10-Q: Madison Technologies Faces Going Concern Doubt

Madison Technologies Inc. reported a continued lack of revenue and a significant working capital deficit, raising substantial doubt about its ability to continue as a going concern.

Summary

• Madison Technologies Inc. filed its Form 10-Q for the quarter ended June 30, 2026.
• The company generated no revenue from operations during the period.
• A net loss of $1,273,981 was reported for the six months ended June 30, 2026, compared to $1,427,959 for the same period in 2025.
• The company has a working capital deficit of $24,572,149 and an accumulated deficit of $35,912,731.
• Management expresses substantial doubt about the company's ability to continue as a going concern.
• The company's ability to continue depends on raising additional capital, support from its largest shareholder, and strategic initiatives.
• General and administrative expenses and professional fees decreased due to fewer SEC filings compared to the prior year.
• Interest expense also decreased, contributing to the reduction in net loss.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing as highly negative due to the company's continued lack of revenue, significant accumulated deficit, and substantial doubt about its ability to continue as a going concern, despite some operational expense reductions.

Positives

• General and administrative expenses decreased to $87,968 for the six months ended June 30, 2026, from $101,022 in the prior year.
• Professional fees decreased to $82,664 for the six months ended June 30, 2026, from $137,174 in the prior year.
• Interest expense decreased to $1,103,350 for the six months ended June 30, 2026, from $1,189,763 in the prior year.
• Net loss decreased to $1,273,981 for the six months ended June 30, 2026, from $1,427,959 in the prior year.

Negatives

• The company generated no revenues from operations for the period ended June 30, 2026.
• A working capital deficit of $24,572,149 exists as of June 30, 2026.
• An accumulated deficit of $35,912,731 exists as of June 30, 2026.
• Management has identified material weaknesses in internal control over financial reporting, including lack of a functioning audit committee and inadequate segregation of duties.
• The company has $Nil in cash as of June 30, 2026.
• The remaining principal balance of senior secured notes and accrued interest are in default.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern.
• The company may not be able to secure additional financing on favorable terms, or at all.
• Issuance of equity securities to raise funds may result in dilution for existing stockholders.
• Material weaknesses in internal control over financial reporting could lead to misstatements in financial statements.
• The remaining principal balance of senior secured notes and accrued interest are in default.

Future Outlook

The company's ability to continue as a going concern is dependent on its ability to raise additional capital through equity or debt, ongoing support from its largest shareholder, and the execution of strategic initiatives such as amalgamation. Management expects to raise additional capital through the issuance of equity or debt securities and the continued execution of its business plan. Future uses of cash are expected to include continuing operations, rolling out its business plan, and repayment of notes payable that are not converted or renegotiated.

Management Comments

• It is managements opinion that these matters raise substantial doubt about our ability to continue as a going concern for a period of twelve months from the issuance date of these consolidated financial statements.
• Our ability to continue as a going concern is dependent upon managements ability to raise additional capital as needed from the sales of stock or debt, ongoing support from the Companys largest shareholder, potential amalgamation or similar strategies that management is working on and to further implement our business plan.
• Management believes that the continued financial support from Arena demonstrates the shareholders commitment and provides the Company with sufficient liquidity to continue operations for the foreseeable future.

Industry Context

StockSavvy.ai notes that Madison Technologies operates in a challenging environment, characterized by a lack of revenue and significant financial distress, as evidenced by its going concern warnings and material weaknesses in internal controls. This situation is common among early-stage or distressed companies seeking to restructure or find new funding, often relying heavily on shareholder support and strategic maneuvers like amalgamations.

Management Changes

Corporate Governance

Legal Proceedings

• Agile Capital Funding LLC filed a Confession of Judgment stating that Sovryn Holdings Inc. and Madison Technologies Inc. owe approximately $190,444 as of February 17, 2024. Management believes this obligation pertains to Sovryn prior to its sale and that Madison has no obligation.

Related Party Transactions

• As of June 30, 2026, $1,008,244 was due to a principal shareholder. These amounts were received for working capital, are unsecured, non-interest bearing, and payable on demand.

Stakeholder Impact

• Existing shareholders may experience dilution if equity securities are issued to raise additional funds.
• Creditors and noteholders face risks due to the company's going concern issues and defaults on senior secured notes.
• The lack of revenue and financial instability poses a significant risk to all stakeholders.

Next Steps

• Raise additional capital through the issuance of equity or debt securities.
• Continue to implement the business plan.
• Pursue potential strategic initiatives, including amalgamation or similar transactions.
• Address material weaknesses in internal control over financial reporting by appointing additional outside directors and implementing improved policies and procedures.

Key Dates

Recommendation

The company exhibits severe financial distress with zero revenue, a significant accumulated deficit, and persistent going concern issues. Material weaknesses in internal controls and defaults on senior secured notes further exacerbate the risk profile. Without a clear path to revenue generation or successful capital raises, the outlook remains highly unfavorable for investors.

Keywords

going concern, net loss, working capital deficit, accumulated deficit, financial statements, internal controls, debt default, capital raise