United states
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| [X] | quarterly report under section 13 or 15(d) of the securities exchange act of 1934 |
For the quarterly period ended March 31, 2015
| [ ] | transition report under section 13 or 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 | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
| 2825 E. Cottonwood Parkway, Suite 500, Salt Lake City, Utah | 84121 | |
(Address of principal executive offices) |
(Zip Code) |
| 801-326-0110 |
| (Registrant’s telephone number, including area code) |
| n/a |
| (Former name, former address and former fiscal year, if changed since last report) |
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[X] Yes [ ] No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (s. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
[ ] 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 | [ ] | |||
|
(Do not check if a smaller reporting company) |
Smaller reporting company | [X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
[X] Yes [ ] 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 May 13, 2015 | |
| Common Stock - $0.001 par value | 11,302,000 |
TABLE OF CONTENTS
| Form 10-Q - Q1 | Madison Technologies, Inc. | Page 2 |
MADISON TECHNOLOGIES INC.
interim Consolidated Financial Statements
MARCH 31, 2015
| Form 10-Q - Q1 | Madison Technologies, Inc. | Page 3 |
part I – financial information
MADISON TECHNOLOGIES INC.
(UNAUDITED)
Contents
| INTERIM CONSOLIDATED FINANCIAL STATEMENTS | |
| Interim Consolidated Balance Sheets | 4 |
| Interim Consolidated Statements of Operations | 5 |
| Interim Consolidated Statements of Stockholders’ Deficiency | 6 |
| Interim Consolidated Statements of Cash Flows | 7 |
| Notes to Interim Consolidated Financial Statements | 8 -13 |
| Form 10-Q - Q1 | Madison Technologies, Inc. | Page 4 |
INTERIM Consolidated Balance Sheets
(unaudited)
| March 31, 2015 | December 31, 2014 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | 23,374 | $ | 3,230 | ||||
| Total Assets | $ | 23,374 | $ | 3,230 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued liabilities | $ | 41,002 | $ | 30,456 | ||||
| Notes Payable and accrued interest - Note 4 | 105,961 | 107,300 | ||||||
| Convertible notes payable - Note 8 | 103,083 | 97,333 | ||||||
| Related party advance - Note 6 | 261 | 261 | ||||||
| TOTAL LIABILITIES | 250,307 | 235,350 | ||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Common Stock - Note 7 Par Value: $0.0001 Authorized 500,000,000 shares Issued and outstanding: 11,302,000 shares | 11,302 | 11,302 | ||||||
| Additional Paid in Capital | 224,600 | 199,600 | ||||||
| Accumulated other comprehensive loss | 126 | (2,746 | ) | |||||
| Accumulated deficit | (462,962 | ) | (440,276 | ) | ||||
| Total stockholders’ deficiency | (226,933 | ) | (232,120 | ) | ||||
| Total liabilities and stockholders’ deficiency | $ | 23,374 | $ | 3,230 | ||||
See Accompanying Notes to Interim Consolidated Financial Statements.
| Form 10-Q - Q1 | Madison Technologies, Inc. | Page 5 |
INTERIM Consolidated Statements of Operations
(UNAUDITED)
| For the three | For the three | |||||||
| months ended | months ended | |||||||
| March 31, 2015 | March 31, 2014 | |||||||
| Revenues | $ | - | $ | - | ||||
| Operating expenses | ||||||||
| General and administrative | 15,402 | 4,766 | ||||||
| 15,402 | 4,766 | |||||||
| Loss before other expense | (15,402 | ) | (4,766 | ) | ||||
| Other expense - interest | (7,283 | ) | (5,339 | ) | ||||
| Net loss | (22,685 | ) | (10,105 | ) | ||||
| Other Comprehensive income | ||||||||
| Translation gain | 2,873 | 1,244 | ||||||
| Total comprehensive loss | $ | (19,813 | ) | $ | (8,861 | ) | ||
| Net loss per share | ||||||||
| -Basic and diluted | $ | (0.002 | ) | $ | (0.001 | ) | ||
| Average number of shares of common stock outstanding | 11,302,000 | 11,302,000 | ||||||
See Accompanying Notes to Interim Consolidated Financial Statements.
| Form 10-Q - Q1 | Madison Technologies, Inc. | Page 6 |
INTERIM Consolidated StatementS of stockholders’ DEFICIency
(UNAUDITED)
| Additional | Accumulated | |||||||||||||||||||||||
| Common | Paid-in | Other | Accumulated | |||||||||||||||||||||
| Shares | Amount | Capital | Comprehensive | Deficit | Total | |||||||||||||||||||
| Balance December 31, 2013 | 11,302,000 | 11,302 | 174,600 | Income | (358,560 | ) | (178,472 | ) | ||||||||||||||||
| Foreign currency adjustments | - | - | 3,068 | - | 3,068 | |||||||||||||||||||
| Convertible debt - Note 8 | - | 25,000 | - | - | 25,000 | |||||||||||||||||||
| Net Loss, December 31, 2014 | - | - | - | (81,716 | ) | (74,262 | ) | |||||||||||||||||
| Balance December 31, 2014 | 11,302,000 | $ | 11,302 | $ | 199,600 | $ | (2,746 | ) | $ | (440,276 | ) | $ | (232,120 | ) | ||||||||||
| Foreign currency adjustments | - | - | 2,872 | - | 2,872 | |||||||||||||||||||
| Convertible debt - Note 8 | - | 25,000 | - | - | 25,000 | |||||||||||||||||||
| Net Loss, March 31, 2015 | - | - | - | (22,685 | ) | (22,685 | ) | |||||||||||||||||
| Balance March 31, 2015 | 11,302,000 | $ | 11,302 | $ | 224,600 | $ | 126 | $ | (462,962 | ) | $ | (226,933 | ) | |||||||||||
See Accompanying Notes to Interim Consolidated Financial Statements.
| Form 10-Q - Q1 | Madison Technologies, Inc. | Page 7 |
INTERIM Consolidated StatementS of cash flows
(UNAUDITED)
| For the three | For the three | |||||||
| months ended | months ended | |||||||
| March 31, 2015 | March 31, 2015 | |||||||
| Cash Flows from operating activities: | ||||||||
| Net loss | $ | (22,685 | ) | $ | (10,105 | ) | ||
| Amortization of convertible debt discount recorded as interest | 5,750 | 4,500 | ||||||
| Accrued interest on notes payable | 1,533 | 839 | ||||||
| Adjustments to reconcile net loss to cash used in operating activities | ||||||||
| Changes assets and liabilities | ||||||||
| Accounts payable and accruals | 10,546 | (3,876 | ) | |||||
| Net cash used in operating activities | (4,856 | ) | (8,642 | ) | ||||
| Cash Flows from financing activities: | ||||||||
| Notes payable | - | |||||||
| Proceeds of convertible notes payable | 25,000 | - | ||||||
| Related Party advances | - | - | ||||||
| Net Cash provided by financing activities | 25,000 | - | ||||||
| Net increase (decrease) in cash | 20,144 | (8,642 | ) | |||||
| Cash, beginning of period | 3,230 | 9,941 | ||||||
| Cash, end of period | $ | 23,374 | $ | 1,299 | ||||
| SUPPLEMENTAL DISCLOSURE | ||||||||
| Interest | $ | 7,282 | $ | 5,339 | ||||
| Taxes paid | $ | - | $ | - | ||||
See Accompanying Notes to Interim Consolidated Financial Statements
| Form 10-Q - Q1 | Madison Technologies, Inc. | Page 8 |
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015
| Note 1 | Interim Reporting |
While the information presented in the accompanying interim three months consolidated 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, 2014 annual consolidated 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, 2014 annual financial statements. Operating results for the three months ended March 31, 2015 are not necessarily indicative of the results that can be expected for the year ended December 31, 2015.
| 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 has been 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 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.
These consolidated 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 March 31, 2015, the Company had not yet achieved profitable operations, has accumulated losses of $462,962 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, however there is no assurance of additional funding being available.
| Form 10-Q - Q1 | Madison Technologies, Inc. | Page 9 |
| Note 3 | Summary of Significant Accounting Policies |
There have been no changes in accounting policies from those disclosed in the notes to the audited consolidated financial statements for the year ended December 31, 2014.
| Note 4 | Recent Accounting Pronouncements |
In June 2014, the Financial Accounting Standards Board (“FASB “) issued Accounting Standards Update (“ASU”) No. 2014-10 “Development Stage Entities. (Topic 915), Elimination of Certain Financial Reporting Requirements. The amendments in ASU 2014-10 remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from accounting principles generally accepted in the United States of America (“U.S. GAAP”). In addition, the amendments eliminate the requirements for development stage entities to: (i) present inception-to-date information in the statements of income, cash flows, and shareholder equity; (ii) label the financial statements as those of a development stage entity; (iii) disclose a description of the development stage activities in which the entity is engaged; and (iv) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The presentation and disclosure requirements in ASC Topic 915, “Development Stage Entities” are no longer required for interim and annual reporting periods beginning after December 15, 2014. The revised consolidation standards will take effect in annual periods beginning after December 15, 2015, however, early adoption is permitted. The Company has adopted the provisions of ASU 2014-10 for these financial statements.
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 | Notes 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 March 31, 2015, accrued interest on the note was $20,297 (March 31, 2014 - $18,297). The note payable balance including accrued interest was $45,297 as at March 31, 2015 (March 31, 2014 - $43,297). Interest on the debt for each of the years ended December 31 was $2,000. | ||
| b) | $26,423 ($30,000 CDN) with annual interest payable at 5% | |
| As at March 31, 2015, accrued interest on the note was $11,296 (March 31, 2014 - $10,185). The note payable balance including accrued interest was $33,218 as at March 31, 2015 (March 31, 2014 - $36,608). Interest on debt for the three months ended March 31 was $296 in 2015 and $339 in 2014. |
The company has an unsecured note payable on demand to Gens Incognito Inc. for $25.000. As at March 31, 2015, accrued interest on the note was $2,446 (March 31, 2014 - $0). The note payable balance including accrued interest was $27,446 as at March 31, 2015 (March 31, 2014 - $0)
| Form 10-Q - Q1 | Madison Technologies, Inc. | Page 10 |
| Note 6 | Related Party Advance |
In 2008 the President advanced the Company $561 repayable without interest or any other terms. The unpaid balance as at March 31, 2014 is $261. There were no related party transactions during the three months ended March 31, 2015.
| Note 7 | 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 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.)
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. These financial statements have been retroactively adjusted to effect this split.
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).
There are no shares subject to warrants, options or other agreements as March 31, 2015.
| Note 8 | Convertible Note Payable |
In total there are eight 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 on three different bases. The effect that conversion would have on earnings per share has not been disclosed due to the anit-dilutive effect.
There are four convertible notes payable convertible on the basis of $0.10 of debt to 1 common share.
The balance of the first convertible note payable convertible on the basis of $0.10 of debt to 1 common share is as follows:
| Mar 31, 2015 | Dec 31, 2014 | |||||||
| 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 | ||||
| Form 10-Q - Q1 | Madison Technologies, Inc. | Page 11 |
The total discount of $40,000 was amortized over 5 years starting April, 2008
The balance of the second convertible note convertible on the basis of $0.10 of debt to 1 common share is as follows:
| Mar 31, 2015 | Dec 31, 2014 | |||||||
| 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 | 19,000 | 18,000 | ||||||
| Balance, convertible note payable | $ | 19,000 | $ | 18,000 | ||||
The total discount of $20,000 is being amortized over 5 years starting June 2010. Accordingly, the annual interest rate is 20% and for the three months ended March 31, 2015 and 2014, $1,000 was recorded as interest expense. As at March 31, 2015, the unamortized discount is $1,000.
The balance of the third convertible note payable convertible on the basis of $0.10 of debt to 1 common share is as follows:
| Mar 31, 2015 | Dec 31, 2014 | |||||||
| 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 | 8,000 | 5,500 | ||||||
| Balance, convertible note payable | $ | 8,000 | $ | 5,500 | ||||
| Form 10-Q - Q1 | Madison Technologies, Inc. | Page 12 |
The total discount of $10,000 is being amortized over 5 years starting April, 2011. Accordingly, the annual interest rate is 20% and for the three months ended March 31, 2015 and 2014, $500 was recorded as interest expense. As at March 31, 2015, the unamortized discount is $2,000.
The balance of the fourth convertible note payable convertible on the basis of $0.10 of debt to 1 common share at is as follows:
| Mar 31, 2015 | Dec 31, 2014 | |||||||
| 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 | 10,000 | 8,750 | ||||||
| Balance, convertible note payable | $ | 10,000 | $ | 8,750 | ||||
The total discount of $25,000 will be amortized over 5 years starting April, 2013. Accordingly, the annual interest rate is 20% and for the three months ended March 31, 2014, $1,250 was recorded as interest expense. As at March 31, 2015 the unamortized discount is $15,000
.
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 convertible on the basis of $0.05 of debt to 1 common share is as follows:
| Mar 31, 2015 | Dec 31, 2014 | |||||||
| Balance | 2014 | |||||||
| 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 | 7,750 | 5,250 | ||||||
| Balance, convertible note payable | $ | 7,750 | $ | 5,250 | ||||
The total discount of $10,000 is being amortized over 5 years starting May, 2011. Accordingly, the annual interest rate is 20% and for the three months ended March 31, 2015 and 2014, $500 was recorded as interest expense. As at March 31, 2015, the unamortized discount is $2,250.
| Form 10-Q - Q1 | Madison Technologies, Inc. | Page 13 |
The balance of the second convertible note payable convertible on the basis of $0.05 of debt to 1 common share is as follows:
| Mar 31, 2015 | Dec 31, 2014 | |||||||
| 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 | 13,750 | 12,500 | ||||||
| Balance, convertible note payable | $ | 13,750 | $ | 12,500 | ||||
The total discount of $25,000 will be amortized over 5 years starting July, 2012. Accordingly, the annual interest rate is 20% and for the three months ended December 31, 2015 and 2014, $1,250 was recorded as interest expense. As at March 31, 2015 the unamortized discount is $11,250.
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:
| Mar 31, 2015 | Dec 31, 2014 | |||||||
| 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 | 4,583 | 3,333 | ||||||
| Balance, convertible note payable | $ | 4,583 | $ | 3,333 | ||||
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 three months ended March 31, 2014 $1,250 was recorded as interest expense. As at December 31, 2014 the unamortized discount was $20,417.
There is one convertible notes payable convertible on the basis of $0.15 of debt to 1 common share The balance of this convertible note payable is as follows:
| Mar 31, 2015 | Dec 31, 2014 | |||||||
| Balance | ||||||||
| Proceeds from promissory note | $ | 25,000 | $ | - | ||||
| Value allocated to additional paid-in capital | 25,000 | - | ||||||
| Balance allocated to convertible note payable | - | - | ||||||
| Amortized discount | - | - | ||||||
| Balance, convertible note payable | $ | - | $ | - | ||||
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 three months ended March 31, 2015 $0 was recorded as interest expense. As at March 31, 2015 the unamortized discount was $25,000
| Form 10-Q - Q1 | Madison Technologies, Inc. | Page 14 |
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.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation.
The following discussion of Madison’s financial condition, changes in financial condition and results of operations for the three months ended March 31, 2015 should be read in conjunction with Madison’s unaudited consolidated interim financial statements and related notes for the three months ended March 31, 2015.
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.
We intend to seek, investigate and, if such investigation warrants, acquire an interest in business opportunities presented to us by persons or firms which desire to seek the advantages of an issuer who has complied with the Securities Act of 1934 (the “1934 Act”). We will not restrict our search to any specific business, industry or geographical location, and we may participate in business ventures of virtually any nature.We are considered to be a “shell company”, which is a company with either no or nominal operations or assets, or assets consisting solely of cash and cash equivalents. An investment in the shares of a shell company should be considered highly illiquid given the resale restrictions that apply to them. This discussion of our proposed business is purposefully general and is not meant to be restrictive of our unlimited discretion to search for and enter into potential business opportunities. We anticipate that we may be able to participate in only one potential business venture because of our lack of financial resources.
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, 2015 and March 31, 2014
Our net loss for the three-month period ended March 31, 2015 was $22,685 (2014: $10,105), which consisted of general and administration expenses. We did not generate any revenue during either three-month period in fiscal 2015 or 2014. The increase in expenses in the current fiscal year relate to accounting, audit, and legal fees that we have incurred in connection with the filing obligations with both the SEC and with SEDAR in Canada.
The weighted average number of shares outstanding was 11,302,000 for the three-month period ended March 31, 2015 and 11,302,000 for the three-month period ended March 31, 2014.
| Form 10-Q - Q1 | Madison Technologies, Inc. | Page 15 |
Liquidity and Capital Resources
As at March 31, 2015, our current assets were $23,374 compared to $3,230 in current assets at December 31, 2014. As of March 31, 2015, our current liabilities were $250,307 compared to $235,350 at December 31, 2014. Current liabilities at March 31, 2015 were comprised of $105,961 in notes payable, $103,083 in convertible notes payable, $41,002 in accounts payable and $261 related party advance to our director.
Stockholders’ deficit decreased from $232,120 as of December 31, 2014 to $226,933 as of March 31, 2015.
As at, 2015, Madison had cash of $23,374 and a working capital deficit of $226,933, compared to cash of $3,230 and working capital deficit of $232,120 as at, 2014.
Net Cash Used in Operating Activities
Madison used cash of $4,856 in operating activities during the first three months of fiscal 2015 compared to cash used of $8,642 in operating activities during the same period in the previous fiscal year. The decrease in the operating activities was principally a result of an decrease in accounts payable and accruals.
Net Cash Provided (Used in) Investing Activities
Net cash used in investing activities was nil for the first three months of fiscal 2015 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 $25,000 for the first three months of fiscal 2015. Madison generated nil from financing activities during the first three months of fiscal 2014 from the proceeds of a note payable.
Plan of Operation
Our plan of operations is to raise debt and, or, equity to meet our ongoing operating expenses and attempt to merge with another entity with experienced management and opportunities for growth in return for shares of our common stock to create value for our shareholders. There can be no assurance that we will successfully complete these transactions. In particular there is no assurance that any such business will be located or that any stockholder will realize any return on their shares after such a transaction. Any merger or acquisition completed by us can be expected to have a significant dilutive effect on the percentage of shares held by our current stockholders. We believe we are an insignificant participant among the firms which engage in the acquisition of business opportunities. There are many established venture capital and financial concerns that have significantly greater financial and personnel resources and technical expertise than we have. In view of our limited financial resources and limited management availability, we will continue to be at a significant competitive disadvantage compared to our competitors.
We intend to seek, investigate and, if such investigation warrants, acquire an interest in business opportunities presented to us by persons or firms which desire to seek the advantages of an issuer who has complied with the Securities Act of 1934 (the “1934 Act”). We will not restrict our search to any specific business, industry or geographical location, and we may participate in business ventures of virtually any nature. This discussion of our proposed business is purposefully general and is not meant to be restrictive of our virtually unlimited discretion to search for and enter into potential business opportunities. We anticipate that we may be able to participate in only one potential business venture because of our lack of financial resources.
We may seek a business opportunity with entities which have recently commenced operations, or that desire to utilize the public marketplace in order to raise additional capital in order to expand into new products or markets, to develop a new product or service, or for other corporate purposes. We may acquire assets and establish wholly owned subsidiaries in various businesses or acquire existing businesses as subsidiaries; though no such opportunities have been identified at the time of this filing.
| Form 10-Q - Q1 | Madison Technologies, Inc. | Page 16 |
We expect that the selection of a business opportunity will be complex and risky. Due to general economic conditions, rapid technological advances being made in some industries and shortages of available capital, we believe that there are numerous firms seeking the benefits of an issuer who has complied with the 1934 Act. Such benefits may include facilitating or improving the terms on which additional equity financing may be sought, providing liquidity for incentive stock options or similar benefits to key employees, providing liquidity (subject to restrictions of applicable statutes) for all stockholders and other factors. Potentially, available business opportunities may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. We have, and will continue to have, essentially no assets to provide the owners of business opportunities. However, we will be able to offer owners of acquisition candidates the opportunity to acquire a controlling ownership interest in an issuer who has complied with the 1934 Act without incurring the cost and time required to conduct an initial public offering.
The analysis of new business opportunities will be undertaken by, or under the supervision of, our Board of Directors. We intend to concentrate on identifying preliminary prospective business opportunities which may be brought to our attention through present associations of our director, professional advisors or by our stockholders. In analyzing prospective business opportunities, we will consider such matters as (i) available technical, financial and managerial resources; (ii) working capital and other financial requirements; (iii) history of operations, if any, and prospects for the future; (iv) nature of present and expected competition; (v) quality, experience and depth of management services; (vi) potential for further research, development or exploration; (vii) specific risk factors not now foreseeable but that may be anticipated to impact the proposed activities of the Company; (viii) potential for growth or expansion; (ix) potential for profit; (x) public recognition and acceptance of products, services or trades; (xi) name identification; and (xii) other factors that we consider relevant. As part of our investigation of the business opportunity, we expect to meet personally with management and key personnel. To the extent possible, we intend to utilize written reports and personal investigation to evaluate the above factors.
We will not acquire or merge with any company for which audited financial statements cannot be obtained within a reasonable period of time after closing of the proposed transaction.
Management anticipates incurring the following expenses during the next 12 month period:
| ● | Management anticipates spending approximately $2,500 in ongoing general and administrative expenses per month for the next 12 months, for a total anticipated expenditure of $30,000 over the next 12 months. The general and administrative expenses for the year will consist primarily of professional fees for the audit and legal work relating to Madison’s regulatory filings throughout the year, as well as transfer agent fees, annual mineral claim fees and general office expenses. | |
| ● | Management anticipates spending approximately $15,000 in complying with Madison’s obligations as a reporting company under the Securities Exchange Act of 1934 and as a reporting issuer in Canada. These expenses will consist primarily of professional fees relating to the preparation of Madison’s financial statements and completing and filing its annual report, quarterly report, and current report filings with the SEC and with SEDAR in Canada. |
As at March 31, 2015, Madison had cash of $23,374 and a working capital deficit of $226,933. Accordingly, Madison will require additional financing in the amount of $248,599 in order to fund its obligations as a reporting company under the Securities Act of 1934 and its general and administrative expenses for the next 12 months.
During the 12 month period following the date of this report, management anticipates that Madison will not generate any revenue. Accordingly, Madison will be required to obtain additional financing in order to continue its plan of operations. Management believes that debt financing will not be an alternative for funding Madison’s plan of operations as it does not have tangible assets to secure any debt financing. Rather management anticipates that additional funding will be in the form of equity financing from the sale of Madison’s common stock. However, Madison does not have any financing arranged and cannot provide investors with any assurance that it will be able to raise sufficient funding from the sale of its common stock to fund its plan of operations. In the absence of such financing, Madison will not be able to acquire any interest in a new property and its business plan will fail. Even if Madison is successful in obtaining equity financing and acquire an interest in a new property, additional exploration on the mineral property will be required before a determination as to whether commercially exploitable mineralization is present. If Madison does not continue to obtain additional financing, it will be forced to abandon its business and plan of operations.
| Form 10-Q - Q1 | Madison Technologies, Inc. | Page 17 |
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.
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.
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
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls andprocedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of February 28, 2015. Based on that evaluation, our management concluded that our disclosure controls and procedures were effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Such officer also confirmed that there was no change in our internal control over financial reporting during the three-month period ended February 28, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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.
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.
| Form 10-Q - Q1 | Madison Technologies, Inc. | Page 18 |
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.
No report required.
(a) Index to and Description of Exhibits
All Exhibits required to be filed with the Form 10-Q are included in this quarterly report or incorporated by reference to Madison’s previous filings with the SEC, which can be found in their entirety at the SEC website at www.sec.gov under SEC File Number 000-51302.
| Exhibit | Description | Status | ||
| 3.1 | Articles of Incorporation, filed as an exhibit to Madison’s registration statement on Form 10-SB filed on May 4, 2005, and incorporated herein by reference. | Filed | ||
| 3.2 | By-Laws, filed as an exhibit to Madison’s registration statement on Form 10-SB filed on May 4, 2005, and incorporated herein by reference. | Filed | ||
| 31 | Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Included | ||
| 32 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | Included |
| 101.INS | XBRL Instance Document** | |
| 101.SCH | XBRL Taxonomy Extension Schema Document** | |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document** | |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document** | |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document** | |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document** |
** In accordance with Regulation S-T, the XBRL-formatted interactive data files that comprise Exhibit 101 in this Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed”.
| Form 10-Q - Q1 | Madison Technologies, Inc. | Page 19 |
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: May 13, 2015 | By: | /s/ Joseph Gallo |
| Name: | Joseph Gallo | |
| Title: | President and Chief Executive Officer | |
| (Principal Executive Officer) |
Exhibit 31
madison
Technologies, Inc.
CERTIFICATIONS PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, Joseph Gallo, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarter ending March 31, 2015 of Madison Technologies, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: May 13, 2015 | |
| /s/ Joseph Gallo | |
| Joseph Gallo Chief Executive Officer |
Exhibit 32
CERTIFICATION
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Madison Technologies, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph Gallo, President, Chief Executive Officer of the Company and a member of the Board of Directors, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| /s/ Joseph Gallo | |
| Joseph Gallo Chief Executive Officer May 13, 2015 |