NOTES
TO THE FINANCIAL STATEMENTS
DECEMBER
31, 2016
Note
1
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 9, 2015, the Company effectively changed its name from Madison Explorations, Inc. to Madison Technologies Inc. and
effected the stock consolidation. These financial statements give retroactive effect to both these changes.
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 countries. The Company will be selling ballistic panels which are personal body
armours, 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.
Effective
December 31, 2016, the Company dissolved its wholly owned subsidiary, Scout Resources Inc. (“Scout”) and assumed all
the debt that Scout owed.
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 December 31, 2016, the Company had not yet achieved profitable operations, had accumulated losses of $570,850
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.
Madison Technologies Inc.
|
Form 10-K - 2016
|
F-
6
|
Note
2
Summary of Significant Accounting Policies
a)
Year end
The
Company has elected a December 31st fiscal year end.
b) Cash
and cash equivalents
The
Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.
As at December 31, 2016, the Company did not have any cash equivalents (2016 – $nil), and $534 was deposited in accounts
that were federally insured (2015 - $0).
c) Revenue Recognition
The
Company recognizes revenue when a contract is in place, goods or services are delivered to the purchaser and collectability is
reasonably assured.
d) Stock-Based Compensation
The
Company follows the guideline under FASB ASC Topic 718 “
Compensation-Stock Compensation
” for all stock based
compensation plans, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights.
Stock compensation expenses are to be recorded using the fair value method. No stock options have been issued.
e) Basic and Diluted Net Income (Loss) per Share
The
Company reports basic loss per share in accordance FASB ASC Topic 260, “
Earnings per share
”. Basic net income
(loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of
common shares outstanding during the period. Diluted net income (loss) per share on the potential exercise of the equity-based
financial instruments is not presented where anti-dilutive.
f) Comprehensive Income
In
accordance with FASB ASC Topic 220 “
Comprehensive Income
,” comprehensive income consists of net income and
other gains and losses affecting stockholder’s equity that are excluded from net income, such as unrealized gains and losses
on investments available for sale, foreign currency translation gains and losses and minimum pension liability.
g)
Use of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying
disclosures. Although these estimates are based on management’s best knowledge of current events and actions the Company
may undertake in the future, actual results may ultimately differ from the estimates. Management believes such estimates to be
reasonable.
Madison Technologies Inc.
|
Form 10-K - 2016
|
F-7
|
h)
Fair Value Measurements
The
Company follows FASB ASC Topic 820, “
Fair Value Measurements and Disclosures”
, for all financial instruments
and non-financial instruments accounted for at fair value on a recurring basis. This new accounting standard establishes a single
definition of fair value and a framework for measuring fair value, sets out a fair value hierarchy to be used to classify the
source of information used in fair value measurement and expands disclosures about fair value measurements required under other
accounting pronouncements. It does not change existing guidance as to whether or not an instrument is carried at fair value. The
Company defines fair value 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, the Company considers the principal or most advantageous market in which the
Company 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. The Company has adopted FASB ASC 825, “
Financial
Instruments”,
which allows companies to choose to measure eligible financial instruments and certain other items at
fair value that are not required to be measured at fair value. The Company has not elected the fair value option for any eligible
financial instruments.
i) Financial Instruments
Fair
Value
The
Company’s financial instruments consisting of cash, account payable and accrued liabilities, notes payable and accrued interest
and related party advances are carried at face which approximates fair value because of their short-term nature.
FASB
ASC Topic 470, “
Debt with Conversions and Other Options,
” which requires that no amount be allocated to the
equity feature of convertible debt where there is no beneficial conversion feature, does not apply to the Company’s
convertible promissory notes. The convertible promissory notes have been issued without an interest component and a promissory
note without any interest rate or any conversion feature would have no fair value, based on the accepted premise that investors
require a profit incentive. Accordingly, the total value of these instruments has been allocated to the equity component as this
is logically the only reason for investment. Promissory note issuances are included in additional paid-in capital and being amortized
and charged to interest on an effective interest rate basis.
Risks:
Financial
instruments that potentially subject the Company to credit risk consist principally of cash. Management does not believe the Company
is exposed to significant credit risk.
Management,
as well, does not believe the Company is exposed to significant interest rate risks during the period presented in these financial
statements.
The
accompanying financial statements do not include any adjustments that might result from the eventual outcome of the risks and
uncertainties described above.
j) Income
Taxes
The
Company accounts for income taxes under an asset and liability approach that requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements
or tax returns. In estimating future tax consequences, all expected future events other than enactment of changes in the tax laws
or rates are considered.
Madison Technologies Inc.
|
Form 10-K - 2016
|
F-
8
|
Due
to the uncertainty regarding the Company’s future profitability, the future tax benefits of its losses have been fully reserved.
k)
Impairment of Long-Lived Assets
Impairment
losses on long-lived assets, such as mining claims, are recognized when events or changes in circumstances indicate that the undiscounted
cash flows estimated to be generated by such assets are less than their carrying value and, accordingly, all or a portion of such
carrying value may not be recoverable. Impairment losses are then measured by comparing the fair value of assets to their carrying
amounts.
l) Foreign
Currency Translation and Transactions
The
Company’s functional currency is US dollars. Foreign currency balances are translated into US dollars as follows:
Monetary
assets and liabilities are translated at the period-end exchange rate. Non-monetary assets are translated at the rate of exchange
in effect at their acquisition, unless such assets are carried at market or nominal value, in which case they are translated at
the period-end exchange rate. Revenue and expense items are translated at the average exchange rate for the period. Foreign exchange
gains and losses in the period are included in operations.
The
functional currency of the now dissolved wholly owned subsidiary was Canadian dollars. The assets and liabilities arising from
these operations were translated at current exchange rates and related revenues and expenses at the exchange rates in effect at
the time the revenue or expense was incurred. Resulting translation adjustments, if material, were accumulated as a separate component
of accumulated other comprehensive income in the statement of stockholders’ deficit.
m)
Intangible Assets
Intangible
assets are non-monetary identifiable assets, controlled by the Company 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 a indefinite useful life shall not be amortized until its useful life is determined to be longer indefinite. An intangible
assets subject to amortization shall be periodically reviewed for impairment. A recoverability test will be performed and, if
applicable, unscheduled amortization is considered.
A
license agreement has been capitalized and recorded at cost. It will be amortized over the life of the contract, which is two
years.
n)
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.
Madison Technologies Inc.
|
Form 10-K - 2016
|
F-
9
|
Note
3
License Agreement
The
Company entered into an exclusive product license agreement on September 16, 2016 to sell Ballistic Panels in certain countries.
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
December 31, 2016, the Company had paid $16,500 to the Licensor, leaving an unpaid balance of $33,500. Amortization of $7,240
has been recorded during the year ended December 31, 2016.
As the Company failed to make
timely payments under the license agreement, it was informed on March 20, 2017, that going forward, the agreement would be on
a non-exclusive basis.
Note
4
Notes and Accrued Interest Payable
The
Company has two notes payable to Paleface Holdings Inc. Each note is unsecured and payable on demand.
|
|
a)
|
$25,000 note with
annual interest payable at 8%.
|
|
|
|
|
|
|
|
As at December 31,
2016, accrued interest on the note was $23,597 (December 31, 2015 - $21,597). The note payable balance including accrued interest
was $48,797 as at December 31, 2016 (December 31, 2015 - $46,797). Interest on the debt for each of the years ended December
31 was $2,000.
|
|
|
|
|
|
|
b)
|
$22,825 ($30,000
CDN) with annual interest payable at 5%
|
|
|
|
As at December 31,
2016, accrued interest on the note was $10,362 (December 31, 2015 - $9,462). The note payable balance including accrued interest
was $33,187 as at December 31, 2016 (December 31, 2015 - $31,089). Interest on debt for the years ended December 31 was $1,143
in 2016 and $1,150 in 2015.
|
The
company also has an unsecured note payable on demand to Gens Incognito Inc. for $25,000, bearing interest at 12%. As at December
31, 2016, accrued interest on the note was $7,698 (December 31, 2015 - $4,706). The note payable balance including accrued interest
was $32,698 as at December 31, 2016 (December 31, 2015 - $29,706)
Note
5
Related Party Advance
In
2008 the former President advanced the Company $561 repayable without interest or any other terms. The unpaid balance as at December
31, 2016 is $261. There were no related party transactions during the year ended December 31, 2016.
Note
6
Common Stock
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.
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.)
Madison Technologies Inc.
|
Form 10-K - 2016
|
F-10
|
On
June 14, 2001, the Company approved a forward stock split of 5,000:1. These financial statements have been retroactively adjusted
to effect this split.
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 December 31, 2016.
Note
7
Convertible Notes Payable
In
total there are eleven convertible notes payable. All notes are non-interest bearing, unsecured and payable on demand. The notes
are convertible into common stock at the discretion of the holder at six different conversion rates: $0.01 debt to 1 common share,
$0.045 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.
There
are four convertible notes payable convertible on the basis of $0.01 of debt to 1 common share
.
The
balance of the first convertible note payable convertible on the basis of $0.01 of debt to 1 common share is as follows:
|
|
Dec 31, 2016
|
|
|
Dec 31, 2015
|
|
|
|
|
|
|
|
|
Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from promissory note
|
|
$
|
40,000
|
|
|
$
|
40,000
|
|
Value allocated to additional paid-in capital
|
|
|
40,000
|
|
|
|
40,000
|
|
|
|
|
|
|
|
|
|
|
Balance allocated to convertible note payable
|
|
|
-
|
|
|
|
-
|
|
Amortized discount
|
|
|
40,000
|
|
|
|
40,000
|
|
Balance, convertible note payable
|
|
$
|
40,000
|
|
|
$
|
40,000
|
|
The
total discount of $40,000 was amortized over 5 years (20%) starting April 2008.and was fully amortized as at April 2013.
The
balance of the second convertible note payable convertible on the basis of $0.01 of debt to 1 common share is as follows:
|
|
Dec 31, 2016
|
|
|
Dec 31, 2015
|
|
|
|
|
|
|
|
|
Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from promissory note
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
Value allocated to additional paid-in capital
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
Balance allocated to convertible note payable
|
|
|
-
|
|
|
|
-
|
|
Amortized discount
|
|
|
20,000
|
|
|
|
20,000
|
|
Balance, convertible note payable
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
The
total discount of $20,000 was amortized over 5 years (20%) starting June 2010 and was fully amortized as at June 2015. Interest
of $2,000 was recorded for the nine months ended September 30, 2015.
Madison Technologies Inc.
|
Form 10-K - 2016
|
F-
11
|
The
balance of the third convertible note payable convertible on the basis of $0.01 of debt to 1 common share is as follows:
|
|
Dec 31, 2016
|
|
|
Dec 31 2015
|
|
|
|
|
|
|
|
|
Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from promissory note
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
Value allocated to additional paid-in capital
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
Balance allocated to convertible note payable
|
|
|
-
|
|
|
|
-
|
|
Amortized discount
|
|
|
22,500
|
|
|
|
17,750
|
|
Balance, convertible note payable
|
|
$
|
22,500
|
|
|
$
|
17,750
|
|
The
total discount of $25,000 is being amortized over 5 years starting July 2012. Accordingly, the annual interest rate is 20% and
for the twelve months ended December 31, 2016 and 2015, $5,000 was recorded as interest expense. As at December 31, 2016 the unamortized
discount is $2,500.
The
balance of the fourth convertible note payable convertible on the basis of $0.01 of debt to 1 common share at is as follows:
|
|
Dec 31, 2016
|
|
|
Dec 31, 2015
|
|
|
|
|
|
|
|
|
Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from promissory note
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
Value allocated to additional paid-in capital
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
Balance allocated to convertible note payable
|
|
|
-
|
|
|
|
-
|
|
Amortized discount
|
|
|
18,750
|
|
|
|
13,750
|
|
Balance, convertible note payable
|
|
$
|
18,750
|
|
|
$
|
13,750
|
|
The
total discount of $25,000 is being amortized over 5 years starting April 2013. Accordingly, the annual interest rate is 20% and
for the twelve months ended December 31, 2016 and 2015, $5,000 was recorded as interest expense. As at December 31, 2016 the unamortized
discount is $6,250.
There
are two convertible notes payable convertible on the basis of $0.005 of debt to 1 common share
Madison Technologies Inc.
|
Form 10-K - 2016
|
F-
12
|
The
balance of the first convertible note payable convertible on the basis of $0.005 of debt to 1 common share is as follows:
|
|
Dec 31, 2016
|
|
|
Dec 31, 2015
|
|
|
|
|
|
|
|
|
Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from promissory note
|
|
$
|
10,000
|
|
|
$
|
10,000
|
|
Value allocated to additional paid-in capital
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
Balance allocated to convertible note payable
|
|
|
-
|
|
|
|
-
|
|
Amortized discount
|
|
|
10,000
|
|
|
|
9,500
|
|
Balance, convertible note payable
|
|
$
|
10,000
|
|
|
$
|
9,500
|
|
The
total discount of $10,000 was amortized over 5 years starting April 2011. Accordingly, the annual interest rate is 20% and for
the twelve months ended December 31, 2016, $500 was recorded as interest expense and $2,000 was recorded as interest expense for
the twelve months ended December 31, 2015
The
balance of the second convertible note payable convertible on the basis of $0.005 of debt to 1 common share is as follows:
|
|
|
Dec
31, 2016
|
|
|
|
Dec
31, 2015
|
|
Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from promissory note
|
|
$
|
10,000
|
|
|
$
|
10,000
|
|
Value allocated to additional paid-in capital
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
Balance allocated to convertible note payable
|
|
|
-
|
|
|
|
-
|
|
Amortized discount
|
|
|
10,000
|
|
|
|
9,250
|
|
Balance, convertible note payable
|
|
$
|
10,000
|
|
|
$
|
9,250
|
|
The
total discount of $10,000 was amortized over 5 years starting May 2011. Accordingly, the annual interest rate is 20% and for the
nine months ended September 30, 2016, $750 was recorded as interest expense and $1,500 was recorded as interest expense for the
nine months ended September 30, 2015.
There
is one convertible notes payable convertible on the basis of $0.045 of debt to 1 common share
The
balance of this convertible note payable is as follows:
|
|
Dec 31, 2016
|
|
|
Dec 31, 2015
|
|
|
|
|
|
|
|
|
Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from promissory note
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
Value allocated to additional paid-in capital
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
Balance allocated to convertible note payable
|
|
|
-
|
|
|
|
|
|
Amortized discount
|
|
|
13,333
|
|
|
|
8,333
|
|
Balance, convertible note payable
|
|
$
|
13,333
|
|
|
$
|
8,333
|
|
The
total discount of $25,000 is being amortized over 5 years starting May 2014. Accordingly, the annual interest rate is 20% and
for the twelve months ended December 30, 2016 and 2015, $5,000 was recorded as interest expense. As at December 31, 2016 the unamortized
discount is $11,667.
There
is one convertible notes payable convertible on the basis of $0.15 of debt to 1 common share
Madison Technologies Inc.
|
Form 10-K - 2016
|
F-
13
|
The
balance of this convertible note payable is as follows:
|
|
Dec 31, 2016
|
|
|
Dec 31, 2015
|
|
|
|
|
|
|
|
|
Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from promissory note
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
Value allocated to additional paid-in capital
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
Balance allocated to convertible note payable
|
|
|
|
|
|
|
|
|
Amortized discount
|
|
|
8,750
|
|
|
|
3,750
|
|
Balance, convertible note payable
|
|
$
|
8,750
|
|
|
$
|
3,750
|
|
The
total discount of $25,000 is being amortized over 5 years starting April, 2015. Accordingly, the annual interest rate is 20% and
for the twelve months ended December 31, 2016, $5,000 was recorded as interest expense, $2,500 was recorded as interest expense
for the twelve months ended December 30, 2016. As at December 31, 2016 the unamortized discount was $16,250.
There
are two convertible notes payable convertible on the basis of $0.05 of debt to 1 common share
The
balance of the first convertible note payable is as follows:
|
|
Dec 31, 2016
|
|
|
Dec 31, 2015
|
|
|
|
|
|
|
|
|
Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from promissory note
|
|
$
|
21,000
|
|
|
$
|
-
|
|
Value allocated to additional paid-in capital
|
|
|
21,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Balance allocated to convertible note payable
|
|
|
-
|
|
|
|
-
|
|
Amortized discount
|
|
|
1,680
|
|
|
|
-
|
|
Balance, convertible note payable
|
|
$
|
1,680
|
|
|
$
|
-
|
|
The
total discount of $21,000 is being amortized at 12% starting May, 2016. For the year ended December 31, 2016, $1,680 was recorded
as interest expense. As at December 31, 2016 the unamortized discount is $19,320.
The
balance of the second convertible note payable convertible on the basis of $0.05 of debt to 1 common share is as follows:
|
|
Dec 31, 2016
|
|
|
Dec 31, 2015
|
|
|
|
|
|
|
|
|
Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from promissory note
|
|
$
|
20,000
|
|
|
$
|
-
|
|
Value allocated to additional paid-in capital
|
|
|
20,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Balance allocated to convertible note payable
|
|
|
-
|
|
|
|
-
|
|
Amortized discount
|
|
|
400
|
|
|
|
-
|
|
Balance, convertible note payable
|
|
$
|
400
|
|
|
$
|
-
|
|
The
total discount of $20,000 is being amortized at 12% starting Nov 2016. For the year ended December 31, 2016, $400 was recorded
as interest expense. As at December 31, 2016 the unamortized discount is $19,600.
Madison Technologies Inc.
|
Form 10-K - 2016
|
F-
14
|
There
is one convertible notes payable convertible on the basis of $0.04 of debt to 1 common share
The
balance of this convertible note payable is as follows:
|
|
|
Dec
31, 2016
|
|
|
|
Dec
31, 2015
|
|
Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from promissory note
|
|
$
|
20,000
|
|
|
$
|
-
|
|
Value allocated to additional paid-in capital
|
|
|
20,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Balance allocated to convertible note payable
|
|
|
|
|
|
|
-
|
|
Amortized discount
|
|
|
600
|
|
|
|
-
|
|
Balance, convertible note payable
|
|
$
|
600
|
|
|
$
|
-
|
|
The
total discount of $20,000 is being amortized at 12% starting October, 2016. For the year ended December 31, 2016 $600 was recorded
as interest expense. As at December 31, 2016 the unamortized discount is $19,400
Note
8
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:
|
|
December 31, 2016
|
|
|
December 31, 2015
|
|
|
|
|
|
|
|
|
Net income (loss) for the period
|
|
$
|
(66,089
|
)
|
|
$
|
(64,485
|
)
|
Statutory and effective tax rates
|
|
|
26.0
|
%
|
|
|
26.0
|
%
|
Income taxes expenses (recovery) at the effective rate
|
|
$
|
(17,183
|
)
|
|
$
|
(16,766
|
)
|
Tax effect of permanent differences
|
|
|
6,222
|
|
|
|
6,435
|
|
Tax benefit not recognized
|
|
|
10,961
|
|
|
|
10,331
|
|
Income tax expense (recovery) and income tax liability (asset)
|
|
$
|
-
|
|
|
$
|
-
|
|
As
at December 31, 2016 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.
|
|
December 31, 2016
|
|
|
December 31, 2015
|
|
|
|
|
|
|
|
|
Tax loss carried forward
|
|
$
|
288,518
|
|
|
$
|
382,678
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets
|
|
$
|
75,015
|
|
|
$
|
99,496
|
|
Valuation allowance
|
|
|
(75,015
|
)
|
|
|
(99,496
|
)
|
|
|
|
|
|
|
|
|
|
Deferred taxes recognized
|
|
$
|
-
|
|
|
$
|
-
|
|
During the year ended December
31, 2016, $136,319 in income tax losses expired.
The
remaining income tax losses will expire between 2027 and 2037.
Madison Technologies Inc.
|
Form 10-K - 2016
|
F-
15
|