NOTES
TO THE INTERIM FINANCIAL STATEMENTS
(Unaudited)
June
30, 2018
Note
1
Interim Reporting
While
the information presented in the accompanying interim six months financial statements is unaudited, it includes all adjustments,
which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows
for the interim periods presented in accordance with accounting principles generally accepted in the United States of America.
These interim financial statements follow the same accounting policies and methods of their application as the Company’s
December 31, 2017 annual financial statements. All adjustments are of a normal recurring nature. It is suggested that these interim
financial statements be read in conjunction with the Company’s December 31, 2017 annual financial statements. Operating
results for the six months ended June 30, 2018 are not necessarily indicative of the results that can be expected for the year
ended December 31, 2018.
Note
2
Nature and Continuance of Operations
The
Company was incorporated on June 15, 1998 in the State of Nevada, USA and the Company’s common shares are publicly traded
on the OTC Bulletin Board.
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. These financial
statements give retroactive effect to this change.
Effective
December 31, 2016, the Company dissolved its wholly owned subsidiary, Scout Resources Inc. (“Scout”) and assumed all
the debt that Scout owed.
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, the smokeless cannabis delivery agreement was terminated.
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 is 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.
On
March 11, 2015, the Company changed its name from Madison Explorations, Inc. to Madison Technologies Inc. and effected the stock
consolidation.
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, 2018, the Company had not yet achieved profitable operations, had accumulated losses of $506,830
since its inception and expects to incur further losses in the development of its business, all of which casts substantial doubt
about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is
dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations
and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to
address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related
party advances. That said, there is no assurance of additional funding being available.
Form 10-Q - Q2
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Madison Technologies Inc.
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Page
10
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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, 2017.
Note
4
Recent Accounting Pronouncements
The
Company adopts new pronouncements relating to generally accepted accounting principles applicable to the Company as they are issued,
which may be in advance of their effective date. Management does not believe that any pronouncement not yet effective but recently
issued would, if adopted, have a material effect on the accompanying financial statements.
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:
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1.
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$10,000
payable within seven days after the effective date;
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2.
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An
additional $15,000 payable within 30 days after the effective date; and
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3.
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A
final payment of $25,000 payable within 90 days of the effective date.
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At
June 30, 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 $44,740.
As
a result of the failure to make payments as required under the agreement, the Company was informed on March 20, 2017, that going
forward, the agreement would be on a non-exclusive basis.
Note
6
Demand Notes and Accrued Interest Payable
The
Company has three notes payable. Each note is unsecured and payable on demand.
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June 30, 2018
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December 31, 2017
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Note payable bearing interest at 8%
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$
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25,000
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$
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25,000
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Accrued interest there on
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26,797
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25,797
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51,797
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50,797
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Form 10-Q - Q2
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Madison Technologies Inc.
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Page
11
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June 30, 2018
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December 31, 2017
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Note payable bearing interest at 5%
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(Debt is Canadian $30,000)
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22,901
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23,809
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Accrued interest there on
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12,882
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12,798
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35,783
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36,607
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Note payable bearing at 12%
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25,000
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25,000
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Accrued interest there on
|
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12,186
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10,690
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37,186
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35,690
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Total debt and interest payable
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$
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124,766
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$
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123,094
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Interest accrued during the period
on the note bearing 8% interest was $500 as at Jun 30, 2018 (2017 - $500).
Interest accrued during the period
on the note bearing 5% interest was $286 as at June 30, 2018 (2017 - $288).
Interest accrued during the period
on the note bearing 12% interest was $748 as at June 30, 2018 (2017 - $748).
Note
7
Convertible Notes Payable
As
at June 30, 2018, there are seven convertible notes payable. Two notes were converted into shares during the year ended December
31, 2017 and two notes were converted into shares during the period ended March 31, 2018. All notes are non-interest bearing,
unsecured and payable on demand. The remaining notes are convertible into common stock at the discretion of the holder at five
different conversion rates: $0.01 debt to 1 common share, $0.005 to 1 common share; $0.15 to 1 common share; $0.05 to 1 common
share; and $0.04 to 1 common share. The effect that conversion would have on earnings per share has not been disclosed due to
the anti-dilutive effect. A recap of convertible debt outstanding based on conversion rates is as follow:
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June 30, 2018
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December 31, 2017
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Convertible at $0.01 debt to 1 common share
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$
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85,000
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$
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110,000
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Convertible at $0.005 debt to 1 common share
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10,000
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20,000
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Convertible at $0.015 debt to 1 common share
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25,000
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25,000
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Convertible at $0.05 debt to 1 common share
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21,000
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21,000
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Convertible at $0.04 debt to 1 common share
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20,000
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20,000
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$
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161,000
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$
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196,000
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Form 10-Q - Q2
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Madison Technologies Inc.
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Page
12
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Note
8
Related Party Advance
In 2008, the President advanced
the Company $561 repayable without interest or any other terms. The unpaid balance as at June 30, 2018 is $261. There were no related
party transactions during the period ended June 30, 2018 or the year ended December 31, 2017.
Note
9
Common Stock
On
March 2, 2018, the Company completed a private placement of 150,000 shares of common stock at a per share price of $0.10 for gross
proceeds of $15,000. As of the date of this report, the shares have not been issued.
On
February 16, 2018, the Company completed a private placement of 150,000 shares of common stock at a per share price of $0.10 for
gross proceeds of $15,000. As of the date of this report, the shares have not been issued.
On
January 25, 2018, two convertible notes were converted into shares. One note for $25,000 was converted into 2,500,000 shares at
$0.01 per share and the other note for $10,000 was converted into 2,000,000 shares at $0.005 per share.
On
January 21, 2018, 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
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 shares 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, 2018.