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, 1999
|_| 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
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)
formerly known as Colecciones de Raquel, Inc.
- --------------------------------------------------------------------------------
(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, 1999, 27,300,000 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, 1999 .......................1
(b) Statements of Operations (Unaudited) - Nine months ended
September 30, 1999 and 1998 Period from
Inception (December 1, 1987) to September 30, 1999....................2
(c) Statements of Operations (Unaudited) - Third Quarter
ended September 30, 1999 and 1998 and Prior 1999 Second Quarter.......3
(d) Statement of Stockholder's Equity (Unaudited)Period from
Inception (December 1, 1987) to September 30, 1999....................4
(e) Statements of Cash Flows (Unaudited) - Nine months
ended September 30, 1999 and Period from
Inception (December 1, 1987) to September 30, 1999....................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>
Raquel, Inc.
(formerly known as Colecciones de Raquel)
(A Development Stage Company)
Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
September 30, 1999
------------------
<S> <C>
Assets
Current Assets
Cash and equivalents $ 128,505
Merchandise Inventory 67,539
Deposits paid and other assets 4,080
-----------
Total Current Assets $ 200,124
Equipment, Furniture & Fixtures, net of accum. depr. $35,014 12,708
-----------
Total Assets $ 212,832
===========
Liabilities and Stockholders Equity
Current Liabilities
Accounts payable & Taxes payable $ 48
Total current liabilities $ 48
Stockholder's equity
Common stock - $.0001 par value, 50,000,000 shares authorized,
27,300,000 shares issued and outstanding 2,730
Additional paid in capital 1,375,444
Deficit accumulated during the development stage (1,165,390)
-----------
Total stockholder's equity 212,784
-----------
Total liabilities and stockholder's equity $ 212,832
===========
</TABLE>
See accompanying notes to financial statements 1
<PAGE>
Raquel, Inc.
(formerly known as Colecciones de Raquel)
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Nine months Inception 12/87 to
Ended September September 30,
1999 1998 1999
---- ---- ----
<S> <C> <C> <C>
Sales 5,002 6,357 37,383
Cost of Goods Sold 1,549 3,285 15,602
---------- ---------- ----------
Gross Profit 3,452 3,072 21,781
Selling, general, and administrative expenses 137,437 191,719 1,293,870
---------- ---------- ----------
(Loss) from operations (133,984) (188,647) (1,272,089)
Other Income 6,102 13,914 110,699
Loss before provision for income taxes (127,882) (174,734) (1,161,390)
Provision for income taxes (4,000)
Net Loss ($127,882) ($174,734) ($1,165,390)
========== ========== ==========
Net Loss per share ($.01) ($.01) ($.0015)
========== ========== ==========
Weighted average number of common shares 27,300,000 27,300,000 27,300,000
========== ========== ==========
</TABLE>
See accompanying notes to financial statements 2
<PAGE>
Raquel, Inc.
(formerly known as Colecciones de Raquel)
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Prior Quarter
Ended September 30, June 30,
1999 1998 1999
---- ---- ----
<S> <C> <C> <C>
Sales 1,123 1,065 2,437
Cost of Goods Sold 424 514 925
---------- ---------- ----------
Gross Profit 699 552 1,511
Selling, general, and administrative expenses 35,302 59,378 55,668
---------- ---------- ----------
(Loss) from operations (34,603) (58,826) (54,157)
Interest Income 1,648 3,936 1,984
Loss before provision for income taxes (32,955) (54,890) (52,173)
Provision for income taxes
Net Loss ($32,955) ($54,890) ($52,173)
========== ========== ==========
Net Loss per share ($.002) ($.01) ($.04)
========== ========== ==========
Weighted average number of common shares 27,300,000 27,300,000 27,300,000
========== ========== ==========
</TABLE>
See accompanying notes to financial statements 3
<PAGE>
RAQUEL, INC.
[Formerly known as COLECCIONES DE RAQUEL, INC.]
(A Developement Stage Company)
Statement of Stockholders' Equity
For the Period from December 1, 1987 (inception) to September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Preferred Stock Common Stock
--------------- ------------
Additional
Number Number Paid-In
of Shares Amount of Shares Amount Capital
--------- ------ --------- ------ -------
<S> <C> <C> <C> <C> <C>
Net loss for the
inception through
December 31, 1992 $ -- $ -- -- $ -- $ --
Net Loss, 1993 -- -- -- -- --
--------- ------------ ------------ ------------ ------------
Balance, Dec. 31, 1993 -- -- -- -- --
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 -- -- -- -- --
Net Loss -- -- -- -- --
--------- ------------ ------------ ------------ ------------
Balance, Dec. 31, 1994 100,000 100 2,000,000 200 377,544
Exercise of B Warrants -- -- 2,000,000 200 999,800
MMI settelement agreement -- -- -- -- --
Cash received from MMI -- -- -- -- --
Net loss -- -- -- -- --
--------- ------------ ------------ ------------ ------------
Balance, Dec. 31, 1995 100,000 100 4,000,000 400 1,377,344
Cash received from MMI -- -- -- -- --
Common Stock exchanged
for Preferred Stock (100,000) (100) 20,000,000 2,000 (1,900)
Net Loss -- -- -- -- --
--------- ------------ ------------ ------------ ------------
Balance Dec 31, 1996 -- -- 24,000,000 $ 2,400 $ 1,375,444
Net Loss -- --
--------- ------------ ------------ ------------ ------------
Balance Dec. 31, 1997 -- -- 24,000,000 $ 2,400 $ 1,375,444
Common stock issued for $ $ 3,300,000 330 $ 1,375,444
consulting services
Net Loss $
--------- ------------ ------------ ------------ ------------
Balance Dec 31, 1998 $ $ 27,300,000 2,730 1,375,444
Net Loss
Balance September, 1999 $ $ 27,300,000 $ 2,730 $ 1,375,444
========= ============ ============ ============ ============
<CAPTION>
Deficit
MMI During the Total
Settlement Development Shareholder's
Agreement Stage Equity
Net loss for 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 -- -- 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) -- (250,000)
Net Loss -- (58,052) (58,052)
---------- ------------ ------------
Balance, Dec. 31, 1994 (250,000) (94,692) 33,152
Exercise of B Warrants -- -- 1,000,000
MMI settelement agreement (1,000,000) -- (1,000,000)
Cash received from MMI 849,875 -- 849,875
Net loss -- (126,518) (126,518)
---------- ------------ ------------
Balance, Dec. 31, 1995 (400,125) (221,210) 756,509
Cash received from MMI 400,125 -- 400,125
Common Stock exchanged
for Preferred Stock
Net Loss -- (308,137) (308,137)
---------- ------------ ------------
Balance Dec 31, 1996 $ -- ($ 529,347) $ 848,497
Net Loss -- ($ 290,579) ($ 290,579)
---------- ------------ ------------
Balance Dec. 31, 1997 (819,926) 557,918
Common stock issued for $ $ $ 330
consulting services
Net Loss (217,582) (217,582)
---------- ------------ ------------
Balance Dec 31, 1998 (1,037,508) 340,666
Net Loss (127,882)
Balance September, 1999 $ ($ 1,165,389) $ 212,832
========== ============ ============
</TABLE>
See accompanying notes to financial statements 4
<PAGE>
Raquel, Inc.
(formerly known as Colecciones de Raquel)
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Period from Inception
For the Nine Month Period Ended December 31, 1987
September 30, to Current
1999 September 30, 1999
----------- ------------------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (127,882) $(1,165,389)
Adjustments to reconcile net loss to net cash used in
operating activities
Depreciation 7,130 35,014
(Increase) decrease in
Inventory 1,052 (67,539)
Prepaid expenses & other assets (2,908) (1,880)
Deposits 0 (2,200)
Increase (decrease) in
Accounts Payable & accrued expenses (4,355) 47
----------- -----------
Net cash used in operating activities $ (121,147) $(1,201,947)
----------- -----------
Cash flows from investing activities
Purchase of Equipment & Improvements (0) (47,721)
Net cash used in investing activities (0) $ (47,721)
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 -- $ 1,378,174
----------- -----------
Net increase(decrease) in cash and cash ($ 121,147) $ 128,505
equivalents ----------- ===========
Cash & cash equivalents, beginning of period $ 249,653
-----------
Cash & cash equivalents, end of period $ 128,505
===========
Interest received $ 6,102
===========
Taxes paid $ 1,311
===========
</TABLE>
See accompanying notes to financial statements 5
<PAGE>
Raquel, Inc.
(formerly known as Colecciones de Raquel)
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
1. Business
Raquel, Inc. (formerly known as Colecciones de Raquel) (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, 1999 and September, 1998
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
6
<PAGE>
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
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
In September of 1998, the Company filed a complaint and Demand for
Arbitration before the American Arbitration Association against John W.
Vanover. The Demand for Arbitration is for the return of $10,000 in cash
and stock certificates for 2.6 million Company common shares. The basis of
the dispute is for non-performance, bad faith, and willful malfeasance.
An Arbitration hearing was held on July 16, 1999, before the American
Arbitration Association in regard to the Company's claims against John W.
Vanover. On August 5, 1999 the Company received notice that the Company
had been awarded its demands in the Complaint.
Currently, 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 expired on June 30, 1999, and the store has been closed.
7
<PAGE>
ITEM 2. Management's Discussion And Analysis Or Plan Of Operation
Material Changes in Results of Operations
Third Quarter revenues were higher than those of 1998 due to increased
mail orders. Cost of Goods Sold were also lower due to a decrease in
lingerie sales which have a lower profit margin. Selling, general, and
administrative expenses for 1999 have continued to decrease due to
cut-backs.
Material Changes in Financial Condition
During the nine month period ended September 30, 1999 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.
The Company's available cash at September 30, 1999 is expected to be
sufficient to defray the Company's operating expenses through calendar
year 1999.
Financing
The Company is currently seeking new financing with several firms in order
to obtain working capital.
Distribution
Additionally, the Company was certified as a "Minority Vendor" in order to
receive special consideration for distribution of its products in major
department stores.
8
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In September of 1998, the Company filed a complaint and Demand for
Arbitration before the American Arbitration Association against John W.
Vanover. The Demand for Arbitration is for the return of $10,000 in cash
and stock certificates for 2.6 million Company common shares. The basis of
the dispute is for non-performance, bad faith, and willful malfeasance.
Other than this item, there are no material pending legal proceedings to
which the Company or the property of the Company are subject.
An Arbitration hearing was held on July 16, 1999, before the American
Arbitration Association in regard to the Company's claims against John W.
Vanover. On August 5, 1999 the Company received notice that the Company
had been awarded its demands in the Complaint.
Currently, 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.
Item 2. Changes in Securities
In September 1998, the Company issued 3,300,000 shares of common stock in
exchange for consulting services to be performed by two consultants. Both
consultants' contracts and services were terminated in 1998 and the
Company placed a stop order on the above shares. (See Item 1 above.)
Further, in April 1999, one consultant agreed to return 700,000 shares of
common stock issued in exchange for consulting services for $4,000 in
cash.
In June, 1999, the Company entered into an agreement with Angela Z. Hardy
and Corporate Image Builders for investor relations services. Per this new
agreement, the Company has released the shares which were initially issued
to Angela Zucchini, aka, Angela Z. Hardy in June of 1998, for payment of
these services.
Item 3. Defaults Upon Senior Securities
Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders
Inapplicable.
Item 5. Other Information
The Company appointed additional board members in November. They are:
Robert Filiatreaux, Corporate Secretary, Isabel Rodriguez, Director, Noah
Luzel Sumpter, Director, and Michael Holguin, Director.
On October 15, the Company changed its corporate name to Raquel, Inc.
Additionally, the Company's stock symbol was changed to "RAQL." Raquel
Zepeda, President and CEO issued a press release announcing these changes.
9
<PAGE>
On June 2, 1999 the Company stock commenced trading on the NASD Bulletin
Board under its symbol, "CRQL."
In June, 1999, the Company entered into an investor relations agreement
with Corporate Image Builders.
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.
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.
RAQUEL, INC.
(FORMERLY KNOWN AS COLECCIONES DE RAQUEL)
(Registrant)
Dated: November 9, 1999 By: /s/ Raquel Zepeda
-------------------------------------
Raquel Zepeda, Chief Financial Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 128,505
<SECURITIES> 0
<RECEIVABLES> 4,080
<ALLOWANCES> 0
<INVENTORY> 67,539
<CURRENT-ASSETS> 200,124
<PP&E> 47,722
<DEPRECIATION> (35,014)
<TOTAL-ASSETS> 212,832
<CURRENT-LIABILITIES> 48
<BONDS> 0
0
0
<COMMON> 2,730
<OTHER-SE> 210,054
<TOTAL-LIABILITY-AND-EQUITY> 212,832
<SALES> 5,002
<TOTAL-REVENUES> 5,002
<CGS> 1,549
<TOTAL-COSTS> 137,437
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,102
<INCOME-TAX> 0
<INCOME-CONTINUING> (127,882)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (127,882)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
