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: September 30, 1999

                        Commission File number: 0-114244

                                 WATCHOUT!, INC.
             (Exact name of registrant as specified in its charter)

                     formerly WHITE CLOUD EXPLORATION, INC.

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 September 30, 1999,  there were  15,030,245  outstanding  shares of common
stock, par value $.0001.


<PAGE>



PART 1.           FINANCIAL INFORMATION

<TABLE>
<CAPTION>

         ITEM 1.           Financial Statements

                                                  WATCHOUT!, INC.
                                                   BALANCE SHEET
                                                    (Unaudited)

                                                     September 30,              December 31
                                                              1999              1998
ASSETS
<S>                                                           <C>               <C>

Current Assets
Cash                                                          -                 580
Accounts Receivable                                           -                 -
Less Allow for Doubtful Accts                                 -                 -
                                                     --------------------------------------------
                                                              0                 580
Inventory                                                     -                 -
                                                     --------------------------------------------
Total Current Assets                                          0                 580

Property, Plant & Equipment                                   -                 -
Less accumulated Depreciation                                 -                 -
                                                     --------------------------------------------
Total Property and Equipment                                  0                 0

Other Assets

Due from member                                               -                 -
Organization Costs                                            15,250            15,250
Less Accumulated Amortization                                 (5,337)           (3,050)
                                                     --------------------------------------------
Total Other Assets                                            9,912             12,200
                                                     =====================================================

TOTAL ASSETS                                                  $9,912            $12,780




<PAGE>



LIABILITIES & STOCKHOLDERS' EQUITY

Current Liabilities

Accrued Expenses                                              $537,213          $537,213
Accounts Payable                                              475,989           475,989
Due to Stockholders                                           457,945           457,945
Notes Payable                                                 499,500           450,000
                                                     --------------------------------------------
Total Current Liabilities                                     1,970,647         1,912,147

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  issued and outstanding                            15,030            15,030
Additional Paid in Capital                                    989,502           989,502
Accumulated Deficit                                           (2,967,736)       (2,912,899)
                                                     --------------------------------------------

Total Stockholders' Deficit                                   (1,963,204)       (1,908,367)
                                                     --------------------------------------------

Total Liabilities & Stockholders' Deficit                     $9,912            $12,780
                                                     ============================================



</TABLE>


     The accompanying notes are an integral part of this financial statement




<PAGE>

<TABLE>
<CAPTION>



                                 WATCHOUT!, INC.
                             STATEMENT OF OPERATIONS
                    For the three months ended September 30,
                                   (UNAUDITED)

                                                                   1998                          1999
OPERATING REVENUES
<S>                                                                  <C>                         <C>

Revenues                                                               (40,189)                           -
Cost of goods sold                                                       53,898                           -
                                                            -------------------             ---------------

Gross profit                                                           (94,087)                           0

OPERATING EXPENSES
Royalties                                                                     -                           -
Research & Development                                                   48,048                           -
Selling Expenses                                                        (2,024)                           -
Professional Fees                                                        47,110                           -
General & Administrative                                                101,830                           -
Bad Debt Expense                                                        125,399                           -
                                                            -------------------             ---------------

Total operating expenses                                                320,363                           0

OPERATING PROFIT (LOSS)                                               (414,450)                           0
(LOSS)S)


OTHER (REVENUES) &
EXPENSES
Interest expense                                                          4,281                      16,500
Miscellaneous income                                                       (16)                           -
Loss on sale of receivables                                                   -                           -
                                                            -------------------             ---------------

Total other revenues & expenses                                           4,265                      16,500


NET INCOME (LOSS)                                                     (418,715)                    (16,500)
                                                            ===================             ===============

LOSS PER SHARE
Primary                                                                  (0.03)                       (.00)

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



</TABLE>




    The accompanying notes are an integral part of this financial statement.


<PAGE>

<TABLE>
<CAPTION>


                                 WATCHOUT!, INC.
                             STATEMENT OF OPERATIONS
                     For the nine months ended September 30,
                                   (UNAUDITED)

                                                                   1998                          1999
OPERATING REVENUES
<S>                                                                  <C>                         <C>
Revenues                                                                132,959                           -
Cost of goods sold                                                      141,929                           -
                                                            -------------------             ---------------

Gross profit                                                            (8,970)                           0

OPERATING EXPENSES
Royalties                                                                56,250                           -
Research & Development                                                   48,048                           -
Selling Expenses                                                          1,250                           -
Professional Fees                                                        51,797                           -
General & Administrative                                                198,950                           -
Bad Debt Expense                                                        125,399                           -
                                                            -------------------             ---------------

Total operating expenses                                                481,695                           0

OPERATING PROFIT (LOSS)                                               (490,665)                           0
(LOSS)S)


OTHER (REVENUES) &
EXPENSES
Interest expense                                                          5,899                      49,500
Miscellaneous income                                                       (16)                           -
Loss on sale of receivables                                            (13,129)                           -
                                                            -------------------             ---------------

Total other revenues & expenses                                          7,245)                      49,500


NET INCOME (LOSS)                                                     (483,420)                    (49,500)
                                                            ===================             ===============

LOSS PER SHARE
Primary                                                                  (0.03)                       (.00)

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



</TABLE>

    The accompanying notes are an integral part of this financial statement.


<PAGE>


<TABLE>
<CAPTION>


                                 WATCHOUT! INC.
                             STATEMENT OF CASH FLOWS
                         Nine months ended September 30,
                                   (UNAUDITED)

                                                                             1998                 1999
OPERATING ACTIVITIES
<S>                                                                           <C>                     <C>
Net Income (Loss)                                                             (483,420)                    -
Adjustments to reconcile net loss
 to net cash used in operating activities
Depreciation & Amortization                                                       (198)                    -
Common stock issued in exchange for services

Changes in operating assets and liabilities
(Increase) Decrease in Accounts Receivable                                       26,669                    -
(Increase) Decrease in Inventory                                                      -                    -
Increase (Decrease) in Accounts Payable                                         307,892                    -
Increase (Decrease) in Interest Payable                                         (2,663)               49,500
                                                                       ----------------      ---------------

Net cash used in operating activities                                           331,700               49,500

INVESTING ACTIVITIES
(Purchase) Sale of Equipment                                                        197                    -
                                                                       ----------------

Net cash provided by investing activities                                           197                    0

FINANCING ACTIVITIES
Advances (payments) from/to Stockholder                                         204,772                    -
Proceeds (payments) from/to factor                                                    -                    -
Proceeds (payments) from/to line of credit                                    (110,505)                    -
Proceeds (payments) from/to notes payable                                             -                    -
Proceeds (payments) from/to Member                                                    -                    -
Proceeds from issuance of stock                                                       -                    -
Capital contributions                                                                 -                    -
                                                                       ----------------      ---------------

Net cash provided by financing activities                                        94,267                    0

Net increase (decrease) in cash and cash
 equivalents                                                                   (57,256)                    -
Cash and cash equivalents at beginning of period                                 59,147                    -
                                                                       ----------------      ---------------

Cash and cash equivalents at end of period                                        1,891                    0
                                                                       ================      ===============

</TABLE>



     The accompanying notes are an integral part of this financial statement




<PAGE>



WATCHOUT!, 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. In November 1998 the Company  changed it's name to Watchout!,
Inc.

The Company has no business or revenues at September 30, 1999. The  subsidiaries
are no longer operating.

2. General and Summary of Significant Accounting Policies

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.

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

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.  There are no specific repayment terms; however, these amounts are
expected to be repaid within 12 months of the balance sheet date.

4.  Changes in Control

Not Applicable




<PAGE>

WATCHOUT!, INC.
NOTES TO FINANCIAL STATEMENTS


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.  The licensor
filed suit to rescind the license, due to non-payment. The case has been settled
and the license abandoned.

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.

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.

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.

The Placement Agreement was terminated in October 1999.


<PAGE>



WATCHOUT!, 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>



WATCHOUT!, 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 September 30, 1999
current  liabilities exceed current assets by $1,970,647,  and total liabilities
exceed total assets by $1,960,735.

In view of these  matters,  realization  of any  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.




<PAGE>



ITEM 2.

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations

Results of  Operations  for the three  month  period  ended  September  30, 1999
compared to the same period in 1998.

         No operations were conducted by the Company in the quarter period ended
September 30, 1999,  and no revenues were  achieved.  On a  consolidated  basis,
after the acquisition of Goldpoint and Watchout!  subsidiaries,  the Company had
revenues  in the third  quarter of 1998 of  ($40,189)  as  compared  to the same
period in 1999 of $0. The cost of goods sold in the three  month  period in 1998
was $53,898 and for the same period in 1999 was $0. The gross profit  (loss) for
the 1998 third quarter period was ($94,087) compared to $0 for the 1999 period.

         The Company incurred  operating  expenses for the three month period of
$320,363 in 1998 compared to $0 in the same period in 1999. The Company recorded
a net operating loss of $(414,450) for the 1998 period as compared to $0 for the
same period in fiscal year 1999. The net income (loss) for the 3 month period in
1998 was  ($418,715)  compared to  ($16,500)  in 1999.  The Company  losses will
continue  until  a  business  can be  achieved  and  profitable  operations  are
achieved. While the Company is seeking capital sources for investment,  there is
no assurance that capital sources can be found.  The loss per share for the 1998
third quarter was ($.05) compared to ($.004) in the third quarter of 1999.

Results of  Operations  for the nine  month  period  ended  September  30,  1999
compared to the same period in 1998.

         No  operations  were  conducted by the Company in the nine month period
ended  September 30, 1999,  and no revenues  were  achieved.  On a  consolidated
basis,  after the  acquisition  of Goldpoint  and  Watchout!  subsidiaries,  the
Company had revenues in the first nine months of 1998 of $132,959 as compared to
the same  period in 1999 of $0. The cost of goods sold in the period in 1998 was
$141,929  and for the same period in 1999 was $0. The gross  profit for the 1998
period  after a "returns  and  allowances  deduction"  of $195,294  was ($8,970)
compared to $0 for the 1999 period.

         The Company  incurred  operating  expenses for the nine month period of
$481,695 in 1998 compared to $0 in the same period in 1999. The Company recorded
a net operating loss of ($490,665) for the 1998 nine month period as compared to
a $0  operating  loss for the same  period in fiscal  year 1999.  The net income
(loss) for the period in 1998 was ($483,420)  compared to ($49,500) in 1999. The
Company losses will continue until business can be achieved and until profitable
operations  are  achieved.  While the  Company is seeking  capital  sources  for
investment,  there is no assurance that capital  sources can be found.  The loss
per share for the 1998 nine month  period was ($.03)  compared to ($.004) in the
same period in 1999.





<PAGE>



Liquidity and Capital Resources

         The Company had no cash  capital at the end of the period.  The Company
will be  forced  to make  private  placements  of  stock  in  order  to fund any
operations.  No assurance exists as to the ability to make private placements of
stock.  The Company has  significant  current  liabilities  of $1,970,647  which
exceed current assets by approximately $1,960,000.  The Company is in default on
notes totaling $450,000, although no demand for payment has been issued.


PART II
                                OTHER INFORMATION

Item 1.           Legal Proceedings -

                  In July 1998, Boit Incorporation, the LCD technology licensor,
                  filed  suit in San Diego,  California  Superior  Court,  about
                  registrants  relationship  with its agent in Hong Kong,  Camke
                  Development  Ltd. The allegation was that Camke was in reality
                  a third party licensee and not actually a manufacturing  agent
                  and  distributor  for South East Asia.  Boit also claimed that
                  Registrant  breached  the  license  contract by not yet having
                  products  in the  marketplace  and seeks  cancellation  of the
                  contract.  The  lawsuit  has  been  settled  and  the  license
                  abandoned in this quarter.

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.

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 September 30, 1999. (incorporated by reference)

                                    None.




<PAGE>


                                   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: November 10, 1999

                                            WATCHOUT!, INC.


                                                 /s/ Kevin Waltzer
                                            by: --------------------------------
                                                    President