SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-QSB

               Quarterly Report Pursuant to Section 13 or 15(d) of
                       The Securities Exchange Act of 1934

                 For the quarterly period ended: March 31, 1998

                        Commission File number: 0-114244

                          WHITE CLOUD EXPLORATION, INC.
             (Exact name of registrant as specified in its charter)

UTAH                                                          84-0959153
---------------------------------                      ------------------------
State or Other Jurisdiction                            (I.R.S. Employer
of incorporation or organization)                       Identification Number)

116 STANYAN, SAN FRANCISCO, CALIFORNIA                        94118
-------------------------------------------------------------------------------
(Address of principal Executive Offices                       Zip Code)

Registrant's telephone number, including area code: 415-387-3135

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  period that the  registrant  was
required  to file  such  reports),  and  (2)  has  been  subject  to the  filing
requirements for at least the past 90 days.

                                            Yes  X       No   ____

As of March 31, 1998, there were 15,030,245  outstanding shares of common stock,
par value $.0001.


<PAGE>



PART 1.           FINANCIAL INFORMATION

         ITEM 1.           FINANCIAL STATEMENTS

                                           WHITE CLOUD EXPLORATION, INC.
                                            Consolidated Balance Sheet
                                                    (Unaudited)

                                              March 31,         December 31
                                                   1998              1997
ASSETS
Current Assets
Cash                                               5,707             59,147
Accounts Receivable                              183,066            137,454
Less Allow for Doubtful Accts                    (58,434)           (53,325)
                                             -----------------------------------
                                                 130,339            143,276
Inventory                                        162,000            162,000
                                             -----------------------------------
Total Current Assets                             292,339            305,276

Fixed Assets
Property, Plant & Equipment                       30,859             17,905
Less accumulated Depreciation                    (11,753)            (5,653)
                                              ----------------------------------
Total Fixed Assets                                19,106             12,252

Other Assets
Due from member                                        -             27,935
Other Assets                                           -             16,853
                                               ---------------------------------
Total Other Assets                                     0             44,788
                                               =================================

Total Assets                                    $311,445           $362,316




<PAGE>



LIABILITIES & STOCKHOLDERS' EQUITY

Current Liabilities
Accrued Expenses                                 200,000           $200,157
Accounts Payable                                 331,571            319,983
Interest Payable                                  23,005             25,668
Due to Stockholders                              316,424            307,424
Due to Member                                     44,349             55,537
Line of Credit                                    43,377             54,968
Notes Payable                                    450,000            450,000
                                              ----------------------------------
Total Current Liabilities                      1,408,727          1,413,737

Stockholders' Equity (Deficit)
Preferred Stock, no par value 10,000,000
shares authorized no shares issued
or outstanding.                                        -                  -
Common Stock, $0.001 par value,
50,000,000 shares authorized
 15,030,245 shares issued and outstanding.        15,030             15,030
Additional Paid in Capital                       989,502            989,502
Accumulated Deficit                           (2,101,814)        (2,055,953)
                                              ----------------------------------

Total Stockholders' Deficit                   (1,097,282)        (1,051,421)
                                              ----------------------------------

Total Liabilities & Stockholders' Deficit       $311,445           $362,316
                                              ==================================






     The accompanying notes are an integral part of this financial statement




<PAGE>



                           WHITE CLOUD EXPLORATION, INC.
                  Consolidated Statement of Income and Expense
                                    (Unaudited)


For the three months ended March 31,

                                            1998              1997
                                    ----------------------------------


OPERATING REVENUES
Revenues                                    $198,397          ($59,953)
Cost of goods sold                            22,972            81,784
                                    ----------------------------------

Gross profit                                 175,426          (141,737)

OPERATING EXPENSES
Royalties                                          -            56,250
Research & development                        23,955           621,563
Selling expenses                              27,479               950
Professional fees                             20,561             7,635
General & Administrative                       6,937             6,795
Marketing                                      1,250                 -
Commitment/Loan fees                               -                 -
                                    ----------------------------------

Total operating expense                       80,182           693,193
                                    ----------------------------------

OPERATING PROFIT (LOSS)                       95,244          (834,929)

OTHER (REVENUES) &
EXPENSES
Interest expense                               4,268             5,764
Miscellaneous income                          (1,691)                -
Loss on sale of receivables                  138,528                 -
                                    ----------------------------------

Total other revenues & expenses              141,105             5,764

NET INCOME (LOSS)                            (45,861)         (840,693)
                                    ==================================

LOSS PER SHARE
Primary                                        (0.00)            (0.06)

Weighted number of shares outstanding     15,030,245        15,030,245


     The accompanying notes are an integral part of this financial statement



<PAGE>



                          WHITE CLOUD EXPLORATION, INC.
                      Consolidated Statement of Cash Flows
                                   (Unaudited)
                                                         Quarter Ended
                                                             March 31

                                                     1998              1997
                                                     ----------------------
Cash flows from
Operating Activities

Net income (loss)                                    (45,861)         39,621

Depreciation & amortization
(Increase) decrease in Accts Receivable              (40,503)       (168,002)
(Increase) decrease in Inventory                           0          (7,980)
(Decrease) increase in Accrued Expenses                 (157)           (231)
(Decrease) increase in Accts Payable                  11,588         (40,269)
(Decrease) increase in Interest Payable               (2,663)              0

Net cash flows used for Operating Activities         (77,596)       (176,861)

Cash flows from investing activities
(Purchase) sale of Fixed Assets                      (12,954)        (15,768)
(Purchase) sale of Other Assets                       50,889         124,166
                                                     -------------------------
Total cash used for investing                         37,935         108,398

Cash flows from financing activities
(Decrease) increase in Due to Stockholders             9,000          67,500
(Decrease) increase in Due to Member                 (11,188)         12,884
(Decrease) increase in Line of Credit                (11,591)        (34,007)
(Decrease) increase in Notes Payable                       0               0
Additional capital invested                                0           8,610
                                                     -------------------------

Total cash from financing activities                 (13,779)         54,987

Increase (Decrease) in cash                          (53,440)        (13,476)
                                                     -------------------------

Cash and cash equivalents -
  beginning of period                                 59,147          13,961
                                                     -------------------------

Cash and cash equivalents -
  end of period                                        5,707             485
                                                     =========================


     The accompanying notes are an integral part of this financial statement



<PAGE>



                          WHITE CLOUD EXPLORATION, INC.
                        STATEMENT OF STOCKHOLDER'S EQUITY
                                 MARCH 31, 1998

                                           ADDITIONAL                    TOTAL
                                              PAID-IN ACCUMULATED  STOCKHOLDER'S
                             COMMON STOCK     CAPITAL     DEFICIT       EQUITY
                      ----------------------------------------------------------
                           Shares  Amount
Balance at 
December 31, 1994          56,710     $57     $75,925   ($102,487)     ($26,505)

Issuance of common
stock for cash            156,000     156      77,844                    78,000

Net loss for year ended
Dec 31, 1995                                              (89,906)      (89,906)
                      ----------------------------------------------------------

Balance at
December 31, 1995         212,710     213     153,769    (192,393)      (38,411)

Issuance of common 
stock for cash             14,362      14     342,986                   343,000

Capital contribution                          250,000                   250,000

Net loss for year 
ended Dec 31, 1996                                       (895,058)     (895,058)
                     -----------------------------------------------------------

Balance at
December 31, 1996         227,072     227    746,305   (1,087,451)     (340,919)

Issuance of common 
stock for cash                  -       -          -            -             -

Capital contribution                         250,000                    250,000

Issuance of common 
stock for services
& repayment of debt to
related party              43,290       43     7,457                      7,500

Issuance of common
stock in conjunction
with merger            14,759,883   14,760   (14,760)

Net loss for year
ended Dec 31, 1997                                       (968,502)     (968,502)
                     -----------------------------------------------------------

Balance at
December 31, 1997      15,030,245   15,030   989,502   (2,055,953)   (1,051,421)

Net loss for quarter
March 31, 1998                                            (45,861)      (45,861)
                     -----------------------------------------------------------
Balance at 
March 31, 1998         15,030,245  $15,030   989,502  ($2,101,814)  ($1,097,282)
                     ===========================================================


     The accompanying notes are an integral part of this financial statement



<PAGE>



WHITE CLOUD EXPLORATION, INC.
NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization-  White Cloud  Exploration,  Inc. (the Company) was incorporated in
the State of Utah on July 22, 1983, for the purpose of obtaining capital to seek
potentially profitable business opportunities.  Since inception, the Company has
been engaged in  organizational  activities.  The Company acquired two entities,
Watchout,  a California  Corporation,  and  Goldpoint  International,  a limited
liability company. White Cloud Exploration,  Inc. changed its year-end from June
30 to December 31.

The Watchout Agreement was entered into effective May 30, 1997, and the Watchout
Acquisition  consummated  pursuant  thereto  effective  as of December 29, 1997.
Pursuant to the Watchout Agreement,  the shareholders of Watchout contributed to
the company all of  Watchout's  common stock for an aggregate  consideration  of
11,296,300  shares of the company  common  stock.  The company  owns 100% of the
issued and  outstanding  shares of Watchout.  Watchout  designs,  develops,  and
intends  to  market  worldwide   watches  and  other  consumer  goods  utilizing
proprietary colored liquid crystal display technology.

The  Goldpoint  Agreement  entered  into  contemporaneously  with  the  Watchout
Agreement and the Goldpoint  Acquisition was considered  contemporaneously  with
the  consummation  of  the  Watchout  acquisition.  Pursuant  to  the  Goldpoint
Agreement,  the members of Goldpoint  contributed to the company an aggregate of
100% of the equity  interests in Goldpoint  for an  aggregate  consideration  of
2,140,000  shares of the company's  common  stock.  As a result of the Goldpoint
Acquisition,  the company owns 100% of the outstanding  membership  interests in
Goldpoint. Goldpoint designs and markets fine writing instruments.

2. GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization-Watchout,   a  California  corporation,   is  a  development  stage
enterprise  engaged in the  development  of fashion  watches.  Watchout plans to
develop, manufacture and sell watches and personal accessories worldwide.

Goldpoint International,  LLC, A Delaware limited liability company, designs and
markets fine writing instruments.

Property and Equipment- Property and equipment are stated at cost.  Depreciation
is computed using the  double-declining  balance  method over  estimated  useful
lives of 5 years.

Other Assets- Other assets consists of organizational costs and trademarks which
have been capitalized and are being amortized over 5 and 40 years, respectively,
using the straight-line method.




<PAGE>



WHITE CLOUD EXPLORATION, INC.
NOTES TO FINANCIAL STATEMENTS


Research and  Development-  Research  and  development  costs are expensed  when
incurred.

Income Taxes- No provision  have been made for income taxes.  As of December 31,
1997, the company had net operating loss (NOL)  carryforwards for federal income
tax purposes of approximately $2,055,900. These net-operating losses may be used
to offset future taxable income. Unused carryforwards will expire in 2012.

Uses of Estimates- The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the reported  activities  during the  reporting  period.  Actual
results may differ from those estimates.

3. RELATED PARTY TRANSACTIONS

Watchout   has   recorded   unsecured,   non-interest-bearing   amounts  due  to
stockholders for the reimbursement of expenses.  There are no specific repayment
terms; however,  these amounts are expected to be repaid within 12 months of the
balance sheet date.

Watchout has also recorded $70,000 in amounts due to  stockholders.  The amounts
are  payable  on  demand  at an  interest  rate of  5.81%.  A  shareholder,  WCM
Investments, Inc., had a consulting agreement in which 1,150,000 shares of White
Cloud Exploration were issued in 1997.

4. CHANGES IN CONTROL

Effective  December  29,  1997  White  Cloud  Exploration  acquired  100% of the
outstanding common stock of Watchout and 100% of the limited liability interests
in Goldpoint International,  LLC in exchange for 11,296,300 and 2,140,000 shares
of White Cloud Exploration restricted common stock.

5. COMMITMENTS AND CONTINGENCIES

License  Agreement-  On  September  21,  1995  Watchout  entered  into a license
agreement  with an  unrelated  third party for the use of patents and  technical
knowledge.  The agreement provides for minimum payments for the first four years
through September 1999, totaling $915,000, which may be offset by the payment of
royalties as a percentage  of sales.  The agreement may be canceled at any time,
without cause, by Watchout,  with 60 days notice and with no further  liability.
In addition to expense reimbursements of $20,000,minimum  payments in the amount
of $225,000 and $296,250 have been made for 1997 and 1996, respectively, and are
reported as royalties in the accompanying Statement of Operations.




<PAGE>



WHITE CLOUD EXPLORATION, INC.
NOTES TO FINANCIAL STATEMENTS

Investment  by   Distribution-   Watchout  entered  into  an  agreement  with  a
distributor on July 21, 1996. The agreement provides that the distributor invest
$500,000 -  $250,000  as a cash  payment to  Watchout  and  $250,000  to be made
available  to  Watchout  for  use in Hong  Kong,  oversees  production,  quality
assurance/quality  control and establish a $150,000 standby letter of credit. In
exchange, Watchout will issue the distributor 4% of the common stock outstanding
as of the date of the  agreement,  grant  distribution  rights in Southeast Asia
(except  Japan),  pay 9%  commission  based on the  factory  store  costs of the
product,  and grant the right to open Watchout retail stores in all of Southeast
Asia.  The agreement  will remain in effect for a minimum of four years or until
the distributor's investment of $500,000 is earned through commissions.

Consulting  Agreement- On November 15, 1996,  Watchout entered into an agreement
which requires  payment of $150,00 in finder's fees to be made to an independent
consultant,  plus 2% of the amount accepted under a placement  agreement but not
to exceed $250,000. In addition,  the consultant earned compensation  consisting
of 1,150,000 shares of White Cloud Exploration, Inc.

Placement  Agreement-  On February 5, 1997,  Watchout  entered into an agreement
with a placement agent to secure additional  capital or financing in the minimum
amount of $6,000,000.  The agreement requires Watchout to pay commissions to the
placement agent equal to 10% of the additional capital or financing received and
a  non-accountable  expense  allowance equal to 3% of the additional  capital or
financing.  In addition,  Watchout is partially responsible for certain expenses
incurred by the placement agent upon closing.  In 1996,  commitment fees paid to
the placement  agent  amounted to $20,000.  No fees were paid in 1997 under this
agreement.

As a condition of the agreement, the placement agent reserved the right of first
refusal to  underwrite  or place any future  public or private  sales of debt or
equity   securities  of  Watchout,   including  those  involving  any  principal
stockholders of the Watchout through November 19, 1999.

Watchout  has also agreed to pay the  placement  agent a 5% finder's  fee in the
event that they are party to any merger, acquisition or joint venture introduced
directly or indirectly by the placement agent.

In  connection  with the  placement  agreement,  the Board of  Directors  issued
3,639,925 shares of common stock to the placement agent for $500. The shares may
be repurchased  on a pro rata basis if $6,000,000 is not raised  pursuant to the
terms of the aforementioned agreement.




<PAGE>



WHITE CLOUD EXPLORATION, INC.
NOTES TO FINANCIAL STATEMENTS

Stock Warrants- In connection with the loan agreements dated September 19, 1997,
Watchout  agreed to pay finder's fees to a third party.  The agreement  requires
payment of finder's  fees in the form of $32,500 at the closing of the loans and
250,000  stock  warrants  with an  exercise  price of $.10 a share  expiring  on
December  19,  2000.  Payment of the  finder's  fees had not been made as of the
balance  sheet date,  however,  the $32,500 fee has been accrued at December 31,
1997. The warrants are to be issued when and if the private placement  described
previously under Placement Agreement is consummated.

In connection with the loans arranged for by Sands Brothers & Co., Ltd.  ("Sands
Brothers"),  White  Cloud  Exploration  has agreed to issue  stock  warrants  to
Raymond J. Larkin,  Watchout-Goldpoint  Partners,  L.P., Sands Brothers and Mark
Hollo totaling 75,000, 225,000,  25,000 and 25,000 shares respectively,  with an
exercise price of $.01 a share, expiring on September 3, 2000.

6. LINE OF CREDIT

A  promissory  note to  Goldpoint  International,  LLC of $54,968  payable  with
interest  60 days  from the date of each cash  advance  under a letter of credit
issued by Opal  Trade  Corporation.  Interest  accrues  at a rate of 4% over the
prime rate  designated  by Chemical  Bank.  This note is  collateralized  by the
assets of the company.

7. LOAN PAYABLE

( a ) Two 18%  promissory  notes of $150,000 and $50,000 due  September 3, 1998.
These notes are considered Senior and have priority in right of payment over all
indebtedness of the company.

( b ) A 12% promissory note of $166,000  payable to John Bader in one payment of
principal  and  interest  due on  demand  or at the time of first  funding  of a
private  placement of stock in the amount of  $6,000,000  by Watchout.  All sums
past due  shall  bear  interest  at 18% from  their  maturity  date.  Collateral
security includes the first $1.32 per unit production  proceeds upon the sale of
certain products.

( c ) A 12% promissory  note of $84,000 payable to Wayne Williams in one payment
of principal  and  interest  due on demand or at the time of first  funding of a
private  placement of stock in the amount of  $6,000,000  by Watchout.  All sums
past due  shall  bear  interest  at 18% from  their  maturity  date.  Collateral
security includes  priority  assignment of contract rights to the next $0.68 per
unit in production proceeds,  second only to the $1.32 per unit assigned to John
Bader from proceeds from certain products.




<PAGE>



WHITE CLOUD EXPLORATION, INC.
NOTES TO FINANCIAL STATEMENTS

8. GOING CONCERN

The  accompanying  financial  statements  have been prepared in conformity  with
generally accepted accounting principles, which contemplates continuation of the
company as a going  concern.  However  the  company  has  sustained  substantial
operating losses in recent years. In addition,  the company has used substantial
amounts of working  capital in its  operations.  Further,  at December  31, 1997
current  liabilities exceed current assets by $1,108,461,  and total liabilities
exceed total assets by $1,051,421.

In view of these  matters,  realization  of a major portion of the assets in the
accompanying  balance  sheet  is  dependent  upon  continued  operations  of the
company,  which in turn is  dependent  upon the  company's  ability  to meet its
financing  requirements,  and the success of its future  operations.  Management
believes that actions  presently  being taken to revise the company's  operating
and financial  requirements  provide the opportunity for the company to continue
as a going concern.




<PAGE>



ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

RESULTS OF OPERATIONS

         On a  consolidated  basis,  after  the  acquisition  of  Goldpoint  and
Watchout! subsidiaries, the Company had revenues in the first quarter of 1998 of
$198,397 as compared to the same period in 1997 of ($59,953).  The cost of goods
sold in the three  month  period in 1998 was  $22,572 and for the same period in
1997 was $81,784.  The gross profit for the 1998 period was $175,426 compared to
($141,737) for the 1997 period.

         The Company incurred  operating  expenses for the three month period of
$80,182 in 1998  compared to  $693,193  in the same period in 1997.  The Company
recorded a net operating  profit of $95,244 for the 1998 period as compared to a
($934,929)  operating  loss for the same  period in fiscal  year  1997.  The net
income  (loss)  for the 3  month  period  in  1998  was  ($45,861)  compared  to
($840,693)  in 1997.  The losses were due to start up expenses  and research and
development costs for the production of Watchout!  and Goldpoint  products.  The
Company  losses will  continue  until more  revenue  from sales can be achieved.
While the  Company  is  seeking  capital  sources  for  investment,  there is no
assurance that capital sources can be found.  The loss per share for the 1998
first quarter was nominal compared to ($.06) in the first quarter of 1997.

LIQUIDITY AND CAPITAL RESOURCES

         The  Company  had nominal  cash  capital at the end of the period.  The
Company  will be forced  to make  private  placements  of stock in order to fund
operations  continuance.  No assurance  exists as to the ability to make private
placements  of stock.  It had accounts  receivable  (net) of about  $123,000 and
inventory  of  $162,000  as its assets.  The  Company  has  significant  current
liabilities  of  $1,408,727   which  exceed  current  assets  by   approximately
$1,100,000.  The Company is in default on notes in the  amounts of $166,000  and
$84,000, although no demand for payment has been issued.


PART II
                                OTHER INFORMATION

Item 1.  Legal Proceedings - None.

Item 2.  Changes in securities - None.

Item 3.  Defaults upon senior securities - None.

Item 4.  Submission of matters to a vote of security holders - None.

Item 5.  Other information - None.


<PAGE>



Item 6.  Exhibits and reports on Form 8-K

                  (a)      The following are filed as Exhibits to this Quarterly
                           Report.  The numbers  refer to the  Exhibit  Table of
                           Item 601 of Regulation S-K:

                                    None.

                  (b)      Reports  on Form 8-K filed  during  the three  months
                           ended March 31, 1997. (incorporated by reference)

                                    None.

                                   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 of the
undersigned thereunto duly authorized.


Dated: July 30, 1998

                                                   WHITE CLOUD EXPLORATION, INC.



                                                   by:/s/Robert Galoob
                                                   -----------------------------
                                                              President