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, 2016 should be read in conjunction with Madison’s unaudited consolidated interim financial
statements and related notes for the three months ended March 31, 2016.
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, 2016 and March 31, 2015
Our
net loss for the three-month period ended March 31, 2016 was $13,296 (2015: $22,685), which consisted of general and administration
expenses. We did not generate any revenue during either three-month period in fiscal 2016 or 2015. The decrease in expenses in
the current fiscal year relate to a reduction in accounts payable and accruals.
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The
weighted average number of shares outstanding was 11,302,000 for the three-month period ended March 31, 2016 and 11,302,000 for
the three-month period ended March 31, 2015.
Liquidity
and Capital Resources
Cash
and Working Capital
As
at, 2016, Madison had cash of $2436 and a working capital deficit of $281,210, compared to cash of $501 and working capital deficit
of $265,750 as at December 31, 2015.
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
its exploration programs 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, excluding mineral property acquisition cost, those direct costs and expenses of data gathering and
mineral exploration, should Madison be unable to do so. To implement its business plan, Madison will need to secure financing
for its business development. Madison currently has no source for funding at this time.
If
Madison is unable to raise additional funds to satisfy its reporting obligations, investors will no longer have access to current
financial and other information about its business affairs.
Net
Cash Used in Operating Activities
Madison
used cash of $65 in operating activities during the first three months of fiscal 2016 compared to cash used of $4,856 in operating
activities during the same period in the previous fiscal year. The decrease in the operating activities was principally a result
of a 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 2016 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 nil for the first three months of fiscal 2016. Madison generated $25,000 from
financing activities during the first three months of fiscal 2015 from the proceeds of a convertible 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.
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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.
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:
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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.
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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.
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As
at March 31, 2016, Madison had cash of $436 and a working capital deficit of $281,210. Accordingly, Madison will require additional
financing in the amount of $325,774 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.
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.