United states

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

[X]	quarterly report under section 13 0r 15(d) of the securities exchange act of 1934

 

For the quarterly period ended September 30, 2018

 

[  ]	transition report under section 13 0r 15(d) of the securities exchange act of 1934

 

For the transition period from ___________________to ___________________

 

Commission file number 000-51302

 

madison technologies inc.

(Exact name of registrant as specified in its charter)

 

Nevada		00-0000000
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

4448 Patterdale Drive, North Vancouver, BC		V7R 4L8
(Address of principal executive offices)		(Zip Code)

 

206-203-0474

(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.

[X] Yes [  ] No

 

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).

[X] Yes [  ] No

 

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	[  ]
Non-accelerated filer	[  ]		Smaller reporting company	[X]
(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 [X] No

 

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 September 30, 2018
Common Stock - $0.001 par value			16,757.565

 

 

 

MADISON TECHNOLOGIES INC.

 

INTERIM Financial Statements

 

SEPTEMBER 30, 2018

 

(unaudited)

 

 

MADISON TECHNOLOGIES INC.

 

(UNAUDITED)

 

TABLE OF Contents

 

INTERIM FINANCIAL STATEMENTS
Interim Balance Sheets	4
Interim Statements of Operations	5
Interim Statements of Stockholders’ Deficit	6
Interim Statements of Cash Flows	7
Notes to the Interim Financial Statements	8-11

 

 

MADISON TECHNOLOGIES INC.

 

interim Balance Sheets

 

(Unaudited)

 

		September 30, 2018				December 31, 2017
ASSETS
CURRENT ASSETS
Cash		$	2,058			$	3,281
Prepaid expenses			6,000				-
			8,058				3,281
Intangible asset, at amortized cost License agreement (Note 5)			-				17,760
Total Assets		$	8,058			$	21,041
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued liabilities		$	41,043			$	45,394
License fee payable (Note 5)			33,500				33,500
Demand notes and accrued interest payable (Note 6)			126,859				123,094
Convertible notes payable (Note 7) as restated (Note 10)			161,000				196,000
Related party advance (Note 8)			261				261
TOTAL LIABILITIES – as restated (Note 10)			362,663				398,249
STOCKHOLDERS’ DEFICIIT
Common Stock (Note 9)
Par Value: $0.001
Authorized 500,000,000 shares
Issued and outstanding: 16,757,565 shares (Dec 31, 2017 – 12,257,565 shares)			16,757				12,257
Additional Paid in Capital – as restated (Note 10)			119,145				88,645
Shares subscribed (Note 9)			30,000				-
Accumulated deficit – as restated (Note 10)			(520,507	)			(478,110	)
Total stockholders’ deficit – as restated (Note 10)			(354,605	)			(377,208	)
Total liabilities and stockholders’ deficit		$	8,058			$	21,041

 

Note 2 Going concern

Note 10 Correction of prior period error

 

See Accompanying Notes to the Interim Financial Statements.

 

 

MADISON TECHNOLOGIES INC.

 

INTERIM STATEMENTS of Operations

 

(Unaudited)

 

		For the three				For the three				For the nine				For the nine
		month ended				month ended				month ended				month ended
		Sep 30, 2018				Sep 30, 2017				Sep 30, 2018				Sep 30, 2017
Revenues
Sales		$	724			$	1,456			$	3,846			$	6,255
Cost of sales			134				798				1,820				4,359
Gross Margin			590				658				2,026				1,896
Operating expenses
Amortization expense			5,260				6,250				17,760				18,750
General and administrative			7,469				5,180				22,052				15,164
			12,729				11,430				39,812				33,914
Loss before other expense			(12,139	)			(10,772	)			(37,786	)			(32,018	)
Other items Interest - as restated (Note 10)			(1,538	)			(1,548	)			(4,611	)			(4,614	)
Net loss and comprehensive loss- as restated (Note 10)		$	(13,677	)		$	(12,320	)		$	(42,397	)		$	(36,632	)
Net loss per share-Basic and diluted		$	(0.001	)		$	(0.001	)		$	(0.003	)		$	(0.003	)
Average number of shares of common stock outstanding			16,757,565				12,216,010				16,345,477				11,575,016

 

See Accompanying Notes to the Interim Financial Statements.

 

 

MADISON TECHNOLOGIES INC.

 

INTERIM StatementS of stockholders’DEFICIT

 

(Unaudited)

 

										Additional
		Common								Paid In				Shares				Accumulated
		Shares				Amount				Capital				Subscribed				Deficit				Total
Balance, December 31, 2016 as restated (Note 10)			11,302,009			$	11,302			$	44,600			$	-			$	(424,837	)		$	(368,935	)
Debt converted to shares
Converted at $0.05 per share			400,000				400				19,600				-				-				20,000
Converted at $0.045 per share			555,556				555				24,445				-				-				25,000
Net loss, December 31, 2017			-				-				-				-				(53,273	)			(53,273	)
Balance, December 31, 2017			12,257,565				12,257				88,645				-				(478,110	)			(377,208	)
Debt converted to shares - Note 7
Converted at $0.01 per share			2,500,000				2,500				22,500				-				-				25,000
Converted at $0.005 per share			2,000,000				2,000				8,000				-				-				10,000
Shares subscribed at $0.10 per share			-				-				-				30,000				-				30,000
Net loss, September 30, 2018			-				-				-				-				(42,397	)			(42,397	)
Balance, September 30, 2018			16,757,565			$	16,757			$	119,145			$	30,000			$	(520,507	)		$	(354,605	)

 

See Accompanying Notes to the Interim Financial Statements.

 

 

MADISON TECHNOLOGIES INC.

 

INTERIM StatementS of cash flows

 

(Unaudited)

 

		For the nine				For the nine
		Months ended				Months ended
		September 30, 2018				September 30, 2017
Cash Flows from operating activities:
Net loss for the year – as restated (Note 10)		$	(42,397	)		$	(36,632	)
Adjustments to reconcile net loss to cash used in operating activities:
Amortization of license			17,760				18,750
Accrued interest on notes payable			4,611				4,614
Foreign exchange on notes payable			(846	)			2,543
Changes in assets and liabilities:
Accounts payable and accruals			(4,351	)			1,186
Prepaid expenses			(6,000	)			-
Net cash used in operating activities			(31,223	)			(9,539	)
Cash Flows from financing activities:
Shares subscribed but not issued			30,000				-
Net cash provided by financing activities			30,000				-
Net decrease in cash			(1,223	)			(9,539	)
Cash, beginning of period			3,281				14,259
Cash, end of period		$	2,058			$	4,720
SUPPLEMENTAL DISCLOSURE
Interest paid		$	-			$	-
Taxes paid		$	-			$	-

 

See Accompanying Notes to the Interim Financial Statements

 

 

MADISON TECHNOLOGIES INC.

 

NOTES TO THE INTERIM FINANCIAL STATEMENTS

 

(Unaudited)

 

September 30, 2018

 

Note 1

Interim Reporting

 

While the information presented in the accompanying interim nine months 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, 2017 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, 2017 annual financial statements. Operating results for the nine months ended September 30, 2018 are not necessarily indicative of the results that can be expected for the year ended December 31, 2018.

 

Note 2

Nature and Continuance of Operations

 

The Company was incorporated on June 15, 1998 in the State of Nevada, USA and the Company’s common shares are publicly traded on the OTC Bulletin Board.

 

On January 21, 2015, a majority of the Company’s stockholders approved a consolidation of the issued and outstanding shares of common stock, on a 10 for 1 basis, thereby decreasing the issued and outstanding share capital from 113,020,000 to 11,302,000. These financial statements give retroactive effect to this change.

 

Effective December 31, 2016, the Company dissolved its wholly owned subsidiary, Scout Resources Inc. (“Scout”) and assumed all the debt that Scout owed.

 

Up until fiscal 2014, the Company was in the business of mineral exploration. On May 28, 2014, the Company formalized an agreement whereby it purchased assets associated with a smokeless cannabis delivery system. The Company planned to develop this system for commercial purposes. On December 14, 2014, the smokeless cannabis delivery agreement was terminated.

 

On September 16, 2016, the Company entered into an exclusive distribution product license agreement with Tuffy Packs, LLC to distribute products into the United Kingdom and 43 other essentially European countries. The Company is selling ballistic panels which are personal body armors, that conforms to the National Institute of Justice (NIJ) Level IIIA threat requirements. The Company’s plan of operations and sales strategy include online and social media marketing, as well as attending various tradeshows and conferences. As the Company failed to make specified payments as required, the agreement was amended to a non-exclusive basis.

 

On March 11, 2015, the Company changed its name from Madison Explorations, Inc. to Madison Technologies Inc. and effected the stock consolidation.

 

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next twelve months. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At June 30, 2018, the Company had not yet achieved profitable operations, has accumulated losses of $520,507 since its inception and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances. That said, there is no assurance of additional funding being available.

 

 

Note 3

Summary of Significant Accounting Policies

 

There have been no changes in the accounting policies from those disclosed in the notes to the audited financial statements for the year ended December 31, 2017.

 

Note 4

Recent Accounting Pronouncements

 

The Company adopts new pronouncements relating to generally accepted accounting principles applicable to the Company as they are issued, which may be in advance of their effective date. Management does not believe that any pronouncement not yet effective but recently issued would, if adopted, have a material effect on the accompanying financial statements.

 

Note 5

License Agreement

 

The Company entered into an exclusive product license agreement on September 16, 2016 with Tuffy Packs, LLC, a Texas corporation, to sell Ballistic Panels in certain countries, essentially in Europe. The license is for a period of two years unless terminated and may be renewed for successive terms of two years each. The payment terms for the license is as follows:

 

	1.	$10,000 payable within seven days after the effective date;
	2.	An additional $15,000 payable within 30 days after the effective date; and
	3.	A final payment of $25,000 payable within 90 days of the effective date.

 

At June 30, 2018, the Company had paid $16,500 to the Licensor, leaving an unpaid balance of $33,500. To date, the Company has recorded a total license amortization of $50,000.

 

As a result of the failure to make payments as required under the agreement, the Company was informed on March 20, 2017, that going forward, the agreement would be on a non-exclusive basis.

 

Note 6

Demand Notes and Accrued Interest Payable

 

The Company has three notes payable. Each note is unsecured and payable on demand.

 

		September 30, 2018				December 31, 2017
Note payable bearing interest at 8%		$	25,000			$	25,000
Accrued interest there on			27,297				25,797
			52,297				50,797

 

 

		September 30, 2018				December 31, 2017
Note payable bearing interest at 5%
(Debt is Canadian $30,000)			23,256				23,809
Accrued interest there on			13,372				12,798
			36,628				36,607
Note payable bearing at 12%			25,000				25,000
Accrued interest there on			12,934				10,690
			37,934				35,690
Total debt and interest payable		$	126,859			$	123,094

 

Interest accrued on the note bearing 8% interest was $500 as at September 30, 2018 (2017 - $500).

Interest accrued on the note bearing 5% interest was $291 as at September 30, 2018 (2017 - $300).

Interest accrued on the note bearing 12% interest was $748 as at September 30, 2018 (2017 - $748).

 

Note 7

Convertible Notes Payable

 

As at September 30, 2018, there are seven convertible notes payable. Two notes were converted into shares during the year ended December 31, 2017 and two notes were converted into shares during the period ended March 31, 2018. All notes are non-interest bearing, unsecured and payable on demand. The remaining notes are convertible into common stock at the discretion of the holder at five different conversion rates: $0.01 debt to 1 common share, $0.005 to 1 common share; $0.15 to 1 common share; $0.05 to 1 common share; and $0.04 to 1 common share. The effect that conversion would have on earnings per share has not been disclosed due to the anti-dilutive effect. A recap of convertible debt outstanding based on conversion rates is as follow:

 

		September 30, 2018				December 31, 2017
Convertible at $0.01 debt to 1 common share		$	85,000			$	110,000
Convertible at $0.005 debt to 1 common share			10,000				20,000
Convertible at $0.015 debt to 1 common share			25,000				25,000
Convertible at $0.05 debt to 1 common share			21,000				21,000
Convertible at $0.04 debt to 1 common share			20,000				20,000
		$	161,000			$	196,000

 

 

Note 8

Related Party Advance

 

In 2008, the current President advanced the Company $561 repayable without interest or any other terms. The unpaid balance as at September 30, 2018 is $261. There were no related party transactions during the period ended September 30, 2018 or the year ended December 31, 2017.

 

Note 9

Common Stock

 

On March 2, 2018, the Company completed a private placement of 150,000 shares of common stock at a per share price of $0.10 for gross proceeds of $15,000. As of the date of this report, the shares have not been issued.

 

On February 16, 2018, the Company completed a private placement of 150,000 shares of common stock at a per share price of $0.10 for gross proceeds of $15,000. As of the date of this report, the shares have not been issued.

 

On January 25, 2018, two convertible notes were converted into shares. One note for $25,000 was converted into 2,500,000 shares at $0.01 per share and the other note for $10,000 was converted into 2,000,000 shares at $0.005 per share.

 

On July 14, 2017, two convertible notes were converted into shares. One note for $25,000 was converted into 555,556 shares at $0.045 per share and the other note for $20,000 was converted to 400,000 shares at $0.05 per share.

 

On January 21, 2015, a majority of the Company’s stockholders approved a consolidation of the issued and outstanding shares of common stock, on a 10 for 1 basis, thereby decreasing the issued and outstanding share capital from 113,020,000 to 11,302,009. This was effected on March 11, 2015. This consolidation has been applied retroactively and all references to the number of shares issued reflect this consolidation.

 

On March 30, 2006, the Company entered into a private placement agreement whereby the Company issued 20,000 Regulation-S shares in exchange for $50,000. ($2.50 per share).

 

On June 7, 2004, the Company issued 5,907,000 in consideration of $472 in cash. ($.00008 per share.)

 

On June 14, 2001, the Company approved a forward stock split of 5,000:1.

 

On June 15, 1998, the Company authorized and issued 5,375,000 shares of its common stock in consideration of $430 in cash. ($.00008 per share.)

 

There are no shares subject to warrants or options as of September 30, 2018.

 

Note 10

Correction of Previously Issued Financial Statements

 

As described in Note 2 (i) Financial Instruments, of the Company’s audited financial statements of the year ended December 31, 2017, the Company corrected the accounting for convertible debt by adopting the principles in FASB ASC Topic 470, “Debt with Conversions and Other Options,” which requires that convertible debt with no beneficial conversion feature be allocated to debt and that no amount be allocated to equity. This change was applied retroactively to the financial statements.

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation.

 

The following discussion of Madison Technologies Inc’s financial condition, changes in financial condition and results of operations for the nine months ended September 30, 2018 should be read in conjunction with Madison’s unaudited consolidated financial statements and related notes for the nine months ended September 30, 2018.

 

Forward Looking Statements

 

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties, including statements regarding Madison’s capital needs, business plans and expectations. Such forward-looking statements involve risks and uncertainties regarding Madison’s ability to carry out its planned exploration programs on its mineral properties. Forward-looking statements are made, without limitation, in relation to Madison’s operating plans, Madison’s liquidity and financial condition, availability of funds, operating and exploration costs and the market in which Madison competes. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks outlined below, and, from time to time, in other reports Madison files with the SEC. These factors may cause Madison’s actual results to differ materially from any forward-looking statement. Madison disclaims any obligation to publicly update these statements, or disclose any difference between its actual results and those reflected in these statements. The information constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

 

 

GENERAL

 

Madison Technologies Inc. (“Madison”) is a Nevada corporation that was incorporated on June 15, 1998. Madison was initially incorporated under the name “Madison-Taylor General Contractors, Inc.” Effective May 24, 2004, Madison changed its name to “Madison Explorations, Inc.” by a majority vote of the shareholders. Effective March 9, 2015, Madison changed its name to “Madison Technologies Inc.,” by a majority vote of the shareholders. See Exhibit 3.3 – Certificate of Amendment for more details.

 

The board of directors of Madison currently consists of Joseph Gallo as the Chief Executive Officer, the Corporate Secretary and, the Chief Financial Officer of Madison. Please see Item 5.02 of the Form 8-K filed on September 8, 2016, May 31, 2017 and March 7, 2018 for information relating to these director and officer changes

 

On March 3, 2018 Thomas Brady passed away and Joseph Gallo consented to and was appointed the President and Chief Executive Officer of Madison by the board of directors. Please see item 5.02 of the Form 8-K filed on March 7, 2018 for information relating to the director and officer changes.

 

On July 3, 2018, Joseph Gallo and the estate of Thomas Brady entered into a share purchase agreement for the purchase and sale of 3,088,500 shares in the capital of Madison for the purchase price of $3,000.00. For more details, see Exhibit 10.1 – Share Purchase Agreement. As a result of the purchase and sale of the 3,088,500 shares, there was a change in control in the voting shares of Madison. Joseph Gallo is now the beneficial owner of 36.8% of the issued and outstanding shares of common stock in the capital of Madison and Mr. Brady owns no shares of common stock in the capital of Madison. Please see item 5.01 of the Form 8-K filed on July 9, 2018 for information relating to the changes in control of registrant.

 

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.

 

Nine months ended September 30, 2018 and September 30, 2017

 

Our net loss for the nine-month period ended September 30, 2018 was $42,397 (2017: $36,632), which consisted of general and administration expenses and amortization and interest. We generated $3,846 in revenue during nine-month period in fiscal 2018 compared to $6,255 during the nine-month period in 2017. The increase in expenses in the current fiscal year relate to an increase in both general and administrative expense and amortization expense related almost exclusively to our Tuffy Pack license agreement obligations.

 

The weighted average number of shares outstanding was 16,345,477 for the nine-month period ended September 30, 2018 and 11,575,016 for the nine-month period ended September 30, 2017.

 

Liquidity and Capital Resources

 

Cash and Working Capital

 

As at September 30, 2018, Madison had cash of $2,058 and a working capital deficit of $354,605, compared to cash of $3,281 and working capital deficit of $394,968 as at December 31, 2017.

 

There are no assurances that Madison will be able to achieve further sales of its common stock or any other form of additional financing. If Madison is unable to achieve the financing necessary to continue its plan of operations, then Madison will not be able to continue and its business will fail.

 

 

The officers and directors have agreed to pay all costs and expenses of having Madison comply with the federal securities laws (and being a public company, should Madison be unable to do so). Madison’s officers and directors have also agreed to pay the other expenses of Madison, should Madison be unable to do so. To continue its business plan, Madison will need to secure financing for its business development. Madison currently has no source for funding at this time.

 

If Madison is unable to raise additional funds to satisfy its reporting obligations, investors will no longer have access to current financial and other information about its business affairs

 

Net Cash Used in Operating Activities

 

Madison used cash of $31,223 in operating activities during the first nine months of fiscal 2018 compared to cash used of $9,539 in operating activities during the same period in the previous fiscal year. The decrease in cash out flow from operations reflects the fact that the company had revenue in 2018.

 

Net Cash Provided (Used in) Investing Activities

 

Net cash used in investing activities was nil for the first Nine months of fiscal 2018 as compared with cash flow from investing activities of nil for the same period in the previous fiscal year.

 

Net Cash Provided by Financing Activities

 

Net cash flows provided by financing activities were $30,000 for the first nine months of fiscal 2018, from proceeds of a convertible note payable. Madison generated nil from financing activities during the first nine months of fiscal 2017.

 

Plan of Operation

 

Our plan of operation is to continue to deliver the Tuffy Pack licensed products into the European and UK retail and wholesale markets via the use of online market and fulfillment services including but not limited to Amazon.eu, Ebay and Ecwid. By implementing these companies’ services Madison will be able to establish a reliable supply chain that will receive delivery of the Licensed Products, warehouse the Licensed Products, package the Licensed Package as per each customer order, and ship the Licensed Products to the customer efficiently and cost effectively.

 

Management expects Madison’s sales distribution strategy to be operational by March 2019, this includes the following components:

 

	1.	Initial inventory with an estimated cost of $10,000
	2.	Social media and online advertising of $10,000
	3.	Payments to be made under Product License Agreement of $33,500

 

At the date of this filing Madison has paid $16,500 of the $50,000.

 

Madison sales strategy is to develop online exposure through the use of social media marketing and sending demo packs of the Licensed Products to both online bloggers and established gun owner clubs. The demo packs will include both new products as well as examples of the products that have been tested and exposed to gunfire to demonstrate the products effectiveness.

 

Management anticipates incurring the following expenses during the next 12 month period:

 

	●	Management anticipates spending approximately $2,500 in ongoing general and administrative expenses per month for the next 12 months, for a total anticipated expenditure of $30,000 over the next 12 months. The general and administrative expenses for the year will consist primarily of professional fees for the audit and legal work relating to Madison’s regulatory filings throughout the year, as well as transfer agent fees, and general office expenses.
	●	Management anticipates spending approximately $15,000 in complying with Madison’s obligations as a reporting company under the Securities Exchange Act of 1934 and as a reporting issuer in Canada. These expenses will consist primarily of professional fees relating to the preparation of Madison’s financial statements and completing and filing its annual report, quarterly report, and current report filings with the SEC and with SEDAR in Canada.

 

 

As at September 30, 2018, Madison had cash of $2,058 and a working capital deficit of $354,605. Accordingly, Madison will require additional financing in the amount of $397,547 in order to fund its obligations as a reporting company under the Securities Act of 1934 and its general and administrative expenses for the next 12 months.

 

Going Concern

 

Madison has not attained profitable operations and is dependent upon obtaining financing to pursue any extensive business activities. For these reasons, Madison’s auditors stated in their report that they have substantial doubt Madison will be able to continue as a going concern.

 

Future Financings

 

Management anticipates continuing to rely on equity sales of Madison’s common stock in order to continue to fund its business operations. Issuances of additional common stock will result in dilution to Madison’s existing stockholders. There is no assurance that Madison will achieve any additional sales of its common stock or arrange for debt or other financing to fund its planned activities.

 

Off-balance Sheet Arrangements

 

Madison has no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

 

Material Commitments for Capital Expenditures

 

At September 30, 2018 Madison had an outstanding liability of $33,500 owing to Tuffy Packs LLC for the purchase of the Product Licensing agreement. As of the date of this filing Madison is in arrears $33,500 according to the Product Licensing Agreement. Please see Exhibit 10.5 Product License Agreement dated March 16, 2016 between Tuffy Packs, LLC and Madison Technologies Inc.

 

Tabular Disclosure of Contractual Obligations

 

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.

 

Critical Accounting Policies

 

Madison’s financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. Management believes that understanding the basis and nature of the estimates and assumptions involved with the following aspects of Madison’s financial statements is critical to an understanding of Madison’s financial statements.

 

 

Use of Estimates

 

The preparation of financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. Madison regularly evaluates estimates and assumptions related to the recovery of long-lived assets, donated expenses and deferred income tax asset valuation allowances. Madison bases its estimates and assumptions on current facts, historical experience and various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by Madison may differ materially and adversely from Madison’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

 

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 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

Management maintains “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in Madison’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to management, including Madison’s President and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

In connection with the preparation of this quarterly report on Form 10-Q, an evaluation was carried out by management, with the participation of the President and the Chief Financial Officer, of the effectiveness of Madison’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of September 30, 2018.

 

Based on the evaluation and the identification of the material weaknesses in Madison’s internal control over financial reporting, as described in its Form 10-K for the year ended December 31, 2009, the President and the Chief Accounting Officer concluded that, as of September 30, 2018, Madison’s disclosure controls and procedures were effective.

 

Changes in Internal Controls over Financial Reporting

 

There were no changes in Madison’s internal controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended September 30, 2018, 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.

 

 

Part II – Other Information

 

Item 1. Legal Proceedings.

 

Madison is not a party to any pending legal proceedings and, to the best of Madison’s knowledge, none of Madison’s property or assets are the subject of any pending legal proceedings.

 

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 three months ended June 30, 2018, the Company received $30,000 from two investors for 300,000 common shares of the Company valued at $0.10 per share. The proceeds from this offering were used for continuing operations.

 

These shares have not yet been issued.

 

Item 3. Defaults upon Senior Securities.

 

During the quarter of the fiscal year covered by this report, no material default has occurred with respect to any indebtedness of Madison. In addition, during this quarter, no material arrearage in the payment of dividends has occurred.

 

Item 4. Mining Safety Disclosures.

 

There are no current mining activities at the date of this report.

 

Item 5. Other Information.

 

During the quarter of the fiscal year covered by this report, Madison reported all information that was required to be disclosed in a report on Form 8-K.

 

Madison has adopted a new code of ethics that applies to all its executive officers and employees, including its CEO and CFO. See Exhibit 14 – Code of Ethics for more information. Madison undertakes to provide any person with a copy of its financial code of ethics free of charge. Please contact Madison at 206-203-0474 to request a copy of Madison’s code of ethics. Management believes Madison’s code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code.

 

 

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.

 

Exhibit		Description		Status
3.1		Articles of Incorporation, filed as an exhibit to Madison’s registration statement on Form 10-SB filed on May 4, 2005, and incorporated herein by reference.		Filed
3.2		By-Laws, filed as an exhibit to Madison’s registration statement on Form 10-SB filed on May 4, 2005, and incorporated herein by reference.		Filed
3.3		Certificate of Amendment dated March 9, 2015,filed as an Exhibit to Madison’s current report on Form 8-K filed March 11, 2015, and incorporated herein by reference		Filed
10.5		Product License Agreement dated September 16, 2016 between Tuffy Packs, LLC and Madison Technologies Inc. filed as an exhibit to Madison’s Form 8-K (Current Report) filed on September 19, 2016, and incorporated herein by reference		Filed
14		Code of Ethics, filed as an exhibit to Madison’s 2010 annual report on Form 10-K filed on March 31, 2010, and incorporated herein by reference.		Filed
31		Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.		Included
32		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.		Included

 

 

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, 2018	By:	/s/ Joseph Gallo
	Name:	Joseph Gallo
	Title:	President
		(Principal Executive Officer)