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, 2000
|_| 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
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(State or other jurisdiction (IRS Employer
of Incorporation) Identification Number)
269 So. Beverly Dr., Suite 938, Beverly Hills, California 90212
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(Address of principal executive offices)
(310) 274-0086
----------------
(Issuer's telephone number)
formerly known as Colecciones de Raquel, Inc.
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(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, 2000, 24,700,000 shares of the Company's $.0001 par value
common stock were outstanding.
1
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statements PAGE
----
(a) Balance Sheet (Unaudited) -September 30, 2000 .....................3
(b) Statements of Operations (Unaudited) - Nine months
ended September 30, 2000 and 1999 Period from
Inception (December 1, 1987) to September 30, 2000.................4
(c) Statement of Stockholder's Equity (Unaudited) -
Period from Inception (December 1, 1987) to September 30, 2000.....5
(d) Statements of Cash Flows (Unaudited) - Nine months
ended September 30, 2000...........................................6
(e) Notes to Unaudited Financial Statements............................7
ITEM 2. Management's Discussion and Analysis or
Plan of Operation.................................................10
PART II - OTHER INFORMATION...................................................11
2
<PAGE>
Raquel, Inc.
(formerly known as Colecciones de Raquel)
(A Development Stage Company)
Balance Sheet
(Unaudited)
September 30 , 2000
<TABLE>
<S> <C>
Assets
Current Assets
Cash and equivalents $ 54,295
Merchandise Inventory 58,941
Deposits paid and other assets 3,089
----------
Total Current Assets $ 116,325
Equipment, Furniture & Fixtures, net of accum. depr $ 39,560 8,574
----------
Total Assets $ 124,899
==========
Liabilities and Stockholders Equity
Current Liabilities
Accounts payable & Taxes payable $ 4,426
Total current liabilities $ 4,426
Stockholder's equity
Common stock - $.0001 par value, 50,000,000 shares authorized,
24,700,000 shares issued and outstanding 2,470
Additional paid in capital 1,375,704
Deficit accumulated during the development stage (1,257,701)
----------
Total stockholder's equity 120,473
----------
Total liabilities and stockholder's equity $ 124,899
==========
</TABLE>
3
<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, 00
2000 1999 2000
----------- ------------ -----------
<S> <C> <C> <C>
Sales $2199 $5,002 $41,150
Cost of Goods Sold 258 1,549 16,860
---------- ----------- -----------
Gross Profit 1941 3,452 24,290
Selling, general, and administrative expenses 55,122 137,437 1,394,964
---------- ----------- -----------
(Loss) from operations (53,181) (133,984) (1,370,674)
Other Income 2,665 6,102 117,774
Loss before provision for income taxes (50,516) (127,882) (1,252,900)
Provision for income taxes (4,800)
Net Loss ($50,516) ($127,882) ($1,257,700)
========== =========== ===========
Net Loss per share ($.01) ($.01)
========== ===========
Weighted average number of common shares 24,700,000 27,300,000
========== ===========
</TABLE>
4
<PAGE>
Raquel, Inc.
(formerly known as Colecciones de Raquel)
(A Development Stage Company)
Statement of Stockholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Deficit
Addt'l During the
Common Stock Paid In Development
Shares Amount Capital Stage Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 24,000,000 $ 2,400 $ 1,375,444 $ (819,926) $ 557,918
Common Stock issued for
consulting services 3,000,000 330 330
Net Loss (217,582) (217,582)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1998 27,300,000 2,730 $ 1,375,444 (1,027,508) 340,666
Common stock canceled (2,600,000) (260) 260 0
Net Loss (169,677) (169,677)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1999 24,700,000 $ 2,470 $ 1,375,704 $(1,207,185) $ 170,989
Net Loss $ (50,516) $ (50,516)
----------- ----------- ----------- -----------
September 30, 2000 24,700,000 $ 2,470 $ 1,375,704 $(1,257,701) $ 120,473
</TABLE>
5
<PAGE>
Raquel, Inc.
(formerly known as Colecciones de Raquel)
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the 9 Month Period Ending
September 30, 2000
------------------
<S> <C>
Cash flows from operating activities
Net loss $ (50,516) $ (50,516)
Adjustments to reconcile net loss to net cash used in
operating activities
Depreciation 4,474
(Increase) decrease in
Inventory 2,854
Prepaid expenses & other assets (3,326)
Increase (decrease) in
Accounts Payable & accrued expenses (3,390)
---------
Net cash used in operating activities $ (49,904)
---------
Cash flows from investing activities
Purchase of Equipment & Improvements (412)
Net cash used in investing activities $ (412)
---------
Cash flows from financing activities
Proceeds from MMI settlement agreement --
Proceeds from sale of common stock --
Payments for offering costs --
Loans & paid-in capital from preferred stockholder --
---------
Net cash provided by financing activities --
---------
Net increase(decrease) in cash and cash equivalents $ (50,316)
=========
Cash & cash equivalents, beginning of period $ 104,611
---------
Cash & cash equivalents, end of period $ 54,295
=========
Interest received $ 2,421
=========
</TABLE>
6
<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, 2000 and September 30, 1999
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
7
<PAGE>
3. Warrants and related settlement agreement, Cont.
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
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. As a result, 2.6 million
shares have been canceled, additionally, the Company was awarded $10,000.
plus costs of suit. These monies have not yet been collected.
Additionally, the Company entered into an investor relations agreement
with Angela Z. Hardy in June, 1999. The Company has a dispute regarding
the agreement and commenced litigation in June, 2000.
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
8
<PAGE>
5. Leases, Cont.
approximately 700 square feet, and the monthly rent is $1,100. This lease
expired in October 1999, and the Company has continued to occupy the
premises on a month-to-month basis. 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.
As of June 30, 2000, the Company moved its offices, the mailing address is
269 So. Beverly Drive, Suite 938, Beverly Hills, California 90212,
telephone number (310) 274-0086, fax number (310) 274-0161.
9
<PAGE>
ITEM 2. Management's Discussion And Analysis Or Plan Of Operation
Material Changes in Results of Operations
The revenues for the Third Quarter reflect an increase from those of 1999.
This is in part due to the April 2000 Distribution Agreement (see
"Distribution" below).
Material Changes in Financial Condition
During the three month period ended September 30, 2000 the Company's cash
position increased due to the higher level of revenue relative to its cost
of operations.
The Company's available cash at September 30, 2000 is expected to be
sufficient to defray the Company's operating expenses through the calendar
year 2000.
Financing
The Company is currently seeking new financing with several firms in order
to obtain working capital. Additionally, the Company is preparing to file
the appropriate documents with the Securities and Exchange Commission for
a secondary offering.
Distribution
In April, 2000 the Company entered into a distribution agreement with
Santa Susana Consultants for the distribution into independent pharmacies.
The contract specifically calls for performance of distribution in a
minimum of 20 stores at the end of a one year period. As of June 30, 2000,
the Company's products are being sold in five locations: Pervellers, 201
S. San Gabriel, San Gabriel, Ca.; Midway United Drugs, 10410 Lower Azusa
Rd., El Monte, Ca.; Botiqua Del Sol, 2331 E. Cesar Chavez Ave., Los
Angeles, Ca.; Huntington Pharmacy, 2300 Huntington Dr., San Marino, Ca.,
and Griffith Pharmacy, 1452 Telegraph Rd., Santa Fe Springs, Ca. During
September, 2000, the Company has also opened distribution in Mexico.
10
<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 $10,000.00 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 the demands in the Complaint. As a result 2.6 million
shares have been canceled. Additionally, the Company was awarded $10,000
plus cost of suit. These monies have not yet been collected.
On June 27, 2000 a Company against Angela Z. Hardy and Corporate Image
Builders was filed in Santa Monica Superior Court for several causes of
action.
Currently, there are no material pending legal proceedings against the
Company. 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.
In December, 1999 2.6 million shares of common stock were canceled as a
result of an action against Vanover.
Item 3. Defaults Upon Senior Securities
Inapplicable
11
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
Inapplicable
Item 5. Other Information
In January, 2000 the Company appointed Edward A. Rose, Jr. as Chief
Financial Officer, General Counsel and a member of the Board of Directors.
Mr. Rose's extensive experience encompasses over twenty years in finance
positions with several fortune 100 companies. He is a Certified Public
Accountant both in New York and California. Additionally, Mr. Rose is a
practicing attorney in California and was admitted to the State Bar in
1995. Mr. Rose holds several degrees, J.D. from Western Sierra Law School;
M.B.A. from Fairleigh Dickinson University; and a B.S. from Ohio State
University. He is also a member of several professional organizations: San
Diego County Bar Association, California Society of Certified Public
Accountants, American Institute of Certified Public Accountants, AICPA
Division for CPA Firms, and American Association of Attorney-CPA;s.
Item 6. Exhibits and Reports on Form 8-K
(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 13, 2000
By: /s/ Raquel Zepeda By: /s/ Edward A. Rose, Jr.
----------------- -----------------------
President Chief Financial Officer
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