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 June 30, 2020

 

[  ] 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)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class  

Trading Symbol

  Name of each exchange on which registered
Common   MDEX   OTCQB

 

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 August 14, 2020
Common Stock - $0.001 par value   19,842,565

 

 

 

 
Form 10-Q - Q2 Madison Technologies Inc. Page 2

 

MADISON TECHNOLOGIES INC.

 

INTERIM Financial Statements

 

JUNE 30, 2020

 

(unaudited)

 

 
Form 10-Q - Q2 Madison Technologies Inc. Page 3

 

MADISON TECHNOLOGIES INC.

 

(UNAUDITED)

 

TABLE OF Contents

 

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 8-12

 

 
Form 10-Q - Q2 Madison Technologies Inc. Page 4

 

MADISON TECHNOLOGIES INC.

 

INTERIM Balance Sheets

 

(Unaudited)

 

    June 30, 2020     December 31, 2019  
             
ASSETS                
                 
CURRENT ASSETS                
Cash   $ 5,015     $ 1,366  
Prepaid expenses     24,000       5,178  
                 
      29,015       6,544  
                 
Total Assets   $ 29,015     $ 6,544  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT                
                 
CURRENT LIABILITIES                
Accounts payable and accrued liabilities   $ 35,397     $ 33,655  
License fee payable (Note 5)     33,500       33,500  
Demand notes and accrued interest payable (Note 6)     -       134,276  
Convertible notes and accrued interest payable (Note 6)     153,194       -  
Convertible notes payable (Notes 7 and 8)     183,490       163,490  
                 
TOTAL LIABILITIES     405,581       364,921  
                 
STOCKHOLDERS’ DEFICIIT                
Common Stock (Note 9)                
Par Value: $0.001                
Authorized 500,000,000 shares                
Issued and outstanding: 18,057,565 shares (Dec 31, 2019 – 18,057,565 shares)     18,057       18,057  
Additional Paid in Capital     197,845       197,845  
Accumulated deficit     (592,468 )     (574,279 )
                 
Total stockholders’ deficit     (376,566 )     (358,377 )
                 
Total liabilities and stockholders’ deficit   $ 29,015     $ 6,544  

 

Note 2 Going concern

 

See Accompanying Notes to the Interim Financial Statements.

 

 
Form 10-Q - Q2 Madison Technologies Inc. Page 5

 

MADISON TECHNOLOGIES INC.

 

INTERIM STATEMENTS of Operations

 

(Unaudited)

 

    For the three     For the three     For the six     For the six  
    month ended     month ended     month ended     month ended  
    June 30 2020     June 30 2019     June 30 2020     June 30 2019  
                         
Revenues                                
Sales   $ 199     $ 873     $ 954     $ 1,679  
Cost of sales     113       495       732       1,108  
                                 
Gross Margin     86       378       222       571  
                                 
Operating expenses                                
Amortization expense     -       -       -       -  
General and administrative     9,606       8,042       15,338       17,307  
                                 
      9,606       8.042       15,338       17,307  
                                 
Loss before other expense     (9,520 )     (7,664 )     (15,116 )     (16,736 )
                                 
Other items                                
Interest     (1,560 )     (1,534 )     (3,073 )     (3,064 )
                                 
Net loss and comprehensive loss   $ (11,080 )   $ (9,198 )   $ (18,189 )   $ (19,800 )
                                 
Net loss per share-Basic and diluted   $ (0.001 )   $ (0.001 )   $ (0.001 )   $ (0.001 )
                                 
Average number of shares of common stock outstanding     18,757,565       16,757,565       18,757,565       16,757,565  

 

See Accompanying Notes to the Interim Financial Statements.

 

 
Form 10-Q - Q2 Madison Technologies Inc. Page 6

 

MADISON TECHNOLOGIES INC.

 

interim StatementS of stockholders’ DEFICIT

 

(Unaudited)

 

                Additional                    
    Common           Paid In     Shares     Accumulated        
    Shares     Amount     Capital     Subscribed     Deficit     Total  
                                     
Balance, December 31, 2019     18,057,565     $ 18,057     $ 197,845     $               -     $ (574,279 )   $ (358,377 )
Net loss for the period     -       -       -       -       (7,109 )     (7,109 )
                                                 
Balance, March 31, 2020     18,057,565     $ 18,057     $ 197,845     $ -     $ (581,388 )   $ (365,486 )
Net loss for the period     -       -       -       -       (11,080 )     (11,080 )
                                                 
Balance, June 30, 2020     18,057,565     $ 18,057     $ 197,845     $ -     $ (592,468 )   $ (376,566 )

 

                Additional                    
    Common           Paid In     Shares     Accumulated        
    Shares     Amount     Capital     Subscribed     Deficit     Total  
                                     
Balance, December 31, 2018     16,757,565     $ 16,757     $ 119,145     $ 30,000     $ (532,016 )   $ (386,114 )
Shares subscribed at $0.05 per share     -       -       -       20,000       -       20,000  
Shares subscribed at $0.05 per share     -       -       -       30,000       -       30,000  
Net loss for the period     -       -       -       -       (10,602 )     (10,602 )
                                                 
Balance, March 31, 2019     16,757,565     $ 16,757     $ 119,145     $ 80,000     $ (542,618 )   $ (326,716 )
Net loss for the period     -       -       -       -       (9,198 )     (9,198 )
                                                 
Balance, June 30, 2019     16,757,565     $ 16,757     $ 119,145     $ 80,000     $ (551,816 )   $ (335,914 )

 

See Accompanying Notes to the Interim Financial Statements.

 

 
Form 10-Q - Q2 Madison Technologies Inc. Page 7

 

MADISON TECHNOLOGIES INC.

 

interim StatementS of cash flows

 

(unaudited)

 

    For the six     For the six  
    Months ended     Months ended  
    June 30, 2020     June 30, 2019  
             
Cash Flows from operating activities:                
Net loss for the period   $ (18,189 )   $ (19,800 )
                 
Adjustments to reconcile net loss to cash used in operating activities:                
Amortization of license     -       -  
Accrued interest on notes payable     3,073       3,064  
Foreign exchange on notes payable     (1,655 )     1,341  
Changes in assets and liabilities:                
Accounts payable and accruals     1,742       (9,808 )
Prepaid expenses     (18,822 )     (10,059 )
                 
Net cash used in operating activities     (33,851 )     (35,262 )
                 
Cash Flows from financing activities:                
Proceeds from Note payable     37,500       -  
Shares subscribed but not issued     -       50,000  
                 
Net cash provided by financing activities     37,500       50,000  
                 
Net increase (decrease) in cash     3,649       14,738  
                 
Cash, beginning of period     1,366       2,543  
                 
Cash, end of period   $ 5,015     $ 17,281  
                 
SUPPLEMENTAL DISCLOSURE                
                 
Interest paid   $ -     $ -  
Taxes paid   $ -     $ -  

 

See Accompanying Notes to the Interim Financial Statements

 

 
Form 10-Q - Q2 Madison Technologies Inc. Page 8

 

MADISON TECHNOLOGIES INC.

 

NOTES TO THE INTERIM FINANCIAL STATEMENTS

 

(Unaudited)

 

June 30, 2020

 

Note 1 Interim Reporting

 

While the information presented in the accompanying interim three month financial statements is unaudited, it includes all adjustments, which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in accordance with accounting principles generally accepted in the United States of America. These interim financial statements follow the same accounting policies and methods of their application as the Company’s December 31, 2019 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, 2019 annual financial statements. Operating results for the six months ended June 30, 2020 are not necessarily indicative of the results that can be expected for the year ended December 31, 2020.

 

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.

 

Subsequent to June 30, 2020, on July 17, 2020, the Company entered into an acquisition agreement to acquire the Casa Zeta-Jones Brand License Agreement from Luxurie Legs, LLC of Delaware. Luxurie Legs will transfer all of its rights, title and interest in the License Agreement to the Company in exchange for a controlling interest in the Company represented by newly issued preferred stock. The stakeholders of Luxurie Legs will control the majority voting power of the Company as holders of newly issued shares of preferred stock. The consummation of the acquisition and closing shall take place when all terms and conditions are met and agree in writing by all parties.

 

 
Form 10-Q - Q2 Madison Technologies Inc. Page 9

 

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, 2020, the Company had not yet achieved profitable operations, had accumulated losses of $592,469 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, 2019.

 

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 December 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 $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.

 

 
Form 10-Q - Q2 Madison Technologies Inc. Page 10

 

Note 6 Convertible Notes and Accrued Interest Payable

 

The Company has three notes payable that previous to April 2, 2020 were not convertible. On that date the three notes were amended to be convertible into common stock at the discretion of the Holder at $0.05 debt to 1 common share, provided that no such conversion shall result in the Holder holding in excess of 9.99% of the total issued and outstanding common stock of the Company at any time. Each note is unsecured and payable on demand.

 

    June 30,
2020
    December 31,
2019
 
             
Note payable bearing interest at 8%   $ 25,000     $ 25,000  
Accrued interest thereon     30,797       29,797  
      55,797       54,797  
             
Note payable bearing interest at 5%                
(Debt is Canadian $30,000)     22,059       23,077  
Accrued interest thereon     14,613       14,712  
      36,673       37,789  
                 
Note payable bearing interest at 12%     25,000       25,000  
Accrued interest thereon     18,186       16,690  
      43,186       41,690  

 

Interest accrued on the note bearing 8% interest was $1,000 for the six months ended June 30, 2020 (2019 - $1,000).

Interest accrued on the note bearing 5% interest was $540 for the six months ended June 30, 2020 (2019 - $568).

Interest accrued on the note bearing 12% interest was $1,496 for the six months ended June 30, 2020 (2019 - $1,496).

 

As at June 30, 2020, there are two convertible notes payable accruing interest at 10% per annum. Each note is unsecured and payable on the maturity date as noted below. The notes are convertible into common stock at the discretion of the Holder at 50% of the lowest closing bid price for the Company’s common stock during the 30 trading days immediately preceding the date of delivery by Holder to the Company of the Conversion Notice.

 

Note payable due June 23, 2021     12,500       -  
Accrued interest there on     31       -  
      12,531       -  
                 
Note payable Dec 26, 2020     5,000       -  
Accrued interest thereon     7       -  
      5,007       -  
                 
Total debt and interest payable   $ 153,194     $ 134,276  

 

 
Form 10-Q - Q2 Madison Technologies Inc. Page 11

 

Note 7 Convertible Notes Payable

 

As at June 30, 2020, there are ten convertible notes payable that are non-interest bearing, unsecured and payable on demand. The notes are convertible into common stock at the discretion of the holder at four different conversion rates: $0.01 debt to 1 common share, $0.005 to 1 common share; $0.05 to 1 common share; and $0.04 to 1 common share. As at April 2, 2020, all the convertible notes payable have been amended to include that no such conversion shall result in the Holder holding in excess of 9.99% of the total issued and outstanding common stock of the Company at anytime. 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:

 

   

June 30,

2020

    December 31,
2019
 
             
Convertible at $0.01 debt to 1 common share   $ 85,000     $ 85.000  
Convertible at $0.005 debt to 1 common share     30,000       10,000  
Convertible at $0.15 debt to 1 common share*     -       25,000  
Convertible at $0.05 debt to 1 common share     48,490       23,490  
Convertible at $0.04 debt to 1 common share     20,000       20,000  
    $ 183,490     $ 163,490  

 

*Effective April 2, 2020, the $25,000 convertible note payable with the conversion price of $0.15 per share was amended to $0.05 per share.

 

Note 8 Related Party Convertible Loan

 

In 2008, the current President advanced the Company $561 repayable without interest or any other terms. The unpaid balance as at October 23, 2018 was $261. The President advanced a further $229 (CAD $300) to cover out of pocket expenditures. On October 23, 2018, the Company entered into a convertible note payable with the President by combining the two advances to the aggregate amount of $490. The note payable is due on demand and may be convertible to common stock of the Company at $0.05 per share. There were no other related party transactions during the period ended June 30, 2020 or the year ended December 31, 2019. The loan has been included in Note 7 above.

 

Note 9 Common Stock

 

On July 23, 2020, the Company issued 1,785,000 shares of common stock pursuant to a notice of conversion of a note payable of $16,900 at $0.01 per share plus legal fees of $950, totalling $17,850.

 

On March 25, 2019, the Company completed a private placement of 600,000 shares of common stock at a per share price of $0.05 for gross proceeds of $30,000. This was issued during the period ended December 31, 2019.

 

On February 14, 2019, the Company completed a private placement of 400,000 shares of common stock at a per share price of $0.05 for gross proceeds of $20,000. This was issued during the period ended December 31, 2019.

 

 
Form 10-Q - Q2 Madison Technologies Inc. Page 12

 

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. The shares were issued during the period ended December 31, 2019.

 

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. The shares were issued during the period ended December 31, 2019.

 

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 June 30, 2020.

 

Note 10 Subsequent Events

 

On July 17, 2020, the Company entered into an acquisition agreement to acquire the Casa Zeta-Jones Brand License Agreement from Luxurie Legs, LLC of Delaware. Luxurie Legs will transfer all of its rights, title and interest in the License Agreement to the Company in exchange for a controlling interest in the Company represented by newly issued preferred stock. The stakeholders of Luxurie Legs will control the majority voting power of the Company as holders of newly issued shares of preferred stock. The consummation of the acquisition and closing shall take place when all terms and conditions are met and agree in writing by all parties.

 

On July 23, 2020 the Company converted $16,900 of a note payable plus legal fees of $950 (totalling $17,850) to 1,785,000 common shares at a conversion price of $0.01 per share.

 

 
Form 10-Q - Q2 Madison Technologies Inc. Page 13

 

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 six months ended June 30, 2020 should be read in conjunction with Madison’s unaudited consolidated financial statements and related notes for the six months ended June 30, 2020.

 

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. (the “Company”) 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, the Company 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 company maintains its statutory resident agent’s office at 1859 Whitney Mesa Drive, Henderson, Nevada, 89014 and its business office is located 4448 Patterdale Drive, North Vancouver BC, V7R 4L8, CANADA. The company’s office telephone number is (206)-203-0474.

 

The company is authorized to issue up to 500,000,000 shares of Common Stock with a par value of $0.001 per share, of which 19,842,565 shares of Common Stock are currently issued and outstanding as at August 14, 2020.

 

 
Form 10-Q - Q2 Madison Technologies Inc. Page 14

 

 

The company has not been involved in any bankruptcy, receivership or similar proceedings. There have been no material reclassifications, merger consolidations or purchase or sale of a significant amount of assets not in the ordinary course of the company’s business, except those disclosed below;

 

On September 16, 2016 The Company 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 the Company 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 the Company’s business.

 

On June 17, 2020, and in connection with the Acquisition, Mr. Jeffrey Canouse was appointed as a member of the Company’s Board of Directors. Mr. Canouse was also appointed to serve as our new Chief Executive Officer, a role which he will assume following the filing of this Quarterly Report, at which time Mr. Gallo shall resign from all officer and director positions with the Company. Until that time, Mr. Gallo shall continue to serve as our Chief Executive Officer and our Board of Directors consists of two directors, Joseph Gallo and Jeffrey Canouse. Please see item 5.02 of the form 8-K filed on July 20, 2020 for information relating to the Appointment of New Director.

 

Effective July 14, 2020, the Board of Directors of Madison Technologies, Inc. (the “Company”) approved the creation and issuance of 100,000 shares of Series A Convertible Preferred Stock and 100 shares of Series B Super Voting Preferred Stock pursuant to the conditions precedent to closing the Acquisition Agreement with Luxurie Legs, LLC ratified on July 17, 2020, under which the Company acquired the Casa Zeta-Jones Brand License Agreement (the “License Agreement”) from Luxurie Legs, LLC (“Luxurie”). Please see item 3.02 of the form 8-K filed on August 7, 2020 for information relating to the Unregistered Sales of Equity Securities.

 

On July 17, 2020, The Company Technologies, Inc. (the “Company”) officially ratified an Acquisition Agreement in order to acquire the Casa Zeta-Jones Brand License Agreement (the “License Agreement”) from Luxurie Legs, LLC, a limited liability company organized pursuant to the laws of the State of Delaware (“LUXURIE”), pursuant to which, at the effective time, LUXURIE will transfer all of its right, title and interest in the License Agreement to the Company in exchange for a controlling interest in the Company represented by newly issued preferred stock. Please see item1.01 of the form 8-K filed on July 20, 2020 for information relating to the entry into a material definitive agreement.

 

On July 28, 2020, the Company filed a Certificate of Amendment to its Articles of Incorporation and Certificates of Designation establishing the designations, preferences, limitations and relative rights of the Company’s Series A Convertible Preferred Stock and Series B Super Voting Preferred Stock in the State of Nevada. Please see item 5.03 of the form 8-K filed on August 7, 2020 for information relating to the Amendment to Articles of Incorporation or Bylaws.

 

 
Form 10-Q - Q2 Madison Technologies Inc. Page 15

 

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.

 

Six months ended June 30, 2020 and June 30, 2019

 

Our net loss for the six-month period ended June 30, 2020 was $18,189 (2019: $19,800), which consisted of general and administration expenses and amortization. We generated $954 in revenue during six-month period in fiscal 2020 compared to $1,679 during the six-month period in 2019. The decrease in expenses in the current fiscal year relate to an decrease 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 18,057,565 for the six-month period ended June 30, 2020 and 16,757,565 for the six-month period ended June 30, 2019.

 

Liquidity and Capital Resources

 

Cash and Working Capital

 

As at June 30, 2020, Madison had cash of $5,015 and a working capital deficit of $376.566, compared to cash of $1,366 and working capital deficit of $358,377 as at December 31, 2019.

 

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

 

 
Form 10-Q - Q2 Madison Technologies Inc. Page 16

 

Net Cash Used in Operating Activities

 

Madison used cash of $33,851 in operating activities during the first six months of fiscal 2020 compared to cash used of $35,262 in operating activities during the same period in the previous fiscal year. The results were essentially the same for both years.

 

Net Cash Provided (Used in) Investing Activities

 

Net cash used in investing activities was nil for the first six months of both fiscal 2020 and fiscal 2019.

 

Net Cash Provided by Financing Activities

 

Net cash flows provided by financing activities of $37,500 for the first six months of fiscal 2020, were from the proceeds of a convertible note payable. Madison generated $50,000 from share subscriptions during the first six months of fiscal 2019.

 

Plan of Operation

 

Tuffy Pack License

 

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.

 

Payments to be made under Product License Agreement of $50,000. At the date of this filing Madison has paid payments of $16,500 of the $50,000. The company anticipates continued payments will be made under its Product License Agreement of $33,500.

 

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.

 

Casa Zeta-Jones Brand License Agreement from Luxurie Legs, LLC

 

Our plan of operation is to deliver the Casa Zeta-Jones brand licensed products into the international markets via to be determined marketing and fulfillment services. The Casa Zeta-Jones brand licensed product line will include a custom designed handle and cartridge system, pre-care products, exclusive shaving products and some of the best after care products on the market today.

 

 
Form 10-Q - Q2 Madison Technologies Inc. Page 17

 

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 June 30, 2020 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.

 

 
Form 10-Q - Q2 Madison Technologies Inc. Page 18

 

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 June 30, 2020.

 

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 June 30, 2020, 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 June 30, 2020, that materially affected, or are reasonably likely to materially affect, Madison’s internal control over financial reporting.

 

Limitations on the Effectiveness of Controls and Procedures

 

Management, including our President and Chief Financial Officer, does not expect that Madison’s controls and procedures will prevent all potential error and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

 

 
Form 10-Q - Q2 Madison Technologies Inc. Page 19

 

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 quarter of the fiscal year covered by this report, (i) Madison did not modify the instruments defining the rights of its shareholders, (ii) no rights of any shareholders were limited or qualified by any other class of securities, and (iii) Madison did not sell any unregistered equity securities.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

No report required.

 

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

No report required.

 

ITEM 5. OTHER INFORMATION

 

No report required.

 

 
Form 10-Q - Q2 Madison Technologies Inc. Page 20

 

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
3.3   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
         
10.6   Acquisition Agreement, ratified July 17, 2020 and Officers Certificates for Madison Technologies, Inc. and Luxurie Legs, LLC dated July 17, 2020, filed as an exhibit to Madison's Form 8-K filed on July 20, 2020, and incorporated herein by reference.   Filed 
         
10.7   Certificate of Amendment to its Articles of Incorporation and Certificates of Designation establishing the designations, preferences, limitations and relative rights of the Company’s Series A Convertible Preferred Stock and Series B Super Voting Preferred Stock in the State of Nevada, filed as an exhibit to Madison's Form 8-k filed on August 7, 2020 and incorporated herein by reference.    Filed
         
31.1   Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.   Included
         
32.1   Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.   Included

 

 
Form 10-Q - Q2 Madison Technologies Inc. Page 21

 

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: August 14, 2020 By: /s/ Joseph Gallo
  Name: Joseph Gallo
  Title: President
    (Principal Executive Officer)

 

 

 

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