MADISON
TECHNOLOGIES INC.
INTERIM
STATEMENTS of Operations
(Unaudited)
|
|
For the three
Months ended
March 31, 2018
|
|
|
For the three
Months ended
March 31, 2017
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
1,576
|
|
|
$
|
1,420
|
|
Cost of sales
|
|
|
(729
|
)
|
|
|
(557
|
)
|
|
|
|
|
|
|
|
|
|
Gross Margin
|
|
|
847
|
|
|
|
863
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
Amortization expense
|
|
|
6,250
|
|
|
|
6,250
|
|
General and administrative
|
|
|
8,462
|
|
|
|
6,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,712
|
|
|
|
12,800
|
|
|
|
|
|
|
|
|
|
|
Loss before other expense
|
|
|
(13,865
|
)
|
|
|
(11,937
|
)
|
|
|
|
|
|
|
|
|
|
Other items Interest – as restated (Note 10)
|
|
|
(1,538
|
)
|
|
|
(1,530
|
)
|
|
|
|
|
|
|
|
|
|
Net loss and comprehensive loss – as restated (Note 10)
|
|
$
|
(15,403
|
)
|
|
$
|
(13,467
|
)
|
|
|
|
|
|
|
|
|
|
Net loss per share-Basic and diluted
|
|
$
|
(0.001
|
)
|
|
$
|
(0.001
|
)
|
|
|
|
|
|
|
|
|
|
Average number of shares of common stock outstanding
|
|
|
15,507,565
|
|
|
|
11,302,000
|
|
See
Accompanying Notes to the Interim Financial Statements.
Form 10-Q - Q1
|
Madison Technologies Inc.
|
Page
7
|
MADISON
TECHNOLOGIES INC.
INTERIM
StatementS of stockholders’DEFICIT
(
Unaudited)
|
|
Common
Shares
|
|
|
Amount
|
|
|
Additional
Paid In Capital
|
|
|
Shares
Subscribed
|
|
|
Accumulated
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, March 31, 2018
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(15,403
|
)
|
|
|
(15,403
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2018
|
|
|
16,757,565
|
|
|
$
|
16,757
|
|
|
$
|
119,145
|
|
|
$
|
30,000
|
|
|
$
|
(493,513
|
)
|
|
$
|
(327,611
|
)
|
See
Accompanying Notes to the Interim Financial Statements.
Form 10-Q - Q1
|
Madison Technologies Inc.
|
Page
8
|
MADISON
TECHNOLOGIES INC.
INTERIM
StatementS of cash flows
(Unaudited)
|
|
For the three
|
|
|
For the three
|
|
|
|
Months ended
|
|
|
Months ended
|
|
|
|
March 31, 2018
|
|
|
March 31, 2017
|
|
|
|
|
|
|
|
|
Cash Flows from operating activities:
|
|
|
|
|
|
|
|
|
Net loss for the year – as restated (Note 10)
|
|
$
|
(15,403
|
)
|
|
$
|
(13,467
|
)
|
Adjustments to reconcile net loss to cash used in operating activities:
|
|
|
|
|
|
|
|
|
Amortization of license
|
|
|
6,250
|
|
|
|
6,250
|
|
Accrued interest on notes payable
|
|
|
1,538
|
|
|
|
1,530
|
|
Foreign exchange on notes payable
|
|
|
(850
|
)
|
|
|
366
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accruals
|
|
|
(6,163
|
)
|
|
|
3,335
|
|
Prepaid expenses
|
|
|
(12,000
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(26,628
|
)
|
|
|
(1,986
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from financing activities:
|
|
|
|
|
|
|
|
|
Shares subscribed
|
|
|
30,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
30,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
|
3,372
|
|
|
|
(1,986
|
)
|
|
|
|
|
|
|
|
|
|
Cash, beginning of period
|
|
|
3,281
|
|
|
|
14,259
|
|
|
|
|
|
|
|
|
|
|
Cash, end of period
|
|
$
|
6,653
|
|
|
$
|
12,273
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
1,538
|
|
|
$
|
1,530
|
|
Taxes paid
|
|
$
|
-
|
|
|
$
|
-
|
|
See
Accompanying Notes to the Interim Financial Statements
Form 10-Q - Q1
|
Madison Technologies Inc.
|
Page
9
|
MADISON
TECHNOLOGIES INC.
NOTES
TO THE INTERIM FINANCIAL STATEMENTS
(Unaudited)
March
31, 2018
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, 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 three months ended March 31, 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.
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, this asset purchase agreement was terminated.
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.
On March 11, 2015, the Company changed its name from Madison Explorations, Inc. to Madison Technologies Inc. and effected the
stock consolidation.
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 will be 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.
Effective
December 31, 2016, the Company dissolved its wholly owned subsidiary, Scout Resources Inc. (“Scout”) and assumed all
the debt that Scout owed.
Thesefinancial
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 March 31, 2018, the Company had not yet achieved profitable operations, had accumulated losses of $493,513
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.
Form 10-Q - Q1
|
Madison Technologies Inc.
|
Page
10
|
Note3
|
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.
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
March 31, 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 $38,490.
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.
|
|
March 31, 2018
|
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
Note payable bearing interest at 8%
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
Accrued interest there on
|
|
|
26,297
|
|
|
|
25,797
|
|
|
|
|
51,297
|
|
|
|
50,797
|
|
Form 10-Q - Q1
|
Madison Technologies Inc.
|
Page
11
|
|
|
March 31, 2018
|
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
Note payable bearing interest at 5%
|
|
|
|
|
|
|
|
|
(Debt is Canadian $30,000)
|
|
|
23,256
|
|
|
|
23,809
|
|
Accrued interest there on
|
|
|
12,791
|
|
|
|
12,798
|
|
|
|
|
36,047
|
|
|
|
36,607
|
|
|
|
|
|
|
|
|
|
|
Note payable bearing at 12%
|
|
|
25,000
|
|
|
|
25,000
|
|
Accrued interest there on
|
|
|
11,438
|
|
|
|
10,690
|
|
|
|
|
36,438
|
|
|
|
35,690
|
|
|
|
|
|
|
|
|
|
|
Total debt and interest payable
|
|
$
|
123,782
|
|
|
$
|
123,094
|
|
Interest
accrued on the note bearing 8% interest was $500 as at Mar 31, 2018 (2017 - $500).
Interest
accrued on the note bearing 5% interest was $291as at Mar 31, 2018 (2017 - $282).
Interest
accrued on the note bearing 12% interest was $748 as at Mar 31, 2018 (2017 - $748).
Note
7
|
Convertible
Notes Payable
|
As
at March 31, 2017, 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 atfivedifferent
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:
|
|
March 31, 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
|
|
Form 10-Q - Q1
|
Madison Technologies Inc.
|
Page
12
|
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
March 31, 2018 is $261. There were no related party transactions during the period ended March 31, 2018 or the year ended December
31, 2017.
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 March 31, 2018.
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 three months ended March 31, 2018 should be read in conjunction with Madison’s unaudited consolidated financial
statements and related notes for the three months ended March 31, 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
September 16, 2016 Madison entered into a material definitive agreement with Tuffy Packs, LLC to acquire an exclusive licensing
agreement for the distribution of Tuffy Pack’s product line into the United Kingdom and 43 European countries. According
to the terms and conditions of the product license agreement Madison will pay an aggregate amount of $50,000 for the exclusive
license to distribute Tuffy Packs’ product line. Tuffy Packs manufactures a line of custom inserts that provide a level
of personal protection from ballistic threats similar to what law enforcement officers wear daily as bulletproof vests. The ballistic
panels conform to the National Institute of Justice (NIJ) Level IIIA threat requirements.
Please
see Item 1.01 of the Form 8-K filed on September 19, 2016 for information relating to the Product License Agreement as well please
see Item 1.01 and Item 2.01 of the Form 8-K filed on September 23, 2016 for information relating to the Product License Agreement
and for a description of Madison’s business.
On
September 26, 2016, Thomas Brady and Steven Cozine 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 $1,000.00. Please see Item 5.01 of the Form 8K filed on October 3,
2016 and see Exhibit 10.1 – Share Purchase Agreement for information relating to the change in control of the registrant.
On
October 12, 2016, Madison Technologies Inc. (“Madison”) received approval from Amazon Europe to begin sales of its
Tuffy Pack line of products in the United Kingdom through the Amazon Marketplace. On October 14, 2016, Madison received approval
from Amazon Europe to begin sales of its Tuffy Pack line of products in Germany, Italy, Spain and France through the Amazon Marketplace.
As of October 21, 2016, Madison had completed its first sale through the Amazon Marketplace also on October 21, 2016 Madison ceased
to be a shell company as defined in Rule 12b-2 of the Exchange Act. Please see Item 5.06 of the Form 8-K filed on October 21,
2016 for information relating to the change in shell status.
On
May 26, 2017, Joseph Gallo consented to and was appointed as an additional director of Madison. Also, on May 26, 2017, Mr. Gallo
consented to and was appointed the Chief Financial Officer of Madison by the board of directors. Please see item 5.02 of the Form
8-K filed on May 31, 2017 for information relating to the 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.
Form 10-Q - Q1
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Madison Technologies Inc.
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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 March 31, 2018 and March 30, 2017
Our
net loss for the three-month period ended March 31, 2018 was $15,403 (2017: $13,467), which consisted of general and administration
expenses and amortization. We generated $1,576 in revenue during three-month period in fiscal 2018 compared to 1,420 during the
three-month period in 2017. The increase in expenses in the current fiscal year relate to an increase in both general and administrative
expense and cost of sales related to our online store operations and the amortization of our Tuffy Pack license agreement obligations.
The
weighted average number of shares outstanding was 15,507,000 for the three-month period ended March 31, 2018 and 11,302,000 for
the three-month period ended March 30, 2017.
Liquidity
and Capital Resources
Cash
and Working Capital
As
at March 31, 2018, Madison had cash of $6,653 and a working capital deficit of $339,121, 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
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Net
Cash Used in Operating Activities
Madison
used cash of $26,628 in operating activities during the first three months of fiscal 2018 compared to cash used of $1,986 in operating
activities during the same period in the previous fiscal year. The increase in the operating activities was principally a result
of an increase in operating expenses.
Net
Cash Provided (Used in) Investing Activities
Net
cash used in investing activities was nil for the first three 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 three months of fiscal 2018, from proceeds of a convertible
note payable. Madison generated nil from financing activities during the first three 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 to implement Madison’s sales distribution strategy beginning in May 2018 and to be operational by September 2018,
this includes the following components:
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1.
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Initial
inventory with an estimated cost of $10,000
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2.
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Social
media and online advertising of $10,000
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3.
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Payments
to be made under Product License Agreement of $33,500
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Payments
to be made under Product License Agreement of $50,000. 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.
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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.
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.
Material
Commitments for Capital Expenditures
At
March 31, 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.
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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
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 March 31, 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 March 31, 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 March 31, 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.
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