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, 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
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, 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) -June 30, 1999 .........................1
(b) Statements of Operations (Unaudited) - Six months
ended June 30, 1999 and 1998 Period from
Inception (December 1, 1987) to June 30, 1999.....................2
(c) Statements of Operations (Unaudited) -Second Quarter
ended June 30, 1999 and 1998 and Prior 1999 First Quarter.........3
(d) Statement of Stockholder's Equity (Unaudited)
Period from Inception (December 1, 1987) to June 30, 1999.........4
(e) Statements of Cash Flows (Unaudited) - Six months
ended June 30, 1999 and Period from
Inception (December 1, 1987) to June 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>
Colecciones de Raquel, Inc.
(A Development Stage Company)
Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
June 30, 1999
-------------
<S> <C>
Assets
Current Assets
Cash and equivalents $ 159,195
Merchandise Inventory 67,893
Deposits paid and other assets 4,067
----------
Total Current Assets $ 231,155
Equipment, Furniture & Fixtures, net of accum. depr. $32,628 15,093
----------
Total Assets $ 246,248
==========
Liabilities and Stockholders Equity
Current Liabilities
Accounts payable $ 331
Taxes payable 6
----------
Total current liabilities $ 337
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 (1,132,262)
----------
Total stockholder's equity 246,248
----------
Total liabilities and stockholder's equity $ 246,248
==========
</TABLE>
See accompanying notes to financial statements 1
<PAGE>
Colecciones de Raquel, Inc.
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Six Months First Quarter
Ended June March 31,
1999 1998 1999
---- ---- ----
<S> <C> <C> <C>
Sales 3,879 5,292 1,804
Cost of Goods Sold 1,125 2,772 228
---------- ---------- ----------
Gross Profit 2,754 2,520 1,576
Selling, general, and administrative expenses 101,962 132,342 46,294
---------- ---------- ----------
(Loss) from operations (99,208) (129,822) (44,294)
Interest Income 4,454 9,978 2,471
Loss before provision for income taxes (94,754) (119,844) (42,247)
Provision for income taxes
Net Loss ($94,754) ($119,844) ($42,247)
========== ========== ==========
Net Loss per share ($.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>
Colecciones de Raquel, Inc.
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Period from Inception
Three Months Dec. 1, 1987 to
Ended June 30, June 30,
1999 1998 1999
---- ---- ----
<S> <C> <C> <C>
Sales 2,437 3,092 35,940
Cost of Goods Sold 925 1,601 14,568
---------- ---------- ----------
Gross Profit 1,511 1,491 21,372
Selling, general, and administrative expenses 55,668 75,246 1,257,542
---------- ---------- ----------
(Loss) from operations (54,157) (73,755) (1,236,170)
Interest Income 1,984 4,627 86,090
Loss before provision for income taxes (52,173) (69,128) (1,127,119)
Provision for income taxes
Net Loss ($52,173) ($69,128) (1,131,119)
========== ========== ==========
Net Loss per share ($.002) ($.003) ($.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>
COLECCIONES DE RAQUEL, INC.
(A Developement Stage Company)
Statement of Stockholders' Equity
For the Period from December 1, 1987 (inception) to June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Preferred Stock Common Stock
--------------- ------------
Additional MMI
Number Number Paid-In Settlement
of Shares Amount of Shares Amount Capital Agreement
--------- ------ --------- ------ ------- ---------
<S> <C> <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 -- -- -- -- -- (250,000)
Net Loss -- -- -- -- -- --
-------- ------------ ---------- ------------ ------------ ------------
Balance, Dec. 31, 1994 100,000 100 2,000,000 200 377,544 (250,000)
Exercise of B Warrants -- -- 2,000,000 200 999,800 --
MMI settelement agreement -- -- -- -- -- (1,000,000)
Cash received from MMI -- -- -- -- -- 849,875
Net loss -- -- -- -- -- --
-------- ------------ ---------- ------------ ------------ ------------
Balance, Dec. 31, 1995 100,000 100 4,000,000 400 1,377,344 (400,125))
Cash received from MMI -- -- -- -- -- 400,125
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 June, 1999 $ 27,300,000 $ 2,730 $ 1,375,444 $ --
============ ========== ============ ============ ============
<CAPTION>
Deficit
During the Total
Development Shareholder's
Stage Equity
----- ------
<S> <C> <C>
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)
Net Loss (58,052) (58,052)
------------ ------------
Balance, Dec. 31, 1994 (94,692) 33,152
Exercise of B Warrants -- 1,000,000
MMI settelement agreement -- (1,000,000
Cash received from MMI -- 849,875
Net loss (126,518) (126,518)
------------ ------------
Balance, Dec. 31, 1995 (221,210) 756,509
Cash received from MMI -- 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 (94,754)
Balance June, 1999 ($ 1,079,755) $ 246,248
============ ============
</TABLE>
4 See accompanying notes to financial statements
<PAGE>
Colecciones de Raquel, Inc.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the Six Month Period from Inception
Period Ended December 31, 1987
June 30, to Current
1999 June 30, 1999
-------------- -------------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (94,754) $(1,132,262)
Adjustments to reconcile net loss to net cash used in
operating activities
Depreciation 4,743 32,627
(Increase) decrease in
Inventory 699 (67,892)
Prepaid expenses & other assets (2,920) (1,868)
Deposits 0 (2,200)
Increase (decrease) in
Accounts Payable & accrued expenses (4,066) 337
----------- -----------
Net cash used in operating activities $ (90,958) $(1,171,258)
----------- -----------
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 -- $ 1,377,844
----------- -----------
Net increase(decrease) in cash and cash ($ 90,458) $ 159,195
equivalents ----------- ===========
Cash & cash equivalents, beginning of period $ 249,653
Cash & cash equivalents, end of period $ 159,195
===========
Interest received $ 4,454
===========
Taxes paid $ 1,311
===========
</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, 1999 and June, 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 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
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. The 2.6 million shares
(certificate nos.8754, 8755, 8756, 8757, 8758, 8759, 8760, 8761, 8762,
8763, 8764, 8765, and 8766) which were issued to John W. Vanover have been
canceled.
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
Although 1999 Second Quarter revenues were lower than those of 1998, Cost
of Goods Sold were lower due to a decrease in lingerie sales which have a
lower profit margin. Selling, general, and administrative expenses for the
1999 Second Quarter year-to-date period were 27% lower than 1998's Second
Quarter year-to-date.
Material Changes in Financial Condition
During the six month period ended June 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. Inventory levels were lower from year-end 1997 due to sales.
The Company's available cash at June 30, 1999 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
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: 2.6 million shares.,
$10,000, costs of filing said complaint and interest accruing from March
16, 1999. The 2.6 million shares (certificate nos. 8754, 8755, 8756, 8757,
8758, 8759, 8760, 8761, 8762, 8763, 8764, 8765, and 8766) which were
issued to John W. Vanover have been canceled.
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 June 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.
On July 16, 1999, an arbitration was held regarding the 2.6 million shares
issued to John W. Vanover . A Notice of Award was received by the Company
on August 5, 1999, granting its claims against Vanover. As a result,
certificate nos. 8754, 8755, 8756, 8757, 8758, 8759, 8760, 8761, 8762,
8763, 8764, 8765, and 8766, totaling 2.6 million shares have been
canceled. As such, the total amount of outstanding shares is 24,700,000,
which will be reflected in next quarter's financials.
Item 3. Defaults Upon Senior Securities
Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders
Inapplicable.
9
<PAGE>
Item 5. Other Information
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.
COLECCIONES DE RAQUEL, INC.
(Registrant)
Dated: August 6, 1999 By: /s/ Raquel Zepeda
----------------------------------------
Raquel Zepeda, Chief Financial Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from 10QSB for
second QTR 1999 and is qualified in it's entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 159,195
<SECURITIES> 0
<RECEIVABLES> 4,067
<ALLOWANCES> 0
<INVENTORY> 67,892
<CURRENT-ASSETS> 231,155
<PP&E> 47,722
<DEPRECIATION> (32,628)
<TOTAL-ASSETS> 246,249
<CURRENT-LIABILITIES> 337
<BONDS> 0
0
0
<COMMON> 2,730
<OTHER-SE> 1,374,444
<TOTAL-LIABILITY-AND-EQUITY> 1,378,174
<SALES> 3,879
<TOTAL-REVENUES> 3,879
<CGS> 1,125
<TOTAL-COSTS> 1,125
<OTHER-EXPENSES> 101,962
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (94,754)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (94,754)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
