnings and a credit to a valuation allowance. Balances that remain outstanding after we have used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. As of September 30, 2022, our allowance for doubtful accounts receivable was $31,500.
Operating leases
In February 2016, the FASB issued ASU 2016-02, Leases (“Topic 842”). The new standard establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. For leases with an initial term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the term of the lease. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition. Similarly, lessors will be required to classify leases as sales-type, finance or operating, with classification affecting the pattern of income recognition. Classification for both lessees and lessors will be based on an assessment of whether risks and rewards as well as substantive control have been transferred through a lease contract. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. We adopted the new standard April 19, 2021. We have elected not to recognize lease assets and lease liabilities for leases with an initial term of 12 months or less.
Intangible assets
Intangible assets are non-monetary identifiable assets, controlled by us that will produce future economic benefits, based on reasonable and supportable assumptions about conditions that will exist over the life of the asset. An intangible asset that does not meet these attributes will be recognized as an expense when it is incurred. Intangible assets that do, are capitalized and initially measured at cost. Those with a determinable life will be amortized on a systematic basis over their future economic life. Those with an indefinite useful life shall not be amortized until its useful life is determined to be longer indefinite. An intangible asset subject to amortization shall be periodically reviewed for impairment. A recoverability test will be performed and, if applicable, unscheduled amortization is considered.
License agreements have been capitalized, recorded at cost and amortized over the life of the contracts. They will be amortized over the life of the license to which it supports.
Equipment
Equipment represents purchases made for assets, whose useful life was determined to be greater than one year. The assets are initially recorded at cost and depreciated over their estimated useful lives.
Website development costs
We recognized the costs associated with developing a website in accordance with ASC 350-50 “Website Development Cost”. The website development costs are divided into three stages, planning, development and production. The development stage can further be classified as application and infrastructure development, graphics development and content development. In short, website development cost for internal use should be capitalized except content input and data conversion costs in content development stage.
Costs associated with the website consist primarily of website development costs paid to third party. These capitalized costs will be amortized based on their estimated useful life over three years upon the website becoming operational. Internal costs related to the development of website content will be charged to operations as incurred. Website development costs related to the customers are charged to cost of sales.
Impairment of Long-Lived Assets
In accordance with the provisions of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as plant and equipment and intangible assets we hold and use are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.
Concentration of credit risk
We place our cash and cash equivalents with a high credit quality financial institution. We maintain United States Dollars. We minimize its credit risks associated with cash by periodically evaluating the credit quality of its primary financial institution.
Financial instruments
Our financial instruments consist principally of cash, accounts payable, accrued liabilities and notes payable. The carrying amounts of such financial instruments in the accompanying financial statements approximate their fair values due to their relatively short-term nature or the underlying terms are consistent with market terms. It is the management’s opinion that we are not exposed to any significant currency or credit risks arising from these financial instruments.
Fair value measurements
We follow the guidelines in ASC Topic 820 “Fair Value Measurements and Disclosures”. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions and credit risk.
We apply the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. All financial instruments approximate their fair value.
Convertible Notes with Fixed Rate Conversion Options
We may enter into convertible notes, some of which contain, predominantly, fixed rate conversion features, whereby the outstanding principal and accrued interest may be converted by the holder, into common shares at a fixed discount to the market price of the common stock at the time of conversion. This results in a fair value of the convertible note being equal to a fixed monetary amount. We record the convertible note liability at its fixed monetary amount by measuring and recording a premium, as applicable, on the Note date with a charge to interest expense in accordance with ASC 480 - “Distinguishing Liabilities from Equity”.
Derivative Liabilities
We have certain financial instruments that are derivatives or contain embedded derivatives. We evaluate all our financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 810-10-05-4 and 815-40. This accounting treatment requires that the carrying amount of any derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with us, the change in the fair value during the period is recorded as either other income or expense. Upon conversion, exercise or repayment, the respective derivative liability is marked to fair value at the conversion, repayment or exercise date and then the related fair value amount is reclassified to other income or expense as part of gain or loss on extinguishment.
Net Loss Per Share
Basic loss per share is calculated by dividing the loss attributable to stockholders by the weighted-average number of shares outstanding for the period. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that shared in our earnings (loss). Diluted loss per share is computed by dividing the loss available to stockholders by the weighted average number of shares outstanding for the period and dilutive potential shares outstanding unless such dilutive potential shares would result in anti-dilution. As of September 30, 2022, no options were outstanding and warrants were outstanding and exercisable. Additionally, as of September 30, 2022, the outstanding principal balance, including accrued interest of the third-party convertible debt, totaled $19,874,163 and was convertible into shares of Common Stock. We issued shares of Preferred Stock that may be converted into our Common Stock. Of the outstanding shares of Preferred Stock as of September 30, 2022, Series D Preferred Stock was convertible into Common shares, Series E-1 Preferred Stock was convertible into Common shares and Series H Preferred Stock was convertible into Common shares. The total potentially dilutive shares calculated are . It should be noted that contractually the limitations on the third-party notes (and the related warrants) limit the number of shares converted to either 4.99% or 9.99% of the then outstanding shares. As of September 30, 2022, and 2021, potentially dilutive securities consisted of the following:
Business Combinations
In accordance with ASC 805-10, “Business Combinations”, we account for all business combinations using the acquisition method of accounting. Under this method, assets and liabilities, including any remaining non-controlling interests, are recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets acquired, net of liabilities assumed, and non-controlling interests is recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities, or non-controlling interests made subsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Any cost or equity method interest that we hold in the acquired company prior to the acquisition is re-measured to fair value at acquisition with a resulting gain or loss recognized in income for the difference between fair value and the existing book value. Results of operations of the acquired entity are included in our results from the date of the acquisition onward and include amortization expense arising from acquired tangible and intangible assets.
Credit losses
In June 2016, the FASB issued ASU 326, “Financial Instruments – Credit Losses”. The ASU sets forth a “current expected credit loss” (CECL) model which requires us to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. Recently, the FASB issued the final ASU to delay adoption for smaller reporting companies to calendar year 2023. We are currently assessing the impact of the adoption of this ASU on its financial statements.
Related Party Transactions
We follow FASB ASC subtopic 850-10, “Related Party Transactions”, for the identification of related parties and disclosure of related party transactions.
Pursuant to ASC 850-10-20, related parties include: a) our affiliates; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit sharing trusts that are managed by or under the trusteeship of management; d) our principal owners; e) our management; f) other parties with which we may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
Material related party transactions are required to be disclosed in the consolidated financial statements, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which statements of operation are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which statements of operations are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
Discontinued operations
Discontinued operations are components of an entity that either have been disposed or abandoned or is classified as held for sale. Additionally, in order to qualify as a discontinued operation, the disposal or abandonment must represent a strategic shift that has or will have a major effect on an entity’s operations and financial results.
Income taxes
We follow the guideline under ASC Topic 740 Income Taxes. “Accounting for Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Due to the uncertainty regarding our future profitability, the future tax benefits of its losses have been fully reserved.
Recently Issued Accounting Pronouncements
We adopt new pronouncements relating to generally accepted accounting principles applicable to us as they are issued, which may be in advance of their effective date.
In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). The new ASU addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options. This amendment is effective for all entities, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact this new guidance will have on its financial statements
We do not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Receivable |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Receivable | Note 4 Notes Receivable
On September 9, 2021, we entered into a secured one-year promissory note with Top Dog Productions Inc. We agreed to lend an aggregate principal sum of up to $2,000,000 that accrues at a rate of 5% per annum. The principal and interest amount of the note may be prepaid in whole or in part at any time, without penalty nor premium. Accrued interest is $19,626 at September 30, 2022. We are seeking to close the acquisition of Top Dog Productions Inc. in 2022 and extend the note’s maturity by approximately one year.
On November 15, 2021, we entered into a $250,000 convertible promissory note with ZA Group Inc. for the sale of its wholly owned subsidiary, CZJ License Inc. The note accrues at a rate of 5% per annum. The principal and accrued interest of the note receivable will be due and payable on November 5, 2023. At any time after 180 days following the date of the note receivable, we may convert all or any part of the outstanding and unpaid amount of the note into fully paid and non-assessable shares of common stock of ZA Group Inc. at a fixed conversion price of $0.005 per share. Accrued interest is $10,586 at September 30, 2022.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intangible Assets | Note 5 - Intangible Assets
Our Federal Communication Commission Licenses (“FCC”) and domain name are considered indefinite-lived intangible assets that are not amortized, but instead are tested at least annually for impairment. The Market Advantage intangible asset is being amortized on a straight-line basis over 94 months from the acquisition date. Amortization expense for the three months ended September 30, 2022 and 2021 was $1,878 and $1,878, respectively and $5,634 and $2,504 for the nine months ended September 30, 2022 and 2021.
Future amortization expense of the intangible assets is as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill |
9 Months Ended | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | ||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||
| Goodwill | Note 6 Goodwill
As of September 31, 2022, we carry goodwill for the following television station asset purchases made in 2021:
|
Equipment |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equipment | Note 7 Equipment
Depreciation expense was $52,339 and ($78,440) for the three months ended September 30, 2022 and 2021, respectively, and $156,517 and $66,065 for the nine months ended September 30, 2022 and 2021, respectively. During the three months ended September 30, 2021, we received an independent third party valuation of the equipment we acquired as part of the television asset purchases and we reduced the carrying value of the acquired equipment and related depreciation in that three-month period.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Right of Use Assets |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Right Of Use Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Right of Use Assets | Note 8 Right of Use Assets
We have six operating leases ranging from a period of 80 months to a period of 332 months. The annual interest rate used was 15%. As at September 30, 2022, the remaining right of use assets are as follows:
The remaining lease liability at September 30, 2022 was $1,466,584. The current portion of the lease liability was $ and the non-current portion of the lease liability was $1,466,584.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Liabilities |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts Payable and Accrued Liabilities | Note 9 Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities as of December 31 are summarized below:
On June 10, 2022, we entered into an agreement with a third party pursuant to which we received $125,000 in cash that we repay daily at $1,837 per diem until we have paid $183,750 in total. As of September 30, 2022, included in accounts payable is the $45,938 remaining balance owed and included in accrued expenses is $14,688 financing fee that is being amortized over the term of the agreement.
On July 28, 2022, we entered into an agreement with a third party pursuant to which we received $125,000 in cash that we repay daily at $1,562 per diem until we have paid $187,375 in total. As of September 30, 2022, included in accounts payable is the $118,647 remaining balance owed and included in accrued expenses is $39,504 financing fee that is being amortized over the term of the agreement.
On September 13, 2022, we entered into an agreement with a third party pursuant to which we received $25,000 in cash that we repay daily at $1,499 per diem until we have paid $44,970 in total. As of September 30, 2022, included in accounts payable is the $25,483 remaining balance owed and included in accrued expenses is $8,483 financing fee that is being amortized over the term of the agreement.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities Exchange Agreements |
9 Months Ended |
|---|---|
Sep. 30, 2022 | |
| Securities Exchange Agreements | |
| Securities Exchange Agreements | Note 10 Securities Exchange Agreements
Sovryn Holdings, Inc.
We entered into a Securities Exchange Agreement on February 16, 2021 with Sovryn, a Delaware corporation and acquired % of the shares of Sovryn in exchange for i) shares of our Series B Preferred Stock to be transferred by Jeffrey Canouse, our CEO at the time, to a designee of Sovryn and ii) shares of Series E Preferred Stock. Upon the effectiveness of an amendment to out Articles of Incorporation to increase our authorized common stock, from par value $ to par value $ per share, from shares to shares, all shares of Series E Preferred Stock issued to the shareholders shall automatically convert into approximately shares of our Common Stock. The Series E Preferred Stock votes on an as-converted basis with our Common Stock prior to their conversion. The Series E Preferred Stock represented approximately % of the fully diluted shares of our Common Stock after the closing of the transactions contemplated by the Securities Purchase Agreement. The valuation for the Preferred Series E shares was determined to be $ based on the market value of our shares we exchanged at the date the transaction. The transaction was recorded as an asset purchase and we recorded goodwill of $which was based on the market value of our shares exchanged at the date of the transaction.
|
Asset Purchase |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Asset Purchase | Note 11 Asset Purchase
On April 19, 2021, pursuant to a February 17, 2021 asset purchase agreement, Sovryn paid a total of $10,182,534 to acquire the licenses and Federal Communications Commission (“FCC”) authorizations to the KNET-CD and KNLA-CD Class A television stations (“the Los Angeles Stations”), certain tangible personal property, real property, contracts, intangible property, files, claims and prepaid items together with certain assumed liabilities in connection with the Los Angeles Stations.
The following table shows the estimated fair values of the Los Angeles Stations’ assets acquired and liabilities assumed at the April 19, 2021 purchase date:
On June 1, 2021, pursuant to a March 14, 2021 an asset purchase agreement, Sovryn paid a total of $1,500,000 to acquire the licenses and Federal Communications Commission (“FCC”) authorizations to the KVVV-LD low power television station (“the Houston Station”), certain tangible personal property, certain real property leases, contracts, intangible property, files, claims and prepaid items together with certain assumed liabilities in connection with the Houston Station.
The following table shows the estimated fair values of the Houston Station’s assets acquired and liabilities assumed at the June 1, 2021 purchase date:
On September 24, 2021, pursuant to a March 29, 2021 an asset purchase agreement, Sovryn paid a total of $1,864,920 to acquire the licenses and Federal Communications Commission (“FCC”) authorizations to the KYMU-LD low power television station (“the Seattle Station”), certain tangible personal property, certain real property leases, contracts, intangible property, files, claims and prepaid items together with certain assumed liabilities in connection with the Seattle Station.
The following table shows the estimated fair values of the Seattle Station’s assets acquired and liabilities assumed at the September 24, 2021 purchase date:
|
Note Payable |
9 Months Ended |
|---|---|
Sep. 30, 2022 | |
| Debt Disclosure [Abstract] | |
| Note Payable | Note 12 Note Payable
On December 28, 2021, we sold a $500,000 promissory note that bears interest at 12% per annum and matures on April 5, 2022, as amended. In connection with the note sale, we issued 500,000 Warrants that expire on December 31, 2023 and may be converted in shares of our Common Stock starting June 26, 2022 at a price of $ per share. We estimate the value the Warrant to be approximately $9,000, based on a value of $ per share of our Common Stock as of December 28, 2021.The promissory note is subordinate to the Notes we issued to the Investors. As of September 30, 2022, $500,000 in note principal is outstanding.
On January 14, 2022, we sold an unsecured $150,000 note payable with $15,000 in fees payable upon the April 5, 2022 maturity that we treated as deferred financing fees and amortize over the term of the note. The obligation is subordinate to the Notes we issued to the Investors. As of September 30, 2022, $120,000 in note principal is outstanding.
On January 14, 2022, we sold an unsecured $150,000 note payable with $15,000 in fees payable upon the April 5, 2022 maturity that we treated as deferred financing fees and amortized over the term of the note. The obligation is subordinate to the Notes we issued to the Investors. As of September 30, 2022, $135,000 in note principal is outstanding.
On April 27, 2022, we sold a $125,000 unsecured note payable that has a $12,500 original issue discount and matures on December 31, 2022. In connection with the note sale, we issued the noteholder a Warrant to purchase a total of 2,500,000 shares of our Common Stock at $0.025 per share, on a cashless exercise basis, that is exercisable starting September 15, 2022 and until April 15, 2024. We estimate the total value of the Warrants to be $45,000, based on a $ price per share of our Common Stock that we treat as a debt discount and amortize over the term of the note. As of September 30, 2022, $125,000 in note principal is outstanding.
|
Convertible Notes Payable |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Notes Payable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Notes Payable | Note 13 Convertible Notes Payable
Our convertible notes payable are as follows as of:
The Notes have a term of thirty-six months and mature on February 17, 2024, unless earlier converted. The Notes accrue interest at a rate of 11% per annum, subject to increase to 20% per annum upon default. Interest is payable in cash on a quarterly basis beginning on March 31, 2021. Notwithstanding the above, at our election, any interest payable on an applicable payment date may be paid in registered shares of our Common Stock in an amount equal (A) the amount of the interest payment due on such date, divided by (B) an amount equal to 80% of the average volume-weighted average price of our Common Stock for the five (5) days immediately preceding the date of conversion. At September 30, 2022 and December 31, 2021 accrued and unpaid interest was $2,475,000 and $453,750, respectively. We have not yet made the $453,750 million interest payments on the Notes held by Arena Partners LP that were due on April 1, 2022, July 1, 2022 and October 1, 2022, and we are currently in discussions with Arena Capital LP on a plan of forbearance.
On September 24, 2021, the Company and the Investors amended the Notes and related closing documents, by executing the Limited Waiver and First Amendment the closing documents (“the amendment”). The amendment also waived specified events of default. The Notes are henceforth convertible at any time, at the holder’s option, into shares of our Common Stock at a price of $per share, subject to default event adjustment. Notwithstanding the foregoing, at any time during the continuance of any Event of Default, the Conversion price in effect shall be equal to the alternate conversion price. If at any time the conversion price as determined hereunder for any conversion would be less than the par value of the Common Stock, then at the sole discretion of the Holder, the conversion price hereunder may equal such par value for such conversion and the conversion amount for such conversion may be increased to include Additional Principal, where Additional Principal means such additional amount to be added to the principal amount of this Note to the extent necessary to cause the number of conversion shares issuable upon such conversion to equal the same number of conversion shares as would have been issued had the conversion price not been adjusted by the Holder to the par value price, subject to certain beneficial ownership limitations (with a maximum ownership limit of 9.99%). The conversion price is also subject to adjustment due to certain events, including stock dividends, stock splits and in connection with our issuance of our Common Stock or common stock equivalents at an effective price per share lower than the conversion price then in effect. We may not redeem the Notes.
As part of the agreement with the Investors, we issued 192,073,017 Warrants. On September 24, 2021, we and the Investor amended the warrant agreement such that each Warrant is exercisable for a period of five (5) years from the date of issuance at an initial exercise price equal to $per share, that is adjusted to $ per share when interest is paid late, subject to certain beneficial ownership limitations (with a maximum ownership limit of 9.99%). The exercise price is also subject to adjustment due to certain events, including stock dividends, stock splits and recapitalizations. The Holder may be eligible for cashless exercise.
The Series F Preferred Stock has no voting rights and shall convert into 4.9% of our issued and outstanding shares of our Common Stock on a fully diluted basis upon Common Shareholder Approval. The Series F Preferred Stock was converted and 192,073,017 common shares were issued on October 11, 2021.
The Investors have contractually agreed to restrict their ability to exercise the Warrants and convert the Notes such that the number of shares of our Common Stock held by the Investors and their affiliates after such conversion or exercise does not exceed 9.99% of our then issued and outstanding shares of Common Stock.
On February 17, 2022, we sold a $50,000 unsecured note payable that bears interest at 12% per annum and matures on April 6, 2022. In connection with the note sale, we issued the noteholder a Warrant to purchase 1,250,000 shares of our Common Stock, on a cashless exercise basis, at $0.021 per share at any time starting July 1, 2022 and ending July 1, 2024. We estimate the value of the Warrant to be $22,500, based on a $ price per share of our Common Stock that we treat as a debt discount that we amortized over the term of the note. In April 2022, we repaid the note.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party |
9 Months Ended |
|---|---|
Sep. 30, 2022 | |
| Related Party Transactions [Abstract] | |
| Related Party | Note 14 Related Party
We entered into a consulting agreement with Warren Zenna of Zenna Consulting Group to provide oversight of marketing and communications services. The agreement commenced March 1, 2021 and ended on July 31, 2021. We paid Zenna Consulting Group $0 fees in the three months ended September 31, 2022 and 2021, respectively. Mr. Zenna is a member of our Board of Directors. On March 1, 2022, we granted a Warrant to Mr. Zenna to purchase up to shares of our Common Stock at $ per share, on a cashless exercise basis, at any time beginning September 1, 2022 and ending September 1, 2026. We estimate the value the Warrant to be approximately $9,000, based on the $ market price per share of our Common Stock on March 1, 2022.
Effective January 1, 2022, we entered into a management consulting agreement with GreenRock LLC, a company controlled by Philip Falcone, for a period of one year ending December 31, 2022, under which we provide monthly remuneration of $35,000, plus expenses in connection with his duties, responsibilities and performance as our chief executive officer. In February 2021, our subsidiary, Sovryn Holdings Inc., entered into consulting agreement with GreenRock LLC to provide us with chief executive officer services. In the three months ended September 31, 2022 and 2021, we paid GreenRock LLC $40,000 and $0 in fees, respectively. Mr. Falcone is the managing member of GreenRock LLC and is our Chief Executive Officer. We paid GreenRock LLC bonuses of $255,794 and 488,934 for the three and nine months ended September 30, 2022.
During the three months ended September 30, 2022, our Chief Executive Officer advanced us funds for our operations and as of September 30, 2022, we owed $28,658 in advances.
On April 7, 2021, we issued shares of our Common Stock to Mr. Canouse in exchange for transferring his shares of our Series B Preferred Stock to FFO1 Irrevocable Trust, an entity controlled by Mr. Falcone, our CEO and Chairman of our Board of Directors. The shares were valued at $1,500. The shares of Series B Preferred Stock that provide a 51% voting control regardless of the number of common or other voting securities we have issued at present or at any time in the future, such that the holder of the Series B Preferred shares shall maintain majority voting control over matters voted on by our shareholders. FFO1 Irrevocable Trust also holds Preferred Series E-1 shares and FFO2 Irrevocable Trust holds Preferred Series E-1 shares. Lisa Falcone, wife of Mr. Falcone, is the trustee of FFO2 Irrevocable Trust and Ms. Falcone has shared voting and dispositive power.
|
Mezzanine Equity |
9 Months Ended |
|---|---|
Sep. 30, 2022 | |
| Mezzanine Equity | |
| Mezzanine Equity | Note 15 Mezzanine Equity
We account for certain of our Preferred Stock in accordance with the guidance in ASC Topic 480, Distinguishing Liabilities from Equity. Based on this guidance, preferred stock that is conditionally redeemable is classified as temporary or “mezzanine” equity. Accordingly, the various Series of Preferred Stock, which is subject to conditional redemption, is presented at redemption value as mezzanine equity outside of the stockholders’ equity section of the consolidated balance sheets
Preferred Shares
Series A Preferred Stock
On February 16, 2021, we cancelled all the Preferred Series A shares. In exchange, the holders of Series A Preferred shares received one-year option agreements to purchase shares of our wholly owned subsidiary at the time, CZJ License, Inc. at $ per share for up to shares. The option agreement expired without being exercised.
Series C Preferred Stock
There are designated and authorized Series C Preferred Stock. Holders of Series C Preferred Stock shall be entitled to receive, when and as declared, dividends equal to 2% per annum on the stated value, payable in additional shares of Series C Preferred Stock. As of September 30, 2022 and December 31, 2021, no shares of Series C Preferred Stock are outstanding.
Series D Preferred Stock
There are designated and authorized Series D Preferred Stock with a 4.99% conversion cap which may be increased to a maximum of 9.99% by holder by written notice to us. There is a stated value of $ per share, subject to adjustment for stock splits, stock dividends, recapitalizations, reorganizations, reclassifications, combinations, subdivisions or other similar events occurring after the date which the Series D are issued. Series D are ranked as a Senior Preferred Stock and have no voting rights. Each share of Series D Preferred Stock may be converted to common shares.
On February 16, 2021, we settled $1,028,000 in note payables, convertible notes payable and accrued interest for 230,000 shares of our Series D Preferred Stock, of which shares of Series D Preferred Stock were converted into shares of our Common Stock and Series D Preferred shares remain unconverted and outstanding as of September 30, 2022 and December 31, 2021.
Series E Preferred Stock
On February 16, 2021, we issued shares of Series E Preferred Stock to acquire Sovryn that we valued at $4,225,062 based on value of 100% of our Common Stock at the time.
On September 16, 2021, the holders of our Series E Preferred Stock entered into an Exchange Agreement with us whereby on October 11, 2021, the Series E Preferred shares were exchanged for Series E-1 Preferred shares and shares of Common Stock. We valued the exchange at the same $4,225,062 value as was assigned to the shares of Series E Preferred Stock. As of September 30, 2022 and December 31, 2021, shares of Series E Preferred Stock are outstanding.
Series E-1 Preferred Stock
There are designated and authorized Series E-1 Preferred Stock that we issued on October 11, 2021 in exchange for our Series E Preferred Stock. At September 30, 2022 and December 31, 2021, Preferred Series E-1 shares remain outstanding. Each share of Series E-1 Preferred Stock may be converted to common shares.
Series F Preferred Stock
There are designated and authorized Series F Preferred Stock. On February 17, 2021, we issued the Investors shares of Series F Preferred Stock that convert into shares of Common Stock, which we valued at $864,000, based on the underlying value of shares our Common Stock that were $ per share at the time. On October 11, 2021, the shares of Series F Preferred Stock were converted into shares of Common Stock. As of September 30, 2022 and December 31, 2021, shares of Series F Preferred Stock are outstanding.
Series G Preferred Stock
We received $ in subscriptions for of Series G Preferred Shares that we valued at $1,000 per share based on the cash price. On November 2, 2021, all of the authorized and issued shares of Series G Preferred Stock were converted into shares of our Common Stock. At September 30, 2022 and December 31, 2021, shares of Series G Preferred Stock are outstanding.
Series H Preferred Stock
On November 11, 2021, pursuant to an Exchange Agreement that we entered into with the Investors, of our Common shares held by the Investors were exchanged for shares of our Series H Preferred Stock and we cancelled the 39,895,000 Common shares. Each share of Series H Preferred Stock may be converted to common shares, subject to a maximum ownership limit of 9.99%. We valued the Common shares and Series H Preferred shares at $3,989,500. At September 30, 2022 and December 31, 2021, shares of Series H Preferred Stock remain outstanding.
|
Shareholders’ Equity |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shareholders’ Equity | Note 16 Shareholders’ Equity
Preferred Stock
As of September 30, 2022 and December 31, 2021, we are authorized to issue shares of $ par value Preferred Stock, with designations, voting, and other rights and preferences to be determined by our Board of Directors of which remain available for designation and issuance.
Series B Preferred Stock
There are designated and authorized Series B Preferred Stock. Holders of Series B Preferred Stock have the right to vote on all shareholder matters equal to 51% of the total vote of Common stockholders. The Series B Preferred Stockholder is entitled to 51% voting rights regardless of the number of common shares or other voting shares issued by the company at any time. Such provision grants the holder of Series B Preferred Stock majority control of us, unless otherwise canceled.
On July 17, 2020, Series B Preferred Stock were issued pursuant to the License Agreement. The Series B Preferred Stock was valued at par at $. Although the Series B Preferred Stock is entitled to 51% voting rights as described above, the stock has no dividend rate nor conversion feature. Furthermore, the shares were not issued to the investors, but rather were granted to new unrelated management.
On February 17, 2021, the Series B Preferred Stock were transferred from Mr. Canouse (our former director and CEO), to FFO1 Irrevocable Trust, a company Mr. Falcone (our director and CEO) is the trustee and has the voting and dispositive power.
At September 30, 2022 and December 31, 2021, there were Series B Preferred shares outstanding, respectively.
Common Stock
In August 14, 2021, our shareholders approved an increase in authorized Common Stock to from , which became effective the same day. As of September 30, 2022 and December 31, 2021 there were , and , shares outstanding, respectively.
Our Board of Directors and majority stockholder approved the decision to not move forward with a reverse stock split ratio of 25 to 1 share, and approved a reverse stock split ratio from 10 to 1 share, which is currently subject to regulatory approval.
Warrants
On February 17, 2021, we issued 192,073,017 Warrants to Arena Investors that are exercisable for a five-year period from the date of issuance and, based on an amendment made on September 24, 2021, the Warrants may be converted into our Common Stock at $0.02 per share, subject to a maximum ownership limit of 9.99%. The exercise price is subject to adjustment due to stock dividends, stock splits and recapitalizations and other events. We valued the Warrants at $864,000 based on a value of $ per share for our Common Stock at the time.
On December 28, 2021, we entered into a promissory note payable and provided 500,000 Warrants. Each Warrant is exercisable at $0.025 per share and expires on December 31, 2023. We valued the Warrants at $9,000 based on a value of $ per share for our Common Stock at the time.
The Warrants issued are loan incentives. The value was allocated to the warrants based on fair value on the date of the grant as determined using the Black-Scholes option pricing model.
For the nine months ended September 30, 2022, a summary of our warrant activity is as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Discontinued Operations | Note 17 Discontinued Operations
On February 16, 2021, we cancelled all the Series A Preferred Stock shares and offered their holder’s option agreements to purchase up to shares of CZJ License, Inc., our wholly owned subsidiary at the time, at an option price of $ per share. The option agreements are exercisable for a period of one year from the date of issuance and were not exercised.
On November 15, 2021, we entered into a Purchase and Sale agreement with ZA Group Inc. to sell CZJ License Inc. for $250,000. At Closing, the ZA Group Inc. delivered a convertible promissory note with a principal amount equal to the purchase price. The interest rate on the note was 5% per annum and matures on November 5, 2023. The note may be converted, from time to time, after 180 days from the issuance date of the note into common stock of ZA Group Inc., at a fixed conversion price of $0.005 per share, subject to a beneficiary ownership limitation of not more than 4.99% of the outstanding shares of common stock of ZA Group Inc.
At November 15, 2021, CZJ License Inc.’s accounts were eliminated from the consolidated financial statements. All expenses incurred by CZJ License Inc. up to November 15, 2021 have been disclosed as discontinued operations. The previous year’s assets, liabilities and expenses have been similarly classified for comparative purposes.
|
Commitments |
9 Months Ended |
|---|---|
Sep. 30, 2022 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments | Note 18 Commitments
On September 28, 2020, we entered into a one-year renewable employment agreement with Mr. Canouse, our Chief Executive Officer at the time. In the three months ended September 31, 2022 and 2021, Mr. Canouse received $24,487 and $0, respectively. Mr. Canouse resigned on July 1, 2022.
On February 17, 2021, we sold the Investors $16,500,000 of Notes and we entered into a Security Agreement and a Guaranty Agreement with the Investors that secure the Notes with liens on all of our tangible and intangible assets. We have not yet made the $0.4 million interest payments on the Notes held by Arena Partners LC that were due on April 1, 2022 and July 1, 2022, and as a result, under the Note terms, the interest rate is 20.0% per annum. We are currently in discussions with the Investors on a plan of forbearance; however, there is no assurance that we will be successful in completion of a plan, which may disrupt our operations and result in a restructuring of obligations.
On October 20, 2021, we entered into a Stock Acquisition Agreement with Top Dog Productions Inc., Jay Blumenfield and Anthony Marsh whereby we will acquire all of the shares of Top Dog Productions Inc., and in exchange, we will pay the purchase price of 12,500,000 shares of our Common Stock. The Closing is subject to receipt of audited and other financial statements of Top Dog Productions, other deliverables, and terms and conditions. At the closing, we will issue a total of 12,500,000 shares of our Common Stock and may issue an additional 12,500,000 Common shares should Top Dog Productions, Inc. achieve financial performance milestones stated in the Stock Acquisition Agreement.
On January 12, 2022, we entered into a consulting agreement with EF Hutton as a lead underwriter. The agreement is for one year and we may terminate the agreement on or after 270th day with 30-days written notice. EF Hutton may terminate the agreement on or after 120 days from execution of the agreement. EF Hutton agrees to provide underwriting the sale of up to $20 million of securities. In return, we grant EF Hutton an option to acquire up to 15% of the total number of securities we offer , provide an underwriting discount of 7% of the total gross proceeds, provide warrants equal to 5% of the aggregate number of shares of Common Stock sold in the offering, warrants to be exercisable at any time in whole or in part for 4 ½ years commencing 6 months from the effective date of offering at a price per share equal to 100% of the public offering price per security. EF Hutton may also provide advisory services for a cash fee of 7% of capital raised for equity placements, 6% for debt placements, closing warrants equal to 3% of aggregate proceeds sold in offering with the warrants to expire in 5 years. We agree to pay expenses for marketing, promotional materials and other costs associated with the work.
In January 2022, we entered into a six-month consulting agreement with a third party to provide strategic and business services relating to the blockchain project that we amended in February 2022. The first two months are payable at $25,000 per month and the remaining four months are payable at $10,000 per month. We have paid $25,000 to date.
In February 2022, we entered into a consulting agreement to establish, launch, manage, operate and produce a 24/7 broadcast network devoted to cryptocurrency, NFT, Web3 and blockchain technology. In consideration for the wide range and scope of work, we agreed to pay the consultant a fee in the aggregate of $600,000, of which $450,000 has been paid and $150,000 is payable upon the launch of the network.
In February 2022, we entered into a consulting agreement with a third party to provide corporate marketing strategy, creation and development of content for distribution, market development, communications, products and growth. The agreement ends the earlier of September 30, 2022 or when an executed Employment Agreement is signed with us. Upon execution of the consulting agreement, we paid the consultant $100,000 and we are obligated to pay a service fee $30,000 per month for March through June. As part of the arrangement, we granted the consultant a Warrant to acquire up to shares of our Common Stock at an exercise price of $0.025 per share that is contingent upon our entering into an Employment Agreement or extending the consulting agreement, which did not occur. As of the date of this report, we paid $160,000.
In March 2022, we entered into a six-month service agreement for press releases, campaigns and social media advertisings. The service fee is $30,000 per month plus expenses. The agreement may not be terminated during the initial six months and we must provide no less than 30-day prior written notice to the termination.
|
Income Taxes |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes | Note 19 Income Taxes
Income tax recovery differs from that which would be expected from applying the effective tax rates to the net income (loss) as follows:
As of September 30, 2022 and December 31, 2021 the tax effect of the temporary timing differences that give rise to significant components of deferred income tax asset are noted below. A valuation allowance has been recorded as management believes it is more likely than not that the deferred income tax asset will not be realized.
Tax losses of approximately $14 million will expire in 2040 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies (Policies) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Use of estimates | Use of estimates
The preparation of the consolidated interim financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Actual results could differ from those estimates.
|
|||||||||||||||||||||||||||||||||||||||||||||
| Consolidation | Consolidation
The accompanying consolidated financial statements include the accounts of our wholly owned subsidiaries, Sovryn Holdings Inc. and CZJ License Inc. CZJ License Inc. was consolidated up until it was sold on November 15, 2021. All the intercompany balances and transactions have been eliminated in the consolidation. During the year ended December 31, 2021, the operations of CZJ License Inc. were consolidated into our operation and were designated as discontinued.
|
|||||||||||||||||||||||||||||||||||||||||||||
| Interim Reporting | Interim Reporting
While the information presented in the accompanying interim three month financial statements is unaudited, it includes all adjustments, which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in accordance with accounting principles generally accepted in the United States of America. These interim financial statements follow the same accounting policies and methods of their application as the Company’s December 31, 2021 annual financial statements. All adjustments are of a normal recurring nature. It is suggested that these interim financial statements be read in conjunction with the Company’s December 31, 2021 annual financial statements. Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that can be expected for the year ended December 31, 2022.
|
|||||||||||||||||||||||||||||||||||||||||||||
| Segment reporting | Segment reporting
We use “the management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by our chief operating decision maker for making operating decisions and assessing performance as the source for determining our reportable segments. Our chief operating decision maker is our chief executive officer, who reviews operating results to make decisions about allocating resources and assessing our entire performance. We did not report any segment information since we primarily generates sales from its television stations.
|
|||||||||||||||||||||||||||||||||||||||||||||
| Reclassifications | Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation.
|
|||||||||||||||||||||||||||||||||||||||||||||
| Revenue recognition | Revenue recognition
We adopted the ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). We recognize revenue when we transfer promised services to the customer. The performance obligation is the monthly services rendered. We have one main revenue source which is leasing of television station channels. Accordingly, we recognize revenue when services are provided as time passes the customers have access to utilize the channel. These revenues are billed in advance, arrears and/or are prepaid. The performance obligation is the monthly services rendered. At the moment, we have one main revenue source which is leasing of television channels. Where there is a leasing contract for channels, we bill monthly for our services as rendered. Where there is no contract, the revenue is recognized as provided.
We recognize revenue in accordance with ASC 606 using the following 5 steps to identify revenues:
Advances from Client’s deposits are contract liabilities with customers that represent our obligation to either transfer goods or services in the future, or refund the amount received. Where possible, we obtain retainers to lessen our risk of non-payment by our customers. Advances from Client’s deposits are recognized as revenue as we meet specified performance obligations as detailed in the contract.
|
|||||||||||||||||||||||||||||||||||||||||||||
| Accounts receivables | Accounts receivables
Trade accounts receivable are stated at the amount we expect to collect. Management considers the following factors when determining the collectability of specific customer accounts: customer credit worthiness, past transaction history, current economic industry trends and changes in customer payment terms. Past due balances over 90 days and other higher risk amounts are reviewed individually for collectability. Based on the management’s assessment, we provide for estimated uncollectible amounts through a charge to earnings and a credit to a valuation allowance. Balances that remain outstanding after we have used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. As of September 30, 2022, our allowance for doubtful accounts receivable was $31,500.
|
|||||||||||||||||||||||||||||||||||||||||||||
| Operating leases | Operating leases
In February 2016, the FASB issued ASU 2016-02, Leases (“Topic 842”). The new standard establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. For leases with an initial term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the term of the lease. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition. Similarly, lessors will be required to classify leases as sales-type, finance or operating, with classification affecting the pattern of income recognition. Classification for both lessees and lessors will be based on an assessment of whether risks and rewards as well as substantive control have been transferred through a lease contract. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. We adopted the new standard April 19, 2021. We have elected not to recognize lease assets and lease liabilities for leases with an initial term of 12 months or less.
|
|||||||||||||||||||||||||||||||||||||||||||||
| Intangible assets | Intangible assets
Intangible assets are non-monetary identifiable assets, controlled by us that will produce future economic benefits, based on reasonable and supportable assumptions about conditions that will exist over the life of the asset. An intangible asset that does not meet these attributes will be recognized as an expense when it is incurred. Intangible assets that do, are capitalized and initially measured at cost. Those with a determinable life will be amortized on a systematic basis over their future economic life. Those with an indefinite useful life shall not be amortized until its useful life is determined to be longer indefinite. An intangible asset subject to amortization shall be periodically reviewed for impairment. A recoverability test will be performed and, if applicable, unscheduled amortization is considered.
License agreements have been capitalized, recorded at cost and amortized over the life of the contracts. They will be amortized over the life of the license to which it supports.
|
|||||||||||||||||||||||||||||||||||||||||||||
| Equipment | Equipment
Equipment represents purchases made for assets, whose useful life was determined to be greater than one year. The assets are initially recorded at cost and depreciated over their estimated useful lives.
|
|||||||||||||||||||||||||||||||||||||||||||||
| Website development costs | Website development costs
We recognized the costs associated with developing a website in accordance with ASC 350-50 “Website Development Cost”. The website development costs are divided into three stages, planning, development and production. The development stage can further be classified as application and infrastructure development, graphics development and content development. In short, website development cost for internal use should be capitalized except content input and data conversion costs in content development stage.
Costs associated with the website consist primarily of website development costs paid to third party. These capitalized costs will be amortized based on their estimated useful life over three years upon the website becoming operational. Internal costs related to the development of website content will be charged to operations as incurred. Website development costs related to the customers are charged to cost of sales.
|
|||||||||||||||||||||||||||||||||||||||||||||
| Impairment of Long-Lived Assets | Impairment of Long-Lived Assets
In accordance with the provisions of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as plant and equipment and intangible assets we hold and use are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.
|
|||||||||||||||||||||||||||||||||||||||||||||
| Concentration of credit risk | Concentration of credit risk
We place our cash and cash equivalents with a high credit quality financial institution. We maintain United States Dollars. We minimize its credit risks associated with cash by periodically evaluating the credit quality of its primary financial institution.
|
|||||||||||||||||||||||||||||||||||||||||||||
| Financial instruments | Financial instruments
Our financial instruments consist principally of cash, accounts payable, accrued liabilities and notes payable. The carrying amounts of such financial instruments in the accompanying financial statements approximate their fair values due to their relatively short-term nature or the underlying terms are consistent with market terms. It is the management’s opinion that we are not exposed to any significant currency or credit risks arising from these financial instruments.
|
|||||||||||||||||||||||||||||||||||||||||||||
| Fair value measurements | Fair value measurements
We follow the guidelines in ASC Topic 820 “Fair Value Measurements and Disclosures”. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions and credit risk.
We apply the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. All financial instruments approximate their fair value.
|
|||||||||||||||||||||||||||||||||||||||||||||
| Convertible Notes with Fixed Rate Conversion Options | Convertible Notes with Fixed Rate Conversion Options
We may enter into convertible notes, some of which contain, predominantly, fixed rate conversion features, whereby the outstanding principal and accrued interest may be converted by the holder, into common shares at a fixed discount to the market price of the common stock at the time of conversion. This results in a fair value of the convertible note being equal to a fixed monetary amount. We record the convertible note liability at its fixed monetary amount by measuring and recording a premium, as applicable, on the Note date with a charge to interest expense in accordance with ASC 480 - “Distinguishing Liabilities from Equity”.
|
|||||||||||||||||||||||||||||||||||||||||||||
| Derivative Liabilities | Derivative Liabilities
We have certain financial instruments that are derivatives or contain embedded derivatives. We evaluate all our financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 810-10-05-4 and 815-40. This accounting treatment requires that the carrying amount of any derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with us, the change in the fair value during the period is recorded as either other income or expense. Upon conversion, exercise or repayment, the respective derivative liability is marked to fair value at the conversion, repayment or exercise date and then the related fair value amount is reclassified to other income or expense as part of gain or loss on extinguishment.
|
|||||||||||||||||||||||||||||||||||||||||||||
| Loss per share |
Net Loss Per Share
Basic loss per share is calculated by dividing the loss attributable to stockholders by the weighted-average number of shares outstanding for the period. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that shared in our earnings (loss). Diluted loss per share is computed by dividing the loss available to stockholders by the weighted average number of shares outstanding for the period and dilutive potential shares outstanding unless such dilutive potential shares would result in anti-dilution. As of September 30, 2022, no options were outstanding and warrants were outstanding and exercisable. Additionally, as of September 30, 2022, the outstanding principal balance, including accrued interest of the third-party convertible debt, totaled $19,874,163 and was convertible into shares of Common Stock. We issued shares of Preferred Stock that may be converted into our Common Stock. Of the outstanding shares of Preferred Stock as of September 30, 2022, Series D Preferred Stock was convertible into Common shares, Series E-1 Preferred Stock was convertible into Common shares and Series H Preferred Stock was convertible into Common shares. The total potentially dilutive shares calculated are . It should be noted that contractually the limitations on the third-party notes (and the related warrants) limit the number of shares converted to either 4.99% or 9.99% of the then outstanding shares. As of September 30, 2022, and 2021, potentially dilutive securities consisted of the following:
|
|||||||||||||||||||||||||||||||||||||||||||||
| Business Combinations | Business Combinations
In accordance with ASC 805-10, “Business Combinations”, we account for all business combinations using the acquisition method of accounting. Under this method, assets and liabilities, including any remaining non-controlling interests, are recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets acquired, net of liabilities assumed, and non-controlling interests is recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities, or non-controlling interests made subsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Any cost or equity method interest that we hold in the acquired company prior to the acquisition is re-measured to fair value at acquisition with a resulting gain or loss recognized in income for the difference between fair value and the existing book value. Results of operations of the acquired entity are included in our results from the date of the acquisition onward and include amortization expense arising from acquired tangible and intangible assets.
|
|||||||||||||||||||||||||||||||||||||||||||||
| Credit losses | Credit losses
In June 2016, the FASB issued ASU 326, “Financial Instruments – Credit Losses”. The ASU sets forth a “current expected credit loss” (CECL) model which requires us to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. Recently, the FASB issued the final ASU to delay adoption for smaller reporting companies to calendar year 2023. We are currently assessing the impact of the adoption of this ASU on its financial statements.
|
|||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions | Related Party Transactions
We follow FASB ASC subtopic 850-10, “Related Party Transactions”, for the identification of related parties and disclosure of related party transactions.
Pursuant to ASC 850-10-20, related parties include: a) our affiliates; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit sharing trusts that are managed by or under the trusteeship of management; d) our principal owners; e) our management; f) other parties with which we may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
Material related party transactions are required to be disclosed in the consolidated financial statements, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which statements of operation are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which statements of operations are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
|
|||||||||||||||||||||||||||||||||||||||||||||
| Discontinued operations | Discontinued operations
Discontinued operations are components of an entity that either have been disposed or abandoned or is classified as held for sale. Additionally, in order to qualify as a discontinued operation, the disposal or abandonment must represent a strategic shift that has or will have a major effect on an entity’s operations and financial results.
|
|||||||||||||||||||||||||||||||||||||||||||||
| Income taxes | Income taxes
We follow the guideline under ASC Topic 740 Income Taxes. “Accounting for Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Due to the uncertainty regarding our future profitability, the future tax benefits of its losses have been fully reserved.
|
|||||||||||||||||||||||||||||||||||||||||||||
| Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements
We adopt new pronouncements relating to generally accepted accounting principles applicable to us as they are issued, which may be in advance of their effective date.
In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). The new ASU addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options. This amendment is effective for all entities, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact this new guidance will have on its financial statements
We do not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.
|
|||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Potentially Dilutive Securities |
|
|||||||||||||||||||||||||||||||||||||||||||||
Notes Receivable (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Notes Receivable |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Intangible Assets |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Future Amortization Expenses of Intangible Assets | Future amortization expense of the intangible assets is as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill (Tables) |
9 Months Ended | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | ||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||
| Schedule of Goodwill Asset Purchase | As of September 31, 2022, we carry goodwill for the following television station asset purchases made in 2021:
|
Equipment (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Equipment |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Right of Use Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Right Of Use Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Remaining Right of Use Assets |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Remaining Lease Liability |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Liabilities (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Accounts Payable and Accrued Liabilities | Accounts payable and accrued liabilities as of December 31 are summarized below:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset Purchase (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Asset Acquisitions | The following table shows the estimated fair values of the Los Angeles Stations’ assets acquired and liabilities assumed at the April 19, 2021 purchase date:
The following table shows the estimated fair values of the Houston Station’s assets acquired and liabilities assumed at the June 1, 2021 purchase date:
The following table shows the estimated fair values of the Seattle Station’s assets acquired and liabilities assumed at the September 24, 2021 purchase date:
|
Convertible Notes Payable (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Notes Payable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Convertible Notes Payable | Our convertible notes payable are as follows as of:
The Notes have a term of thirty-six months and mature on February 17, 2024, unless earlier converted. The Notes accrue interest at a rate of 11% per annum, subject to increase to 20% per annum upon default. Interest is payable in cash on a quarterly basis beginning on March 31, 2021. Notwithstanding the above, at our election, any interest payable on an applicable payment date may be paid in registered shares of our Common Stock in an amount equal (A) the amount of the interest payment due on such date, divided by (B) an amount equal to 80% of the average volume-weighted average price of our Common Stock for the five (5) days immediately preceding the date of conversion. At September 30, 2022 and December 31, 2021 accrued and unpaid interest was $2,475,000 and $453,750, respectively. We have not yet made the $453,750 million interest payments on the Notes held by Arena Partners LP that were due on April 1, 2022, July 1, 2022 and October 1, 2022, and we are currently in discussions with Arena Capital LP on a plan of forbearance.
On September 24, 2021, the Company and the Investors amended the Notes and related closing documents, by executing the Limited Waiver and First Amendment the closing documents (“the amendment”). The amendment also waived specified events of default. The Notes are henceforth convertible at any time, at the holder’s option, into shares of our Common Stock at a price of $per share, subject to default event adjustment. Notwithstanding the foregoing, at any time during the continuance of any Event of Default, the Conversion price in effect shall be equal to the alternate conversion price. If at any time the conversion price as determined hereunder for any conversion would be less than the par value of the Common Stock, then at the sole discretion of the Holder, the conversion price hereunder may equal such par value for such conversion and the conversion amount for such conversion may be increased to include Additional Principal, where Additional Principal means such additional amount to be added to the principal amount of this Note to the extent necessary to cause the number of conversion shares issuable upon such conversion to equal the same number of conversion shares as would have been issued had the conversion price not been adjusted by the Holder to the par value price, subject to certain beneficial ownership limitations (with a maximum ownership limit of 9.99%). The conversion price is also subject to adjustment due to certain events, including stock dividends, stock splits and in connection with our issuance of our Common Stock or common stock equivalents at an effective price per share lower than the conversion price then in effect. We may not redeem the Notes.
As part of the agreement with the Investors, we issued 192,073,017 Warrants. On September 24, 2021, we and the Investor amended the warrant agreement such that each Warrant is exercisable for a period of five (5) years from the date of issuance at an initial exercise price equal to $per share, that is adjusted to $ per share when interest is paid late, subject to certain beneficial ownership limitations (with a maximum ownership limit of 9.99%). The exercise price is also subject to adjustment due to certain events, including stock dividends, stock splits and recapitalizations. The Holder may be eligible for cashless exercise.
The Series F Preferred Stock has no voting rights and shall convert into 4.9% of our issued and outstanding shares of our Common Stock on a fully diluted basis upon Common Shareholder Approval. The Series F Preferred Stock was converted and 192,073,017 common shares were issued on October 11, 2021.
The Investors have contractually agreed to restrict their ability to exercise the Warrants and convert the Notes such that the number of shares of our Common Stock held by the Investors and their affiliates after such conversion or exercise does not exceed 9.99% of our then issued and outstanding shares of Common Stock.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders’ Equity (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Warrants Activity | For the nine months ended September 30, 2022, a summary of our warrant activity is as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Previous Year Assets Liabilities and Expenses |
|
Income Taxes (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Income Tax Expense | Income tax recovery differs from that which would be expected from applying the effective tax rates to the net income (loss) as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Deferred Income Tax Asset |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature of Operations (Details Narrative) - USD ($) |
Nov. 15, 2021 |
Sep. 30, 2022 |
Aug. 31, 2022 |
Dec. 31, 2021 |
Aug. 30, 2021 |
Aug. 14, 2021 |
Aug. 13, 2021 |
|---|---|---|---|---|---|---|---|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||
| Sale of stock, consideration received on transaction | $ 250,000 | ||||||
| Common stock, shares authorized | 6,000,000,000 | 6,000,000,000 | 6,000,000,000 | 500,000,000 | 1,000,000,000 | 6,000,000,000 |
Going Concern (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Dec. 31, 2021 |
Oct. 01, 2022 |
Jul. 01, 2022 |
Apr. 01, 2022 |
|
| Net income loss | $ (1,880,556) | $ (2,405,292) | $ (6,949,431) | $ (4,961,892) | $ 14,262,579 | |||
| Working capital deficit | 4,373,271 | |||||||
| Accumulated deficit | 22,696,452 | 22,696,452 | 15,747,021 | |||||
| Interest payable | $ 2,475,000 | $ 2,475,000 | $ 453,750 | |||||
| Arena Partners LP [Member] | ||||||||
| Interest payable | $ 400,000 | $ 400,000 | ||||||
| Arena Partners LP [Member] | Subsequent Event [Member] | ||||||||
| Interest payable | $ 400,000 | |||||||
Schedule of Potentially Dilutive Securities (Details) - shares |
9 Months Ended | |
|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 2,592,691,302 | 2,602,584,634 |
| Warrant [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 231,173,016 | 192,073,017 |
| Convertible Preferred Stock [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 1,347,395,000 | 1,574,573,017 |
| Convertible Debt [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 1,014,123,286 | 835,839,600 |
Schedule of Notes Receivable (Details) - USD ($) |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Short-Term Debt [Line Items] | ||
| Prepaid expenses | $ 9,288 | $ 24,042 |
| Accrued interest | 30,622 | 6,811 |
| Total Notes Receivables | 817,534 | 749,603 |
| Secured Note Top Dog Productions Inc [Member] | ||
| Short-Term Debt [Line Items] | ||
| Convertible note – ZA Group | 527,624 | 468,750 |
| Convertible Note Z A Group [Member] | ||
| Short-Term Debt [Line Items] | ||
| Convertible note – ZA Group | $ 250,000 | $ 250,000 |
Notes Receivable (Details Narrative) - USD ($) |
Nov. 15, 2021 |
Sep. 09, 2021 |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|---|---|
| Notes receivable | $ 817,534 | $ 749,603 | ||
| Accrued interest | 30,622 | $ 6,811 | ||
| Top Dog Production Inc [Member] | Secured Promissory Note [Member] | ||||
| Debt instrument, interest rate during period | 5.00% | |||
| Accrued interest | 19,626 | |||
| Top Dog Production Inc [Member] | Secured Promissory Note [Member] | Maximum [Member] | ||||
| Notes receivable | $ 2,000,000 | |||
| ZA Group Inc [Member] | Convertible Promissory Note [Member] | ||||
| Notes receivable | $ 250,000 | |||
| Debt instrument, interest rate during period | 5.00% | |||
| Accrued interest | $ 10,586 | |||
| Debt instrument conversion price per share | $ 0.005 |
Schedule of Intangible Assets (Details) |
Sep. 30, 2022
USD ($)
|
|---|---|
| Finite-Lived Intangible Assets [Line Items] | |
| Cost | $ 10,390,333 |
| Amortization | 10,016 |
| Net | 10,380,317 |
| Domain Name [Member] | |
| Finite-Lived Intangible Assets [Line Items] | |
| Cost | 172,427 |
| Amortization | |
| Net | 172,427 |
| Market Advantage [Member] | |
| Finite-Lived Intangible Assets [Line Items] | |
| Cost | 58,843 |
| Amortization | 10,016 |
| Net | 48,827 |
| FCC Licenses [Member] | |
| Finite-Lived Intangible Assets [Line Items] | |
| Cost | 10,159,063 |
| Amortization | |
| Net | $ 10,159,063 |
Schedule of Future Amortization Expenses of Intangible Assets (Details) |
Sep. 30, 2022
USD ($)
|
|---|---|
| Goodwill and Intangible Assets Disclosure [Abstract] | |
| 2023 | $ 7,512 |
| 2024 | 7,512 |
| 2025 | 7,512 |
| 2026 | 7,512 |
| 2027 | 7,512 |
| Thereafter | 11,267 |
| Total | $ 48,827 |
Schedule of Goodwill Asset Purchase (Details) - USD ($) |
Sep. 30, 2022 |
Sep. 24, 2021 |
Jun. 01, 2021 |
Apr. 19, 2021 |
|---|---|---|---|---|
| Total | $ 1,816,122 | $ 225,966 | $ 613,097 | $ 977,059 |
| K N L A K N E T Acquisition [Member] | ||||
| Total | 977,059 | |||
| K V V V Acquisition [Member] | ||||
| Total | 613,097 | |||
| K Y M U Acquisition [Member] | ||||
| Total | $ 225,966 |
Intangible Assets (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Finite-Lived Intangible Assets [Line Items] | ||||
| Amortization of intangible assets | $ 80,993 | $ (57,437) | $ 242,481 | $ 177,006 |
| FCC Licenses [Member] | ||||
| Finite-Lived Intangible Assets [Line Items] | ||||
| Amortization of intangible assets | $ 1,878 | $ 1,878 | $ 5,634 | $ 2,504 |
Equipment (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Property, Plant and Equipment [Abstract] | ||||
| Depreciation expenses | $ 52,339 | $ 78,440 | $ 156,517 | $ 66,065 |
Schedule of Remaining Lease Liability (Details) - USD ($) |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Right Of Use Assets | ||
| 2022 | $ 56,833 | |
| 2023 | 231,120 | |
| 2024 | 239,780 | |
| 2025 | 253,163 | |
| 2026 | 261,433 | |
| Remaining | 3,219,115 | |
| Lease obligations, net | 4,261,445 | |
| Amount representing interest | 2,794,861 | |
| Remaining lease liability | 1,466,584 | |
| Less current portion | $ 3,767 | |
| Non-current lease obligation | $ 1,466,584 | $ 1,464,728 |
Right of Use Assets (Details Narrative) - USD ($) |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Lessee operating lease discount rate | 15.00% | |
| Operating lease liability | $ 1,466,584 | |
| Current portion of lease liability | $ 3,767 | |
| Non-current portion of lease liability | $ 1,466,584 | $ 1,464,728 |
| Minimum [Member] | ||
| Lessee operating lease term of contract | 80 months | |
| Maximum [Member] | ||
| Lessee operating lease term of contract | 332 months |
Schedule of Accounts Payable and Accrued Liabilities (Details) - USD ($) |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Payables and Accruals [Abstract] | ||
| Accounts payable | $ 1,151,618 | $ 659,219 |
| Customer deposits | 62,563 | 78,812 |
| Accrued expenses | 61,698 | 38,238 |
| Accrued interest | 171,457 | 15,533 |
| Total | $ 1,447,336 | $ 791,802 |
Accounts Payable and Accrued Liabilities (Details Narrative) - USD ($) |
Sep. 13, 2022 |
Jul. 28, 2022 |
Jun. 10, 2022 |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|---|---|---|
| Defined Benefit Plan Disclosure [Line Items] | |||||
| Accrued expenses | $ 61,698 | $ 38,238 | |||
| Third Party [Member] | |||||
| Defined Benefit Plan Disclosure [Line Items] | |||||
| Cash | $ 125,000 | ||||
| Daily repayment | 1,837 | ||||
| Payment on related party | $ 183,750 | ||||
| Related party, owe | 45,938 | ||||
| Accrued expenses | 14,688 | ||||
| Third Party One [Member] | |||||
| Defined Benefit Plan Disclosure [Line Items] | |||||
| Cash | $ 125,000 | ||||
| Daily repayment | 1,562 | ||||
| Payment on related party | $ 44,970 | $ 187,375 | |||
| Related party, owe | 118,647 | ||||
| Accrued expenses | 39,504 | ||||
| Third Party Two [Member] | |||||
| Defined Benefit Plan Disclosure [Line Items] | |||||
| Cash | 25,000 | ||||
| Daily repayment | $ 1,499 | ||||
| Related party, owe | 25,483 | ||||
| Accrued expenses | $ 8,483 |
Asset Purchase (Details Narrative) - USD ($) |
2 Months Ended | 3 Months Ended | 6 Months Ended |
|---|---|---|---|
Apr. 19, 2021 |
Jun. 01, 2021 |
Sep. 24, 2021 |
|
| Sovryn Holdings, Inc [Member] | |||
| Asset Acquisition [Line Items] | |||
| Payments to acquire licenses | $ 10,182,534 | $ 1,500,000 | $ 1,864,920 |
Schedule of Convertible Notes Payable (Details) - USD ($) |
Sep. 30, 2022 |
Dec. 31, 2021 |
||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total | $ 18,542,500 | $ 17,350,000 | ||||||||||||||
| Less current portion | 2,042,500 | 850,000 | ||||||||||||||
| Long term portion | 16,500,000 | 16,500,000 | ||||||||||||||
| Senior Secured [Member] | ||||||||||||||||
| Total | [1] | 16,500,000 | 16,500,000 | |||||||||||||
| Series 1 [Member] | ||||||||||||||||
| Total | [2] | 1,050,000 | 850,000 | |||||||||||||
| Series 2 [Member] | ||||||||||||||||
| Total | [3] | 250,000 | ||||||||||||||
| Series 3 [Member] | ||||||||||||||||
| Total | [4] | 275,000 | ||||||||||||||
| Series 4 [Member] | ||||||||||||||||
| Total | [5] | 220,000 | ||||||||||||||
| Series 5 [Member] | ||||||||||||||||
| Total | [6] | 192,500 | ||||||||||||||
| Series Six [Member] | ||||||||||||||||
| Total | [7] | $ 55,000 | ||||||||||||||
| ||||||||||||||||
Schedule of Convertible Notes payable (Details) (Parenthetical) - USD ($) |
1 Months Ended | 9 Months Ended | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 16, 2022 |
Jun. 24, 2022 |
May 05, 2022 |
Apr. 27, 2022 |
Feb. 17, 2022 |
Jan. 14, 2022 |
Jan. 06, 2022 |
Feb. 17, 2021 |
Feb. 15, 2022 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Dec. 31, 2021 |
Dec. 28, 2021 |
Oct. 11, 2021 |
Sep. 24, 2021 |
|||||||||||||
| Convertible notes payable | $ 18,542,500 | $ 17,350,000 | |||||||||||||||||||||||||
| Purchase of warrants | 500,000 | ||||||||||||||||||||||||||
| Adjustment of warrants | $ 9,000 | ||||||||||||||||||||||||||
| Warrant exercise price | $ 0.025 | ||||||||||||||||||||||||||
| Warrants and rights outstanding | $ 864,000 | $ 9,000 | |||||||||||||||||||||||||
| Share issued price per share | $ 0.001 | $ 0.001 | |||||||||||||||||||||||||
| Common Stock [Member] | |||||||||||||||||||||||||||
| Share issued price per share | $ 0.02 | ||||||||||||||||||||||||||
| Series 1 [Member] | |||||||||||||||||||||||||||
| Convertible notes payable | [1] | $ 1,050,000 | $ 850,000 | ||||||||||||||||||||||||
| Series 2 [Member] | |||||||||||||||||||||||||||
| Convertible notes payable | [2] | 250,000 | |||||||||||||||||||||||||
| Series 3 [Member] | |||||||||||||||||||||||||||
| Convertible notes payable | [3] | 275,000 | |||||||||||||||||||||||||
| Series 4 [Member] | |||||||||||||||||||||||||||
| Convertible notes payable | [4] | 220,000 | |||||||||||||||||||||||||
| Series 4 [Member] | Common Stock [Member] | |||||||||||||||||||||||||||
| Shares issued | $ 0.02 | $ 0.02 | |||||||||||||||||||||||||
| Series 5 [Member] | |||||||||||||||||||||||||||
| Convertible notes payable | [5] | 192,500 | |||||||||||||||||||||||||
| Series Six [Member] | |||||||||||||||||||||||||||
| Convertible notes payable | [6] | 55,000 | |||||||||||||||||||||||||
| Unsecured Notes Payable One [Member] | |||||||||||||||||||||||||||
| Maturity date | Dec. 31, 2022 | ||||||||||||||||||||||||||
| Issue discount | $ 12,500 | ||||||||||||||||||||||||||
| Unsecured Notes Payable One [Member] | Series 1 [Member] | |||||||||||||||||||||||||||
| Convertible notes payable | $ 1,050,000 | ||||||||||||||||||||||||||
| Shares issued | $ 0.021 | ||||||||||||||||||||||||||
| Interest rate, percentage | 6.00% | ||||||||||||||||||||||||||
| Maturity date | Dec. 31, 2022 | ||||||||||||||||||||||||||
| Unsecured Notes PayableTwo [Member] | |||||||||||||||||||||||||||
| Warrants and rights outstanding | $ 45,000 | ||||||||||||||||||||||||||
| Unsecured Notes PayableTwo [Member] | Common Stock [Member] | |||||||||||||||||||||||||||
| Purchase of warrants | 2,500,000 | ||||||||||||||||||||||||||
| Shares issued | $ 0.018 | ||||||||||||||||||||||||||
| Warrant exercise price | $ 0.025 | ||||||||||||||||||||||||||
| Unsecured Notes PayableTwo [Member] | Series 2 [Member] | |||||||||||||||||||||||||||
| Shares issued | $ 0.018 | $ 0.018 | |||||||||||||||||||||||||
| Interest rate, percentage | 12.00% | 12.00% | 12.00% | ||||||||||||||||||||||||
| Maturity date | Apr. 06, 2022 | Apr. 06, 2022 | Apr. 06, 2022 | ||||||||||||||||||||||||
| Proceeds from unsecured note payable | $ 50,000 | $ 25,000 | $ 250,000 | ||||||||||||||||||||||||
| Warrant exercise price | $ 0.021 | $ 0.021 | |||||||||||||||||||||||||
| Warrants and rights outstanding | $ 22,500 | $ 10,800 | $ 112,500 | ||||||||||||||||||||||||
| Unsecured Notes PayableTwo [Member] | Series 2 [Member] | Common Stock [Member] | |||||||||||||||||||||||||||
| Purchase of warrants | 1,250,000 | 600,000 | 6,250,000 | ||||||||||||||||||||||||
| Shares issued | $ 0.018 | ||||||||||||||||||||||||||
| Warrant exercise price | $ 0.021 | ||||||||||||||||||||||||||
| Unsecured Notes Payable Three [Member] | |||||||||||||||||||||||||||
| Warrants and rights outstanding | $ 90,000 | ||||||||||||||||||||||||||
| Unsecured Notes Payable Three [Member] | Common Stock [Member] | |||||||||||||||||||||||||||
| Share issued price per share | $ 0.018 | ||||||||||||||||||||||||||
| Unsecured Notes Payable Three [Member] | Series 3 [Member] | |||||||||||||||||||||||||||
| Interest rate, percentage | 11.25% | ||||||||||||||||||||||||||
| Maturity date | Feb. 23, 2023 | ||||||||||||||||||||||||||
| Proceeds from unsecured note payable | $ 137,500 | ||||||||||||||||||||||||||
| Issue discount | $ 15,000 | ||||||||||||||||||||||||||
| Unsecured Notes Payable Three [Member] | Series 3 [Member] | Common Stock [Member] | |||||||||||||||||||||||||||
| Purchase of warrants | 2,500,000 | ||||||||||||||||||||||||||
| Warrant exercise price | $ 0.10 | ||||||||||||||||||||||||||
| Unsecured Notes Payable Four [Member] | Series 4 [Member] | |||||||||||||||||||||||||||
| Interest rate, percentage | 12.00% | 12.00% | |||||||||||||||||||||||||
| Maturity date | May 05, 2023 | May 05, 2023 | |||||||||||||||||||||||||
| Proceeds from unsecured note payable | $ 110,000 | $ 110,000 | |||||||||||||||||||||||||
| Unsecured Notes Payable Four [Member] | Series 4 [Member] | Common Stock [Member] | |||||||||||||||||||||||||||
| Purchase of warrants | 5,000,000 | 5,000,000 | |||||||||||||||||||||||||
| Debt instrument convertible | $ 0.02 | $ 0.02 | |||||||||||||||||||||||||
| Unsecured Notes Payable Five [Member] | Series 5 [Member] | |||||||||||||||||||||||||||
| Purchase of warrants | 3,750,000 | ||||||||||||||||||||||||||
| Interest rate, percentage | 12.00% | ||||||||||||||||||||||||||
| Maturity date | May 05, 2023 | ||||||||||||||||||||||||||
| Warrant exercise price | $ 0.02 | ||||||||||||||||||||||||||
| Warrants and rights outstanding | $ 67,500 | ||||||||||||||||||||||||||
| Issue discount | $ 7,500 | ||||||||||||||||||||||||||
| Share issued price per share | $ 0.018 | ||||||||||||||||||||||||||
| Notes payable | $ 82,500 | ||||||||||||||||||||||||||
| Unsecured Notes Payable Six [Member] | |||||||||||||||||||||||||||
| Notes payable | $ 55,000 | ||||||||||||||||||||||||||
| Unsecured Notes Payable Six [Member] | Series 5 [Member] | |||||||||||||||||||||||||||
| Purchase of warrants | 5,000,000 | ||||||||||||||||||||||||||
| Interest rate, percentage | 12.00% | ||||||||||||||||||||||||||
| Maturity date | May 05, 2023 | ||||||||||||||||||||||||||
| Warrant exercise price | $ 0.02 | ||||||||||||||||||||||||||
| Warrants and rights outstanding | $ 90,000 | ||||||||||||||||||||||||||
| Issue discount | $ 10,000 | ||||||||||||||||||||||||||
| Share issued price per share | $ 0.018 | ||||||||||||||||||||||||||
| Notes payable | $ 110,000 | ||||||||||||||||||||||||||
| Unsecured Notes Payable Six [Member] | Series Six [Member] | |||||||||||||||||||||||||||
| Interest rate, percentage | 12.00% | ||||||||||||||||||||||||||
| Maturity date | Sep. 16, 2023 | ||||||||||||||||||||||||||
| Issue discount | $ 5,000 | ||||||||||||||||||||||||||
| Share issued price per share | $ 0.001 | ||||||||||||||||||||||||||
| Notes payable | $ 55,000 | ||||||||||||||||||||||||||
| Series F Preferred Stock [Member] | |||||||||||||||||||||||||||
| Share issued price per share | $ 0.0045 | ||||||||||||||||||||||||||
| Securities Purchase Agreement [Member] | Investors [Member] | |||||||||||||||||||||||||||
| Debt instrument face amount | $ 16,500,000 | ||||||||||||||||||||||||||
| Convertible notes payable | $ 15,000,000 | ||||||||||||||||||||||||||
| Purchase of warrants | 192,073,017 | ||||||||||||||||||||||||||
| Shares issued | $ 0.0045 | $ 0.020 | |||||||||||||||||||||||||
| Interest rate, percentage | 11.00% | ||||||||||||||||||||||||||
| Securities Purchase Agreement [Member] | Investors [Member] | Common Stock [Member] | |||||||||||||||||||||||||||
| Shares issued | $ 0.02 | ||||||||||||||||||||||||||
| Securities Purchase Agreement [Member] | Investors [Member] | Series F Preferred Stock [Member] | |||||||||||||||||||||||||||
| Purchase of warrants | 1,000 | 192,073,017 | 192,073,017 | ||||||||||||||||||||||||
| Adjustment of warrants | $ 864,000 | ||||||||||||||||||||||||||
| |||||||||||||||||||||||||||
Convertible Notes Payable (Details Narrative) - USD ($) |
Feb. 17, 2022 |
Oct. 11, 2021 |
Feb. 17, 2021 |
Sep. 30, 2022 |
Dec. 31, 2021 |
Dec. 28, 2021 |
Sep. 24, 2021 |
|---|---|---|---|---|---|---|---|
| Interest payable current | $ 2,475,000 | $ 453,750 | |||||
| Purchase of warrants | 500,000 | ||||||
| Warrant exercise price | $ 0.025 | ||||||
| Warrants and rights outstanding | $ 864,000 | $ 9,000 | |||||
| Unsecured Notes Payable [Member] | |||||||
| Interest rate, percentage | 12.00% | ||||||
| Proceeds from unsecured note payable | $ 50,000 | ||||||
| Maturity date | Apr. 06, 2022 | ||||||
| Warrants and rights outstanding | $ 22,500 | ||||||
| Common Stock [Member] | Unsecured Notes Payable [Member] | |||||||
| Shares issued price per share | $ 0.018 | ||||||
| Purchase of warrants | 1,250,000 | ||||||
| Warrant exercise price | $ 0.021 | ||||||
| Securities Purchase Agreement [Member] | Investors [Member] | |||||||
| Debt conversion description | The Notes accrue interest at a rate of 11% per annum, subject to increase to 20% per annum upon default. Interest is payable in cash on a quarterly basis beginning on March 31, 2021. Notwithstanding the above, at our election, any interest payable on an applicable payment date may be paid in registered shares of our Common Stock in an amount equal (A) the amount of the interest payment due on such date, divided by (B) an amount equal to 80% of the average volume-weighted average price of our Common Stock for the five (5) days immediately preceding the date of conversion. | ||||||
| Interest rate, percentage | 11.00% | ||||||
| Interest payable current and noncurrent | 2,475,000 | $ 453,750 | |||||
| Interest payable current | $ 453,750 | ||||||
| Shares issued price per share | $ 0.0045 | $ 0.020 | |||||
| Purchase of warrants | 192,073,017 | ||||||
| Securities Purchase Agreement [Member] | Investors [Member] | Series F Preferred Stock [Member] | |||||||
| Purchase of warrants | 192,073,017 | 1,000 | 192,073,017 | ||||
| Preferred Stock, Voting Rights | The Series F Preferred Stock has no voting rights and shall convert into 4.9% of our issued and outstanding shares of our Common Stock on a fully diluted basis upon Common Shareholder Approval. | ||||||
| Securities Purchase Agreement [Member] | Investors [Member] | Common Stock [Member] | |||||||
| Shares issued price per share | $ 0.02 | ||||||
| Securities Purchase Agreement [Member] | Investors [Member] | Warrant [Member] | |||||||
| Shares issued price per share | $ 0.025 |
Shareholders’ Equity (Details Narrative) - USD ($) |
9 Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
Feb. 17, 2021 |
Jul. 17, 2020 |
Sep. 30, 2022 |
Aug. 31, 2022 |
Dec. 31, 2021 |
Dec. 28, 2021 |
Aug. 30, 2021 |
Aug. 14, 2021 |
Aug. 13, 2021 |
|
| Class of Stock [Line Items] | |||||||||
| Preferred stock, shares authorized | 50,000,000 | 50,000,000 | |||||||
| Preferred stock, par value | $ 0.001 | $ 0.001 | |||||||
| Preferred stock, shares designated | 48,617,400 | 48,617,400 | |||||||
| Common stock, shares authorized | 6,000,000,000 | 6,000,000,000 | 6,000,000,000 | 500,000,000 | 1,000,000,000 | 6,000,000,000 | |||
| Common stock, shares outstanding | 1,599,095,027 | 1,599,095,027 | |||||||
| Warrants issued | 500,000 | ||||||||
| Warrant outstanding | $ 864,000 | $ 9,000 | |||||||
| Common stock, par value | $ 0.001 | $ 0.001 | |||||||
| Warrant exercisable | $ 0.025 | ||||||||
| Warrant maturity date | Dec. 31, 2023 | ||||||||
| Warrant [Member] | |||||||||
| Class of Stock [Line Items] | |||||||||
| Common stock, par value | $ 0.0045 | $ 0.018 | |||||||
| Arena Partners LLP [Member] | |||||||||
| Class of Stock [Line Items] | |||||||||
| Warrants issued | 192,073,017 | ||||||||
| Issuance of warrants, description | Warrants to Arena Investors that are exercisable for a five-year period from the date of issuance and, based on an amendment made on September 24, 2021, the Warrants may be converted into our Common Stock at $0.02 per share, subject to a maximum ownership limit of 9.99% | ||||||||
| Director [Member] | |||||||||
| Class of Stock [Line Items] | |||||||||
| Reverse stock split | 25 to 1 share | ||||||||
| Majority Stockholder [Member] | |||||||||
| Class of Stock [Line Items] | |||||||||
| Reverse stock split | 10 to 1 share | ||||||||
| Series B Preferred Stock [Member] | |||||||||
| Class of Stock [Line Items] | |||||||||
| Preferred stock, shares authorized | 100 | 100 | |||||||
| Preferred stock, par value | $ 0.001 | $ 0.001 | |||||||
| Preferred stock, voting rights | Although the Series B Preferred Stock is entitled to 51% voting rights as described above, the stock has no dividend rate nor conversion feature | Holders of Series B Preferred Stock have the right to vote on all shareholder matters equal to 51% of the total vote of Common stockholders. The Series B Preferred Stockholder is entitled to 51% voting rights regardless of the number of common shares or other voting shares issued by the company at any time | |||||||
| Preferred stock, shares outstanding | 100 | 100 | |||||||
| Series B Preferred Stock [Member] | Mr. Canouse [Member] | |||||||||
| Class of Stock [Line Items] | |||||||||
| Conversion of shares | 100 | ||||||||
| Series B Preferred Stock [Member] | License Agreement [Member] | |||||||||
| Class of Stock [Line Items] | |||||||||
| Preferred stock, shares authorized | 100 | ||||||||
| Preferred stock, par value | $ 0.001 |
Schedule of Previous Year Assets Liabilities and Expenses (Details) - USD ($) |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2022 |
Dec. 31, 2021 |
|
| Discontinued Operations and Disposal Groups [Abstract] | ||
| Prepaid Expenses | $ 37,218 | |
| Website | 10,000 | |
| Intangible Assets - License | 423,410 | |
| Assets | 470,628 | |
| Accounts Payable & Accrued | 33,500 | |
| Liabilities | 33,500 | |
| Amortization | 74,760 | 64,687 |
| Selling, general and administrative | 190,857 | 152,939 |
| Professional fees | 213,500 | 172,750 |
| Expenses | $ 479,117 | $ 390,376 |
Discontinued Operations (Details Narrative) - $ / shares |
Nov. 15, 2021 |
Feb. 16, 2021 |
|---|---|---|
| Purchase and Sale Agreement [Member] | ||
| Agreement description | we entered into a Purchase and Sale agreement with ZA Group Inc. to sell CZJ License Inc. for $250,000. At Closing, the ZA Group Inc. delivered a convertible promissory note with a principal amount equal to the purchase price. The interest rate on the note was 5% per annum and matures on November 5, 2023. The note may be converted, from time to time, after 180 days from the issuance date of the note into common stock of ZA Group Inc., at a fixed conversion price of $0.005 per share, subject to a beneficiary ownership limitation of not more than 4.99% of the outstanding shares of common stock of ZA Group Inc. | |
| CZJ License, Inc [Member] | ||
| Number of shares acquired, shares | 300,000 | |
| Share issued price per share | $ 10 | |
| CZJ License, Inc [Member] | Maximum [Member] | ||
| Number of shares acquired, shares | 300,000 |
Commitments (Details Narrative) - USD ($) |
1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 12, 2022 |
Feb. 17, 2021 |
Mar. 31, 2022 |
Feb. 28, 2022 |
Jan. 31, 2022 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Jul. 01, 2022 |
Dec. 28, 2021 |
Oct. 20, 2021 |
|
| Periodic payment | $ 25,000 | |||||||||||
| Service fee | $ 416,019 | $ 741,296 | $ 2,556,767 | $ 1,745,592 | ||||||||
| Warrant exercise price | $ 0.025 | |||||||||||
| Warrants and rights outstanding | $ 864,000 | $ 9,000 | ||||||||||
| IPO [Member] | ||||||||||||
| Sale of stock description | we grant EF Hutton an option to acquire up to 15% of the total number of securities we offer , provide an underwriting discount of 7% of the total gross proceeds, provide warrants equal to 5% of the aggregate number of shares of Common Stock sold in the offering, warrants to be exercisable at any time in whole or in part for 4 ½ years commencing 6 months from the effective date of offering at a price per share equal to 100% of the public offering price per security. EF Hutton may also provide advisory services for a cash fee of 7% of capital raised for equity placements, 6% for debt placements, closing warrants equal to 3% of aggregate proceeds sold in offering with the warrants to expire in 5 years. We agree to pay expenses for marketing, promotional materials and other costs associated with the work | |||||||||||
| Top Dog Productions Inc [Member] | Common Stock [Member] | ||||||||||||
| Business acquisition, shares issuable, value | $ 12,500,000 | |||||||||||
| Arena Partners LC [Member] | ||||||||||||
| Interest payable | $ 400,000 | |||||||||||
| Interest rate, percentage | 20.00% | |||||||||||
| Security Agreement [Member] | ||||||||||||
| Proceeds from loans | $ 16,500,000 | |||||||||||
| Consulting Agreement [Member] | ||||||||||||
| Service fee | $ 600,000 | |||||||||||
| Consultant fee | 450,000 | |||||||||||
| Professional fees payable | 150,000 | |||||||||||
| Warrants and rights outstanding | $ 160,000 | |||||||||||
| Consulting Agreement [Member] | Warrant [Member] | ||||||||||||
| Stock issued during period shares acquisitions | 160,000,000 | |||||||||||
| Consulting Agreement [Member] | Common Stock [Member] | ||||||||||||
| Warrant exercise price | $ 0.025 | |||||||||||
| Consulting Agreement [Member] | First Two Months [Member] | ||||||||||||
| Periodic payment | 25,000 | |||||||||||
| Consulting Agreement [Member] | Remaining Four Months [Member] | ||||||||||||
| Periodic payment | $ 10,000 | |||||||||||
| Service Agreement [Member] | ||||||||||||
| Service fee | $ 30,000 | |||||||||||
| Jeffrey Canouse [Member] | ||||||||||||
| Management fees | $ 24,487 | $ 0 | ||||||||||
| Third Party [Member] | Consulting Agreement [Member] | ||||||||||||
| Service fee | $ 30,000 | |||||||||||
| Consultant fee | $ 100,000 | |||||||||||
Schedule of Income Tax Expense (Details) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Income Tax Disclosure [Abstract] | ||
| Net loss for the nine-month period | $ (6,949,431) | $ (856,777) |
| Statutory and effective tax rates | 21.00% | 21.00% |
| Income taxes expenses (recovery) at the effective rate | $ (1,459,380) | $ (179,923) |
| Effect of change in tax rates | ||
| Permanent differences | ||
| Valuation allowance | 1,459,380 | 179,923 |
| Income tax expense and income tax liability | ||
Schedule of Deferred Income Tax Asset (Details) - USD ($) |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Income Tax Disclosure [Abstract] | ||
| Tax loss carried forward | ||
| Deferred tax assets | 4,454,522 | 2,995,142 |
| Valuation allowance | (4,454,522) | (2,995,142) |
| Deferred taxes recognized |
Income Taxes (Details Narrative) $ in Millions |
Sep. 30, 2022
USD ($)
|
|---|---|
| Expire in 2024 [Member] | |
| Operating Loss Carryforwards [Line Items] | |
| Tax losses | $ 14 |