<PAGE>
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 March 31, 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 March 31, 1998, 24,000,000 shares of the Company's $.0001 par value common
stock were outstanding.
<PAGE>
PART 1 - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
ITEM 1. Financial Statements
PAGE
<S> <C>
(a) Balance Sheet (Unaudited) -March 31, 1998. . . . . . . . . . . . 1
(b) Statements of Operations (Unaudited) - Three Months
ended March 31, 1998 and 1997 Period from
Inception (December 1, 1987) to March 31, 1998 . . . . . . . . . 2
(c) Statements of Statements of Operations (Unaudited) -First Quarter
ended March 31, 1998 and 1997 and Prior 1997 Third Quarter . . . 3
(d) Statement of Stockholder's Equity (Unaudited) -
Period from Inception (December 1, 1987) to March 31, 1998 . . . 4
(e) Statements of Cash Flows (Unaudited) - Three Months
ended March 31, 1998 and 1997 and Period from
Inception (December 1, 1987) to March 31, 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
</TABLE>
ii
<PAGE>
COLECCIONES DE RAQUEL, INC.
(A Development Stage Company)
BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
March 31, 1998
--------------
ASSETS
<S> <C>
Current Assets
Cash and equivalents $401,837
Merchandise Inventory 71,504
Deposits paid and other assets 11,070
--------
Total Current Assets $484,410
Equipment, Furniture & Fixtures, net of accum. depr. $21,056 23,637
--------
Total Assets $508,048
--------
--------
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Accounts payable $482
Taxes payable 365
--------
Total current liabilities $847
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 (870,643)
Total stockholder's equity 507,201
Total liabilities and stockholder's equity $508,048
--------
--------
</TABLE>
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
Three Months Ended March 31, March 31,
1998 1997 1998
---- ---- ----
<S> <C> <C> <C>
Sales 2,199 1,827 28,698
Cost of Goods Sold 1,170 642 12,324
----- ----- ------
Gross Profit 1,029 1,185 16,374
Selling, general, and administrative expenses 57,096 79,945 973,710
------ ------ -------
(Loss) from operations (56,067) (78,760) (957,336)
Interest Income 5,351 8,118 69,894
Litigation settlement income 20,000
Loss before provision for income taxes (50,716) (70,642) (867,442)
Provision for income taxes 3,200
Net Loss ($50,716) ($70,642) ($870,642)
--------- --------- ----------
--------- --------- ----------
Net Loss per share ($.01) ($.0025)
------ --------
------ --------
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>
First Quarter Third Quarter
Ended March 31, September 30,
1998 1997 1997
---- ---- ----
<S> <C> <C> <C>
Sales 2,199 1,827 1,166
Cost of Goods Sold 1,170 642 552
----- ----- -----
Gross Profit 1,029 1,185 614
Selling, general, and administrative expenses 57,096 79,945 72,382
------ ------ ------
(Loss) from operations (56,067) (78,760) (71,768)
Interest Income 5,351 8,118 7,173
Loss before provision for income taxes (50,716) (70,642) (64,595)
Provision for income taxes
Net Loss ($50,716) ($70,642) (64,595)
--------- --------- --------
--------- --------- --------
Net Loss per share ($.01) ($.0025) ($.001)
------ -------- -------
------ -------- -------
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
--------- ------- ----------- ------- --------- ---------- ----------- -----------
Balance March 31, 1998 - $ - 24,000,000 $2,400 $1,375,444 $ - ($ 870,643) $ 507,201
--------- ------- ----------- ------- --------- ---------- ----------- -----------
--------- ------- ----------- ------- --------- ---------- ----------- -----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS 4
<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
March 31, December 31, 1987 -
1998 1997 March 31, 1998
---------- ----------- -------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (50,716) $ (70,642) $(870,642)
Adjustments to reconcile net loss to net cash used in
operating activities
Depreciation 2,235 2,087 21,056
(Increase) decrease in
Inventory 1,557 618 (71,503)
Prepaid expenses & other assets (570) 93 (7,340)
Deposits (1,600) 0 (3,730)
(Increase) decrease in
Accounts Payable & accrued expenses (9,822) (7,990) 846
-------- -------- --------
Net cash used in operating activities $(58,916) $(75,834) $(931,313)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Equipment (186) (2,747) (44,694)
Net cash used in investing activities (186) (2,747) (44,694)
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 - - $1,377,844
-------- -------- --------
Net increase(decrease) in cash and cash ($ 59,102) ($ 78,581) $401,837
equivalents -------- --------
CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD $460,939 $744,065 $460,939
-------- -------- --------
CASH & CASH EQUIVALENTS, END OF PERIOD $401,837 $665,484 $401,837
-------- -------- --------
-------- -------- --------
INTEREST RECEIVED $ 5,351 $ 8,118 $ 69,894
-------- -------- --------
-------- -------- --------
TAXES PAID $ 0 $ 0 $ 3,200
-------- -------- --------
-------- -------- --------
</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 March 31, 1998 and for the periods
ended March, 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 First 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 First Quarter year
to date period were slightly lower than 1997's First Quarter
year-to-date. This decrease of 20 percent in General and
Administrative expenses is largely attributed to a decrease in
personnel and expenses.
MATERIAL CHANGES IN FINANCIAL CONDITION
During the three month period ended March 31, 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 March 31, 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 March 6, 1998, the Company entered into a twelve month distribution
agreement with R-Town Entertainment for the sale of both the CD entitled
"Sabor A Mi" featuring the Artist "Raquel Zepeda" and the fragrance "Sabor A
Mi". R-Town Entertainment specializes in distributing music by Latino
Artists throughout the U.S. And Mexico. Additionally, the Company continues
to sell its products through its two locations in Beverly Hills and downtown
Los Angeles.
Further, the Company is approaching local boutiques for sales and
distribution of its products. As of March 1998, the Company has received
minimal orders.
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: May 15, 1998 By: /s/ RAQUEL ZEPEDA
------------------------
Raquel Zepeda,
Chief Financial Officer
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 10-QSB FOR
THE QUARTERLY PERIOD ENDING MARCH 31, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> MAR-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 401,837
<SECURITIES> 0
<RECEIVABLES> 11,070
<ALLOWANCES> 0
<INVENTORY> 71,504
<CURRENT-ASSETS> 484,410
<PP&E> 23,637
<DEPRECIATION> (21,056)
<TOTAL-ASSETS> 508,048
<CURRENT-LIABILITIES> 847
<BONDS> 0
0
0
<COMMON> 2,400
<OTHER-SE> 507,201
<TOTAL-LIABILITY-AND-EQUITY> 508,048
<SALES> 2,199
<TOTAL-REVENUES> 6,380
<CGS> 1,029
<TOTAL-COSTS> 1,029
<OTHER-EXPENSES> 57,097
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (50,716)
<INCOME-TAX> 0
<INCOME-CONTINUING> (50,716)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (50,716)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
