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, 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
- --------------------------------------------------------------------------------
(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 March 31, 2000, 24,700,000 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, 2000 ........................ 1
(b) Statements of Operations (Unaudited) - Three months ended
March 31, 2000 and 1999 Period from Inception
(December 1, 1987) to March 31, 2000 ............................. 2
(c) Statement of Stockholder's Equity (Unaudited) - Period from
Inception (December 1, 1987) to March 31, 2000 ................... 3
(d) Statements of Cash Flows (Unaudited) - Three months ended
March 31, 2000 and Period from Inception
(December 1, 1987) to March 31, 2000 ............................. 4
(e) Notes to Unaudited Financial Statements .......................... 5
ITEM 2. Management's Discussion and Analysis or Plan of Operation ............ 7
PART II - OTHER INFORMATION .................................................. 8
ii
<PAGE>
Raquel, Inc.
(formerly known as Colecciones de Raquel)
(A Development Stage Company)
Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
March 31, 2000
--------------
<S> <C>
Assets
Current Assets
Cash and equivalents $ 73,014
Merchandise Inventory 61,635
Deposits paid and other assets 79,305
----------
Total Current Assets $ 152,319
Equipment, Furniture & Fixtures, net of accum. depr. $35,086 12,636
----------
Total Assets $ 164,955
===========
Liabilities and Stockholders Equity
Current Liabilities
Accounts payable & Taxes payable $ 3,016
Total current liabilities $ 3,016
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 1,375,444
Deficit accumulated during the development stage (1,215,975)
----------
Total stockholder's equity 161,939
----------
Total liabilities and stockholder's equity $ 164,955
===========
</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>
Three months Inception 12/87 to
Ended March March 31,
2000 1999 2000
--------- --------- ---------
<S> <C> <C> <C>
Sales 800 1,804 39,750
Cost of Goods Sold 160 228 16,762
--------- --------- ---------
Gross Profit 640 1,576 22,988
Selling, general, and administrative expenses 12,293 46,294 1,315,093
--------- --------- ---------
(Loss) from operations (11,653) (44,718) (1,329,146)
Other Income 1,323 2,471 116,431
Loss before provision for income taxes (10,330) (42,247) (1,312,715)
Provision for income taxes (4,800)
Net Loss ($10,330) ($42,247) ($1,217,515)
======== ======== ===========
Net Loss per share ($.01) ($.01)
===== =====
Weighted average number of common shares 24,700,000 24,700,000
========== ==========
</TABLE>
See accompanying notes to financial statements 2
<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 24,000,0000 $ 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 cancelled (2,600,000) (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 1Qtr, 2000 24,700,000 $ 2,470 (10,330)
-----------
$(1,217,515)
</TABLE>
See accompanying notes to financial statements 3
<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 Three Month December 31, 1987
Period Ended March 31, to Current
2000 March 31, 2000
-------------------- -------------------
<S> <C> <C>
Cash flows from operating activities
Net loss $(10,330) $(1,203,626)
Adjustments to reconcile net loss to net cash used in
operating activities
Depreciation -- 35,086
(Increase) decrease in
Inventory 160 (67,379)
Prepaid expenses & other assets (11,002) (14,190)
Deposits 0 (2,200)
Increase (decrease) in
Accounts Payable & accrued expenses (5,177) (5,130)
-------- -----------
Net cash used in operating activities $(26,349) $(1,257,439)
-------- -----------
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 ($26,349) $ 73,014
equivalents ===========
Cash & cash equivalents, beginning of period $ 99,363
--------
Cash & cash equivalents, end of period $ 73,014
========
Interest received $ 1,323
========
</TABLE>
4
<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 March 31, 2000 and March, 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
5
<PAGE>
3. Warrants and related settlement agreement (continued)
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 cancelled, additionally, the Company was awarded $10,000,
plus cost 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 anticipates litigation is imminent in this matter.
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. This lease expired in October 1999,
and the Company has contiued 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.
6
<PAGE>
ITEM 2. Management's Discussion And Analysis Or Plan Of Operation
Material Changes in Results of Operations
First Quarter revenues were lower than those of 1999. There has been
a dramatic drop in Selling, general, and administrative expenses for
2000 due to cut-backs.
Material Changes in Financial Condition
During the three month period ended March 31, 2000 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 March 31, 2000 is expected to be
sufficient to defray the Company's operating expenses through
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 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. Currently, the Company's products have been placed into one
location and anticipates three additional locations prior to June
30, 2000.
7
<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.As a result, 2.6 million shares have been cancelled,
additionally, the Company was awarded $10,000, plus cost 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 anticipates litigation is
imminent in this matter.
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.
In December, 1999 2.6 million shares of common stock were cancelled
as a result of an action against John Vanover.
Item 3. Defaults Upon Senior Securities
Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders
Inapplicable.
8
<PAGE>
Item 5. Other Information
In January, 2000 the Company appointed Edward A. Rose, Jr. As Chief
Financial Officer, General Counsel, and a member to 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 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: May 16, 2000 By: /s/ Raquel Zepeda
------------------------------------
Raquel Zepeda, Chief Financial
Officer
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from 10QSB and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 73,014
<SECURITIES> 0
<RECEIVABLES> 17,529
<ALLOWANCES> 2,247
<INVENTORY> 61,635
<CURRENT-ASSETS> 143,119
<PP&E> 12,635
<DEPRECIATION> 35,086
<TOTAL-ASSETS> 164,955
<CURRENT-LIABILITIES> 3,016
<BONDS> 0
0
0
<COMMON> 2,470
<OTHER-SE> 161,939
<TOTAL-LIABILITY-AND-EQUITY> 164,955
<SALES> 800
<TOTAL-REVENUES> 800
<CGS> 160
<TOTAL-COSTS> 11,653
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (10,330)
<INCOME-TAX> 0
<INCOME-CONTINUING> (10,330)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,330)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
