U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File Number 0-24798
COLECCIONES DE RAQUEL, INC.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 93-1123005
- --------------------------------------------------------------------------------
(State or other jurisdiction (IRS Employer
of Incorporation) Identification Number)
9873 S. Santa Monica Blvd., Beverly Hills, California 90212
-------------------------------------------------------------
(Address of principal executive offices)
(310) 203-9240
---------------------------
(Issuer's telephone number)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 during the past 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 |X| No |_|
At June 30, 1998, 24,000,000 shares of the Company's $.0001 par value common
stock were outstanding.
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statements PAGE
----
(a) Balance Sheet (Unaudited) - June 30, 1998 ...................... 1
(b) Statements of Operations (Unaudited) - Six Months ended
June 30, 1998 and 1997 Period from Inception (December 1,
1987) to June 30, 1998 ......................................... 2
(c) Statements of Operations (Unaudited) - Second Quarter ended
June 30, 1998 and 1997 and Prior 1998 First Quarter ............ 3
(d) Statement of Stockholder's Equity (Unaudited) Period from
Inception (December 1, 1987) to June 30, 1998 .................. 4
(e) Statements of Cash Flows (Unaudited) - Six Months ended June
30, 1998 and 1997 and Period from Inception (December 1, 1987)
to June 30, 1998 ............................................... 5
(f) Notes to Unaudited Financial Statements ........................ 6
ITEM 2. Management's Discussion and Analysis or Plan of Operation ...... 8
PART II - OTHER INFORMATION ................................................ 9
ii
<PAGE>
Colecciones de Raquel, Inc.
(A Development Stage Company)
Balance Sheet
(Unaudited)
June 30, 1998
-------------
Assets
Current Assets
Cash and equivalents $ 335,805
Merchandise Inventory 70,866
Deposits paid and other assets 10,143
-----------
Total Current Assets $ 416,814
Equipment, Furniture & Fixtures, net of accum. depr. $23,319 22,110
-----------
Total Assets $ 438,924
===========
Liabilities and Stockholders Equity
Current Liabilities
Accounts payable $ 366
Taxes payable 485
-----------
Total current liabilities $ 851
Stockholder's equity
Common stock - $.0001 par value, 50,000,000 shares authorized,
24,000,000 shares issued and outstanding 2400
Additional paid in capital 1,375,444
Deficit accumulated during the development stage (939,771)
Total stockholder's equity 438,073
Total liabilities and stockholder's equity $ 438,924
===========
See accompanying notes to financial statements 1
<PAGE>
Colecciones de Raquel, Inc.
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Period from
Inception (Dec.1, 1987)
to
Six Months Ended June 30, June 30,
1998 1997 1998
---- ---- ----
<S> <C> <C> <C>
Sales 5,292 4,622 31,790
Cost of Goods Sold 2,772 1,740 13,925
----------- ----------- -----------
Gross Profit 2,520 2,882 17,865
Selling, general, and administrative expenses 132,342 169,455 1,048,956
----------- ----------- -----------
(Loss) from operations (129,822) (166,573) (1,031,091)
Interest Income 9,978 15,937 74,521
Litigation settlement income 20,000
Loss before provision for income taxes (119,844) (150,636) (936,570)
Provision for income taxes 4,000
Net Loss $ (119,844) $ (150,636) $ (940,570)
=========== =========== ===========
Net Loss per share $ (.01) $ (.006)
=========== ===========
Weighted average number of common shares 24,000,000 24,000,000
=========== ===========
</TABLE>
See accompanying notes to financial statements 2
<PAGE>
Colecciones de Raquel, Inc.
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Second Quarter First Quarter
Ended June 30, March 31,
1998 1997 1998
---- ---- ----
<S> <C> <C> <C>
Sales 3,092 1,827 2,199
Cost of Goods Sold 1,601 642 1,170
------------ ------------ ------------
Gross Profit 1,491 1,185 1,029
Selling, general, and administrative expenses 75,246 79,945 57,096
------------ ------------ ------------
(Loss) from operations (73,755) (78,760) (56,067)
Interest Income 4,627 8,118 5,351
Loss before provision for income taxes (69,128) (70,642) (50,716)
Provision for income taxes
Net Loss $ (69,128) $ (70,642) (50,716)
============ ============ ============
Net Loss per share $ (.01) $ (.01) $ (.01)
============ ============ ============
Weighted average number of common shares 24,000,000 24,000,000 24,000,000
============ ============ ============
</TABLE>
See accompanying notes to financial statements 3
<PAGE>
COLECCIONES DE RAQUEL, INC.
(A Development Stage Company)
Statement of Stockholders' Equity
For the Period from December 1, 1987 (inception) to March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Preferred Stock Common Stock
------------------- ---------------------- Deficit
Additional MMI During the Total
Number Number Paid-In Settlement Development Shareholder's
of Shares Amount of Shares Amount Capital Agreement Stage Equity
--------- --------- ------------ ------- ---------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net loss from the
inception through
December 31, 1992 -- $ -- -- $ -- $ -- $ -- $ (29,178) $ (29,178)
Net Loss, 1993 -- -- -- -- -- -- (7,462) (7,462)
-------- --------- ------------ ------- ---------- ----------- --------- -----------
Balance, Dec. 31, 1993 -- -- -- -- -- -- (36,640) (36,640)
Common Stock Issued
In reorganization -- -- 20,000,000 2,000 34,754 -- -- 36,754
Common Stock Issued in IPO -- -- 1,000,000 100 90,990 -- -- 91,090
Preferred Stock exchanged
for Common Stock per IPO 100,000 100 (20,000,000) (2,000) 1,900 -- -- --
Exercise of A Warrants -- -- 1,000,000 100 249,900 -- -- 250,000
MMI Settlement Agreement -- -- -- -- -- (250,000) -- (250,000)
Net Loss, 1994 -- -- -- -- -- -- (58,052) (58,052)
-------- --------- ------------ ------- ---------- ----------- --------- -----------
Balance, Dec. 31, 1994 100,000 100 2,000,000 200 377,544 (250,000) (94,692) 33,152
Exercise of B Warrants -- -- 2,000,000 200 999,800 -- -- 1,000,000
MMI settlement agreement -- -- -- -- -- (1,000,000) -- (1,000,000
Cash received from MMI -- -- -- -- -- 849,875 -- 849,875
Net loss, 1995 -- -- -- -- -- -- (126,518) (126,518)
-------- --------- ------------ ------- ---------- ----------- --------- -----------
Balance, Dec. 31, 1995 100,000 100 4,000,000 400 1,377,344 (400,125) (221,210) 756,509
Cash received from MMI -- -- -- -- -- 400,125 -- 400,125
Net Loss -- -- -- -- -- -- (--) (--)
-------- --------- ------------ ------- ---------- ----------- --------- -----------
Cash received from MMI -- -- -- -- -- -- 400,125 400,125
Common Stock exchanged
for Preferred Stock (100,000) (100) 20,000,000 2,000 (1,900)
Net Loss (308,137) (308,137)
-------- --------- ------------ ------- ---------- ----------- --------- -----------
Balance Dec. 31, 1996 -- $ -- 24,000,000 $ 2,400 $1,375,444 $ -- $(529,347) $ 848,497
Net Loss (290,579) (290,579)
-------- --------- ------------ ------- ---------- ----------- --------- -----------
Balance Dec. 31, 1997 -- $ -- 24,000,000 $ 2,400 $1,375,444 $ -- $(819,926) $ 557,918
Net Loss 6 months -- $ -- $ $ $(119,844) $ (119,844)
-------- --------- ------------ ------- ---------- ----------- --------- -----------
Balance June 30, 1998 -- $ -- 24,000,000 $ 2,400 $1,375,444 $ -- $(939,771) $ 438,073
======== ========= ============ ======= ========== =========== ========= ===========
</TABLE>
4 See accompanying notes to financial statements
<PAGE>
Colecciones de Raquel, Inc.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Period from
For the Period Ended Inception to Current
June 30, December 31, 1987 -
1998 1997 June 30, 1998
-------- -------------------------------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss $(69,128) $(79,994) $ (939,770)
Adjustments to reconcile net loss to net cash used in
operating activities
Depreciation 2,263 2,154 23,319
(Increase) decrease in
Inventory 647 1,663 (70,856)
Prepaid expenses & other assets (674) (4,412) (8,014)
Deposits 1600 70 (2,130)
(Increase) decrease in
Accounts Payable & accrued expenses (4) 185 842
-------- -------- ----------
Net cash used in operating activities $(65,296) $(80,334) $ (996,609)
-------- -------- ----------
Cash flows from investing activities
Purchase of Equipment (736) (1,783) (45,430)
Leasehold Improvements (0) (129)
--------
Net cash used in investing activities (736) (1,912) (45,430)
Cash flows from financing activities
Proceeds from MMI settlement agreement -- -- $1,250,000
Proceeds from sale of common stock -- -- 91,090
Payments for offering costs -- -- --
Loans & paid-in capital from preferred stockholder -- -- 36,754
-------- -------- ----------
Net cash provided by financing activities -- -- $1,377,844
-------- -------- ----------
Net increase(decrease) in cash and cash
equivalents $(66,032) $(82,246) $ 335,805
-------- --------
Cash & cash equivalents, beginning of period $401,837 $665,484 862,776
-------- -------- ----------
Cash & cash equivalents, end of period $335,805 $583,238 $ 796,744
======== ======== ==========
Interest received $ 4,627 $ 0 $ 74,521
======== ======== ==========
Taxes paid $ 800 $ 0 $ 4,000
======== ======== ==========
</TABLE>
5
<PAGE>
Colecciones de Raquel, Inc.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
1. Business
Colecciones de Raquel, Inc. (The "Company") designs and markets cosmetics,
skin care, fragrance, and lingerie. The Company's cosmetics line is
specifically designed for golden skin tones such as sallow and olive
complexions.
2. Unaudited financial statements
The financial statements as of June 30, 1998 and for the periods ended
June, 1998 and 1997 included herein are unaudited; however, such
information reflects all adjustments consisting of normal recurring
adjustments, which are, in the opinion of management, necessary for a fair
presentation of the information for such periods. In addition, the results
of operation for the interim periods are not necessarily indicative of
results for the entire year. The accompanying financial statements should
be read in conjunction with the Company's annual report filed on Form
10-KSB.
3. Warrants and related settlement agreement
In August 1994, the Company completed an initial public offering of its
securities. The Company sold 1,000,000 units at $.10 per unit for gross
proceeds of $100,000 on a self-underwritten basis. Expenses of the
offering were $8,910. Each unit consists of one share of common stock and
one Class A Warrant. The Class A Warrants were exercisable for one share
of common stock and two Class B Warrants at a price of $.25 each. The
Class B Warrants were exercisable for one share of common stock and one
Class C Warrant at a price of $.50 each. The Class C warrants were to be
exercisable for one share of common stock at a price of $1.00 each.
In February 1995, all of the B Warrants were exercised in a transaction
which the Company claims was fraudulent. Although the Company received no
portion of the $250,000 exercise price, Units consisting of one share of
common stock and two B Warrants were issued by the Company's transfer
agent without the knowledge of the Company's officers or directors to
persons purportedly exercising the A Warrants.
In February 1995, all of the B Warrants were exercised in a transaction
which the Company claims was fraudulent. Although the Company received no
portion of the $1,000,000 exercise price, Units consisting of one share of
common stock and one C warrant were issued by the Company's transfer agent
without the knowledge of the Company's officers or directors to persons
purportedly exercising the B Warrants.
The shares of common stock issued in the Company's initial public offering
and upon exercise of the A Warrants and B Warrants (collectively,
"Shares") have been publicly traded. The C Warrants were also purportedly
exercised without the receipt by the Company of the exercise price, the
Company believes that the shares issued upon exercise of the C Warrants
were not traded and the Company has canceled the C Warrants and the shares
issued upon their exercise.
In September 1995, the Company entered into an Agreement with Moore
McKenzie, Inc., a Philippine corporation ("MMI"), which purchased and
resold the shares following their exercise by third party entities. MMI
has expressly denied any involvement in the exercise of the A Warrants, B
Warrants, and C Warrants. Solely for the purpose of protecting and
preserving its investment in the Shares and its reputation and goodwill,
MMI agreed to pay the Company the exercise price of the A Warrants
($250,000) and B Warrants ($1,000,000). As of February 29, 1996, the
Company had received all of the settlement.
6
<PAGE>
3. Warrants and related settlement agreement (continued)
Further, the Company agreed to sell MMI an additional 1,000,000 shares of
common stock at a price of $1.00 per share in place of the shares which
could have been purchased upon exercise of the canceled C Warrants. The
option to purchase the additional 1,000,000 shares at $1.00 per share
expired in September, 1996. MMI did not purchase the additional 1,000,000
and no additional shares were issued. As part of the Agreement with MMI,
the Company agreed to assist and cooperate with MMI in any action against
third parties to recover MMI's damages suffered as a result of or in
connection with MMI's purchase of the Shares.
4. Legal proceedings
There are no material pending legal proceedings to which the Company or
the property of the Company are subject. In addition, no proceedings are
known to be contemplated by a governmental authority against the Company
or any officer or director of the Company.
5. Leases
On October 1, 1995, the Company entered into a two year lease for a store
front located in Beverly Hills, California. In October, 1997 this lease
was renewed for another 2 years. The space is approximately 700 square
feet, and the monthly rent is $1,100. In May 1996, the Company entered
into a three year lease for a 900 square foot store front in downtown Los
Angeles, California. Monthly rent for the space, which the Company is
utilizing for its second showroom/boutique location, is $1,451 per month,
this lease ends on June 30, 1999.
7
<PAGE>
ITEM 2. Management's Discussion And Analysis Or Plan Of Operation
Material Changes in Results of Operations
The 1998 Second Quarter revenues slightly exceeded those of 1997, although
Cost of Goods Sold was slightly higher in 1998, which was due to a
reduction of retail prices on the lingerie. Selling, general, and
administrative expenses for the 1998 Second Quarter year to date period
were slightly lower than 1997's Second Quarter year-to-date.
Material Changes in Financial Condition
During the three month period ended June 30, 1998 the Company's cash
position decreased due to the continued low level of sales relative to its
cost of operations, and lack of offsetting inflows from financing
activities. Inventory levels were slightly lower from year-end 1997 due to
sales.
The Company's available cash at June 30, 1998 is expected to be sufficient
to defray the Company's operating expenses through calendar year 1998. The
Company's continued existence will be dependent on its ability to generate
significant product sales and ultimately to achieve profitable operations.
8
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no other material pending legal proceedings to which the
Company or the property of the Company are subject. In addition, no
proceedings are known to be contemplated by a governmental authority
against the Company or any officer or director of the Company.
Item 2. Changes in Securities
Inapplicable.
Item 3. Defaults Upon Senior Securities
Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders
Inapplicable.
Item 5. Other Information
On May 10, 1998, the Company entered into a Consulting Service
Agreement with Mr. John Vanover. (See S/8 filing on 6/17/98)
On May 20, 1998, the Company entered into a sales contract with Con
Estilo Latino. The Company's products will be featured in high-quality, full
color Spanish language catalog that will be issued in the Fall of 1998. The
proceeds will be divided on a 50/50 basis for each sale. The catalog's
circulation is 125,000 and targets the Hispanic Market.
On June 1, 1998, the Company entered into a Consulting Service
Agreement with A. R. Hardy and Associates. (See S/8 filing on 6/17/98)
Item 6. Exhibits and Reports on Form 8K
(a) Exhibits
Inapplicable.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the period covered by this
report.
9
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
COLECCIONES DE RAQUEL, INC.
(Registrant)
Dated: August 13, 1998 By: /s/ Raquel Zepeda
-------------------------------------------
Raquel Zepeda, Chief Financial Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 10-QSB FOR
THE QUARTLERLY PERIOD ENDING JUNE 30, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 335,805
<SECURITIES> 0
<RECEIVABLES> 10,143
<ALLOWANCES> 0
<INVENTORY> 70,866
<CURRENT-ASSETS> 416,814
<PP&E> 22,110
<DEPRECIATION> (23,319)
<TOTAL-ASSETS> 438,924
<CURRENT-LIABILITIES> 851
<BONDS> 0
0
0
<COMMON> 2,400
<OTHER-SE> 438,073
<TOTAL-LIABILITY-AND-EQUITY> 438,924
<SALES> 3,092
<TOTAL-REVENUES> 6,118
<CGS> 1,601
<TOTAL-COSTS> 1,601
<OTHER-EXPENSES> 75,246
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (69,128)
<INCOME-TAX> 0
<INCOME-CONTINUING> (69,128)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (69,128)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
