UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☑     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the Quarterly Period Ended October 31, 2014

or

☐     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 333-191443

CLONE ALGO TECHNOLOGIES INC.

(FORMERLY KNOWN AS TRAVELSAFE, INC.)

(Exact name of registrant as specified in its charter)

 3753 Howard Hughes Parkway, Suite 200, Las Vegas, NV 89169-0952

 (Address of principal executive offices)(Zip Code)

844-256-6325

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

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 (§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 filer. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in rule 12b-2 of the Exchange Act.

(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 ☐ No ☑

As of December 12, 2014, the registrant had 94,150,000 shares of its common stock outstanding.

CLONE ALGO TECHNOLOGIES INC.

(FORMERLY KNOWN AS TRAVELSAFE, INC.)

 QUARTERLY REPORT ON FORM 10-Q

October 31, 2014

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1 - Financial Statements

CLONE ALGO TECHNOLOGIES INC.

(FORMERLY KNOWN AS TRAVELSAFE, INC.)

CONDENSED BALANCE SHEETS

The accompanying notes are an integral part of these unaudited condensed financial statements.

CLONE ALGO TECHNOLOGIES INC.

(FORMERLY KNOWN AS TRAVELSAFE, INC.)

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

The accompanying notes are an integral part of these unaudited condensed financial statements.

CLONE ALGO TECHNOLOGIES INC.

(FORMERLY KNOWN AS TRAVELSAFE, INC.)

CONDENSED STATEMENT OF CASH FLOWS

(UNAUDITED)

The accompanying notes are an integral part of these unaudited condensed financial statements.

CLONE ALGO TECHNOLOGIES INC.

(FORMERLY KNOWN AS TRAVELSAFE, INC.)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

OCTOBER 31, 2014

CLONE ALGO TECHNOLOGIES INC.

(FORMERLY KNOWN AS TRAVELSAFE, INC.)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

OCTOBER 31, 2014

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and related notes included under Part I, Item 1 of this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements about our business and operations. Our actual results may differ materially from those we currently anticipate.

Plan of Operations

We have commenced limited operations and our proposed business plan is not yet fully operational. We are finalizing our business plan and obtained our first two customers in a span of one and one-half months.

On September 24, 2014, John Fahlberg (the “Seller”) and Nakul Gupta and Oksana Murarova (the “Purchasers”) entered into and closed a Stock Purchase Agreement (the “Stock Purchase Agreement”), whereby the Purchasers purchased from the Seller an aggregate of 5,000,000 shares of common stock, par value $0.00001 per share (the “Shares”) of the Clone Algo Technologies Inc. (f/k/a) Travelsafe, Inc. (the “Company”) for an aggregate purchase price of $280,000 (the “Purchase Price”). The Shares represented approximately 84% of the issued and outstanding shares of the Company. Prior to the closing of the Stock Purchase Agreement, the Seller was the sole officer and director of the Company, as well as the Company’s majority shareholder.

In connection with the closing of the Stock Purchase Agreement, on September 24, 2014, John Fahlberg submitted to the Company a resignation letter pursuant to which he resigned from his position as officer and member of the Board of Directors of the Company. Mr. Fahlberg’s resignation was not a result of any disagreements relating to the Company’s operations, policies or practices. On September 24, 2014, the board of directors of the Company (the “Board”) and the majority stockholders of the Company (the “Shareholders”) accepted the resignation of Mr. Fahlberg and, contemporaneously appointed (i) Nakul Gupta to serve as the Chief Executive Officer, Chief Financial Officer and member of the Board of Directors; and (ii) Oksana Murarova to serve as the Secretary, Treasurer, and member of the Board of Directors. In addition, the Company amended its Articles of Incorporation and (a) changed its name from “Travelsafe, Inc.” to “Clone Algo Technologies Inc.”; (b) increased its authorized number of shares of common stock from 250 million to 3 billion; (c) increased its authorized number of shares of preferred stock from 10 million to 200 million; (d) increased the par value of its shares of common stock from $0.00001 to $0.001; and (e) increased the par value of its shares of preferred stock from $0.00001 to $0.001.

On September 29, 2014, the Company entered into a one year agreement with Tradeology Ltd. (“Tradeology”) for Tradeology to provide technical services and support for maintaining its intellectual property platform and computer servers. The agreement is effective October 1, 2014, and is renewable for an additional year unless either party gives a written notice to the other party not to renew the agreement at least sixty days prior to the renewal date. Pursuant to the terms of the agreement, the Company agreed to pay $400,000 annually for maintaining its intellectual property platform and computer servers. During the three months ended October 31, 2014, the Company prepaid $220,000 of this $400,000. Mr. Niraj Goel owns more than 50% of Tradeology and also, via his control of Strategyland Research Limited, controls the Company. Mr. Goel owns more than 50% of Strategyland Research Limited and is a member of its board of directors.

On September 29, 2014, the Company and a third party Strategyland Research Limited (Strategyland) entered into an Intellectual Property Transfer Agreement (the “Agreement”). Pursuant to the Agreement, Strategyland sold all of its rights, title and interest in and to the following assets, properties and rights: (a) the BookSmooth Trademark and the BookSmooth Domain Name; (b) all of the goodwill related to the Strategyland’s rights, title and interest to the BookSmooth Trademark and the BookSmooth Domain Name; (c) the BookSmooth Mobile APP complete with manuals; and (d) the BookSmooth Mobile APP Source codes (collectively, the “Intellectual Property”). Strategyland paid a cash consideration of $176,000 to the Company in consideration for the purchase of 88 million shares of Company’s common stock and sale of the Intellectual Property. The shares represent approximately 93.67% of the total issued and outstanding shares of the Company. This resulted in a change of control of the Company with Strategyland Research Limited becoming the majority shareholder of the Company.

The Company plans on launching, in the coming weeks, a new mobile application called “YAY.” This APP will eventually allow users to: 1) make free phone calls to other users; 2) chat and send photos for free to other users; 3) get pre-approved for loans; 4) share pictures and videos on our social networking service; 5) sell items to other users; 6) sell items on a wholesale basis to other users who are retailers; 7) reserve hotel rooms and travel packages; and 8) obtain discounts from our partners.

We are a technology company specializing in developing algorithms based on artificial intelligence and operate social investment networks. The Company ushers the social trading revolution and helps the users create passive income by cloning algorithms which automatically trade forex, shares, gold and CFDs to the account holder’s brokerage account. Our development efforts have been focused primarily on the development and marketing of our business model. In addition, to date we have limited operating history for investors to evaluate the potential of our business development. As such, we have not built our customer base or our brand name.

Results of Operation

We have conducted minimal operations during the three months ended October 31, 2014, and we have recorded $110,000 in revenues for developing software applications for our customers during this period as compared to $0 in revenues for the same comparable period in 2013.  We recorded maintenance cost of our intellectual property infrastructure and computer servers as cost of sales of $33,333 for the three months ended October 31, 2014 as compared to $0 for the same comparable period in 2013.

Liquidity and Capital Resources

Cash and cash equivalents were $987,424 at October 31, 2014 compared to $16,224 at July 31, 2014. The Company recorded $110,000 in accounts receivables, $186,667 in prepaid infrastructure expense and $5,050 in prepaid expenses at October 31, 2014.

Management expects the Company’s expenses will continue to increase during the foreseeable future as a result of increased operational expenses and the development of additional software APPs. The Company anticipates earning revenues over the next twelve months from software development of customized applications, however, it may be dependent on the proceeds from future debt or equity investments to sustain its operations and implement its business plan. If the Company is unable to raise sufficient capital, it will be required to delay or forego some portion of its business plan, which may have an effect on its anticipated results from operations and financial condition. There is no assurance that the Company will be able to obtain necessary amounts of capital or that its estimates of capital requirements will prove to be accurate.

The Company presently does not have any significant credit available, bank financing or other external sources of liquidity. Its current operations and capital raise have been a source of liquidity, however, the Company will need to obtain additional capital in order to expand its operations and continue being profitable. In order to obtain capital, the Company may need to sell additional shares of its common stock or borrow funds from private lenders. There can be no assurance that it will be successful in obtaining additional funding.

To the extent that the Company has raised additional capital through the sale of equity, the issuance of such securities may result in dilution to existing stockholders. If additional funds are raised through the issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of common stock and the terms of such debt could impose restrictions on the Company’s operations. Regardless of whether the cash assets prove to be inadequate to meet the Company’s operational needs, it may seek to compensate providers of services by issuance of stock in lieu of cash, which may also result in dilution to existing shareholders. Even if the Company is able to raise the funds required, it is possible that it could incur unexpected costs and expenses, fail to collect significant amounts owed, or experience unexpected cash requirements that would force the Company to seek alternative financing.

Management has been successful in the past in raising capital, however, no assurance can be given that these sources of financing will continue to be available to us and/or that demand for our equity/debt instruments will be sufficient to meet our capital needs, or that financing will be available on terms favorable to us. If funding is insufficient at any time in the future, the Company may not be able to take advantage of business opportunities or respond to competitive pressures, or may be required to reduce the scope of its planned service development and marketing efforts, any of which could have a negative impact on our business and operating results.

The following detailed information summarizes the key components of our cash flows for the three months ended October 31, 2014. To date, we have financed our growth from our operations and through the sale of our stock. Our primary use of cash has been for legal, accounting and consulting fees. The following trends are reasonably likely to result in a material decrease in our liquidity over the near to long term:

Operating Activities

Financing Activities

Net cash provided by financing activities was $1,245,129 for the three months period ended October 31, 2014 primarily due to contributed capital by former officer of $3,475 and cash received from sales of stock of $1,246,000, which was offset by cash paid for loan to related party of $4,346.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, sales or expenses, results of operations, liquidity or capital expenditures, or capital resources that are material to an investment in our securities.

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements which we have prepared in accordance with U.S. generally accepted accounting principles. In preparing our financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We have identified the following accounting policies that we believe require application of management’s most subjective judgments, often requiring the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Our actual results could differ from these estimates and such differences could be material.

While our significant accounting policies are described in more detail in Note 2 of our financial statements for the period ended October 31, 2014, we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our financial statements.

Cash and Cash Equivalents 

For purposes of reporting within the statement of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.

Revenue Recognition

The Company recognizes revenues when persuasive evidence of an arrangement exists; delivery has occurred; price is fixed or determinable; and collectability of the related receivable is reasonably assured. The Company closely follows the provisions of Financial Accounting Standards Board Accounting Standards Codification (ASC) 605 “Revenue Recognition”, which includes the guidelines of Staff Accounting Bulletin No. 104 as described above.

Earnings (Loss) Per Common Share

Income Taxes 

The Company accounts for income taxes under ASC Topic 740, income taxes (“ASC Topic 740”). Under ASC Topic 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC Topic 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Recent Accounting Pronouncements

The Company qualifies as an “emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. As an emerging growth company, we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. Except for the early adoption of ASU 2014-10, as discussed above, we have elected to take advantage of the benefits of this extended transition period.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern. The new standard required management of public and private companies to evaluate whether there is substantial doubt about the entity's ability to continue as a going concern and, if so, disclose that fact. Management will also be required to evaluate and disclose whether its plans alleviate that doubt. The new standard is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early adoption is permitted. The Company does not expect the adoption of the ASU to have a significant impact on our consolidated financial statements.

The Company has implemented all new accounting pronouncements that are in effect and that may impact its unaudited condensed financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable because we are a smaller reporting company.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are not effective as of October 31, 2014 to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure for the reason described below.

Because of our limited operations we have a small number of employees which prohibits a segregation of duties. In addition, we lack a formal audit committee with a financial expert. As we grow and expand our operations we will engage additional employees and experts as needed. However, there can be no assurance that our operations will expand.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

Item 1A. Risk Factors

Not required for smaller reporting companies.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On September 29, 2014, the Company entered into an Intellectual Property Transfer Agreement with Strategyland Research Limited to acquire the seller’s rights, title and interest in and to the following assets, properties and rights: (a) the BookSmooth Trademark and the BookSmooth Domain Name; (b) all of the goodwill related to the seller’s rights, title and interest to the BookSmooth Trademark and the BookSmooth Domain Name; (c) the BookSmooth Mobile APP complete with manuals; and (d) the BookSmooth Mobile APP Source codes. In addition, the seller paid a cash consideration of $176,000 to the Company. In consideration of the sale of the Intellectual Property, the Company agreed to issue 88,000,000 shares of its common stock to the seller.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.

(1) Incorporated by reference to Exhibit 3.1 to the Current Report to Form 8-K filed with the SEC on September 30, 2014.

(2) Incorporated by reference to Exhibit 10.1 to the Current Report to Form 8-K filed with the SEC on September 30, 2014.

(3) Incorporated by reference to Exhibit 10.1 to the Current Report to Form 8-K filed with the SEC on November 12, 2014.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: December 12, 2014

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