ITEM 3.02 Unregistered Sales of Equity Securities
As
previously reported in the Current Report on Form 8-K filed on July 20, 2020, and in the Schedule 14F filed on July 24,
2020, effective July 14, 2020, the Board of Directors of Madison Technologies, Inc. (the “Company”) approved the creation
and issuance of 100,000 shares of Series A Convertible Preferred Stock and 100 shares of Series B Super Voting Preferred Stock
pursuant to the conditions precedent to closing the Acquisition Agreement with Luxurie Legs, LLC ratified on July 17, 2020, under
which the Company acquired the Casa Zeta-Jones Brand License Agreement (the “License Agreement”) from Luxurie Legs,
LLC (“Luxurie”).
Series
A Convertible Preferred Stock
Shares
of Series A Convertible Preferred Stock are convertible into shares of the Company’s Common Stock equal to 95% of the issued
and outstanding shares of Common Stock post-closing, with a 9.99% conversion cap and anti-dilution rights for twenty-four (24)
months.
On
August 6, 2020, the Board of Directors of the Company approved the issuance of all 100,000 authorized shares of Series A Convertible
Preferred Stock to the following Luxurie stakeholders:
|
Equity
Markets Advisory Inc.
|
40,000
Shares
|
|
|
|
|
Trillium
Partners LP
|
40,000
Shares
|
|
|
|
|
Walter
Hoelzel
|
5,000
Shares
|
|
|
|
|
Stuart
Sher
|
5,000
Shares
|
Series
B Super Voting Preferred Stock
Also
on August 6, 2020, the Board of Directors of the Company approved the issuance of all 100 authorized shares of Series B Super
Voting Preferred Stock to Jeffrey Canouse, a current Director of the Company, who has been approved by the Board of Directors
to become the Company’s Chief Executive Officer upon the resignation of Joseph Gallo, following the completion of the remaining
closing formalities of the License Agreement, as detailed in the July 20, 2020 Current Report on Form 8-K and the July 24, 2020
Schedule 14F as previously filed with the Commission.
As
such, Jeffrey Canouse effectively holds the majority voting power over the Company, by virtue of the 51% Super Voting rights attributed
to the holder of the Series B Super Voting Preferred Stock, as further detailed below.
We
claim an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”)
since the foregoing issuances did not involve a public offering, the recipients took the securities for investment and not resale,
we took appropriate measures to restrict transfer, and the recipients had access to similar documentation and information as would
be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuance and the
Company paid no underwriting discounts or commissions.
The
foregoing description of the August 6, 2020 Unanimous Written Consent of the Board of Directors is qualified in its entirety
by the Unanimous Written Consent of the Board of Directors dated August 6, 2020, filed as Exhibit 10.1 to this report, which is
incorporated by reference herein.