U.S. SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




FORM 10-K




ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE ACT OF 1934




For the fiscal year ended December 31, 2011




Commission file number: 000-52783




WATCHTOWER, INC.


(Exact name of registrant as specified in its charter)





Nevada

98-0523910(State of incorporation)

(I.R.S. Employer Identification No.)





100 Henry Street, Brooklyn, New York 11201


(Address of principal executive offices)





(718) 624-5000


(Registrant’s telephone number, including area code)





Securities registered pursuant to Section 12(b) of the Exchange Act:


None





Securities registered pursuant to Section 12(g) of the Exchange Act:


Common Stock, $0.0001 par value




Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o     No x





Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o     No x





Indicate by check markwhether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 such filing requirements for the past 90 days. Yes xNo o





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  oNo x





Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   x





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):




Large accelerated filer
o
Accelerated filer
oNon-accelerated filer
o
Smaller reporting company
x(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 Act). Yes x No o





State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently computed second fiscal quarter. $220,000 based upon $0.05 per share which was the last price at which the common equity purchased by non-affiliates was last sold, since there is no public bid or ask price.





The number of shares of the issuer’s common stock issued and outstanding as of March 23, 2012 was 12,400,000 shares.





Documents Incorporated By Reference:  None













TABLE OF CONTENTS




PagePART IItem 1
Business


3Item 1A
Risk Factors


6Item IB
Unresolved Staff Comments


6Item 2
Properties


6Item 3
Legal Proceedings


6Item 4
Mine Safety Disclosures


6PART IIItem 5
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities


7Item 6
Selected Financial Data


8Item 7
Management’s Discussion and Analysis of Financial Condition and Results of Operation


8Item 7A
Quantitative and Qualitative Disclosures About Market Risk.


13Item 8
Financial Statements and Supplementary Data


F-1Item 9
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure


14Item 9A
Controls and Procedures


14Item 9B
Other Information


15PART IIIItem 10
Directors, Executive Officers and Corporate Governance


16Item 11
Executive Compensation


18Item 12
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters


18Item 13
Certain Relationships and Related Transactions, and Director Independence


19Item 14
Principal Accountant Fees and Services


20PART IVItem 15
Exhibits and Financial Statement Schedules


21SIGNATURES


22





2





PART I




Item 1.  Business.





As used in this Annual Report on Form 10-K (this “Report”), references to the “Company,”, the “Registrant,” “we,” “our” or “us” refer to Watchtower, Inc., unless the context otherwise indicates.





Forward-Looking Statements





This Report contains forward-looking statements. For this purpose, any statements contained in this Report that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking information includes statements relating to future actions, prospective products, future performance or results of current or anticipated products, sales and marketing efforts, costs and expenses, interest rates, outcome of contingencies, financial condition, results of operations, liquidity, business strategies, cost savings, objectives of management, and other matters. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as “may,” “will,” “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,” “potential,” or “continue” or the negative of these similar terms. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking information to encourage companies to provide prospective information about themselves without fear of litigation so long as that information is identified as forward-looking and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the information.





These forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions that we cannot predict. In evaluating these forward-looking statements, you should consider various factors, including the following: (a) those risks and uncertainties related to general economic conditions, (b) whether we are able to manage our planned growth efficiently and operate profitable operations, (c) whether we are able to generate sufficient revenues or obtain financing to sustain and grow our operations, (d) whether we are able to successfully fulfill our primary requirements for cash, which are explained below under “Liquidity and Capital Resources”. We assume no obligation to update forward-looking statements, except as otherwise required under the applicable federal securities laws.





Corporate Background





Watchtower, Inc. (the “Company”) was incorporated on February 20, 2007, in the State of Nevada. We were focused on becoming involved in the growing market for renewable and environmentally sustainable energy and intended to market and resell agricultural based bio-diesel fuels. Bio-diesel is fuel made from vegetable oils or animal fats which can be used in existing diesel engines, such as ethanol. Our goal was to source various available agri-biodiesel fuel products from many producers internationally and offer renewable alternatives to petroleum based fuels in the United States. Since inception, the Company conducted virtually no business other than organizational matters, filing its Registration Statement on Form SB-2, which was declared effective by the Securities and Exchange Commission (the “SEC”) on August 20, 2007 (the “Registration Statement”), and filings of periodic reports with the SEC pursuant to the reporting requirements of Securities Exchange Act of 1934, as amended (the “Exchange Act”).





3





In April 2007, we raised an aggregate of $35,000 from 39 investors in a private placement. These funds were used by us primarily in connection with the preparation of our Registration Statement relating to (i) the resale of 3,500,000 shares of our common stock, par value $0.0001 per share which were issued and outstanding and offered and sold by the holders thereof, and (ii) the sale of up to 5,000,000 shares of common stock, par value $0.0001 per share, to be offered and sold by us. The 5,000,000 shares offered by the Company were offered and sold at a price of $0.05 per share on a "best efforts basis" by our directors and officers.





On August 24, 2007, the Company concluded and terminated its public offering held in accordance with the Registration Statement. Although pursuant to the Registration Statement the offering could have remained open for as long as 180 business days after the date of the prospectus, the Company terminated the offering because it believed that additional funds would not have been raised pursuant to the offering. Prior to the conclusion of the offering, the Company had sold to 9 persons an aggregate of 900,000 shares of its common stock for a purchase price of $0.05 per share (amounting in the aggregate to $45,000.00). We incurred expenses of $25,000 in connection with this offering. The net proceeds of the offering were used for working capital. No proceeds were received by the Company for the resales of our common stock by existing shareholders.





On April 30, 2009, Yisroel Guttfreund and Yechezkel Klohr, the principal shareholders of the Company entered into a Stock Purchase Agreement which provided for the sale of 8,000,000 shares of common stock of the Company (the “Purchased Shares”) to Sholom Drizin (the “Purchaser”). The consideration paid for the Purchased Shares, which represent 64.52% of the issued and outstanding share capital of the Company on a fully-diluted basis, was $50,000. The Purchaser used his personal funds to purchase the Purchased Shares.





On April 30, 2009, in connection with the acquisition of the Purchased Shares, (i) Yisroel Guttfreund resigned from his positions as officer and director of the Company, (ii) Yechezkel Klohr resigned from his positions as an officer of the Company and resigned as a director of the Company 10 days after the filing of the  information statement pursuant to Rule 14f-1, filed with the Securities and Exchange Commission on May 11, 2009, and (iii) the Board of Directors of the Company elected (a) Menachem M. Schneerson as President, Chief Executive Officer and a director of the Company and (b) Shmaya Glick, as Secretary and Treasurer.





Business Overview





The Company was focused on becoming involved in the growing market for renewable and environmentally sustainable energy and intended to market and resell agricultural based bio-diesel fuels. Our goal was to source various available agri-biodiesel fuel products from many producers internationally and offer renewable alternatives to petroleum based fuels in the United States. Due to the state of the economy, the Company has conducted virtually no business other than organizational matters, filing its Registration Statement and filings of periodic reports with the SEC. The Company has since abandoned its business plan and is now seeking an operating company with which to merge or to acquire.





We are now considered a blank check company. The SEC defines those companies as “any development stage company that is issuing a penny stock, within the meaning of Section 3 (a)(51) of the Exchange Act, and that has no specific business plan or purpose, or has indicated that its business plan is to merge with an unidentified company or companies.” Under SEC Rule 12b-2 under the Securities Act of 1933, as amended (the “Securities Act”), we also qualify as a “shell company,” because we have no or nominal assets (other than cash) and no or nominal operations. Many states have enacted statutes, rules and regulations limiting the sale of securities of “blank check” companies in their respective jurisdictions. Management does not intend to undertake any efforts to cause a market to develop in our securities, either debt or equity, until we have successfully concluded a business combination. We intend to comply with the periodic reporting requirements of the Exchange Act for so long as we are subject to those requirements.





4





Watchtower’s current business plan is to attempt to identify and negotiate with a business target for the merger of that entity with and into Watchtower. In certain instances, a target company may wish to become a subsidiary of Watchtower or may wish to contribute or sell assets to Watchtower rather than to merge. No assurances can be given that Watchtower will be successful in identifying or negotiating with any target company. Watchtower seeks to provide a method for a foreign or domestic private company to become a reporting or public company whose securities are qualified for trading in the United States secondary markets.





A business combination with a target company normally will involve the transfer to the target company of the majority of the issued and outstanding common stock of Watchtower, and the substitution by the target company of its own management and board of directors. No assurances can be given that Watchtower will be able to enter into a business combination, or, if Watchtower does enter into such a business combination, no assurances can be given as to the terms of a business combination, or as to the nature of the target company.





Competition





The  Company  is an  insignificant  participant  among  firms  which  engage in business  combinations  with, or financing of,  development  stage  enterprises. There are many established management and financial consulting companies and venture capital firms which have significantly greater financial and personnel resources, technical expertise and experience than the Company. In view of the Company's limited financial resources and management  availability,  the Company will  continue  to  be at a  significant  competitive  disadvantage  vis-a-vis  the Company's competitors.





Regulation and Taxation





The Investment Company Act of 1940 defines an "investment company" as an issuer which is or holds  itself out as being  engaged  primarily  in the  business  of investing,  reinvesting  or trading of  securities.  While the Company  does not intend to  engage in such  activities,  the  Company  could  become  subject  to regulation  under the  Investment  Company  Act of 1940 in the event the Company obtains or  continues  to hold a minority  interest  in a number of  development stage   enterprises.   The  Company  could  be  expected  to  incur  significant registration  and compliance  costs if required to register under the Investment Company  Act of 1940.  Accordingly, management will continue to  review  the Company's  activities  from  time  to  time  with a  view  toward  reducing  the likelihood the Company could be classified as an "investment company."





The Company intends to structure a merger or acquisition in such manner as to minimize Federal and state tax consequences to the Company and to any target company.





Employees





The  Company's  only  employees  at the  present  time  are  its  officers  and directors,  who will devote as much time as the Board of Directors  determine is necessary to carry out the affairs of the Company.





5





Item 1A.  Risk Factors





Smaller reporting companies are not required to provide the information required by this Item 1A.





Item 1B.  Unresolved Staff Comments





None





Item 2.  Properties





We currently maintain our corporate offices at 100 Henry Street, Brooklyn, New York 11201.




We do not pay rent for this space because the amount of the space we use at such office is de minimis. We believe that this space will be sufficient until we start generating revenues and need to hire employees.





Item 3.  Legal Proceedings.





There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.




Item 4.  Mine Safety Disclosures.




None





6





PART II





Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.





Market Information





Our common stock has been eligible to be traded on the Over-The-Counter Bulletin Board since October 18, 2007 under the ticker symbol WTWR. There has been no active trading in the Company’s securities, and there has been no bid or ask prices quoted.





Holders





As of March 23, 2012, there were 12,400,000 common shares issued and outstanding, which were held by 40 stockholders of record.





Dividends





We have never declared or paid any cash dividends on our common stock nor do we anticipate paying any in the foreseeable future. Furthermore, we expect to retain any future earnings to finance our operations and expansion. The payment of cash dividends in the future will be at the discretion of our Board of Directors and will depend upon our earnings levels, capital requirements, any restrictive loan covenants and other factors the Board considers relevant.





Equity Compensation Plans





We do not have any equity compensation plans.




Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities





We did not sell any unregistered securities during the fiscal year ended December 31, 2011.





Purchases of Equity Securities by the Small Business Issuer and Affiliated Purchasers





We have not repurchased any shares of our common stock during the fiscal year ended December 31, 2011.





7





Item 6.  Selected Financial Data.





Smaller reporting companies are not required to provide the information required by this Item 6.





Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.





Certain statements contained in this prospectus, including statements regarding the anticipated development and expansion of our business, our intent, belief or current expectations, primarily with respect to the future operating performance of Watchtower, Inc. All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made.





Plan of Operation - General





During the next 12 months, the Company intends to seek, investigate and, if such investigation warrants, acquire an interest in one or more business opportunities presented to it by persons or firms who or which desire to seek the perceived advantages of a publicly held corporation. At this time, the Company has no plan, proposal, agreement, understanding or arrangement to acquire or merge with any specific business or company, and the Company has not identified any specific business or company for investigation and evaluation. No member of management or promoter of the Company has had any material discussions with any other company with respect to any acquisition of that company.





The Company will not restrict its search to any specific business, industry or geographical location, and the Company may participate in a business venture of virtually any kind or nature. The discussion of the proposed plan of operation under this caption and throughout this Annual Report is purposefully general and is not meant to be restrictive of the Company's virtually unlimited discretion to search for and enter into potential business opportunities.





The Company will have to obtain funds in one or more private placements to finance the operation of any acquired business. Persons purchasing securities in these placements and other shareholders will likely not have the opportunity to participate in the decision relating to any acquisition. The Company's proposed business is sometimes referred to as a "blind pool" because any investors will entrust their investment monies to the Company's management before they have a chance to analyze any ultimate use to which their money may be put. Consequently, the Company's potential success is heavily dependent on the Company's management, which will have virtually unlimited discretion in searching for and entering into a business opportunity. None of the officers and directors of the Company has had any experience in the proposed business of the Company. There can be no assurance that the Company will be able to raise any funds in private placements. In any private placement, management may purchase shares on the same terms as offered in the private placement.





Management anticipates that it will only participate in one potential business venture. This lack of diversification should be considered a substantial risk in investing in the Company because it will not permit the Company to offset potential losses from one venture against gains from another. The Company may seek a business opportunity with a firm which only recently commenced operations, or a developing company in need of additional funds for expansion into new products or markets, or seeking to develop a new product or service, or an established business which may be experiencing financial or operating difficulties and is in the need for additional capital which is perceived to be easier to raise by a public company. In some instances, a business opportunity may involve the acquisition or merger with a corporation which does not need substantial additional cash but which desires to establish a public trading market for its common stock. The Company may purchase assets and establish wholly owned subsidiaries in various business or purchase existing businesses as subsidiaries.





8





The Company anticipates that the selection of a business opportunity in which to participate will be complex and extremely risky. Because of general economic conditions, rapid technological advances being made in some industries, and shortages of available capital, management believes that there are numerous firms seeking the benefits of a publicly traded corporation. Such perceived benefits of a publicly traded corporation may include facilitating or improving the terms on which additional equity financing may be sought, providing liquidity for the principals of a business, creating a means for providing incentive stock options or similar benefits to key employees, providing liquidity (subject to restrictions of applicable statutes) for all shareholders, and other factors. Potentially available business opportunities may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.





As part of any transaction, the acquired company may require that management or other stockholders of the Company sell all or a portion of their shares to the acquired company, or to the principals of the acquired company. It is anticipated that the sales price of such shares will be lower than the current market price or anticipated market price of the Company's Common Stock. The Company's funds are not expected to be used for purposes of any stock purchase from insiders. The Company shareholders will not be provided the opportunity to approve or consent to such sale. The opportunity to sell all or a portion of their shares in connection with an acquisition may influence management's decision to enter into a specific transaction. However, management believes that since the anticipated sales price will be less than market value, that the potential of a stock sale by management will be a material factor on their decision to enter a specific transaction.





The above description of potential sales of management stock is not based upon any corporate bylaw, shareholder or board resolution, or contract or agreement. No other payments of cash or property are expected to be received by management in connection with any acquisition.





The Company has not formulated any policy regarding the use of consultants or outside advisors, but does not anticipate that it will use the services of such persons.





The Company has, and will continue to have, insufficient capital with which to provide the owners of business opportunities with any significant cash or other assets. However, management believes the Company will offer owners of business opportunities the opportunity to acquire a controlling ownership interest in a public company at substantially less cost than is required to conduct an initial public offering. The owners of the business opportunities will, however, incur significant post-merger or acquisition registration costs in the event they wish to register a portion of their shares for subsequent sale. The Company will also incur significant legal and accounting costs in connection with the acquisition of a business opportunity including the costs of preparing post-effective amendments, Forms 8-K, agreements and related reports and documents nevertheless, the officers and directors of the Company have not conducted market research and are not aware of statistical data which would support the perceived benefits of a merger or acquisition transaction for the owners of a business opportunity.





The Company does not intend to make any loans to any prospective merger or acquisition candidates or tounaffiliated third parties.





Sources of Opportunities





The Company anticipates that business opportunities for possible acquisition will be referred by various sources, including its officers and directors, professional advisers, securities broker-dealers, venture capitalists, members of the financial community, and others who may present unsolicited proposals.





The Company will seek a potential business opportunity from all known sources, but will rely principally on personal contacts of its officers and directors as well as indirect associations between them and other business and professional people. It is not presently anticipated that the Company will engage professional firms specializing in business acquisitions or reorganizations.





9





The officers and directors of the Company are currently employed in other positions and will devote only a portion of their time (not more than three hour per week) to the business affairs of the Company, until such time as an acquisition has been determined to be highly favorable, at which time they expect to spend full time in investigating and closing any acquisition for a period of two weeks. In addition, in the face of competing demands for their time, the officers and directors may grant priority to their full-time positions rather than to the Company.





Evaluation of Opportunities





The analysis of new business opportunities will be undertaken by or under the supervision of the officers and directors of the Company. Management intends to concentrate on identifying prospective business opportunities which may be brought to its attention through present associations with management. In analyzing prospective business opportunities, management will consider such matters as the available technical, financial and managerial resources; working capital and other financial requirements; history of operation, if any; prospects for the future; present and expected competition; the quality and experience of management services which may be available and the depth of that management; the potential for further research, development or exploration; specific risk factors not now foreseeable but which then may be anticipated to impact the proposed activities of the Company; the potential for growth or expansion; the potential for profit; the perceived public recognition or acceptance of products, services or trades; name identification; and other relevant factors. Officers and directors of the Company will meet personally with management and key personnel of the firm sponsoring the business opportunity as part of their investigation. To the extent possible, the Company intends to utilize written reports and personal investigation to evaluate the above factors. The Company will not acquire or merge with any company for which audited financial statements cannot be obtained.





It may be anticipated that any opportunity in which the Company participates will present certain risks. Many of these risks cannot be adequately identified prior to selection of the specific opportunity, and the Company's shareholders must, therefore, depend on the ability of management to identify and evaluate such risk. In the case of some of the opportunities available to the Company, it may be anticipated that the promoters thereof have been unable to develop a going concern or that such business is in its development stage in that it has not generated significant revenues from its principal business activities prior to the Company's anticipation. There is a risk, even after the Company's participation in the activity and the related expenditure of the Company's funds, that the combined enterprises will still be unable to become a going concern or advance beyond the development stage. Many of the opportunities may involve new and untested products, processes, or market strategies which may not succeed. Such risks will be assumed by the Company and, therefore, its shareholders.





The Company will not restrict its search for any specific kind of business, but may acquire a venture which is in its preliminary or development stage, which is already in operation, or in essentially any stage of its corporate life. It is currently impossible to predict the status of any business in which the Company may become engaged, in that such business may need additional capital, may merely desire to haveits shares publicly traded, or may seek other perceived advantages which the Company may offer.





Acquisition of Opportunities





In implementing a structure for a particular business acquisition, the Company may become a party to a merger, consolidation, reorganization, joint venture, franchise or licensing agreement with another corporation or entity. It may also purchase stock or assets of an existing business.  On the consummation of a transaction, it is possible that the present management and shareholders of the Company will not be in control of the Company. In addition, a majority or all of the Company's officers and directors may, as part of the terms of the acquisition transaction, resign and be replaced by new officers and  directors without a vote of the Company's shareholders.





10





It is anticipated that any securities issued in any such reorganization would be issued in reliance on exemptions from registration under applicable Federal and state securities laws. In some circumstances, however, as a negotiated element of this transaction, the Company may agree to register such securities either at the time the transaction is consummated, under certain conditions, or at specified time thereafter. The issuance of substantial additional securities and their potential sale into any trading market which may develop in the Company's common stock may have a depressive effect on such market. While the actual terms of a transaction to which the Company may be a party cannot be predicted, it may be expected that the parties to the business transaction will find it desirable to avoid the creation of a taxable event and thereby structure the acquisition in a so called "tax free" reorganization under Sections 368(a)(1) or 351 of the Internal Revenue Code of 1986, as amended (the "Code"). In order to obtain tax free treatment under the Code, it may be necessary for the owners of the acquired business to own 80% or more of the voting stock of the surviving entity. In such event, the shareholders of the Company, including investors in this offering, would retain less than 20% of the issued and outstanding shares of the surviving entity, which could result in significant dilution in the equity of such shareholders.





As part of the Company's investigation, officers and directors of the Company will meet personally with management and key personnel, may visit and inspect material facilities, obtain independent analysis or verification of certain information provided, check references of management and key personnel, and take other reasonable investigative measures, to the extent of the Company's limited financial resources and management expertise.





The manner in which each Company participates in an opportunity will depend on the nature of the opportunity, the respective needs and desires of the Company and other parties, the management of the opportunity, and the relative negotiating strength of the Company and such other management.





With respect to any mergers or acquisitions, negotiations with target company management will be expected to focus on the percentage of the Company which target company shareholders would acquire in exchange for their shareholdings in the target company. Depending upon, among other things, the target company's assets and liabilities, the Company's shareholders will in all likelihood hold a lesser percentage ownership interest in the Company following any merger or acquisition. The percentage ownership may be subject to significant reduction in the event the Company acquires a target company with substantial assets. Any merger or acquisition effected by the Company can be expected to have a significant dilutive effect on the percentage of shares held by the Company's then shareholders, including purchasers in this offering.





The Company will not have sufficient funds (unless it is able to raise funds in a private placement) to undertake any significant development, marketing and manufacturing of any products which may be acquired.





Accordingly, following the acquisition of any such product, the Company will, in all likelihood, be required to either seek debt or equity financing or obtain funding from third parties, in exchange for which the Company would probably be required to give up a substantial portion of its interest in any acquired product. There is no assurance that the Company will be able either to obtain additional financing or interest third parties in providing funding for the further development, marketing and manufacturing of any products acquired.





It is anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. If a decision is made not to participate in a specific business opportunity the costs therefore incurred in the related investigation would not be recoverable.





Furthermore, even if an agreement is reached for the participation in a specific business opportunity, the failure to consummate that transaction may result in a loss to the Company of the related costs incurred.





11





Management believes that the Company may be able to benefit from the use of "leverage" in the acquisition of a business opportunity. Leveraging a transaction involves the acquisition of a business through incurring significant indebtedness for a large percentage of the purchase price for that business.





Through a leveraged transaction, the Company would be required to use less of its available funds for acquiring the business opportunity and, therefore, could commit those funds to the operations of the business opportunity, to acquisition of other business opportunities or to other activities. The borrowing involved in a leveraged transaction would ordinarily be secured by the assets of the business opportunity to be acquired. If the business opportunity acquired is not able to generate sufficient revenues to make payments on the debt incurred by the Company to acquire that business opportunity, the lender would be able to exercise the remedies provided by law or by contract. These leveraging techniques, while reducing the amount of funds that the Company must commit to acquiring a business opportunity, may correspondingly increase the risk of loss to the Company. No assurance can be given as to the terms or the availability of financing for any acquisition by the Company. During periods when interest rates are relatively high, the benefits of leveraging are not as great as during periods of lower interest rates because the investment in the business opportunity held on a leveraged basis will only be profitable if it generates sufficient revenues to cover the related debt and other costs of the financing. Lenders from which the Company may obtain funds for purposes of a leveraged buy-out may impose restrictions on the future borrowing, distribution, and operating policies of the Company. It is not possible at this time to predict the restrictions, if any, which lenders may impose or the impact thereof on the Company.





Results of Operations





Years Ended December 31, 2011 and 2010





We had $3,570 in cash and cash equivalents as of December 31, 2011, and have experienced losses since inception. We did not generate any revenues from operations during the years ended December 31, 2011 and 2010. Total operating costs and expenses during the year ended December 31, 2011 were $26,294 for a net loss of $28,970 compared to total operating costs and expenses of $25,266 for a net loss of $26,770 for the year ended December 31, 2010. Expenses for both years consisted entirely of professional, legal and accounting fees relating to our reporting requirements and general and administrative expenses. We have incurred a cumulative net loss of $127,165 for the period February 20, 2007 (inception) to December 31, 2011.





Liquidity and Capital Resources





Our balance sheet as of December 31, 2011 reflects that the Company has $3,570 in assets. In addition, the Company had a working capital deficiency and stockholders’ deficiency of $71,365 at December 31, 2011.





As of December 31, 2011 and 2010, loans payable to related party bear interest at 5% per annum and are payable on demand. Loans consist of advances made by Sholom Drizin, the principal shareholder of the Company. Interest expense on these loans was $2,676 and $1,504 for the years ended December 31, 2011 and 2010, respectively.




The focus of Watchtower’s efforts is to acquire or develop an operating business.  Despite no active operations at this time, management intends to continue in business and has no intention to liquidate the Company.  Watchtower has considered various business alternatives including the possible acquisition of an existing business, but to date has found possible opportunities unsuitable or excessively priced. Watchtower does not contemplate limiting the scope of its search to any particular industry. Management has considered the risk of possible opportunities as well as their potential rewards.  Management has invested time evaluating several proposals for possible acquisition or combination; however, none of these opportunities were pursued.  Watchtower presently owns no real property and at this time has no intention of acquiring any such property. Watchtower’s significant expected expenses are comprised primarily of professional fees incident to its reporting requirements.





12





The accompanying financial statements have been prepared assuming the Company will continue as a going concern.  The Company’s recurring losses from operations, stockholders' deficiency and working capital deficiency, and lack of revenue generating operations, raise substantial doubt about the Company’s ability to continue as a going concern.





Management believes that the Company will continue to incur losses and negative cash flows from operating activities for the foreseeable future and will need additional equity or debt financing to sustain its operations until it can achieve profitability and positive cash flows, if ever. Management plans to seek additional debt and/or equity financing for the Company, but cannot assure that such financing will be available, of if available, on acceptable terms.





The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.  There can be no assurance that management will be successful in implementing its business plan or that the successful implementation of such business plan will actually improve the Company’s operating results.





Going Concern Consideration





The Company is a development stage company and has not commenced planned principal operations.  The Company had no revenues and has incurred a cumulative net loss of $127,165 for the period February 20, 2007 (inception) to December 31, 2011.  In addition, the Company had a working capital deficiency and stockholders' deficiency of $71,365 at December 31, 2011.  These factors raise substantial doubt about the Company’s ability to continue as a going concern.





The financial statements contained herein for the period ending December 31, 2011, have been prepared on a “going concern” basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. For the reasons discussed herein and in the footnotes to our financial statements included herein, there is a significant risk that we will be unable to continue as a going concern. Our audited financial statements included in this Annual Report for the year ended December 31, 2011, contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.





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 material effect on our financial condition, results of operations or liquidity.





Need For Additional Financing





Based upon current major shareholder’s willingness to extend credit to the Company and/or invest in the Company until a business combination is completed, the Company believes that its existing capital will be sufficient to meet the Company’s cash needs required for the costs of compliance with the reporting requirements of the Exchange Act, and for the costs of accomplishing its goal of completing a business combination, for an indefinite period of time. Accordingly, in the event the Company is able to complete a business combination during this period, it anticipates that its existing capital will be sufficient to allow it to accomplish the goal of completing a business combination. There is no assurance, however, that the available funds will ultimately prove to be adequate to allow it to complete a business combination, and once a business combination is completed, the Company’s needs for additional financing are likely to increase substantially. In addition, as the current major shareholder is under no obligation to continue to extend credit to the Company and/or invest in the Company, there is no assurance that such credit or investment will continue or that it will continue to be sufficient for future periods.





Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.





Smaller reporting companies are not required to provide the information required by this item.




13





Item 8.  Financial Statements.






F-1





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors and Stockholders
 Watchtower, Inc.
 
 We have audited the accompanying balance sheets of Watchtower, Inc. (a Development Stage Company) (“the Company”) as of December 31, 2011 and 2010, and the related statements of operations, stockholders’ equity (deficiency) and cash flows for the years ended December 31, 2011 and 2010, and the period February 20, 2007 (inception) to December 31, 2011.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audit.
 
 We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  Also, an audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.
 
 In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Watchtower, Inc. at December 31, 2011 and 2010, and the results of its operations and its cash flows for the years ended December 31, 2011 and 2010, and the period February 20, 2007 (inception) to December 31, 2011 in conformity with accounting principles generally accepted in the United States of America.
 
 The accompanying financial statements have been prepared assuming the Company will continue as a going concern.  As discussed in Note 2 to the financial statements, the Company is a development stage company, has incurred a cumulative net loss since inception, and has a working capital deficiency and stockholders' deficiency.  These factors raise substantial doubt about the Company’s ability to continue as a going concern.  Management’s plans regarding those matters are also described in Note 2.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
  WOLINETZ, LAFAZAN & COMPANY, P.C.
 
 
 
 Rockville Centre, New York
 March 27, 2012
  F-2
 
 
 WATCHTOWER, INC.


(A DEVELOPMENT STAGE COMPANY) BALANCE SHEETS
 December 31,2011


2010ASSETSCurrent Assets:Cash and Cash Equivalents

$
3,570


$
1,138Total Current Assets


3,570



1,138Total Assets

$
3,570


$
1,138LIABILITIES AND STOCKHOLDERS’ DEFICIENCYCurrent Liabilities:Accrued Expenses

$
1,000


$
2,274Accrued Interest - Related Party


4,461



1,785Loans Payable - Related Party


69,474



39,474Total Current Liabilities


74,935



43,533Commitments and ContingenciesStockholders’ Deficiency:Preferred Stock, $.0001 par value; 5,000,000 shares authorized,none issued and outstanding


-Common Stock, $.0001 par value; 500,000,000 shares authorized,12,400,000 shares issued and outstanding


1,240



1,240Additional Paid-In Capital


54,560



54,560Deficit Accumulated During the Development Stage


(  127,165
)


(98,195
)Total Stockholders’ Deficiency


(71,365
)


(42,395
)Total Liabilities and Stockholders’ Deficiency

$
3,570


$
1,138
 The accompanying notes are an integral part of these financial statements.
  F-3
 
 WATCHTOWER, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENT OF OPERATIONS
  For the Year Ended

December 31,


For the Period

February 20, 2007

(Inception) to

December 31,2011


2010


2011Net Revenues

$
-


$
-


$
-Costs and Expenses:Professional Fees


18,323



21,273



97,600Consulting Fees


-



-



14,500General and Administrative Expenses


7,971



3,993



37,353Start Up Costs


-



-



1,103Total Costs and Expenses


26,294



25,266



150,556Operating Loss


(26,294
)


(25,266
)


( 150,556
)Other Income (Expense):Interest Expense


(2,676
)


(1,504
)


(6,245
)Extinguishment of Debt


-



-



29,636Total Other Income (Expense)


(2,676
)


(1,504
)


23,391Net Loss

$
(28,970
)

$
(26,770
)

$
( 127,165
)Basic and Diluted Loss Per Share

$
(.00
)

$
(.00
)Weighted Average Common Shares Outstanding


12,400,000



12,400,000
  The accompanying notes are an integral part of these financial statements.
  F-4
 
 WATCHTOWER, INC.
 (A DEVELOPMENT STAGE COMPANY) STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIENCY) FOR THE PERIOD FEBRUARY 20, 2007 (INCEPTION) TO DECEMBER 31, 2011
 DeficitAccumulatedCommon Stock


Additional

Paid-In


During the

DevelopmentShares


Amount


Capital


Stage


TotalBalance, February 20, 2007


-


$
-


$
-


$
-


$
-Common Stock Issued to Foundersat $.0001 Per Share, February 20, 2007


8,000,000



800



-



-



800Common Stock Issued to Private InvestorsAt $.01 Per Share, April 10, 2007


3,500,000



350



34,650



-



35,000Common Stock Issued Pursuant to PublicOffering at $.05 Per Share, Net of Expensesof Offering, August 25, 2007


900,000



90



19,910



-



20,000Net Loss for the Period


-



-







(15,202
)


( 15,202
)Balance, December 31, 2007


12,400,000



1,240



54,560



(15,202
)


40,598Net Loss for the Year EndedDecember 31, 2008


-



-



-



(60,174
)


( 60,174
)Balance, December 31, 2008


12,400,000



1,240



54,560



(75,376
)


( 19,576
)Net Income for the Year EndedDecember 31, 2009


-



-



-



3,951



3,951Balance, December 31, 2009


12,400,000



1,240



54,560



(71,425
)


( 15,625
)Net Loss for the Year EndedDecember 31, 2010


-



-



-



(26,770
)


( 26,770
)Balance, December 31, 2010


12,400,000



1,240



54,560



(98,195
)


( 42,395
)Net Loss for the Year EndedDecember 31, 2011


-



-



-



(28,970
)


( 28,970
)Balance, December 31, 2011


12,400,000


$
1,240


$
54,560


$
( 127,165
)

$
( 71,365
)
 The accompanying notes are an integral part of these financial statements.
  F-5
  WATCHTOWER, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENT OF CASH FLOWS
 For the Year EndedDecember 31,



For the Period

February 20, 2007

(Inception) to

December 31,2011



2010



2011Cash Flows from Operating Activities:Net Loss

$
(28,970
)

$
(26,770
)

$
( 127,165
)Adjustments to Reconcile Loss to Net CashUsed in Operating Activities:Extinguishment of Debt


-



-



( 29,636
)Changes in Assets and Liabilities:Increase (Decrease) in Accrued Expenses


(1,274
)


2,274



2,786Increase in Accrued Interest - Related Party


2,676



1,506



4,461Net Cash Used in Operating Activities


(27,568
)


( 22,990
)


(149,554
)Cash Flows from Investing Activities:


-



-



-Cash Flows from Financing Activities:Proceeds from Sale of Common Stock


-



-



80,800Expenses of Public Offering


-



-



( 25,000
)Proceeds of Borrowings - Loans Payable -Related Party


30,000



20,000



69,474Proceeds of Borrowings - Loans Payable


-



-



27,850Net Cash Provided by Financing Activities


30,000



20,000



153,124Increase (Decrease) in Cash


2,432



(2,990
)


3,570Cash – Beginning of Period


1,138



4,128



-Cash – End of Period

$
3,570


$
1,138


$
3,570Supplemental Disclosures of Cash Flow Information:Interest Paid

$
-


$
-


$
-Income Taxes Paid

$
-


$
-


$
-
 
 The accompanying notes are an integral part of these financial statements.
  F-6
 
 
 WATCHTOWER, INC.
 (A DEVELOPMENT STAGE COMPANY)
 NOTES TO FINANCIAL STATEMENTS
 
 NOTE 1 -    Summary of Significant Accounting Policies
 
 Organization
 
 Watchtower, Inc. (“the Company”) was incorporated on February 20, 2007 under the laws of the State of Nevada.
  The Company has not yet generated revenues from planned principal operations and is considered a development stage company.  The Company originally intended to market and resell agricultural based bio-diesel fuels.  The Company has since abandoned its business plan and is now seeking an operating company with which to merge or acquire.  Accordingly, the Company is now considered a blank check company.  There is no assurance, however, that the Company will achieve its objectives or goals.
 
 Cash and Cash Equivalents
 
 The Company considers all highly-liquid investments purchased with a maturity of three months or less to be cash equivalents.
 
 Revenue Recognition
 
 For revenue from product sales, the Company will recognize revenue in accordance with Staff Accounting Bulletin No. 104, “Revenue Recognition” (SAB No. 104), which superseded Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements” (SAB No. 101).  SAB No. 104 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectibility is reasonably assured.  Determination of criteria (3) and (4) are based on management’s judgment regarding the fixed nature of the selling prices of the products delivered and the collectibility of those amounts.  Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments will be provided for in the same period the related sales are recorded.
 
 Advertising Costs
 
 Advertising costs will be charged to operations when incurred.  The Company did not incur any advertising costs during the years ended December 31, 2011 and 2010 and the period February 20, 2007 (inception) to December 31, 2011.
 
 Income Taxes
 
 The Company accounts for income taxes using the asset and liability method, the objective of which is to establish deferred tax assets and liabilities for the temporary differences between the financial reporting and the tax bases of the Company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled.  A valuation allowance related to deferred tax assets is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized.
  F-7
 WATCHTOWER, INC.
 (A DEVELOPMENT STAGE COMPANY)
 NOTES TO FINANCIAL STATEMENTS
 
 
 NOTE 1 -   Summary of Significant Accounting Policies (Continued)
 
 Loss Per Share
 
 The computation of loss per share is based on the weighted average number of common shares outstanding during the period presented.  Diluted loss per common share is the same as basic loss per common share as there are no potentially dilutive securities outstanding (options and warrants).
 
 Research and Development
 
 Research and development costs will be charged to expense in the period incurred.  The Company did not incur any research and development costs during the year ended December 31, 2011 and 2010 and the period February 20, 2007 (inception) to December 31, 2011.
 
 Accounting Estimates
 
 The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reported period.  Actual results could differ from those estimates.
 
 Fair Value Measurements
 
 The authoritative guidance for fair value measurements defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or the most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and (iv) willing to transact.  The guidance describes a fair value hierarchy based on the levels of inputs, or which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:
 
 Level 1:  Quoted prices in active markets for identical assets or liabilities.
 
 Level 2:  Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active, or other inputs that are observable or corroborated by observable market data or substantially the full term of the assets or liabilities.
 
 Level 3:  Unobservable inputs that are supported by little or no market activity and that are significant to the value of the assets or liabilities.
 
 The Company's financial instruments include cash and equivalents and loans payable - related party.  These items are determined to be Level 1 fair value measurements.
  F-8
  WATCHTOWER, INC.
 (A DEVELOPMENT STAGE COMPANY)
 NOTES TO FINANCIAL STATEMENTS
 
 
 NOTE 1 -   Summary of Significant Accounting Policies (Continued)
 
 Accounting Standards Codification
 
 In June 2009, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification 105, "Generally Accepted Accounting Principles" ("ASC 105").  On July 1, 2009, the FASB completed ASC 105 as the single source of authoritative U.S. generally accepted accounting principles ("GAAP"), superseding all then-existing authoritative accounting and reporting standards, except for rules and interpretive releases for the SEC under authority of federal securities laws, which are sources of authoritative GAAP for Securities and Exchange Commission registrants.  ASC 105 reorganizes the authoritative literature comprising U.S. GAAP into a topical format that eliminates the current GAAP hierarchy.  ASC 105 is not intended to change U.S. GAAP and will have no impact on the Company's consolidated financial position, results of operations or cash flows.  However, since it completely supersedes existing standards, it will affect the way the Company references authoritative accounting pronouncements in its financial statements and other disclosure documents.
 
 Recently Issued Accounting Pronouncements
 
 In February 2010, the FASB issued updated guidance related to subsequent events.  As a result of this updated guidance, public filers must still evaluate subsequent events through the issuance date of their financial statements; however, they are not required to disclose the date in which subsequent events were evaluated in their financial statements disclosures.  This amended guidance became effective upon its issuance on February 24, 2010.
  NOTE 2 -   Going Concern
 
 The Company is a development stage company and has not commenced planned principal operations.  The Company had no revenues and has incurred a cumulative net loss of $127,165 for the period February 20, 2007 (inception) to December 31, 2011.  In addition, the Company had a working capital deficiency and stockholders' deficiency of $71,365 at December 31, 2011.  These factors raise substantial doubt about the Company’s ability to continue as a going concern.
 
 There can be no assurance that sufficient funds required during the next year or thereafter will be generated from operations or that funds will be available from external sources such as debt or equity financings or other potential sources.  The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force the Company to substantially curtail or cease operations and would, therefore, have a material adverse effect on its business.  Furthermore, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on the Company’s existing stockholders.
 
 The accompanying financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.
 
 The Company is attempting to address its lack of liquidity by raising additional funds, either in the form of debt or equity or some combination thereof.  During the year ended December 31, 2011, the Company borrowed $30,000 from a related party.  There can be no assurances that the Company will be able to continue to raise the additional funds it requires.
  F-9
 
 WATCHTOWER, INC.
 (A DEVELOPMENT STAGE COMPANY)
 NOTES TO FINANCIAL STATEMENTS
 
 NOTE 3 -   Loans Payable - Related Party
 
 Loans payable to related party at December 31, 2011 and 2010 bear interest at 5% per annum and are payable on demand.  They consist of advances made by an individual who is the new principal shareholder of the Company (see Note 8).  Interest expense on these loans was $ 2,676 and $1,504 for the years ended December 31, 2011 and 2010, respectively.
  NOTE 4 -   Common Stock
 
 In February 2007 the Company issued 8,000,000 shares of common stock to the Founders of the Company for $800.
 
 In April 2007 the Company sold 3,500,000 shares of common stock for $35,000 to private investors.
 
 On August 24, 2007 the Company sold 900,000 shares of common stock pursuant to its public offering for gross proceeds of $45,000.  Expenses of the public offering amounted to $25,000.
  NOTE 5 -   Preferred Stock
 
 The Company’s Board of Directors may, without further action by the Company’s stockholders, from time to time, direct the issuance of any authorized but unissued or unreserved shares of preferred stock in series and at the time of issuance, determine the rights, preferences and limitations of each series.  The holders of preferred stock may be entitled to receive a preference payment in the event of any liquidation, dissolution or winding-up of the Company before any payment is made to the holders of the common stock.  Furthermore, the board of directors could issue preferred stock with voting and other rights that could adversely affect the voting power of the holders of the common stock.
  NOTE 6 -    Extinguishment of Debt
 
 Indebtedness consisting of loans payable in the amount of $27,850 and related accrued interest of $1,786 was forgiven during 2009.
  NOTE 7 -   Income Taxes
 
 At December 31, 2011, the Company had available net-operating loss carryforwards for Federal tax purposes of approximately $127,000, which may be applied against future taxable income, if any, from 2027 to 2031.  Certain significant changes in ownership of the Company may restrict the future utilization of these tax loss carryforwards.
 
 At December 31, 2011, the Company had a deferred tax asset of approximately $43,000 representing the benefit of its net operating loss carryforwards.  The Company has not recognized the tax benefit because realization of the tax benefit is uncertain and thus a valuation allowance has been fully provided against the deferred tax asset.  The difference between the Federal Statutory Rate of 34% and the Company's effective tax rate of 0% is due to an increase in the valuation allowance of approximately $10,000 for the year ended December 31, 2011.
  F-10
 
 WATCHTOWER, INC.
 (A DEVELOPMENT STAGE COMPANY)
 NOTES TO FINANCIAL STATEMENTS
 
 
 NOTE 8 -   Change of Ownership and Management
 
 On April 30, 2009, the principal shareholders of the Company entered into a Stock Purchase Agreement which provided for the sale of 8,000,000 shares of common stock of the Company (the "Purchased Shares") to Sholom Drizin (the "Purchaser").  The consideration paid for the Purchased Shares, which represent 64.52% of the issued and outstanding common stock of the Company, was $50,000.  The Purchaser used his personal funds to purchase the purchased shares.
 
 Effective as of April 30, 2009, in connection with the acquisition of the Purchased Shares, (i) Yisroel Guttfreund resigned from his positions as an officer and director of the Company, (ii) Yechezkel Klohr resigned from his positions as an officer and director of the Company and (iii) the Board of Directors of the Company elected (a) Menachem M. Schneerson as President, Chief Executive Officer and a director of the Company and (b) Shmaya Glick, as Secretary and Treasurer.


F-11





Item 9.  Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.





The Company has had no disagreements with its certified public accountants with respect to accounting practices or procedures or financial disclosure.





Item 9A.  Controls and Procedures





EVALUATION OF DISCLOSURE CONTROLS





Our Chief Executive Officer and Principal Financial Officer, after evaluating the effectiveness of the Company’s “disclosure controls and procedures” as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Exchange Act as of December 31, 2011, the end of the period covered by this annual report, have concluded that our disclosure controls and procedures were effective to ensurethat the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, or persons performing similar functions, to allow timely decisions regarding disclosure.





A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. We believe our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective.





MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING





Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Rules 13a-15(f) under the Securities Exchange Act of 1934, internal control over financial reporting is a process designed by, or under the supervision of, the Company’s principal executive, principal operating and principal financial officers, or persons performing similar functions, and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.





The Company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records, that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Company’s management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.





Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.





14





The Company’s management, including the Company’s Chief Executive Officer and Principal Financial Officer assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2011. In making this assessment, management used the framework in “Internal Control - Integrated Framework” promulgated by the Committee of Sponsoring Organizations of the Treadway Commission, commonly referred to as the “COSO” criteria. Based on the assessment performed, management believes that as of December 31, 2011, the Company’s internal control over financial reporting was effective based upon the COSO criteria. Additionally, based on management’s assessment, the Company determined that there were no material weaknesses in its internal control over financial reporting as of December 31, 2011.





This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act that permits the Company to provide only management's report in this annual report





Changes in Internal Controls





There have been no changes in our internal control over financial reporting that occurred during our year ended December 31, 2011 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.





The Company’s management, including the chief executive officer and principal financial officer, do not expect that its disclosure controls or internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.





Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management’s override of the control. The design of any systems of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of these inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Individual persons perform multiple tasks which normally would be allocated to separate persons and therefore extra diligence must be exercised during the period these tasks are combined. Management is aware of the risks associated with the lack of segregation of duties at the Company due to the small number of employees currently dealing with general administrative and financial matters. Although management will periodically reevaluate this situation, at this point it considers the risks associated with such lack of segregation of duties and that the potential benefits of adding employees to segregate such duties do not justify the substantial expense associated with such increases. It is also recognized the Company has not designated an audit committee and no member of the board of directors has been designated or qualifies as a financial expert. The Company will address these concerns at the earliest possible opportunity.





Item 9B.  Other Information.





None.





15





PART III





Item 10.  Directors, Executive Officers and Corporate Governance.





Directors and Executive Officers





The following table sets forth certain information regarding the members of our board of directors and our executive officers:





Name

Age

Positions and Offices HeldMenachem M. Schneerson

55

Director, Chairman, President and ChiefExecutive OfficerShmaya Glick

42

Director, Treasurer, Secretary





Menachem M. Schneerson, is currently a real estate investor and manager and has been involved in real estate investment for over twenty years. Through Delson Holding, Mr. Schneerson is involved with the management of a portfolio of buildings in New York City.





Shmaya Glick, is currently an executive in KTS Development, a company he founded in 2005, where he manages real estate projects, from building rehabilitations and renovations to new developments. He has held management and executive positions in the construction management, general contracting, real estate development and finance industries for over 12 years.





Mr. Schneerson is married to Sholom Drizin’s daughter and Mr. Glick is married to Mr. Drizin’s niece. There are currently no arrangements or agreements regarding the compensation of either Mr. Schneerson or Mr. Glick with respect to serving as officers and directors of the Company.





None of our directors or officers is a director in any other U.S. reporting companies. None of our directors or officers has been affiliated with any company that has filed for bankruptcy within the last ten years. The Company is not aware of any proceedings to which any of the Company’s officers or directors, or any associate of any such officer or director, is a party adverse to the Company or any of the Company’s subsidiaries or has a material interest adverse to it or any of its subsidiaries.





Each director of the Company serves for a term of one year or until the successor is elected at the Company's annual shareholders' meeting and is qualified, subject to removal by the Company's shareholders. Each officer serves, at the pleasure of the board of directors, for a term of one year and until the successor is elected at the annual meeting of the board of directors and is qualified.





16





Section 16(a) Beneficial Ownership Reporting Compliance





Section 16(a) of the Securities Exchange Act of 1934 requires officers and directors of the Company and persons who own more than ten percent of a registered class of the Company's equity securities to file reports of ownership and changes in their ownership with the Securities and Exchange Commission, and forward copies of such filings to the Company. We believe, based solely on our review of the copies of such forms, that during the fiscal year ended December 31, 2011, all reporting persons complied with all applicable Section 16(a) filing requirements.





Auditors





Wolinetz, Lafazan & Company, P.C., an independent registered public accounting firm, is our auditor.





We do not currently have a Code of Ethics applicable to our principal executive, financial and accounting officers. We do not have a “financial expert” on the board or an audit committee or nominating committee.





Potential Conflicts of Interest





Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our directors. The Board of Directors has not established an audit committee and does not have an audit committee financial expert, nor has the Board established a nominating committee. The Board is of the opinion that such committees are not necessary since the Company has only two directors, and to date, such directors have been performing the functions of such committees. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation, nominations, and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executive officers or directors.





Involvement in Certain Legal Proceedings





There are no legal proceedings that have occurred within the past ten years concerning our directors, or control persons which involved a criminal conviction, a criminal proceeding, an administrative or civil proceeding limiting one's participation in the securities or banking industries, or a finding of securities or commodities law violations.





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Item 11.  Executive Compensation.





Summary Compensation





Since our incorporation on February 20, 2007, we have not paid any compensation to our directors or officers in consideration for their services rendered to our Company in their capacity as such.  We have no pension, health, annuity, bonus, insurance, stock options, profit sharing or similar benefit plans.





Employment Contracts. We have no employment agreements with any of our directors or executive officers.





Stock Options/SAR Grants. No grants of stock options or stock appreciation rights were made since our date of incorporation on February 20, 2007.





Long-Term Incentive Plans. As of December 31, 2011, we had no group life, health, hospitalization, or medical reimbursement or relocation plans in effect. Further, we had no pension plans or plans or agreements which provide compensation on the event of termination of employment or corporate change in control.





Outstanding Equity Awards at Fiscal Year-End. Since our incorporation on February 20, 2007, no stock options or stock appreciation rights were granted to any of our directors or executive officers.  We have no long-term equity incentive plans.





Compensation of Directors





Since our incorporation on February 20, 2007, no compensation has been paid to any of our directors in consideration for their services rendered in their capacity as directors.





Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.





The following table lists, as of March 23, 2012, the number of shares of common stock of our Company that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.





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The percentages below are calculated based on 12,400,000 shares of our common stock issued and outstanding as of March 23, 2012. We do not have any outstanding options, warrants or other securities exercisable for or convertible into shares of our common stock. Unless otherwise indicated, the address of each person listed is c/o Watchtower, Inc., 100 Henry Street, Brooklyn, New York 11201.





Name of Beneficial Owner

Number of

Shares

of Common

Stock

Beneficially

Owned

Percent of

Common Stock

Beneficially

OwnedSholom Drizin


8,000,000

64.5
%Menachem M. Schneerson


0

0
%Shmaya Glick


0

0
%All directors and executive officers as a group (two persons)


0

0
%




Item 13.  Certain Relationships and Related Transactions, and Director Independence.





Certain Relationships and Related Transactions





As of December 31, 2011 and 2010, loans payable to related party bear interest at 5% per annum and are payable on demand. Loans consist of advances made by Sholom Drizin, the principal shareholder of the Company. Interest expense on these loans was $2,676 and $1,504 for the years ended December 31, 2011 and 2010, respectively.





Director Independence





We are not subject to listing requirements of any national securities exchange or national securities association and, as a result, we are not at this time required to have our board comprised of a majority of “independent directors.” We do not believe that any of our directors currently meet the definition of “independent” as promulgated by the rules and regulations of the American Stock Exchange.





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Item 14.  Principal Accounting Fees and Services.





Our principal independent accountant is Wolinetz, Lafazan & Company, P.C. Their pre-approved fees billed to the Company are set forth below:




Fiscal Year Ended December 31, 2011


Fiscal Year Ended December 31, 2010Audit Fees

$
11,000


$
11,000Audit Related Fees

$
0


$
0Tax Fees

$
0


$
0All Other Fees

$
0


$
0





As of December 31, 2011, the Company did not have a formal documented pre-approval policy for the fees of the principal accountant. The Company does not have an audit committee. The percentage of hours expended on the principal accountant's engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was 0%.





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PART IV





Item 15.  Exhibits and Financial Statement Schedules.





Exhibit

Description3.1

Certificate of Incorporation of Registrant (annexed to the Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on July 27, 2007 and incorporated herein by reference)3.2

By-Laws of Registrant (annexed to the Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on July 27, 2007 and incorporated herein by reference)10.1

Form of Regulation S Subscription Agreement (annexed to the Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on July 27, 2007 and incorporated herein by reference)10.2

Form of Investment Confirmation for the offering (annexed to the Current Report on Form 8-K filed with the Securities and Exchange Commission on August 29, 2007 and incorporated herein by reference)31.1

Certification pursuant to Section 302 of the Sarbanes-Oxley Act31.2

Certification pursuant to Section 302 of the Sarbanes-Oxley Act32.1

Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley32.2

Certification of Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley





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SIGNATURES





I Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.






WATCHTOWER, INC.Dated: March 27, 2012
By:
/s/ Menachem M. SchneersonName:
Menachem M. SchneersonTitle:
President, Chief Executive Officer,and Director (Principal Executive Officer)





Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.






Dated: March 27, 2012
By:
/s/ Menachem M. SchneersonName:
Menachem M. SchneersonTitle:
President, Chief Executive Officer,and Director (Principal Executive Officer)




Dated: March 27, 2012
By:
/s/ Shmaya GlickName: Shmaya GlickTitle:   Treasurer, Secretary and Director(Principal Financial and Accounting Officer)
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