SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
December 29, 1997
Date of Report (Date of earliest event reported)
WHITE CLOUD EXPLORATION, INC.
(Exact name of registrant as specified in its charter)
Utah 0114244 84-0959153
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
116 Stanyan, San Francisco, California 94118
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): 415/387-3135<PAGE>
Item 1. Changes in Control of Registrant.
Pursuant to a Stock and Asset Contribution
Agreement (the "Watchout Agreement"), and as described in
Item 2, effective as of December 29, 1997, the shareholders
of Watchout!, a California corporation ("Watchout"), received
from White Cloud Exploration, Inc., a Utah corporation
("Registrant"), 11,296,300 newly-issued shares of
Registrant's Common Stock in exchange for 100% of the
outstanding shares of Watchout (the "Watchout Acquisition").
The 11,296,300 shares represent approximately 74% of the
outstanding shares of the Common Stock of Registrant on a
fully-diluted basis. Prior to the closing of the Watchout
Acquisition, Watchout was controlled by Robert Galoob and
David Galoob.
Pursuant to a LLC Interest and Asset Contribution
Agreement (the "Goldpoint Agreement," and together with the
Watchout Agreement, the "Agreements"), the members (i.e.,
equity holders) of Goldpoint International, LLC, a Delaware
limited liability company ("Goldpoint"), effective as of
December 29, 1997, contemporaneously with the closing of the
Watchout Acquisition, received from Registrant 2,140,000
newly-issued shares of Registrant's Common Stock in exchange
for 100% of the membership interests in Goldpoint (the
"Goldpoint Acquisition," and together with the Watchout
Acquisition, the "Acquisitions"). The 2,140,000 shares
represent approximately 14% of the outstanding shares of
Common Stock of Registrant on a fully-diluted basis. Prior
to the closing of the Goldpoint Acquisition, Goldpoint was
controlled by Mr. Stephen J. Petre.
As of the closing of the Acquisitions, the
following persons will own more than 5% of Registrant's
outstanding Common Stock (on a fully diluted basis):
David Galoob: 4,327,268 shares (28.3%)
Robert Galoob: 2,596,378 shares (17.0%)
Mark Hollo: 1,819,963 shares (12.0%)
Arch Angel
Holding Company, LLC: 1,580,000 shares (10.3%)
William C. Meier: 1,022,213 shares (6.7%)
Martin Sands: 909,981 shares (5.9%)
Steven Sands: 909,981 shares (5.9%)
Martin Sands and Steven Sands are executive
officers, and Mark Hollo is a managing director of, Sands
Brothers & Co., Ltd. (see Item 2; BACKGROUND--Selling
Agreement). Shares held by Messrs. Martin and Steven Sands
and Mr. Hollo are subject to forfeiture under certain
circumstances. Mr. Hollo and Sands Brothers & Co., Ltd. each
also hold Warrants to purchase 25,000 shares of Registrant's
-2-<PAGE>
common stock at $.01 per share. These Warrants were issued
in connection with the Larkin and Watchout-Goldpoint
Partners, L.P. loans described in Item 2; BACKGROUND--Bridge
Financing. The shares held in the name of Arch Angel Holding
Company are beneficially owned by Stephen J. Petre (see
above). Of the 1,022,213 shares listed above as owned by
William C. Meier, 772,213 are held in the name of WCM
Investments, the beneficially owner of which is Mr. Meier
(see below).
Prior to the closing of the Acquisitions, White
Cloud was controlled by William C. Meier through his
beneficial ownership of WCM Investments, Inc., a Texas
corporation ("WCM Investments"). WCM Investments obtained
control of Registrant by purchasing on April 17, 1997,
5,010,750 (pre-reverse stock split) shares of Registrant's
Common Stock from Joanna Branch, Inc., Ronsdon, P.L.C., and
Canyon Peak, Inc. (collectively, "Sellers") for $10,000 in
cash, a $15,000 promissory note, and a $85,000 promissory
note. On May 14, 1997, WCM Investments purchased from
Registrant 7,500,000 (pre-reverse stock split) newly-issued
shares of Registrant's Common Stock for $7,500 in cash. The
12,510,750 shares were automatically converted into 72,213
pursuant to a 173.25 to 1 reverse stock split of Registrant's
Common Stock and represented 72.2% of the shares of Common
Stock of Registrant outstanding immediately prior to the
closing of the Acquisitions.
The Sellers acquired control of Registrant pursuant
to a Purchase Agreement dated October 10, 1996, pursuant to
which Sellers purchased from CSI, Inc. (which previously
controlled Registrant), for $25,000 cash, 4,900,000 (pre-
reverse stock split) shares of Registrant's Common Stock,
representing approximately 50% of the then outstanding shares
of Registrant's Common Stock.
Effective as of December 29, 1997, pursuant to the
Agreements, and contemporaneously with the consummation of
the Acquisitions, Robert Galoob and David Galoob accepted
appointments as directors of Registrant from the prior
directors of Registrant, each of whom resigned as directors.
Item 2. Acquisition or Disposition of Assets.
The Watchout Agreement was entered into effective
May 30, 1997, and the Watchout Acquisition consummated
pursuant thereto effective as of December 29, 1997. Pursuant
to the Watchout Agreement, the shareholders of Watchout
contributed to Registrant 251,354 shares of Watchout's common
stock for an aggregate consideration of 11,296,300 shares of
Registrant's Common Stock. The number of shares of
-3-<PAGE>
Registrant's Common Stock issued pursuant to the Watchout
Agreement was determined by reference to the proportionate
post-Acquisition equity ownership of Registrant negotiated by
the pre-Acquisition Watchout shareholders, Goldpoint members
and Registrant shareholders.
As a result of the Watchout Acquisition, Registrant
owns 100% of the issued and outstanding shares of Watchout.
Watchout designs, develops and intends to market worldwide
watches and other consumer goods utilizing proprietary
colored liquid crystal display technology.
The Goldpoint Agreement was entered into
contemporaneously with the Watchout Agreement and the
Goldpoint Acquisition was consummated contemporaneously with
the consummation of the Watchout Acquisition. Pursuant to
the Goldpoint Agreement, the members of Goldpoint contributed
to Registrant an aggregate of 100% of the equity interests in
Goldpoint for an aggregate consideration of 2,140,000 shares
of Registrant's Common Stock. The number of shares of
Registrant's Common Stock issued pursuant to the Goldpoint
Agreement was determined by reference to the proportionate
post-Acquisition equity ownership of Registrant negotiated by
the pre-Acquisition Watchout shareholders, Goldpoint members
and Registrant shareholders.
As a result of the Goldpoint Acquisition,
Registrant owns 100% of the outstanding membership interests
in Goldpoint. Goldpoint designs and markets fine writing
instruments.
Pursuant to the Agreements, in the event that:
(i) Watchout or Goldpoint does not provide the financial
information necessary for Registrant to comply with its
obligations to provide such information in connection with
Registrant's filing obligations under the Securities Exchange
Act of 1934, as amended, or (ii) the closing of the Private
Placement (as defined below) does not occur, the holders of
the majority of Registrant's Common Stock outstanding prior
to the Acquisition, have the right but not the obligation to
rescind the Watchout Acquisition and/or the Goldpoint
Acquisition, as the case may be.
The descriptions contained herein of the Agreements
and the Acquisitions are qualified in their entirety by
reference to the Watchout Agreement, dated as of May 30,
1997, by and among Registrant, Watchout and the shareholders
of Watchout, and the Goldpoint Agreement, dated as of May 30,
1997, by and among Registrant, Goldpoint and the members of
Goldpoint, filed as Exhibits 7.2 and 7.1, respectively, to
Registrant's Form 8-K dated September 24, 1997.
-4-<PAGE>
BACKGROUND
Selling Agreement
On February 5, 1997, Watchout and Sands Brothers &
Co., Ltd. ("Sands Brothers") entered into a Selling Agreement
pursuant to which Sands Brothers will act as placement agent
in a private placement of $6,000,000 (at least $3,000,000 of
which shall provide immediately available funds to the issuer
at the closing of the private placement) of equity securities
to be issued by an entity with shares registered under the
Securities Exchange Act of 1934, as amended (the "Private
Placement"). The Agreements were entered into and the
Acquisitions consummated to facilitate the Private Placement.
Bridge Financing
Pursuant to agreements between Sands Brothers and
Watchout, Sands Brothers agreed to arrange bridge financing
for Watchout to use as working capital during the period
between execution of the Agreements and consummation of the
Private Placement. Pursuant to such agreements, Sands
Brothers arranged the loans described below.
On September 3, 1997, Registrant issued Promissory
Notes in the amounts of $50,000 to Raymond J. Larkin and
$150,000 to Watchout-Goldpoint Partners, L.P., an entity
which is not otherwise an affiliate of Registrant, Watchout!
or Goldpoint. The loaned funds were then made available to
Watchout and Goldpoint as working capital to fund their
respective business operations until the Acquisitions and
Private Placement are consummated. In connection with such
loans, Mr. Larkin and Watchout-Goldpoint Partners, L.P.,
Sands Brothers and Mark Hollo were issued Warrants to
purchase 75,000, 225,000, 25,000 and 25,000 shares of
Registrant's Common Stock, respectively, at $.01 per share.
On September 19, 1997, Watchout issued Promissory
Notes in the amounts of $166,000 and $84,000 to John Bader
and Wayne E. Williams, respectively. The loaned funds were
then made available to Watchout and Goldpoint to be used as
working capital for their respective business operations.
Robert Galoob and David Galoob have jointly and severally
guaranteed $100,000 of the foregoing loans. Each of the
foregoing Notes are secured by an Assignment of Contract
Rights and related Security Agreement. Upon consummation of
the Private Placement, Messrs. Bader and Williams are
entitled to be issued Warrants to purchase 166,000 and 84,000
shares of Registrant's Common Stock, respectively, at $.10
per share.
-5-<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
As of the date of filing this Current Report on
Form 8-K, it is impracticable for the Registrant to provide
the financial statements required by this Item 7(a). In
accordance with Item 7(a)(4) of Form 8-K, such financial
statements shall be filed by amendment to this Form 8-K no
later than 60 days after December 29, 1997.
(b) Pro Forma Financial Information.
As of the date of filing this Current Report on
Form 8-K, it is impracticable for the Registrant to provide
the pro forma financial information required by this Item
7(b). In accordance with Item 7(b) of Form 8-K, such
financial statements shall be filed by amendment to this Form
8-K no later than 60 days after December 29,1997.
(c) Exhibits.
None.
-6-<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned hereunto
duly authorized.
WHITE CLOUD EXPLORATION, INC.
(Registrant)
/s/ Robert Galoob
_____________________________
Robert Galoob, President
Dated: January 7, 1998
-7-<PAGE>
