SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-KSB
(Mark One)

[X]  Annual Report under Section 13 or 15(d) of the Securities Exchange Act of
     1934 for the fiscal year ended December 31, 2002

[ ] Transition Report under Section 13 or 15(d) of the Securities Exchange
     Act of 1934 for the transition period from __________ to _____________

Commission file number:  0-24798

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                               XYNERGY CORPORATION
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                        [formerly known as Raquel, Inc].
                 (Name of small business issuer in its charter)

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         Nevada                                    93-1123005
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(State or other jurisdiction of           (I.R.S. Employer Identification No.)
incorporation or organization)

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269 S. Beverly Drive, Suite 938
Beverly Hills, CA                                             90212
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(Address of principal executive offices)                      (Zip Code)

Issuer's telephone number: (310) 274-0086
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Securities to be registered pursuant to Section 12(b) of the Act: None

Securities to be registered pursuant to Section 12(g) of the Act:

                         Common Stock, $.0001 Par Value
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                                (Title of Class)

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the preceding 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  [  ]

         Check if no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [___]

         The issuer's revenues for the fiscal year ended December 31, 2002 were
$2,487.

         The aggregate market value of the voting stock held by non-affiliates
of the registrant is incalculable inasmuch as the co,mon stock hasnOt traded
within the past 60 days.

         The number of shares of the registrant's Common Stock, $.0001 par
value, outstanding as of December 31, 2002 was 31,161,851.

         Documents incorporated by reference: None.
         Transitional Small Business Issuer Format (check one):
         Yes [ ]    No   [X]



<PAGE>



                                     PART I


Item 1.  Description of Business.

Business Development.
--------------------

Xynergy Corporation  [formerly known as "Raquel,  Inc."] was organized under the
laws of the State of Nevada on August 6, 1993.  [Unless  the  context  indicates
otherwise,   the  term  "Company,"   "XYNY"  or  "Xynergy"   refers  to  Xynergy
Corporation].  Xynergy Corporation started as "Colecciones de Raquel, Inc." with
its IPO in  1994.  In 1998,  Colecciones  de  Raquel  became  "Raquel,  Inc." In
February,  2002, after its  acquisitions of Think Blots greeting cards,  Raquel,
Inc. became Xynergy Corporation.

Historical Development. Raquel Zepeda, CEO and founder of Xynergy, started the
Company as "Colecciones de Raquel of Beverly Hills," a full line of cosmetics,
skin care and fragrance. The line was specifically designed for the needs of
olive skinned women, targeting the Hispanic/Latin market.

Ms. Zepeda's inspiration was born from her experience in an attempt to sell
another brand of cosmetics: they were unsuitable for olive and sallow skin
tones. That experience, coupled with her background in modeling, inspired her to
create a cosmetics line for Latina women. In 1983, she introduced Morena
Cosmetics in the San Francisco/Bay Area. Ms. Zepeda had quite an impact in that
area, Raquel needed more capital to continue. While marketing Morena Cosmetics
on a small scale, Raquel dedicated the next 5 years of her life to further
research and development. Raquel developed even more unique and effective color
formulations, along with guidelines for the golden-skinned woman. Of this,
Colecciones de Raquel was created.

Public Offering. As part of an initial public offering in August 1994, the
Company issued 1,000,000 Units of securities for an aggregate offering price of
$100,000. The Company realized net proceeds of $91,090 from the sale of the
Units. Each Unit consisted of one share of common stock and one A Warrant. Each
A Warrant entitled was exercisable at an exercise price of $.25 per A Warrant
for one share of common stock and two B Warrants. Each B Warrant was exercisable
at an exercise price of $.50 per B Warrant for one share of common stock and one
C Warrant. Each C Warrant was to be exercisable at $1.00 per C Warrant for one
share of common stock.

The Company utilized substantially all of the net proceeds from the public
offering during the year ended December 31, 1994. The Company's business
operations during the year ended December 31, 1994 resulted in only minimal
revenues and, at year end, the Company had only a small amount of cash available
to finance continuing operations on an extremely limited basis.

In 1995, the Company learned that the A and B warrants had been fraudulently
exercised. Transactions for these warrants involved MMI, a brokerage firm based
in the Philippines. In September of 1995 MMI settled with the Company and paid
for the A and B warrants. All C warrants were canceled.

From September 1995 through February 1996, the Company received $1,250,000 in
full payment for the exercise of the A and B warrants. As a result, the Company
was able to expand its operations.

With proceeds of the Company's public offering it has produced its proprietary
fragrance, "Sabor A Mi," a complete line of colors cosmetics and skin care and
opened two boutiques in Beverly Hills and Los Angeles. All products are being
sold and marketed through these boutiques. Additionally, the Company has
produced a music compact disc which it plans to cross-market with the sale of
the fragrance. "Sabor A Mi" is also the name of a very popular Spanish love
song. The compact disc contains information on the Company's line of cosmetics
along with a sample fragrance strip and product ordering information.

Recent Operations. The Company closed its last boutique in the year 2000;
seeking alternative distribution for its products. In May, 2000, the Company
entered into an agreement with Susana Consultants for drug store distribution.
Raquel of Beverly Hills products were placed in four independent drug stores.
Sales were minimal due to the line's premium category which is not typically
sold in drug stores.



                                       2
<PAGE>

After several attempts at department store retail marketing of the Raquel of
Beverly Hills products, the Company changed its marketing tactic to network
marketing, also known as "multi-level marketing" in 2000. A sales and
distribution plan has been designed for this particular style of marketing. Upon
further financing, the plan will be executed.

During the year 2001, the Company changed its strategy and mission. Since the
company's products were not producing revenues, a new approach was taken: to
acquire companies whose revenues or innovative value would amplify the Company's
overall worth.

Xynergy engaged several consultants to assist in these acquisitions and other
company matters. In March 2001, Xynergy entered into business consulting
agreements with LBI Group and Vincent Barone and filed an S-8 to issue stock
options for payment of services. In August, 2001 the Company entered into
another business consulting agreement with Anthony Leone, with payment via stock
options and filed a subsequent S-8,

On September 5, 2001, Xynergy acquired "Think Blots," a greeting card line. The
line is distinctive in that it combines original ink blot art work with humorous
dialogue, and is currently available on the internet at
www.dementeddiagnosis.com.

On November 5, 2001, the Company filed a lawsuit against Rainmaker Development
Corporation ("Rainmaker") and Mattel, Inc. ("Mattel") for copyright and
trademark infringement. The Complaint was filed in the United States District
Court, Southern District of California, Case No. 01CV2027W (LAB). The Complaint
was for the use of the trademark, "Think Blot," for a game produced by Rainmaker
which uses the same name and concept as the Company's greeting card line, "Think
Blots" which were created in 1987. Rainmaker's date of first use is 1997, ten
years after Think Blots' registered copyright.

Previously, March 2001, Rainmaker Corporation filed an Opposition to Raquel
Zepeda's original Application for Trademark Registration for the Think Blots
greeting card line. The proceeding was suspended due to the Company's lawsuit
against Rainmaker and Mattel, Inc. Rainmaker Corporation filed a Motion for
Summary Judgment for the lawsuit in Federal District Court. In April, 2002.
their Motion was granted. Nonetheless, the Company will continue to assert its
rights to market the greeting card line under the provisions and protection of
copyright laws.

In December , 2001 Xynergy engaged the services of another consultant, Jason
Chester and filed another S-8 to issue options for payment of services. The
Contract for services is attached to the S-8 filing dated **, 2001.

Web Marketing Network, Inc. of Canada, ("WMN"), an e-commerce marketing company,
was acquired in January 2002. WMN was a provider of advertising services such as
opt-in and direct email marketing, pay per click programs, search engine
placement, marketing consultation, lead generation, affiliate marketing systems
design, multi-level marketing. Due to . . .the acquisition was dissolved in
September, 2002.

In March, 2002 the Company changed its name to Xynergy Corporation and affected
a 100 to 1 reverse stock-split. A 14C211 was filed to execute these changes.

On March 26, 2002, Xynergy signed a letter of intent to acquire Corporate Space
Power Industries & Electric, Inc. ("CSPIE").The acquisition was consummated on
April 22, 2002, reflected in the 8-K filing dated May 2, 2002. However, in
August, 2002 Xynergy and CSPIE commenced negotiations for dissolution of the
acquisition. Due to current market conditions coupled with other circumstances,
the Board of Directors of both companies agreed that their respective goals
could not be achieved through this union. A Dissolution Agreement was affected
and filed along with Xynergy's Second Quarter 10QSB as Exhibit 10.30.

On April 22, 2002, by a unanimous vote of the Board of Directors, Xynergy
elected to incorporate Raquel of Beverly Hills in the State of Nevada as a
wholly owned subsidiary. Additionally, Xynergy voted to issue ten million shares
to Raquel of Beverly Hills in exchange for all 10 million shares of Raquel of
Beverly Hills.

Xynergy Corporation announced its issuance of a non-binding letter of intent to
acquire Voyaware, LLC in July, 2002.VOYAWARE, LLC, which was acquired (see
attached Exhibit 10.32) in September, 2002, is focused on developing innovative
mobile solutions for today's Direct Sales Professionals. Voyaware creates
innovative mobile software for hand-held computers used by independent direct
sales professionals. Unlike most mobile software, whose applications are geared
for use by sales people working for large corporations, VoyaWare is specifically
tailored for the independent sales professional. Targeting these direct sales
professionals world-wide, a 100 billion dollar industry, VoyaWare's revenue
projections are substantial.



                                       3
<PAGE>

The Company believes that Voyaware's products would be very useful to Raquel of
Beverly Hills' independent sales consultants. Therefore, some of the sales kits
will include the Voyaware package, enhancing revenues for Voyaware. As such,
this would provide one vehicle for marketing two of Xynergy's subsidiary's
products. Additionally, Voyaware products will be marketed to the entire direct
sales industry.

Xynergy will continue to seek other acquisitions of successful companies in the
private sector who would like to enter the public arena.

Due to the innovate and uniqueness of its array of products, Xynergy management
believes that it will be able to attract financing from both the private and
public sectors in the near future.


Business of the Issuer.

                               PRINCIPAL PRODUCTS.

Raquel of Beverly Hills

The Company markets premium cosmetics (color), skin care, under the trademark,
"Raquel of Beverly Hills," and the fragrances "Sabor A Mi, Melody of Eternal
Passion" and "-Peligro!". (www.Raquelinc.com)

Raquel of Beverly Hills cosmetics are unique in that they are designed for a
niche market: golden-skinned consumers, which include Hispanics, Asians, and
Mediterraneans; specifically targeting the Hispanic/Latin market. The Company's
cosmetic line is intended to appeal to these markets by complementing their
"golden" skin tones.

The fragrance was named after a world-famous Latin love song, "Sabor A Mi". The
Company has also produced a music CD containing five (5) songs sung by Ms.
Zepeda, including "Sabor A Mi". Additionally, the CD contains a fragrance strip
of "Sabor A Mi, Melody of Eternal Passion", an ad for the complete line of
products, along with purchasing information. The CD is a giveaway with purchase
of the fragrance and will also be available for purchase in select music stores.

The Company's products are intended for use by individuals. As such, there is a
possibility that claims for product liability may be made against the Company.
Although the producers of the Company's products have advised the Company that
they maintain product liability insurance, there is no assurance that such
insurance is adequate or will be applicable if claims are made against the
Company. The Company also maintains product liability insurance.


Think Blots  Greeting Card Line

Xynergy markets a greeting card line by the tradename "Think Blots." Combining
original ink blot art work with humorous and flirtatious dialogue, they offer an
introspective avenue of communication. The line was originally developed in 1987
by Ms. Zepeda and is protected by a registered copyright. The line can be viewed
at www.dementeddiagnosis.com.

In addition, Xynergy will be introducing Demented Diagnosis, a "mental test" as
an advertising campaign. Through the Demented Diagnosis ads, people will
acquaint themselves with the cards. Eventually, these ads will be placed
alongside horoscopes and cross-word puzzles.


Principal Markets and Marketing Strategy.

Raquel of Beverly Hills

The Company's principal market is Hispanic/Latin consumer group . It is
estimated that Latina women spend twice as much as anglos on cosmetics, a
double-digit billion-dollar, growing industry. Raquel of Beverly hills further
anticipates a market share of non- Hispanic, golden-skinned consumers such as
Asians, Mediterraneans and some Europeans.

U.S. Hispanic consumers are 20.6 million strong, with a spending power of $440
billion which is expected to double to $880 billion by the year 2010. The U.S.
Hispanic cosmetics is estimated to be 1.6 billion, and the Latin American market
is estimated to be over $5.9 billion, totaling $7.5 billion.

In recognition of the strength of this market, Liz Claiborne launched its
"latino style" fragrance, "Mambo" in 2001; spending $20 million on adverting.
Coty launched "Dulce Vanilla," another "latin fragrance" in 1999. Companies such
as Avon, Estee Lauder, Mabelline, Pavion Ltd., Proctor & Gamble, and Revlon have
made directional changes in advertising content and product orientation in an
effort to more effectively reach the non-Anglo market. Estee Lauder introduced
it "Prescriptives" line targeting ethnic women in 1991. According to NPD Beauty
Trends, Prescriptives was one of the top selling prestige lines in 1996; and in
fiscal 1997 Estee Lauder reported sales of $124.7 million in "other Americas."
In 1994, Avon printed a bilingual brochure targeted to Hispanic women in a small
test-market study. Avon has identified the Hispanic market as promising because
professional appearance is very important to Hispanics and because Hispanic
children are introduced to makeup and jewelry at an early age. Avon research
reflects that its average order for Hispanics is about $9 higher than for
non-Hispanics. Market studies have confirmed that Hispanics generally spend more
on consumer goods per capita than do other market segments.



                                       4
<PAGE>

Raquel of Beverly Hills now plans to increase sales through expansion directly
and aggressively through network/multi-level marketing. According to the Direct
Selling Association, in 1999 U.S. Retail Sales were equivalent to $24.54
billion. Personal care represented 24.9% or $6.11 billion dollars. In
comparison, according to NPD Beauty Trends, cosmetics sales in department stores
was $6.5 billion in 1999. Leaders in this industry such as Avon and Jafra
reported earnings of $1.343 billion and $76.6 million, respectively for the
third quarter of 2000.

During the near term, the Company intends to concentrate on marketing its
products in the Los Angeles, California area which contains a large and growing
number of Hispanics. Approximately 3.8 million Hispanics reside in the Los
Angeles, California area and comprise approximately 19% of the entire United
States Hispanic population. Simmons Hispanic II Study projected that by the year
2005 the U.S. Hispanic market will comprise the largest minority group in the
United States. According to McGraw-Hill's 1995 Hispanic Consumer Market Report,
Hispanics buying power for 1997 was estimated at $357 billion in the U.S. This
report also estimated that Hispanics spent $6 billion on Personal Care Products
and Services. (This market segment includes cosmetics, fragrance and skin care.)
Latin America`s cosmetic market was $5.9 billion and expected to increase to
$7.6 billion by 1998, according to Euromonitor International. Eventually, the
Company plans to extend its distribution nationally and internationally.

The Company intends to market its products utilizing the services of Ms. Zepeda
and employees, and does not plan to utilize the services of any other individual
or firm spokesperson for these marketing efforts. The Company's ability to
maintain or expand its marketing efforts is directly dependent on the level of
sales and profitability achieved from its marketing of its products.

Think Blots  Greeting Card Line

Think Blots greeting card line's principal market will commence in the Los
Angeles area and electronically via the internet. Eventually the line will be
marketed nationally and internationally.

Today, the industry generates more than $7.5 billion in retail sales from
consumer purchases of more than 7 billion cards. Greeting card retail growth
recently has been driven primarily by sales of cards for everyday-general and
friendship situations versus seasons (holidays) and by individual cards rather
than from packaged or boxed cards. Women purchase approximately 80% of all
greeting cards. These facts are attributed to the projected need for more
emotion-based me-to-you messages in the form of greeting cards. As such, we now
have cards for every relationship, every occasion, every ethnicity, every age
group, every gender and every special interest group. Additionally, greeting
cards are being sold in more outlets than ever before, as well as being
purchased and sent over the Internet.

To introduce consumers as to how Think Blots concept works, Demented Diagnosis,
a "cartoonish" mental test was developed. Demented Diagnosis, a "mental test"
using different Think Blots with multiple choice answers. These answers then
provide a humorous conclusion as to the individual's personality. Through our
Demented Diagnosis ads, people will acquaint themselves with unique concept of
self-discovery from ink blot art. Eventually, these ads will be placed alongside
horoscopes and cross- word puzzles.



                                       5
<PAGE>

        Distribution.

Raquel of Beverly Hills

Xynergy has developed a new strategy for distribution of Raquel of Beverly Hills
products. Direct sales in a simple multi-level marketing format has been
developed. Multi-level marketing has several advantages: it is very popular in
the Hispanic/Latina market, advertising costs are minimal, and all product sales
are either pre-paid or C.O.D.

A competitive compensation package has been fashioned for promoting both product
sales and recruiting. Persons who recruit other consultants will be given
override commissions plus a recruiting bonus. Attractive sales kits and a
training program have been created to promote sales. Additional
compensation/incentive programs will be developed in order to keep sales people
motivated.

Think Blots  Greeting Card Line

Think Blots greeting card line is currently available on the internet.
Additionally, it will be available in stores and has obtained the interest of a
Los Angeles distributor.

Additionally, the Company is seeking syndication of Demented Diagnosis in weekly
newspapers. (See www.dementeddiagnosis.com.) Xynergy believes obtaining
syndication of these "tests" would prove to be an excellent marketing and
advertising tool for the greeting card line.

        Competition.

Raquel of Beverly Hills

There are numerous other companies that produce and sell cosmetics. Many of
these companies are significantly larger, better financed and more established
than Raquel of Beverly Hills. Competitors include Revlon, Estee Lauder,
Maybelline, Mary Kay and Avon. These companies have established customers and
are continually seeking to obtain additional customers.

Although Raquel of Beverly Hills' competitors are in a better position to
effectively market their products, the Company plans to use its focus in the
Hispanic market as an edge to "carve" out a portion of market share into this
industry.

Think Blots  Greeting Card Line

Estimates indicate that there are nearly 2,000 greeting card publishers in the
U.S. today, ranging from major corporations to small family-run organizations.
As indicated above, Think Blots faces substantial competition. However, the
Company believes that Think Blots' unique style will give the line a competitive
edge.

        Raw Materials.

Xynergy's products are produced by independent third parties who also obtain the
materials used to produce these products. Xynergy believes that these materials
are available from various sources at competitive prices. Although Xynergy has
not entered into any agreement with any companies, Xynergy has been informed
that suppliers will be able to fulfill Xynergy's expected limited need for
products on a timely basis. Xynergy anticipates that it will be required to
prepay a portion of the price for the products purchased from suppliers upon
placing an order and the balance payable upon delivery of the products.
Accordingly, Xynergy does not expect to receive credit terms from suppliers.
Xynergy also anticipates that, in the future, it may be able to obtain thirty
day credit terms from suppliers if the level of its purchases increase. No
discussions have been held regarding any such credit terms and there is no
assurance that Xynergy will be able to purchase products without paying for them
in advance. Xynergy has not experienced any difficulties in obtaining required
products from producers. However, Xynergy's experience in obtaining products may
not be indicative of its ability to obtain products in the future due to its
minimal operations to date.

        Xynergy has not entered into any contracts for either the materials used
in producing its products or the production of these products. Accordingly,
there can be no assurance that Xynergy will be able to obtain products in
quantities, at prices, and at required times to meet its needs. These needs
include fulfilling future sales commitments.

        Xynergy does not plan to carry significant amounts of either materials
or finished products in its inventory. Therefore, it will be relying on third
parties to supply it with products on a continuing basis.

        Patents and Trademarks.

In December, 1999, Xynergy applied for the tradenames "Chic'a Beverly Hills" and
"Yoohoo." Chic'a Beverly Hills will be marketed as a mass-market teen line,
along with the fragrance, Yoohoo.

Xynergy has obtained the trademarks for the following: "-Peligro!", its
fragrance for men, "Sabor A Mi, Melody of Eternal Passion," "Chic'a Beverly
Hills," a cosmetics line for teens and Raquel of Beverly Hills logo. A trademark
for Think Blots is also pending. Additionally, copyrights are held for the
following: Color Me Golden, a beauty guide for golden skin tones; Sound
Recording for "Sabor A Mi," along with the music Compact Disc, Raquel of Beverly
Hills' logo, Raquel of Beverly Hills' product brochure, Think Blots greeting
cards, and Demented Diagnosis.



                                       6
<PAGE>

The formulas for the fragrances "Sabor A Mi," "-Peligro!" and "Yoohoo" were
developed by Ms. Zepeda for Raquel of Beverly Hills and are the proprietary
formulas of Xynergy.

        Government Regulation.

Xynergy does not believe that its products are subject to government
regulations, including those imposed by the United States Food and Drug
Administration. However, Xynergy has not requested nor has it received any
notification that its products are not subject to such regulations. If Xynergy's
products are subject to any government regulation, noncompliance with such
regulations, either presently in effect or subsequently enacted, might adversely
effect its ability to market its product.

        Employees.

As of December 31, 2001, Xynergy employed one (1) persons full time. Xynergy may
hire additional part-time secretarial and retail sales employees depending on
its level of operations.

Raquel Zepeda, is president and CEO. Along with her experience in banking (6
yrs), legal (8 yrs.), has worked in the cosmetics industry for over ten years.
Ms. Zepeda has been the driving force of this venture. Ms. Zepeda used her
inventive abilities to create Raquel of Beverly Hills' original fragrances and
design all of Raquel of Beverly Hills' product lines. Additionally, Ms. Zepeda
created the greeting card line, "Think Blots."

Xynergy may engage consultants to assist it in various aspects of its business.
See "Item

9.  Directors, Executive Officers, Promoters and Control Persons".

Item 2.  Description of Property.

Xynergy maintains its main offices at the private home of Ms. Zepeda and
maintains a mailing address at 269 So Beverly Drive, Suite 938, Beverly Hills,
California.

Item 3.  Legal Proceedings.

In 1999, Xynergy [Raquel, Inc.] filed a lawsuit against Angela Z. Hardy for the
return of S-8 stock issued to her for investor relations services. A judgement
was obtained against Ms. Hardy.

In March 2001, Rainmaker Corporation filed and Opposition to Xynergy's
Application for trademark for the Think Blots greeting card line. The proceeding
was suspended due Xynergy's lawsuit against Rainmaker and Mattel, Inc. (See
paragraph below.)

The Company filed a lawsuit on November 5, 2001 against Rainmaker Development
Corporation ("Rainmaker") and Mattel, Inc. ("Mattel") for copyright and
trademark infringement. The Complaint was filed in the United States District
Court, Southern District of California, Case No. 01CV2027W (LAB). The Complaint
was for the use of the trademark, "Think Blot," for a game produced by Rainmaker
which uses the same name and concept as the Company's greeting card line, "Think
Blots" which were created in 1987. Rainmaker's date of first use is 1997, ten
years after Think Blots' registered copyright. Rainmaker Corporation filed a
Motion for Summary Judgment. In April, 2002. their Motion was granted.

Other than these items, there are no material pending legal proceedings to which
Xynergy or the property of Xynergy are subject. In addition, no proceedings are
known to be contemplated by a governmental authority against Xynergy or any
officer or director of Xynergy.


Item 4.  Submission of Matters to a Vote of Security Holders.

        Not applicable

<PAGE>


PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

Prior to the completion of Xynergy's initial public offering, there was no
trading activity in Xynergy's common stock. Xynergy believes that certain market
makers began quoting prices for the shares of Xynergy's common stock following
Xynergy's initial public offering which closed August 1994. Xynergy's common
stock may be traded in the over-the-counter market and quoted in what are
commonly referred to as the "pink sheets" which are posted by Pink Sheets,
formerly National Quotation Bureau; or the OTC "Electronic Bulletin Board",
which reports quotations by brokers or dealers in particular securities. Because
of the lack of readily available quotations and the limited trading volume
frequently associated with these securities, there is a greater risk of market
volatility of such securities than for securities traded on national exchanges.
Trading in Xynergy's stock is reported under the symbol XYNY (formerly RAQL).

The following table sets forth the quarterly high and low bid prices (to the
nearest $1/8) of the common stock for the last 3 years.

Year Ended December 31,2000                  Closing Bid           Closing Ask

                                       High       Low         High        Low

First Quarter ...................     .07         .017        .153        .025
Second Quarter ..................     .07         .055        .153        .10
Third Quarter ...................     .08         .025        .125        .03
Forth Quarter ...................     .04         .025        .10         .03


Year Ended December 31,2001                 Closing Bid              Closing Ask

                                      High         Low          High    Low

        First Quarter                 .125         .03          .25     .04
        Second Quarter                .21          .025         .39     .025
        Third Quarter                 .21          .031         .29     .06
        Forth Quarter                 .062         .021         .075    .025


Year Ended December 31,2002                 Closing Bid           Closing Ask

                                       High      Low             High    Low

        First Quarter                  .125      .03             .25     .04
        Second Quarter                 .21       .025            .39     .025
        Third Quarter                  .21       .031            .29     .06
        Forth Quarter                  .062      .021            .075    .025



These quotations represent inter-dealer quotations without adjustment for retail
markups, markdowns or commissions and do not necessarily represent actual
transactions.


As of December 31, 2002, there were 1,017 record holders of Xynergy's common
stock.

Common Stock. The authorized capital stock of Xynergy includes 50,000,000 shares
of common stock which has a par value of $.0001 per share. The holders of common
stock (a) have equal rateable rights to dividends from funds legally available
therefor, when and if declared by the Board of Directors of Xynergy; (b) are
entitled to share rateably in all of the assets of Xynergy available for
distribution to holders of common stock upon liquidation, dissolution or winding
up of the affairs of Xynergy; (c) does not have preemptive, subscription or
conversion rights and there are no redemption or sinking fund provisions
applicable thereto; and (d) are entitled to one noncumulative vote per share on
all matters on which shareholders may vote at all meetings.



                                       7
<PAGE>

Preferred Stock. The authorized capital stock of Xynergy also includes
10,000,000 shares of preferred stock, par value $.001 per share. The Board of
Directors of Xynergy has the right to determine the characteristics of any
preferred stock. Such characteristics include voting rights, dividend
requirements, redemption provisions and/or liquidation preferences.

The Board of Directors of Xynergy has designated 100,000 shares of preferred
stock as Series A Preferred Stock (the "Preferred Stock"). Concurrently with the
completion of Xynergy's initial public offering, Ms. Zepeda exchanged the
20,000,000 shares of common stock that she owned for 100,000 shares of Preferred
Stock. The rights of the holder of the Preferred Stock (the entire issue of
100,000 shares being held by the President, Raquel Zepeda) have been amended by
the Board of Directors to allow the conversion of Preferred stock into common
stock at the rate of one share of Series A Preferred stock for 200 shares of
Common stock at any time. In 1996, the Board of Directors directed the
Corporation to issue 20,000,000 shares of common stock to the President, Raquel
Zepeda, in exchange for the 100,000 shares of Preferred stock held by her, and
to retire the Preferred Stock. This brought the total of issued and outstanding
common stock of the Corporation to 24,000,000 shares. This action was
anticipated to have a material dilutive effect on the holders of the
Corporation's outstanding common stock. Further, in June of 1998, Xynergy issued
3.3 million shares of common stock through an S-8 filing for payment of services
to two consultants. As of September, 1998 a stop trade order was placed on the
shares issued through the S-8, due to non- performance. A settlement has been
reached with one consultant for return of 700,000 shares. A settlement for the
additional 2.6 million shares was settled before the American Arbitration
Association and have been canceled.

In May, 2001, the Company issued 4,000,000 shares to individuals for purchase of
stock options. In August, 2001, and December, 2001 the Company issued stock for
exercise of options of 1,000,000 shares, and 500,000 shares, respectively. (See
Item 1, Recent Operations, Pages 3-4.)

As of December 31, 2002, there were 30,100,000 shares of common stock
outstanding, with each share entitled to one vote. As the holder of 18,320,000
shares, Ms. Zepeda will continue to be able to elect all of Xynergy's directors
and continue to control Xynergy. See "Item 11. Security Ownership of Certain
Beneficial Owner and Management".


Xynergy has not paid any cash dividends since its inception and does not
contemplate paying dividends in the foreseeable future. It is anticipated that
earnings, if any, will be retained for the operation of Xynergy's business.

Item 6.  Management's Discussion and Analysis or Plan of Operation.

Plan of Operation

Xynergy has expanded its plan of operation substantially, since its change in
strategy as a holding Company. Xynergy's new name, Xynergy, expressly describes
this change in plan and mission. XYNERGY, pronounced "zin-er-gee," is derived
from "synergy" which means "the combined action of two or more entities to
achieve an effect which is greater than that of which each individually is
capable.'

Xynergy's mission is revenue enhancement through an integration of companies in
growth and emerging markets. Xynergy believes that this will protect its value
as markets change and fluctuate.

As of April 22, Xynergy has successfully completed three acquisitions: Think
Blots greeting card line, Web Marketing Network, Inc., and Corporate Space Power
Industries & Electric, Inc. Additionally, Raquel of Beverly Hills is being
incorporated, another one of Xynergy's wholly owned subsidiaries. See Item 1,
Recent Operations, Page 3. These companies represent various market segments
that will allow Xynergy to maintain its position in the future, no matter how
industries and commerce fluctuate.

Xynergy is preparing to file a registration statement with the SEC for a second
round of financing via Forms S-4 or S-3 to obtain working capital for Xynergy
and its subsidiaries.



                                       8
<PAGE>

Material Changes in Financial Condition

Cash and cash equivalents were $2,721 at December 31, 2002. As a result,
revenues from the year 2002 continued to be insufficient to support the selling,
general and administrative expenses, nor to execute Xynergy's marketing plan for
its products.

Xynergy's available cash position at December 31, 2002 may not be sufficient to
cover Xynergy's operating expenses through calendar year 2002. While its
receivables are substantial, and have been submitted to a collection agency for
retrieval; recovery of these monies is uncertain. (See Item 1, Recent
Operations, Pages 3-4.)

Material Changes in Results of Operations

All expenses for Xynergy have decreased substantially. Xynergy has been
operating in a "hibernative" state. No monies have been spent toward office
rent, or salaries, greatly minimizing selling, general and administrative
expenses.

However, due to the minimal operating activities, Xynergy has not been able to
implement any sales or marketing strategies, resulting in minimal revenues for
the year ended December 31, 2002. Management believes that by implementing its
current Plan of Operation of raising working capital and executing its marketing
strategies, future revenues and share value will increase.

Item 7.  Financial Statements.


XYNERGY CORPORATION
(A Development Stage Company)
INDEX TO FINANCIAL STATEMENTS

Financial statements will be filed with an amended 10ksb. The Company does not
have the financial resources to conduct an audit at this time.


Item 8.Changes In and Disagreements with Accountants on Accounting and
Financial Disclosures.


On April 23, 2002, Xynergy Corporation signed an engagement letter with Buetel
Accountancy Corporation. This change was reported in the Company's 8-K filing
dated May 2, 2002.

This change was not affected as a result of a dispute or disagreement.




                                       9
<PAGE>

PART III

Item 9.Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act.

        The directors and executive officers of Xynergy are as follows:

        Name                         Age          Position

        Raquel Zepeda                51           President and Chairman


Directors serve until the next annual meeting of shareholders and until their
successors have been elected and have been qualified. Officers serve until the
meeting of the Board of Directors following the next annual meeting of
shareholders and until their successors have been elected and have been
qualified.

        RAQUEL ZEPEDA, has served as President and as a director of Xynergy
since its inception on August 6, 1993 and as the Treasurer of Xynergy since
August 1995. Ms. Zepeda established RAQL as a sole proprietorship in 1987. See
"Business". From July 1993 to July 1994, Ms. Zepeda was employed as a legal
secretary by the law firm of Rosky, Landau, Stall & Sheehy. From July 1992 to
July 1993 she was employed in a similar capacity by the law firm of Turner,
Gerstenfeld, Wilk, Tigerman & Young. From April 1988 to July 1992, Ms. Zepeda
was employed as a temporary legal secretary by various law firms in the Los
Angeles, California area. None of the law firms that employed Ms. Zepeda has any
relation to Xynergy.


Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934 and the rules thereunder
require Xynergy's officers and directors and persons who own more than 10% of
Xynergy's common stock to file reports of ownership and changes in ownership
with the Securities and Exchange Commission and to furnish Xynergy with copies.
During each of the fiscal years ended December 31, 2002, and 1996, each of the
directors and officers filed the required Form 3.


Item 10.  Executive Compensation.

Compensation of Officers. No executive officer of Xynergy was paid cash or
non-cash compensation in excess of $100,000 during calendar year 1999, 1997, or
1996 and Xynergy had and has no compensation plans in place and no officer has
received non-cash compensation, other than employee benefits made available to
all employees of Xynergy. The following table sets forth the cash compensation
paid by Xynergy to its chief executive officer for services rendered during
calendar years 1998, 1999, 2000, and 2002.


                                     Annual Compensation (1)

     Name and                                                   Other Annual
Principal Position           Year      Salary ($)   Bonus ($)   Compensation

Raquel Zepeda, President     2002      --            ---              ---
                             2001      --            ---              ---
                             2000      --            ---              ---




                                       10
<PAGE>

Incentive Stock Option Plan. Xynergy has adopted an Incentive Stock Option Plan
(the "Plan"). The purpose of the Plan is to secure and retain key employees of
Xynergy. The Plan authorizes the granting of options to key employees of Xynergy
to purchase an aggregate of 500,000 shares of commons stock, subject to
adjustment for various forms of reorganizations that may occur. No options may
be granted after August 6, 2003 and the fair value of an option to each optionee
cannot exceed $100,000 per year. An employee must have six months of continuous
employment with Xynergy before he or she may exercise an option granted under
the Plan. The option exercise price may not be less than 100% of the fair market
value of the shares at the time of the granting of such option. In the event an
option is granted to a stockholder who owns 10% or more of Xynergy's shares at
the time of the grant of the option, the option price must not be less than 110%
of the fair market value of the shares at the time of such grant. Options
granted under the Plan are nonassignable and terminate three months after
employment by the optionee ceases, except if employment terminates due to the
disability of the optionee, in which event the option will expire twelve months
from the date employment ceases. The Plan is administered by Xynergy's Board of
Directors. No options have been granted under the Plan. It may be expected that
any options granted will be exercised only if it is advantageous to the option
holder and when the market price of Xynergy's common stock exceeds the option
price. In the event that Xynergy grants options pursuant to the Plan, the
existence of such options may have a negative effect on the market price of
Xynergy's common stock.

Compensation of Directors. Directors have received 10,000 shares of common stock
as compensation for their services.

Employment Agreement.. In January, 1996, Xynergy and Ms. Zepeda entered into an
Amendment No. 1 to the original Employment Agreement which provides for her full
time employment by Xynergy. The Amendment provides a base salary effective
January 1, 1995 of $50,000 per annum, increasing to $60,000 per annum effective
January 1, 1996 and thereafter increasing only for cost of living adjustments.
The Amendment provides for incentive compensation as determined by the Board of
Directors of Xynergy considering as a factor in such incentive compensation the
profitability of Xynergy. In 1997, Ms. Zepeda received an 8.33% increase to
$65,000 per year.



Item 11.  Security Ownership of Certain Beneficial Owners and Management.

Security Ownership of Certain Beneficial Owners. The following table sets forth
information for each person who is known to Xynergy to be the beneficial owner
of more than five percent of any class of Xynergy's voting stock as of December
31, 2002:

<TABLE>
<CAPTION>
                                                Amount and                              Percent of
                        Name and Address of     Nature of               Percent of      all Voting
Title of Class          Beneficial Owner        Beneficial Owner        Class           Classes
--------------          ----------------        ----------------        -----           -------

<S>                                             <C>                     <C>             <C>
Common Stock       Raquel Zepeda                18,378,000 shares       58%             58%
                   269 So. Beverly Dr.           owned directly
                   Monica Blvd.
                   Beverly Hills, CA


As of December 31, 2002, there were 30,100,000 shares of common stock
outstanding, with each share entitled to one vote. Therefore, Xynergy has
securities outstanding with an aggregate of 30,100,000 votes.

Security Ownership of Management. The following table sets forth as to each
class of equity securities of Xynergy beneficially owned by all of Xynergy's
directors and nominees, each of the named executive officers and by all of
Xynergy's directors and executive officers as a group:

                                           Amount and
                   Name and Address of     Nature of               Percent of
Title of Class     Beneficial Owner        Beneficial Owner        Class
--------------     ----------------        ----------------        -----

Common Stock    Raquel Zepeda             18,378,000 shares       61%
                269 So. Beverly Dr.       owned directly
                Monica Blvd.
                Beverly Hills, CA



Common Stock       All executive officers and   19,648,000 shares       64%
                        directors as a group
                        (2 persons)
</TABLE>




                                       11
<PAGE>

Changes in Control. Other than the Employment Agreement with Ms. Zepeda, there
are no agreements, arrangements, or pledges of securities of Xynergy, the
operation of which may at a subsequent date result in a change of control of
Xynergy.


Item 12.  Certain Relationships and Related Transactions.

                Not applicable.

<PAGE>


Item 13.  Exhibits and Reports on Form 8-K.

        (a)  Exhibits and Index of Exhibits.

        Exh.
         No.            Description

     3.1 Articles of Incorporation, incorporated by reference from Form SB-2
Registration Statement No. 33-76464-LA as filed on March 31, 1994, Exhibit 3(a).

     3.2 Amendment to Articles of Incorporation, incorporated by reference from
Form SB-2 Registration Statement No. 33-76464-LA as filed on March 31, 1994,
Exhibit 3(b).

     3.3 Bylaws, incorporated by reference from Form SB-2 Registration Statement
No. 33-76464-LA as filed on March 31, 1994, Exhibit 3(c).

     3.4 Amendment to Bylaws, incorporated by reference from Form SB-2
Registration Statement No. 33-76464-LA as filed on March 31, 1994, Exhibit 3(d).

     3.5 Certificate of Determination of Rights and Preferences of Series A
Preferred Stock, incorporated by reference from Form 10K Registration Statement
No. 41093.4-LA, as filed on December 31, 1995, Exhibit 3.5(a).

     3.6 Amended and Restated Bylaws, incorporated by reference from Form 10K
Registration Statement No. 41093.4-LA, as filed on December 31, 1995, Exhibit
3.6(a).

     3.7 Amendment to Certificate of Determination of Rights and Preferences of
Series A Preferred Stock, incorporated by reference from Form 10K Registration
Statement No. 97WLA13270018 as filed on December 31, 1996, Exhibit 3.7(a).

     3.8 Certificate amending articles of incorporation changing the corporate
name from Colecciones de Raquel, Inc. to Raquel, Inc.

     3.9 Certificate of Amendment to Articles of Incorporation filed with the
Company's 8-K, dated May 2, 2002, and incorporated herein by reference.

     4.1 Specimen Certificate of Common Stock, incorporated by reference from
Form SB-2 Registration Statement No. 33-76464-LA as filed on March 31, 1994,
Exhibit 4(a).

     4.2 Form of Warrant Agreement, incorporated by reference from Form SB-2
Registration Statement No. 33-76464-LA as filed on March 31, 1994 Exhibit 4(b).
Exh. No. Description

     4.3 Specimen A Warrant Certificate, incorporated by reference from Form
SB-2 Registration Statement No. 33-76464-LA as filed on March 31, 1994, Exhibit
4(c).

     4.4 Specimen B Warrant Certificate, incorporated by reference from Form
SB-2 Registration Statement No. 33-76464-LA as filed on March 31, 1994, Exhibit
4(d).

                                       12
<PAGE>

     4.5 Specimen C Warrant Certificate, incorporated by reference from Form
SB-2 Registration Statement No. 33-76464-LA as filed on March 31, 1994, Exhibit
4(e).

     4.6 Specimen Certificate of Series A Preferred Stock, incorporated by
reference from Form SB-2 Registration Statement No. 33-76464-LA as filed on
March 31, 1994, Exhibit 4(g).

     10.1 Incentive Stock Option Plan, incorporated by reference from Form SB-2
Registration Statement No. 33-76464-LA as filed on March 31,1994, Exhibit 4(g).

     10.2 Employment Agreement dated January 31, 1994 between The Company and
Raquel Zepeda, incorporated by reference from Form SB-2 Registration Statement
No. 33-76464-LA as filed on March 31, 1994, Exhibit 10(b).

     10.3 Trademark Application for "Colecciones de Raquel", incorporated by
reference from Form SB-2 Registration Statement No. 33-76464-LA as filed on
March 31, 1994, Exhibit 10(c).

     10.4 Trademark No. 1,709,662 for "Sabor A Mi", incorporated by reference
from Form SB-2 Registration Statement No. 33-76464-LA as filed on March 31,
1994, Exhibit 10(d)

     10.5 Agreement dated December 31, 1993 between The Company and Raquel
Zepeda, incorporation by reference from Amendment No. 1 to Form SB-2
Registration Statement No. 33-76464-LA as filed on May 9, 1994, Exhibit 10(e),

     10.6 Settlement Agreement and General Mutual Release dated June 20,1995
between the Raquel Zepeda dba Colecciones de Raquel and Rixima, Inc.,
incorporated by reference from Form 10KSB Registration Statement No. 34597.1 as
filed on December 31, 1994, Exhibit 10.6(a).

     10.7Agreement dated September, 1994 between The Company and Moore McKenzie,
Inc., incorporated by reference from Form 10KSB Registration Statement
No.34597.1-LA as filed on December 31, 1994, Exhibit 10.7(a).

     10.8 Commercial Lease dated September 29, 1995 between the Company and
Wallace H. Siegel and Allen Siegel, incorporated by reference from Form 10KSB
Registration Statement No.34597.1-LA as filed on December 31, 1994, Exhibit
10.8(a).

     10.9 Amendment No. 1 to Employment Agreement dated January 1, 1996 between
the Company and Raquel Zepeda, incorporated by reference from Form 10KSB
Registration Statement No.34597.1-LA as filed on December 31, 1994, Exhibit
10.9(a).

     10.10 Commercial Lease dated September 29, 1995 between the Company and
L.A. Pacific Center, Inc., incorporated by reference from Form 10KSB
Registration Statement No. 97-WLA-13270018 as filed on December 31, 1996.

     10.11 Distribution Agreement between Raquel, Inc. [formerly known as
Colecciones de Raquel] and R-Town Entertainment incorporated by reference from
Form 10KSB Registration Statement No. 98-WLA-123500 as filed March, 1998.

     10.12 Trademark No. 2,050,606 for Raquel, Inc. [formerly known as
Colecciones de Raquel] Face Logo" incorporated by reference from Form 10KSB
Registration Statement No. 98-WLA-123500 as filed March, 1998..

     10.13 Certificate of Copyright Registration VA 736-099 for "RAQL Mark
(Logo)" incorporated by reference from Form 10KSB Registration Statement No.
98-WLA-123500 as filed March, 1998.

     10.14 Certificate of Copyright Registration SR 190-794 for Sabor A Mi,
"Melody Of Eternal Passion" incorporated by reference from Form 10KSB
Registration Statement No. 98-WLA-123500 as filed March, 1998..



                                       13
<PAGE>

                Exh.
                 No.    Description

     10.15 Certificate of Copyright Registration VA 334-469 for "Colecciones De
Raquel Color Collection Brochure".

     10.16 Notice of Allowance for Trademark "PELIGRO," SR 75/074408
incorporated by reference from Form 10KSB Registration Statement No.
98-WLA-123500 as filed March, 1998.

     10.17 Request For Extension of Time To File A Statement Of Use With
Declaration for Trademark "PELIGRO", SR 75/074408 incorporated by reference from
Form 10KSB Registration Statement No. 98-WLA-123500 as filed March, 1998..

     10.18 Notice of Approval of Extension Request for Trademark "PELIGRO", SR
75/074408 incorporated by reference from Form 10KSB Registration Statement No.
98-WLA-123500 as filed March, 1998.

     10.19 Contract with Con Estilo Latino

     10.20 Contracts with A.R. Hardy & Associates and John W. Vanover
incorporated herein by reference from Form S-8 filed on June 17, 1998 (File No.
333-57061)

     10.21 Trademark applications for "Chic'a Beverly Hills" and "Yoohoo."

     10.22 Employment agreement with Edward A. Rose, Jr.

     10.28 Acquisition Agreement between Corporate Space Power Industries and
Electric, Inc. and Xynergy Corporation; incorporated herein by reference from
Form S-8 filed on May 3, 2002.

     10.29 Letter to Oppenheim & Ostrick incorporated herein by reference from
Form S-8 filed on May 3, 2002.

     10.30 Dissolution agreement between Xynergy and CSPIE dated August, 2002

     10.31 Cancellation Agreement of acquisition of Web Marketing Network, Inc.
dated August 26, 2002,

     10.32 Acquisition agreement between Voyaware, LLC and Xynergy Corp. dated
September, 2002.


                                       14
<PAGE>



        (b)     Reports on Form 8-K.

        On September 20, 2000 a Form 8-K was filed, reporting the acquisition of
Think Blots greeting card line. The filing included the Acquisition Agreement as
an exhibit and is incorporated herein by reference.

A Form 8-K was filed dated January 23, 2002 to report the acquisition of Web
Marketing Network,

8-K filing dated May 2, 2002 reports acquisition of Corporate Space Power
Industries and Electric Corporation, change in auditors, and Amendment to
Articles of Incorporation..
On May 2, 2002 a Form 8-K was filed reporting the acqusition of CSPIE.

In June, 2002 a Form 8-K and subsequent 8-KA were filed to report the change in
accountants from Ostrick and Oppenheim to Beutel Accountancy.



                                       15
<PAGE>

SIGNATURES


        In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

Dated: March 30, 2003                   XYNERGY CORPORATION
                                        [formerly known as RAQUEL, INC.]







                                        By:   /s/Raquel Zepeda
                                              ----------------
                                              Raquel Zepeda, President,
                                              Chief Executive Officer
                                                & Chairman


        In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.

Signature

 /s/ Raquel Zepeda              Corporate Secretary           March 30,  2003
RAQUEL ZEPEDA                   and Director)