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 September 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 September 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) -September 30, 1998 ................. 1
(b) Statements of Operations (Unaudited) - Nine months ended
September 30, 1998 and 1997 Period from Inception (December 1,
1987) to September 30, 1998.................................... 2
(c) Statements of Operations (Unaudited) -Third Quarter ended
September 30, 1998 and 1997 and Prior 1998 First Quarter....... 3
(d) Statement of Stockholder's Equity (Unaudited) Period from
Inception (December 1, 1987) to September 30, 1998 ............ 4
(e) Statements of Cash Flows (Unaudited) - Nine months ended
September 30, 1998 and 1997 and Period from Inception
(December 1, 1987) to September 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
<PAGE>
Colecciones de Raquel, Inc.
(A Development Stage Company)
Balance Sheet
(Unaudited)
September 30, 1998
------------------
Assets
Current Assets
Cash and equivalents $ 283,758
Merchandise Inventory 70,243
Deposits paid and other assets 10,698
----------
Total Current Assets $ 364,699
Equipment, Furniture & Fixtures, net of accum. depr. $25,587 19,982
----------
Total Assets $ 384,681
==========
Liabilities and Stockholders Equity
Current Liabilities
Accounts payable $ 950
Taxes payable 548
----------
Total current liabilities $ 1,498
Stockholder's equity
Common stock - $.0001 par value, 50,000,000 shares
authorized, 24,000,000 shares issued and outstanding 2,400
Additional paid in capital 1,375,444
Deficit accumulated during the development stage (994,661)
Total stockholder's equity 383,184
Total liabilities and stockholder's equity $ 384,681
==========
<PAGE>
Colecciones de Raquel, Inc.
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Period from
Inception
(Dec. 1, 1987)
Nine Months To
Ended, Sept. September
1988 1997 1998
---- ---- ----
<S> <C> <C> <C>
Sales 6,357 5,787 32,865
Cost of Goods Sold 3,285 2,293 14,439
------------ ------------ ------------
Gross Profit 3,072 3,494 18,426
Selling, general, and administrative expenses 191,719 241,837 1,108,294
------------ ------------ ------------
(Loss) from operations (188,647) (238,342) (1,090,491)
Interest Income 13,914 23,111 78,457
Litigation settlement income 20,000
Loss before provision for income taxes (174,734) (215,231) (992,034)
Provision for income taxes 4,000
Net Loss $ (174,734) $ (215,231) $ (996,034)
============ ============ ============
Net Loss per share $ (.01) $ (.001)
============ ============
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>
Third Quarter Second Quarter
Ended September 30, June 30,
1998 1997 1998
---- ---- ----
<S> <C> <C> <C>
Sales 1,065 1,166 3,092
Cost of Goods Sold 514 552 1,601
------------ ------------ ------------
Gross Profit 552 614 1,491
Selling, general, and administrative expenses 59,378 72,382 75,246
------------ ------------ ------------
(Loss) from operations (58,826) (71,768) (73,755)
Interest Income 3,936 7,173 4,627
Loss before provision for income taxes (54,890) (64,595) (69,128)
Provision for income taxes
Net Loss $ (54,890) $ (64,595) (69,128)
============ ============ ============
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 September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Preferred Stock Common Stock
----------------------- ------------------------ Deficit
Additional MMI During the
Number Number Paid-In Settlement Development
of Shares Amount of Shares Amount Capital Agreement Stage
--------- ------ --------- ------ ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net loss from the
inception through
December 31, 1992 -- $ -- -- $ -- $ -- $ -- $ (29,178)
Net Loss, 1993 -- -- -- -- -- -- (7,462)
-------- --------- ---------- -------- ----------- ----------- ---------
Balance, Dec. 31, 1993 -- -- -- -- -- -- (36,640)
Common Stock Issued
In reorganization -- -- 20,000,000 2,000 34,754 -- --
Common Stock Issued in IPO -- -- 1,000,000 100 90,990 -- --
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 -- --
MMI Settlement Agreement -- -- -- -- -- (250,000) --
Net Loss, 1994 -- -- -- -- -- -- (58,052)
-------- --------- ---------- -------- ----------- ----------- ---------
Balance, Dec. 31, 1994 100,000 100 2,000,000 200 377,544 (250,000) (94,692)
Exercise of B Warrants -- -- 2,000,000 200 999,800 -- --
MMI settlement agreement -- -- -- -- -- (1,000,000) --
Cash received from MMI -- -- -- -- -- 849,875 --
Net loss, 1995 -- -- -- -- -- -- (126,518)
-------- --------- ---------- -------- ----------- ----------- ---------
Balance, Dec. 31, 1995 100,000 100 4,000,000 400 1,377,344 (400,125) (221,210)
Cash received from MMI -- -- -- -- -- 400,125 --
Net Loss -- -- -- -- -- -- (--)
-------- --------- ---------- -------- ----------- ----------- ---------
Cash received from MMI -- -- -- -- -- -- 400,125
Common Stock exchanged
for Preferred Stock (100,000) (100) 20,000,000 2,000 (1,900)
-------- --------- ---------- -------- ----------- ----------- ---------
Net Loss (308,137)
Balance Dec. 31, 1996 -- $ -- 24,000,000 $ 2,400 $ 1,375,444 $ -- $(529,347)
-------- --------- ---------- -------- ----------- ----------- ---------
Net Loss (290,579)
-------- --------- ---------- -------- ----------- ----------- ---------
Balance Dec. 31, 1997 -- $ -- 24,000,000 $ 2,400 $ 1,375,444 $ -- $(819,926)
Net Loss 6 months -- $ -- $ $ $ $(119,844)
-------- --------- ---------- -------- ----------- ----------- ---------
Balance Sept. 30, 1998 -- $ -- 24,000,000 $ 2,400 $ 1,375,444 $ -- $(939,771)
======== ========= ========== ======== =========== =========== =========
</TABLE>
Total
Shareholder's
Equity
-------------
Net loss from the
inception through
December 31, 1992 $ (29,178)
Net Loss, 1993 (7,462)
-----------
Balance, Dec. 31, 1993 (36,640)
Common Stock Issued
In reorganization 36,754
Common Stock Issued in IPO 91,090
Preferred Stock exchanged for
Common Stock per IPO --
Exercise of A Warrants 250,000
MMI Settlement Agreement (250,000)
Net Loss, 1994 (58,052)
-----------
Balance, Dec. 31, 1994 33,152
Exercise of B Warrants 1,000,000
MMI settlement agreement (1,000,000)
Cash received from MMI 849,875
Net loss, 1995 (126,518)
-----------
Balance, Dec. 31, 1995 756,509
Cash received from MMI 400,125
Net Loss (--)
-----------
Cash received from MMI 400,125
Common Stock exchanged
for Preferred Stock
-----------
Net Loss (308,137)
Balance Dec. 31, 1996 $ 848,497
-----------
Net Loss (290,579)
-----------
Balance Dec. 31, 1997 $ 557,918
Net Loss 6 months $ (174,734)
-----------
Balance Sept. 30, 1998 $ 384,681
===========
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
September 30, December 31, 1987 -
1998 1997 Sept. 30, 1998
----------- ----------- --------------------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss $ (54,890) $ (64,594) $ (994,660)
Adjustments to reconcile net loss to net cash used in
operating activities
Depreciation 2,268 2,181 25,587
(Increase) decrease in
Inventory 623 304 (70,233)
Prepaid expenses & other assets 3,477 (3,099) (4,537)
Deposits (750) 0 (2,880)
(Increase) decrease in
Accounts Payable & accrued expenses (647) 644 195
----------- ----------- -----------
Net cash used in operating activities $ (49,919) $ (64,564) $(1,046,528)
----------- ----------- -----------
Cash flows from investing activities
Purchase of Equipment (2,128) 98 (47,558)
Leasehold Improvements (0) 0 --
Net cash used in investing activities (2,128) 98 (47,558)
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 $ (52,047) $ (64,466) $(1,094,086)
equivalents
----------- ----------- -----------
Cash & cash equivalents, beginning of period $ 335,805 $ 583,238 335,805
=========== =========== ===========
Cash & cash equivalents, end of period $ 283,758 $ 518,772 $ 283,758
=========== =========== ===========
Interest received $ 3,936 $ 7,173 $ 78,457
=========== =========== ===========
Taxes paid $ 0 $ 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 September 30, 1998 and for the periods
ended September, 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
6
<PAGE>
($250,000) and B Warrants ($1,000,000). As of February 29, 1996, the
Company had received all of the settlement.
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 September 30, 1999.
7
<PAGE>
ITEM 2. Management's Discussion And Analysis Or Plan Of Operation
Material Changes in Results of Operations
The 1998 Third Quarter revenues slightly exceeded those of 1997,
although Cost of Goods Sold was slightly higher in 1998. Selling,
general, and administrative expenses for the 1998 Third Quarter year
to date period were 20.7% lower than 1997's Third Quarter
year-to-date.
Material Changes in Financial Condition
During the nine month period ended September 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 lower from year-end
1997 due to sales.
The Company's available cash at September 30, 1998 is expected to be
sufficient to defray the Company's operating expenses through
calendar year 1999. 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 September 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: December 14, 1998 By: /s/ Raquel Zepeda
-------------------------------------
Raquel Zepeda, Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from 10-QSB for
the quarterly per. 9/30/98 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 283,758
<SECURITIES> 0
<RECEIVABLES> 7,818
<ALLOWANCES> 0
<INVENTORY> 70,243
<CURRENT-ASSETS> 364,699
<PP&E> 22,862
<DEPRECIATION> 2,268
<TOTAL-ASSETS> 384,681
<CURRENT-LIABILITIES> 1,498
<BONDS> 0
0
0
<COMMON> 2,400
<OTHER-SE> 383,183
<TOTAL-LIABILITY-AND-EQUITY> 384,681
<SALES> 6,357
<TOTAL-REVENUES> 20,271
<CGS> 3,285
<TOTAL-COSTS> 3,285
<OTHER-EXPENSES> 59,378
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (54,890)
<INCOME-TAX> 0
<INCOME-CONTINUING> (54,890)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (54,890)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
