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, 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 March 31, 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) - March 31, 1999 .........................1
(b) Statements of Operations (Unaudited) - Three months ended
March 31, 1999 and 1997 Period from
Inception (December 1, 1987) to March 31, 1999......................2
(c) Statements of Operations (Unaudited) -Third Quarter
ended March 31, 1999 and 1998 and Prior 1998 Fourth Quarter.........3
(d) Statement of Stockholder's Equity (Unaudited) -
Period from Inception (December 1, 1987) to March 31, 1999..........4
(e) Statements of Cash Flows (Unaudited) - Three months ended
March 31, 1999 and Period from Inception (December 1, 1987)
to March 31, 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
<PAGE>
Colecciones de Raquel, Inc.
(A Development Stage Company)
Balance Sheet
(Unaudited)
March 31, 1999
--------------
Assets
Current Assets
Cash and equivalents $ 210,504
Merchandise Inventory 68,625
Deposits paid and other assets 7,130
-----------
Total Current Assets $ 286,259
Equipment, Furniture & Fixtures, net of
accum. depr. $30,242 17,478
-----------
Total Assets $ 303,737
===========
Liabilities and Stockholders Equity
Current Liabilities
Accounts payable $ 4,235
Taxes payable 1,082
-----------
Total current liabilities $ 5,317
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 (1,079,754)
Total stockholder's equity 298,420
Total liabilities and stockholder's equity $ 303,737
===========
See accompanying notes to financial statements 1
<PAGE>
Colecciones de Raquel, Inc.
(A Development Stage Company)
Statements of Operations
(Unaudited)
Period from
Inception
(Dec.1, 1987)
Three Months To
Ended March March 1999
1999 1998 1999
---- ---- ----
Sales 1,804 2,199 34,185
Cost of Goods Sold 228 1,170 14,281
---------- ---------- ----------
Gross Profit 1,576 1,029 19,904
Selling, general, and
administrative expenses 46,294 57,096 1,202,727
---------- ---------- ----------
(Loss) from operations (44,718) (56,067) (1,182,823)
Interest Income 2,471 5351 84,106
Litigation settlement &
other income 22,964
Loss before provision for
income taxes (42,247) (50,716) (1,075,755)
Provision for income taxes 4,000
Net Loss ($42,247) ($50,716) (1,079,755)
========== ========== ==========
Net Loss per share ($.0015) ($.01)
========== ==========
Weighted average number of
common shares 27,300,000 24,000,000
========== ==========
See accompanying notes to financial statements 2
<PAGE>
Colecciones de Raquel, Inc.
(A Development Stage Company)
Statements of Operations
(Unaudited)
First Quarter Fourth Quarter
Ended March 31, December 31,
1999 1998 1998
---- ---- ----
Sales 1804 2199 882
Cost of Goods Sold 228 1170 319
---------- ---------- ----------
Gross Profit 1,576 1029 563
Selling, general, and
administrative expenses 46,294 57,096 48,892
---------- ---------- ----------
(Loss) from operations (44,718) (56,067) (48,329)
Interest Income 2,471 5,351 3,374
Loss before provision for
income taxes (42,247) (50,716) (44,955)
Provision for income taxes
Net Loss ($42,247) ($50,716) (44,955)
========== ========== ==========
Net Loss per share ($.0015) ($.01) ($.01)
========== ========== ==========
Weighted average number of
common shares 27,300,000 24,000,000 27,300,000
========== ========== ==========
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 March 31, 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 March, 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 (42,247)
Balance March, 1999 ($1,079,755) $ 298,420
=========== ============
</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 -
1999 1998 March 31, 1999
----------- ----------- --------------------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss $ (42,247) $ (50,716) $ (994,660)
Adjustments to reconcile net loss
to net cash used in
operating activities
Depreciation 2,358 2,235 25,587
(Increase) decrease in
Inventory 34 1,557 (70,233)
Prepaid expenses & other assets (141) (570) (4,537)
Deposits 0 (1,600) (2,880)
(Increase) decrease in
Accounts Payable & accrued expenses 915 (9,822) 195
----------- ----------- -----------
Net cash used in operating activities $ (39,290) $ (58,916) $(1,046,528)
----------- ----------- -----------
Cash flows from investing activities
Purchase of Equipment (0) (186) (47,558)
Leasehold Improvements (0) 0
Net cash used in investing activities (0) (186) (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
equivalents ($39,290) ($59,102) $(1,094,086)
----------- ----------- -----------
Cash & cash equivalents, beginning of period $ 249,653 $ 460,939 335,805
----------- ----------- -----------
Cash & cash equivalents, end of period $ 210,504 $ 401,837 $ 283,758
=========== =========== ===========
Interest received $ 2,470 $ 5,351 $ 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 March 31, 1999 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 1998 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 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
6
<PAGE>
Company had received all of the settlement. 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. MMI did not purchase the
additional 1,000,000 and no additional shares were issued. The option to
purchase the additional 1,000,000 shares at $1.00 per share expired in
September, 1996.
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. In July,
1998, the Company placed a stop order on the above 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. 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
Sales were down 18% in the 1999 Third Quarter revenues compared to those
of 1998. However, the First Quarter 1988 Cost of Goods Sold were
substantially lower in 1999 due to an increase in cosmetic sales and
decrease in lingerie, who have a lower mark-up value. First Quarter 1999 S
G& Expenses were down 23% from the prior year. This is mostly attributed
to cut-backs in costs in September of 1998. The First Quarter expense were
higher from Fourth Quarter, 1998 due to accounting expenses incurred
during the audit.
Material Changes in Financial Condition
The Company's cash position decreased the three month period ended March
31, 1999. This is attributed to the Company's continued low level of sales
relative to its cost of operations, and lack of offsetting inflows from
financing activities. Due to sales, inventory levels were lower from
year-end 1998.
The continued operation and existence the Company will be dependent on
obtaining additional capital to implement its plans to increase
distribution and sales, and its ability to generate significant product
sales and ultimately to achieve profitable operations. The Company's
available cash at March 31, 1999 is expected to be sufficient to defray
the Company's operating expenses through calendar year 1999.
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.
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. 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. The remaining 2,600,000 shares are
pending cancellation subsequent to an arbitration. See Item 1 above.
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 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.
Item 6. Exhibits and Reports on Form 8K
(a) Exhibits
Inapplicable.
9
<PAGE>
(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: May 10, 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
first quarter 1999 and is qualified in it's entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-01-1999
<CASH> 210,504
<SECURITIES> 0
<RECEIVABLES> 7,130
<ALLOWANCES> 0
<INVENTORY> 68,625
<CURRENT-ASSETS> 286,259
<PP&E> 47,720
<DEPRECIATION> 30,242
<TOTAL-ASSETS> 303,737
<CURRENT-LIABILITIES> 5,317
<BONDS> 0
0
0
<COMMON> 2,730
<OTHER-SE> 298,420
<TOTAL-LIABILITY-AND-EQUITY> 303,737
<SALES> 1,804
<TOTAL-REVENUES> 1,804
<CGS> 228
<TOTAL-COSTS> 46,294
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,471
<INCOME-TAX> 0
<INCOME-CONTINUING> (42,247)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (42,247)
<EPS-PRIMARY> (.002)
<EPS-DILUTED> (.002)
</TABLE>
