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, 2004

      [_]   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

                               XYNERGY CORPORATION
                               -------------------
                        [Formerly known as 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)

         269 So. Beverly Dr., Suite 938, Beverly Hills, California 90212
         ---------------------------------------------------------------
                    (Address of principal executive offices)

                                 (310) 274-0086
                                 --------------
                           (Issuer's telephone number)

                           FORMERLY KNOWN 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 [_]

The number of shares of the registrant's Common Stock, $.001 par value,
outstanding as of September 30, 2004 was 293,635,697.

<PAGE>

PART 1 - FINANCIAL INFORMATION

ITEM 1.Financial Statements                                               PAGE

      (a)   Balance Sheet (Unaudited) -September 30, 2004                   1

      (b)   Statements of Operations (Unaudited) - [Third Quarter]
            Three months ended September 30, 2004 and 2003

            Statements of Operations (Unaudited) - Nine months ended,
            September 30, 2004, 2003 and Period from Inception
            (August 6, 1993) to September 30, 2004                          2

      (c)   Statement of Stockholder's Equity (Unaudited) - Period from
            Inception (August 6, 1993) to September 30, 2004                4

      (d)   Statements of Cash Flows (Unaudited) - Nine months ended
            September 30, 2003, 2004 and Period from Inception
            (August 6, 1993) to September 30, 2004                          7

      (e)   Notes to Unaudited Financial Statements                         8

ITEM  2.    Management's Discussion and Analysis or
            Plan of Operation                                               9

PART II - OTHER INFORMATION                                                10

<PAGE>

                               XYNERGY CORPORATION
                        (FORMERLY KNOWN AS RAQUEL, INC. )
                         (A Development Stage Company)
                           Consolidated Balance Sheet
                                  (Unaudited)

                                                              September 30, 2004

ASSETS

Current Assets

    Cash and equivalents                                            $    59,698
                                                                    -----------
    Total Current Assets                                            $    59,698
                                                                    -----------
Equipment, Furniture & Fixtures, cost                                     1,217
                                                                    -----------
Deposits and other assets                                               132,250
                                                                    -----------

Total Assets                                                        $   193,165
                                                                    ===========
LIABILITIES AND STOCKHOLDERS EQUITY

Current Liabilities
   Accounts payable & Taxes payable                                 $    10,812
   Notes payable                                                         37,845
   Notes payable to related parties                                      78,663

   Total current liabilities                                        $   127,320
                                                                    -----------

Stockholder's equity
   Common stock - $.001 par value, 900,000,000 shares
    authorized, 293,635,697 shares issued and outstanding               293,636
   Preferred stock authorized 100,000,000 shares,
   $0.001 par value
   Issued and Outstanding 40,000,000 shares                              40,000
   Additional paid in capital                                         2,284,324
   Stock Subscriptions Receivable                                      (360,000)
   Treasury stock                                                       (13,000)
   Deficit accumulated during the development stage                  (2,179,115)
                                                                    -----------
   Total stockholder's equity                                            65,845
Total liabilities and stockholder's equity                          $   193,165
                                                                    ===========


                                        1

<PAGE>

                               XYNERGY CORPORATION
                        (FORMERLY KNOWN AS RAQUEL, INC.)
                         (A Development Stage Company)
                     CONSOLIDATED STATEMENTS OF Operations
                                  (Unaudited)

                                                           Third Quarter,
                                                            three months
                                                         Ended September 30,

                                                         2004             2003
                                                         ----             ----
Sales

Cost of Goods Sold                                          --
Gross Profit
Selling, general, and administrative expenses          130,069            8,708
                                                       -------           -------
(Loss) from operations                                (130,069)          (8,708)
Other Income                                             6,202
Net Loss                                             ($123,867)         ($8,708)
                                                     ==========        =========
Net Loss per share                                           a                a
                                                     ==========        =========
Common shares outstanding                          244,635,697       18,161,851
                                                   ============      ===========

a = net loss equals less than ($0.01) per share


                                       2
<PAGE>

                               XYNERGY CORPORATION
                        (FORMERLY KNOWN AS RAQUEL, INC.)
                         (A Development Stage Company)
                     CONSOLIDATED STATEMENTS OF Operations
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                    Year-to-Date,
                                                     Nine months          Inception 8/6/93 to
                                                   Ended Sept. 30,            Sept.30,

                                                      2004           2003            2004
                                                      ----           ----            ----
<S>                                               <C>              <C>        <C>
Sales                                                                   49         48,074

Cost of Goods Sold                                       --                        24,627
                                                   --------       ---------    ----------
Gross Profit                                                            49         23,447
Selling, general, and administrative expenses       252,597         20,420      2,321,212
                                                   --------       ---------    ----------
(Loss) from operations                             (252,597)       (20,371)    (2,297,765)
Other Income                                          7,204                       125,850
Loss before provision for income taxes             (245,393)       (20,371)    (2,171,915)
Taxes                                                                   --         (7,200)
Net Loss                                          ($245,393)      ($20,371)   ($2,179,115)
                                                  ==========      =========   ============
Basic & diluted

Net (Loss) per Common share                           ($.01)             a
                                                  ==========      =========
aa = net loss equals less than ($0.01) per share

Weighted average number of
  Common shares outstanding                     243,602,730     18,161,851
                                                ===========     ==========
</TABLE>


                                       3
<PAGE>

                               XYNERGY CORPORATION
          Consolidated Financial StatementsStatement of Stockholders'
          EquityFrom August 6, 1993 [Inception] To September 30, 2004

<TABLE>
<CAPTION>
                                                      Preferred Stock                     Common Stock
                                              ------------------------------    -------------------------------        Paid In
                                                  Shares           Amount          Shares            Amount            Capital
                                              -------------    -------------    -------------     -------------     -------------
<S>                                           <C>              <C>              <C>               <C>               <C>
Net (loss) from Inception to

December 31, 1993
Common Shares issued to Founder                                                       200,000     $         200     $      36,554
Common Shares issued for cash
in IPOI w/"A "warrants attached                                                        10,000                10            91,080
Preferred shares issued in exchange
for common shares                                   100,000              100         (200,000)             (200)              100
Common shares issued in
exercise of "A" warrants (see Note 3)                                                  10,000                10           249,990
Net (Loss) for 1994
                                              -------------    -------------    -------------     -------------     -------------

Balance Dec.  31, 1994                              100,000              100           20,000                20           377,724
Common shares issued in exercise
of "B" warrants (see Note 3)                                                           20,000                20           999,980
Cash proceeds from MMI
Net (Loss) for 1995
                                              -------------    -------------    -------------     -------------     -------------

Balance Dec.  31, 1995                              100,000              100           40,000                40         1,377,704
Common shares issued in exchange
for preferred shares                               (100,000)            (100)         200,000               200              (100)
Cash Proceeds from MMI
Net (Loss) for 1996
                                              -------------    -------------    -------------     -------------     -------------

Balance Dec.  31, 1996                                   --               --          240,000               240         1,377,604
Net (Loss) for 1997
                                              -------------    -------------    -------------     -------------     -------------

Balance Dec.  31, 1997                                                                240,000               240          1377,604
Common shares issued for cons. svcs                                                    33,000                33               297
Net (Loss) for 1998
                                              -------------    -------------    -------------     -------------     -------------

Balance Dec.  31, 1998                                   --               --          273,000               273         1,377,901
Common shares cancelled
for services not rendered                                                             (26,000)              (26)               26

Net (Loss) for 1999
                                              -------------    -------------    -------------     -------------     -------------

Balance, Dec.  31, 1999                                                               247,000               247         1,377,927
Net (Loss) for the year 2000
                                              -------------    -------------    -------------     -------------     -------------

Balance Dec.  31, 2000                                                                247,000               247         1,377.297
</TABLE>

<TABLE>
<CAPTION>

                                                                  Stock Owned             Accum.
                                                Subscriptions          By                Deficit for
                                                 Receivable       Subsidiaries           Dev. Stage        Total Equity
                                                -------------     -------------         -------------     -------------
<S>                                             <C>               <C>                   <C>               <C>
Net (loss) from Inception to                                                            $     (36,640)    $     (36,640)
  December 31, 1993
Common Shares issued to Founder                                                                                  36,754
Common Shares issued for cash
  in IPOI w/"A "warrants attached                                                                                91,090
Preferred shares issued in exchange
  for common shares                                                                                                 -0-
Common shares issued in
  exercise of "A" warrants (see Note 3)              (259,000)                                (94,692)           33,152
Net (Loss) for 1994                                                                           (58,052)          (58,052)
                                                -------------     -------------         -------------     -------------

Balance Dec.  31, 1994                               (250,000)                                (94,962)           33,152
Common shares issued in exercise
  of "B" warrants (see Note 3)                     (1,000,000)                                                        -
Cash proceeds from MMI                                849,875                                                   849,875
Net (Loss) for 1995                                                                          (126,518)         (126,518)
                                                -------------     -------------         -------------     -------------

Balance Dec.  31, 1995                               (400,125)                               (221,210)          756,509
Common shares issued in exchange
  for preferred shares
Cash Proceeds from MMI                                400,125                                                   400,125
Net (Loss) for 1996                                                                          (308.137)         (308,137)
                                                -------------     -------------         -------------     -------------

Balance Dec.  31, 1996                                                                       (529,347)          848,497
Net (Loss) for 1997                                                                          (250,579)         (250,570)
                                                -------------     -------------         -------------     -------------

Balance Dec.  31, 1997                                                                       (819,926)          557,918
Common shares issued for cons. svcs                                                                                 330
Net (Loss) for 1998                                                                          (217,582)         (217,582)
                                                -------------     -------------         -------------     -------------

Balance Dec.  31, 1998                                                                     (1,037,508)          340,666
Common shares cancelled
  for services not rendered
Net (Loss) for 1999                                                                          (169,677)         (169,677)
                                                -------------     -------------         -------------     -------------

Balance, Dec.  31, 1999                                                                    (1,207,185)          170,989
Net (Loss) for the year 2000                                                                  (97,675)          (97,675)
                                                -------------     -------------         -------------     -------------

Balance Dec.  31, 2000                                                                     (1,304,860)           73,314
</TABLE>

                                       4
<PAGE>

<TABLE>
<CAPTION>
                                                      Preferred Stock                     Common Stock
                                              ------------------------------    -------------------------------        Paid In
                                                  Shares           Amount          Shares            Amount            Capital
                                              -------------    -------------    -------------     -------------     -------------
<S>                                           <C>              <C>              <C>               <C>               <C>
Common shares issued by
exercise of options for cash                                                           54,000                54            70,742
Net (Loss) for the year 2001
                                              -------------    -------------    -------------     -------------     -------------

Balance December 31, 2001                                                             301,000               301         1,448,399
Common Stock Issued for cash in exercise
of options through subscrip.  receivable                                               15,000                15            37,485
Common stock issued for acquisitions                                               10,500,000            10,500
Common Stock Issued for cash in exercise
of options through subscrip.  receivable                                            2,000,000             2,000           198,000
Common Stock Issued for cash in exercise
of options through subscrip.  receivable                                            1,000,000             1,000            24,000
Common Stock Issued for cash in exercise
of options through subscrip.  receivable                                              750,000               750            36,750
Common Stock Issued for services                                                   13,035,851            13,036            98,935
Common Stock Issued & held by Subsidiaries                                         13,000,000            13,000
Common stock Cancelled for term
of acquisitions                                                                    (9,500,000)           (9,500)
Cash Rec'd on Subscriptions
Net Loss for the year 2002
                                              -------------    -------------    -------------     -------------     -------------

Balance, December 31, 2002                                                         31,101,851            31,102         1,843,569
Pref. Stock Issued for svcs                       1,250,000    $       1,250                                               23,750
Common Stock Issued for svcs                                                        3,398,846             3,399           167,290
Common Stock Canceled svcs
not rendered                                                                         (900,000)             (900)
Comm.  Stock Canceled (Subs. term.)                                                (2,500,000)           (2,500)         (222,500)
Write-off uncollectible Subs. Rec
Net Loss, Year 2003
                                              -------------    -------------    -------------     -------------     -------------

Balance, Dec. 31, 2003                            1,250,000    $       1,250       31,100,697     $      31,101     $   1,812,109
                                              -------------    -------------    -------------     -------------     -------------
</TABLE>

<TABLE>
<CAPTION>
                                                                   Stock Owned             Accum.
                                                 Subscriptions          By                Deficit for
                                                  Receivable       Subsidiaries           Dev. Stage        Total Equity
                                                 -------------     -------------         -------------     -------------
<S>                                              <C>               <C>                   <C>               <C>
Common shares issued by
exercise of options for cash                                                                                      70,526
Net (Loss) for the year 2001                                                                  (113,167)         (113,167)
                                                 -------------     -------------         -------------     -------------
Balance December 31, 2001                                                                $  (1,418,027)    $      30,673
Common Stock Issued for cash in exercise
of options through subscrip.  receivable               (37,650)                                                      -0-
Common stock issued for acquisitions                                                                              10,500
Common Stock Issued for cash in exercise
of options through subscrip.  receivable              (200,000)
Common Stock Issued for cash in exercise
of options through subscrip.  receivable               (25,000)
Common Stock Issued for cash in exercise
of options through subscrip.  receivable               (37,500)
Common Stock Issued for services                                                                                 111,971
Common Stock Issued & held by Subsidiaries                               (13,000)
Common stock Cancelled for term
of acquisitions                                                                                                   (9,500)
Cash Rec'd on Subscriptions                             20,250                                                    20,250
Net Loss for the year 2002                                                                    (199,179)         (199,179)
                                                 -------------     -------------         -------------     -------------

Balance, December 31, 2002                            (279,750)          (13,000)           (1,617,206)          (35.285)
Pref. Stock Issued for svcs                                                                                       25,000
Common Stock Issued for svcs                                                                                     170,689
Common Stock Canceled svcs
not rendered                                                                                                        (900)
Comm.  Stock Canceled (Subs. term.)                    225,000
Write-off uncollectible Subs. Rec                       54,750                                                    54,750
Net Loss, Year 2003                                                                           (316,516)         (316,516)
                                                 -------------     -------------         -------------     -------------

Balance, Dec. 31, 2003                           $          --           (13,000)        $  (1,933,722)    $    (102,262)
                                                 -------------     -------------         -------------     -------------
</TABLE>

                                       5
<PAGE>

<TABLE>
<CAPTION>
                                                      Preferred Stock                     Common Stock
                                              ------------------------------    -------------------------------        Paid In
                                                  Shares           Amount          Shares            Amount            Capital
                                              -------------    -------------    -------------     -------------     -------------
<S>                                           <C>              <C>              <C>               <C>               <C>
Common Stock issued for svcs                                                        2,600,000             2,600            99,400
Common Stock for dep. collateral                                                    1,500,000             1,500            28,500
Net Loss, First Quarter (3/31/04)
                                              -------------    -------------    -------------     -------------     -------------

Balance March 31, 2004                            1,250,000    $       1,250       35,200,697     $      35,201     $   1,940,009
Cancel. of Stock Svcs.  not rendered                                                 (500,000)             (500)
Adj.  Comm.  for reverse-split                                                         60,000                60               (60)
Net Loss, 2nd Qtr (6/30/04)
                                              -------------    -------------    -------------     -------------     -------------

Balance, June 30, 2004                            1,250,000    $        1,250      34,760,697     $      34,761     $   1,939,949
Pref. Stock Issued-Def.  Comp                    38,750,000    $      38,750
Common Stock Issued per
under 504 Agreement                                                               144,000,000     $     144,000     $     216,000
Common Stock issued for svcs                                                       42,875,000            42,875            74,375
Com. Stock Iss.  - Dep.  on Acquisition                                            36,000,000     $      36,000
Common Stock Subscriptions
Com. Stock for cash                                                                36,000,000     $      36,000            54,000
Net Loss, 3rd Qtr (9/30/04)
                                              -------------    -------------    -------------     -------------     -------------
Balance, September 30 2004                       40,000,000    $      40,000      293,635,697     $     293,636     $   2,284,324
</TABLE>

<TABLE>
<CAPTION>
                                                                 Stock Owned             Accum.
                                               Subscriptions          By                Deficit for
                                                Receivable       Subsidiaries           Dev. Stage        Total Equity
                                               -------------     -------------         -------------     -------------
<S>                                            <C>               <C>                   <C>               <C>
Common Stock issued for svcs                                                                                   102,000
Common Stock for dep. collateral                                                                                30,000
Net Loss, First Quarter (3/31/04)                                                           (108,923)         (108,923)
                                               -------------     -------------         -------------     -------------

Balance March 31, 2004                                   $--           (13,000)        $  (2,042,645)    $     (79,185)
Cancel. of Stock Svcs.  not rendered                                                                              (500)
Adj.  Comm.  for reverse-split
Net Loss, 2nd Qtr (6/30/04)                                                                  (12,603)          (12,603)
                                               -------------     -------------         -------------     -------------

Balance, June 30, 2004                                   $--           (13,000)        $  (2,055,248)    $     (92,288)
Pref. Stock Issued-Def.  Comp                                                                                   38,750
Common Stock Issued per
under 504 Agreement                                                                                            360,000
Common Stock issued for svcs                                                                                   117,250
Com. Stock Iss.  - Dep.  on Acquisition                                                                        (36,000)
Common Stock Subscriptions                     $    (360,000)                                                 (360,000)
Com. Stock for cash                                                                                             90,000
Net Loss, 3rd Qtr (9/30/04)                                                                 (123,867)         (123,867)
                                               -------------     -------------         -------------     -------------
Balance, September 30 2004                     $    (360,000)    $     (13,000)        $  (2,179,115)    $      65,845
</TABLE>

                                       6
<PAGE>

                               XYNERGY CORPORATION
                        (FORMERLY KNOWN AS RAQUEL, INC. )
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENTS OF CASH Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                           Year to Date                     Period from Inception
                                                      (9 Mos.)Period Ended                     August 6, 1993
                                                          September 30,                          to Current
                                                             2004                2003        September 30, 2004
                                                       -------------------       ----       ---------------------
<S>                                                   <C>                  <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
 Net loss                                                 $  (245,393)      $   (20,371)      $(2,179,115)
 Adjustments to reconcile
   net loss to net cash used in operating activities
   Preferred stock issued for services                                                             25,000
   Common stock issued for acquisitions                                                             1,000
   Common stock issued for services                           218,750                             537,594
   Write-off subscriptions receivable                              --                              54,750
   Depreciation expense                                                                            34,019
Change in assets and liabilities
   Decr.  (Incr.) in Other Assets                                                  (500)
   Increase (decrease) in Deposits & Prepds                    27,500                              27,500
   Increase (decrease) in Accounts Payable                    (20,065)           21,050            10,812
                                                          ------------       -----------      ------------
Cash used by operating activities                         $   (74,208)      $       179       $(1,543,440)

Cash flows from investing activities
      Purchase of  Equipment                                    1,217                         $   (35,236)
                                                          ------------                        ------------
      Net cash used in investing activities               $     1,217                         $   (35,236)

CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds fr Stock Subscr.  Receivable                                                      $    20,250
   Proceeds from loans                                         44,569                             116,508
   Proceeds from sale of  common stock                         90,000                           1,501,616
                                                          ------------                        ------------
Cash received by financing activities                         134,569                         $ 1,638,374
                                                          ------------                        ------------

   Net increase(decrease) in cash                         $    59,144       $       179       $    59,698
                                                          ------------       -----------      ------------

CASH BEGINNING OF PERIOD                                  $       554               428
                                                          ------------       -----------

Cash, end of period                                       $    59,698       $       607       $    59,698
                                                          ===========       ============      ===========
</TABLE>

Significant Non-Cash Transactions

During 2003 1,250,000 preferred shares were issued for services valued at
$25,000; 3,398,846 common shares were issued for consulting services valued at
$170,689; 900,000 common shares were canceled for services not rendered valued
at ($900); 2,500,000 common shares were canceled for termination of $225,000
subscriptions receivable; and $54,750 of subscriptions receivable were
written-off as uncollectible.

During 2004 the Company issued 144,000,000 shares of common stock for
subscriptions receivable valued at $360,000. An additional 37,500,000 shares of
common stock valued at $66,000 were issued for deposits under an acquisition
agreement and collateral for loans.


                                       7
<PAGE>

The Company also issued 38,750,000 shares of preferred stock valued at $17,250
for deferred compensation.

The accompanying notes are an integral part of these financial statements

NOTE 1. ADJUSTMENTS

The financial statements as of September 30, 2004 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 for the year ended December 31,
2003 filed on Form 10-KSB.

NOTE 2. GOING CONCERN

The accompanying financial statements have been prepared assuming that the
company will continue as a going concern. The Company has accumulated a
$2,174,620 loss during its development phase, has a deficit in stockholders'
equity and negative working capital. This raises substantial doubt about the
Company's ability to continue as a going concern. The Company's ability to
continue as a going concern is dependent upon its success in acquiring
additional capital. There is no assurance that the Company will be successful in
its efforts to raise additional proceeds or achieve profitable operations. The
financial statements do not include any adjustments that might result from this
uncertainty. During the last quarter, the Company was able to raise some capital
in a private placement. (See Note 4 below.) Additionally, Management is
evaluating several proposals that would bring capital into the company including
a convertible debt offering.

NOTE 3. NOTE PAYABLE

On March 22, 2004, the Company entered into a three year loan agreement for
$27,500.00 dollars at prime plus 2% with a one year renewal option. The loan
calls for a pledge 1,500,000 shares of common stock as security and was closed
in April 2004. Payments are due quarterly under the terms of the agreement.

NOTE 4. SUBSEQUENT EVENTS

On August 8, 2004 the Company signed an agreement with Indigo Technologies, Inc.
("Indigo") to acquire all their equity interests in exchange for 36,000,000
shares of Xynergy stock. On December 20, 2004 the Company terminated the
acquisition of Indigo Technologies, Inc. and canceled the 36,000,000 shares of
Xynergy stock issued to Indigo.

Accounts Receivable and Common Stock Issued and Outstanding increased
dramatically during this period due to the sale of Xynergy Common Stock under a
504 private placement offering resulting from the acquisition of Indigo. In
December of 2004, the acquisition was canceled because Indigo did not comply
with the terms of the acquisition. Of the $360,000.00 in Accounts Receivable,
$150,000.00 was canceled and adjusted to equity in Fourth Quarter of 2004,
$120,000.00 was received, and $90,000.00 was still due. If this amount is not
received, Xynergy expects to file a complaint in Federal District Court and
believes it will recover these funds.


                                       8
<PAGE>


                               XYNERGY CORPORATION
                        (FORMERLY KNOWN AS RAQUEL, INC.)
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

ITEM 2. Management's Discussion And Analysis Or Plan Of Operation

The Private Securities Litigation Reform Act of 1995 provides a "safe-harbor"
for forward-looking statements. Certain statements contained in this report that
are not historical fact, including, but not limited to, those concerning its
expectations of future sales revenues, gross profits, research and development,
sales and marketing, and administrative expenses, product introductions and cash
requirements are forward-looking statements. These forward-looking statements
are subject to risks and uncertainties that may cause its actual results to
differ from expectations including variations in the level of orders, general
economic conditions in the markets served by its customers, international
economic and political climates, timing of future product releases, difficulties
or delays in product functionality of performance, its failure to respond
adequately to changes in technology or customer preferences, changes in its
pricing or that of its competitors and its inability to manage growth. All of
the above factors constitute significant risks to its operations. There can be
no assurance that the Company's results of operations will not be adversely
affected by one or more of these factors. As a result, its actual results may
vary materially from its expectations. The words "believe", "expect",
"anticipate", "intend", and "plan" and similar expressions identify
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements which speak only as of the date the statement
was made.

Plan of Operation

In 2004, Xynergy has positioned itself to raise capital for its subsidiaries to
execute and implement sales and distribution plans. On March 26, 2004 Xynergy
was listed on the Berlin Stock Exchange under the symbol UYW, German Cusip
Number US9841531067. This new listing on the Berlin Stock Exchange is expected
to improve Xynergy's exposure for European investors and to improve the trading
liquidity of Xynergy shares for all of its shareholders. No new shares were
issued as part of this listing and the improved visibility for Xynergy and
improved liquidity for Xynergy shareholders could produce an improvement in
shareholder value as the Company continues its growth in 2004.

RAQUEL OF BEVERLY HILLS now plans to increase sales through expansion directly
and aggressively through infomercials and network/multi-level marketing. In May,
2004 the Company announced that it was going to market the Raquel of Beverly
Hills line via infomercials. In June, 2004 Xynergy Corp signed an agreement with
Incredible Discoveries for production of an infomercial for selling Raquel of
Beverly Hills products.

Production of its launch product, a compact palette containing several makeup
colors is expected to commence shortly. This palette will be compact enough to
carry inside a small purse for ideal marketability. The compact will come in
three different color schemes: "Coleccion de la Luna, Coleccion del Sol, and
Coleccion Terrestre." Coleccion de la Luna is for light golden skin tones,
Coleccion del Sol for medium golden skin tones, and Coleccion Terrestre for deep
golden skin tones. Each compact will contain two shades of foundation for
year-round use. It will also contain lipsticks, blush, concealer, foundations
and eye shadows, offering a collection for year-round use. Filming of the
informercial ie expected to commence shortly after the production of the
compacts is complete.

The Raquel of Beverly Hills infomercial will be produced and launched in Florida
via Spanish-Language television. Expansion on marketing its products in areas
containing large and growing number of Hispanics will then expand to California,
Texas, and New York. Ultimately, distribution will be expanded to Latin America,
Europe, and Asia. The Company expects that this new avenue of sales and
distribution will ultimately increase its revenues.


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<PAGE>


According to the Electronic Retailing Association, infomercials brought in more
than $154 billion last year and the market is growing at the rate of 10% per
year. The Direct Selling Association reported that in 1999 U.S. Retail Sales
were equivalent to $24.54 billion. Personal care represented 24.9% or $6.11
billion dollars.Think Blots(TM) greeting card line was the Company's first
acquisition which was consummated in September 2001.

THINK BLOTS(TM) is a totally unique and entertaining concept in greeting cards.
In addition, introduced Demented Diagnosis(C), a "mental test" as a promotional
tool. Through Demented Diagnosis(C) tests, people will acquaint themselves with
unique concept of self-discovery from ink blot art. Eventually, the Company
plans to syndicate Demented Diagnosis so that they may be placed alongside
horoscopes and cross-word puzzles.

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.

Distribution

RAQUEL OF BEVERLY HILLS, as mentioned above, will commence its distribution
through Spanish Language infomercials. Eventually, it will include distribution
through catalogue sales and direct salespeople. See Plan of Operation above.

THINK BLOTS will be distributed through retail outlets and e-cards on the
internet. Its website, WWW.DEMENTEDDIAGNOSIS.COM is expected to launch sometime
in December, 2004. Additionally, the company is seeking syndication of DEMENTED
DIAGNOSIS in periodicals which would give Think Blots greeting card line
additional exposure.

The above statements, in Plan of Operation and Distribution are based on the
Company's ability to obtain appropriate financing to execute its marketing
plans. This information, therefore, contains forward-looking statements. As
such, the Company is including the following: Safe Harbor Statement under the
Private Securities Litigation Reform Act of 1995: The statements contained
herein which are not historical fact are forward-looking statements that are
subject to risks and uncertainties that could cause actual results to differ
materially from those expressed in the forward-looking statements.

Material Changes and Analysis of Financial Condition

The Company's cash position increased during the nine month period ended
September 30, 2004 due to inflows from financing activities. The Company has now
obtained sufficient financing to produce its Raquel of Beverly Hills products
which are to be sold via an infomercial . While the company cannot guarantee the
success of its infomercial, there is potential for a substantial increase in
revenues. Additionally, the company expects to use proceeds of these inflows of
cash from financing activities to market and produce its greeting card line,
Think Blots.

Due to the previous downsizing of Xynergy, its expenses continue to be minimal.
Its major expenses will be in the production of products and legal and
accounting costs that have increased extensively due to requirements under
"Sarbanes-Oxley."


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<PAGE>


PART II - OTHER INFORMATION

Item 1. Legal Proceedings

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 January of 2002, the company changed its amount of authorized stock, common
to 250,000,000 and preferred to 50,000,000. In February, 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. The name change was
due to its expansion into other markets and acquisitions of other companies. In
October, 2003 the Company filed a Certificate of Designation of Class A
Convertible Preferred Stock. Maximum number of shares in Series A stock is
10,000,000 shares with a twenty to one conversion rate and twenty cumulative
votes per share. In July, 2004 the Company increased its amount of authorized
common stock to nine hundred million (900,000,000) and its preferred to one
hundred million (100,000,000). As of September 30, 2004, the Company had
293,635,697 shares outstanding. (See Statement of Shareholder's Equity.)

Item 3. Defaults Upon Senior Securities

Inapplicable.

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

Inapplicable.

Item 5. Other Information

On June 3, 2004, Xynergy delivered a letter to Weinberg, dismissing their
services. (See 8k filing of June 17, 2004.) The decision to change independent
auditors was approved by the Company's Board of Directors. On June 16, 2004 the
Company engaged Shelley International, CPA's. Due to the Company's late filings,
the symbol was changed to "XYNYE" and trading was ultimately moved from the OTC
Bulletin Board to the OTC "Pink Sheets."

Many delays were due to the fact that the auditors who performed the 2002 audit
had complications with the SEC which compelled Xynergy to conduct a re-audit of
the 2002 operations. Further, as described in the previous paragraph, the
auditors who were initially engaged to perform the 2003 audit were dismissed in
June, 2004. (See 8k filing dated June 17, 2004.) The Company anticipates that it
will have all of its quarterly reports filed shortly. As of the date of this
report, 10ksb reports for 2002 and 2003 have been filed.

Item 6. Exhibits and Reports on Form 8K

(a) Exhibits

Inapplicable.

(b) Reports Form 8-K

              On June 17, 2004, a Form 8-K and subsequent 8KA were filed
              reporting the dismissal of Weinberg & Co. and engagement of
              Shelley International. Also reported was the signing of an
              agreement for the production of an infomercial for Raquel of
              Beverly Hills products with Incredible Discoveries.

              Form 8k was filed on August 23, 2004, reporting the acquisition of
              Indigo Technologies, Inc. Subsequently, and 8KA was filed in
              December, 2004 to report the termination of this acquisition.


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<PAGE>

                                   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.

                                              XYNERGY CORPORATION
                                             (FORMERLY KNOWN AS RAQUEL, INC.)
                                             (Registrant)

Dated: February 23, 2005                      By: /s/ Raquel Zepeda
                                                  -----------------------------
                                                  Raquel Zepeda, Chief Financial
                                                  Officer & Chairman

The signing officer has reviewed the report;

      Based on such officer's knowledge, the report does not contain any untrue
statement of material fact or omit a material fact necessary in order to make
statements made, in light of the circumstances under which such statements were
made, not misleading;

      Based on such officer's knowledge, the financial statements and other
financial information included in the report to be filed, fairly present in all
material respects the financial condition and results of operation of the
company as of, and for, the periods presented in the report;

      The signing officers are responsible for establishing and maintaining
internal controls, have designed such internal controls to insure that material
information relating to the company and its consolidated subsidiaries is made
known to such officers, particularly during the period in which the periodic
reports are to be prepared, have evaluated the effectiveness of the controls as
of a date within 90 days prior to the date of the report, and have presented in
the report their conclusions about the effectiveness of the controls based on
their evaluation as of such date;

      The signing officers have disclosed to the company's auditors and the
audit committee all significant deficiencies in the design or operation of
internal controls which could adversely affect the company's ability to record,
process, summarize and report financial data and have identified for the
auditors any material weaknesses in internal controls and any fraud, whether or
not material, that involves management or other employees who have a significant
role in the company's internal controls; and

      The signing officers have indicated in the report whether or not there
were any significant changes in internal controls or other factors that could
significantly affect internal controls subsequent to the date of their
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.


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