<PAGE>
                                          
                      U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, D.C.  20549
                                          
                                    FORM 10-QSB

(Mark One)
     [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES AND EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 1998

     [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                        THE SECURITIES EXCHANGE ACT OF 1934
                                          
                  For the transition period from ______ to ______

Commission File Number 0-24798

                              COLECCIONES DE RAQUEL, INC.
--------------------------------------------------------------------------------
         (Exact name of small business issuer as specified in its charter)

         Nevada                                            93-1123005
--------------------------------------------------------------------------------
(State or other jurisdiction                              (IRS Employer
of Incorporation)                                     Identification Number)

              9873 S. Santa Monica Blvd., Beverly Hills, California 90212       
--------------------------------------------------------------------------------
                        (Address of principal executive offices)
                                     (310) 203-9240 
                              ---------------------------
                              (Issuer's telephone number)

--------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.

               Yes  X            No 
                   ---              ---

At March 31, 1998, 24,000,000 shares of the Company's $.0001 par value common
stock were outstanding.

<PAGE>

PART 1 - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
ITEM 1.   Financial Statements                                                   
                                                                           PAGE
     <S>                                                                    <C>
     (a)  Balance Sheet (Unaudited) -March 31, 1998. . . . . . . . . . . .   1

     (b)  Statements of Operations (Unaudited) - Three Months
          ended March 31, 1998 and 1997 Period from
          Inception (December 1, 1987) to March 31, 1998 . . . . . . . . .   2
     
     (c)  Statements of Statements of Operations (Unaudited) -First Quarter
          ended March 31, 1998 and 1997 and Prior 1997 Third Quarter . . .   3

     (d)  Statement of Stockholder's Equity (Unaudited) -
          Period from Inception (December 1, 1987) to March 31, 1998 . . .   4

     (e)  Statements of Cash Flows (Unaudited) - Three Months
          ended March 31, 1998 and 1997 and Period from
          Inception (December 1, 1987) to March 31, 1998 . . . . . . . . .   5

     (f)  Notes to Unaudited Financial Statements. . . . . . . . . . . . .   6

ITEM 2.   Management's Discussion and Analysis or
          Plan of Operation. . . . . . . . . . . . . . . . . . . . . . . .   8

PART II - OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . .  9
</TABLE>


                                         ii

<PAGE>
                                          
                            COLECCIONES DE RAQUEL, INC.
                           (A Development Stage Company)
                                   BALANCE SHEET
                                    (Unaudited)
<TABLE>
<CAPTION>
                                                                 March 31, 1998
                                                                 --------------
ASSETS
     <S>                                                            <C>
     Current Assets 

          Cash and equivalents                                       $401,837
          Merchandise Inventory                                        71,504
          Deposits paid and other assets                               11,070
                                                                     --------

          Total Current Assets                                       $484,410

     Equipment, Furniture & Fixtures, net of accum. depr.  $21,056     23,637
                                                                     --------

     Total Assets                                                    $508,048
                                                                     --------
                                                                     --------

LIABILITIES AND STOCKHOLDERS EQUITY

     Current Liabilities
          Accounts payable                                               $482
          Taxes payable                                                   365
                                                                     --------

          Total current liabilities                                      $847

     Stockholder's equity
     Common stock - $.0001 par value, 50,000,000 shares authorized,
     24,000,000 shares issued and outstanding                            2400

          Additional paid in capital                                1,375,444

          Deficit accumulated during the development stage          (870,643)

          Total stockholder's equity                                  507,201

     Total liabilities and stockholder's equity                      $508,048
                                                                     --------
                                                                     --------
</TABLE>


                   See accompanying notes to financial statements.             1

<PAGE>

                             COLECCIONES DE RAQUEL, INC.
                            (A Development Stage Company)
                              STATEMENTS OF OPERATIONS
                                    (Unaudited)
                                          
                                          
<TABLE>
<CAPTION>

                                                                                      Period from
                                                                                 Inception(Dec.1, 1987)
                                                                                          to
                                                 Three Months Ended March 31,          March 31,
                                                     1998         1997                   1998
                                                     ----         ----                   ----
<S>                                                 <C>          <C>                    <C>
Sales                                               2,199         1,827                  28,698
Cost of Goods Sold                                  1,170           642                  12,324
                                                    -----         -----                  ------

Gross Profit                                        1,029         1,185                  16,374

Selling, general, and administrative expenses      57,096        79,945                 973,710
                                                   ------        ------                 -------

(Loss) from operations                            (56,067)      (78,760)               (957,336)

Interest Income                                     5,351         8,118                  69,894

Litigation settlement income                                                             20,000

Loss before provision for income taxes            (50,716)      (70,642)               (867,442)

Provision for income taxes                                                                3,200

Net Loss                                         ($50,716)     ($70,642)              ($870,642)
                                                 ---------     ---------              ----------
                                                 ---------     ---------              ----------

Net Loss per share                                 ($.01)       ($.0025)
                                                   ------       --------
                                                   ------       --------
  
Weighted average number of common shares       24,000,000    24,000,000
                                               ----------    ----------
                                               ----------    ----------
</TABLE>


                   See accompanying notes to financial statements.             2

<PAGE>
                         
                            COLECCIONES DE RAQUEL, INC.
                           (A Development Stage Company)
                              STATEMENTS OF OPERATIONS
                                    (Unaudited)
<TABLE>
<CAPTION>
                                          
                                                          First Quarter          Third Quarter
                                                         Ended March 31,         September 30,

                                                       1998           1997           1997
                                                       ----           ----           ----
<S>                                                 <C>            <C>            <C>
Sales                                                 2,199          1,827          1,166
Cost of Goods Sold                                    1,170            642            552
                                                      -----          -----          -----

Gross Profit                                          1,029          1,185            614

Selling, general, and administrative expenses        57,096         79,945         72,382
                                                     ------         ------         ------

(Loss) from operations                              (56,067)       (78,760)       (71,768)

Interest Income                                       5,351          8,118          7,173


Loss before provision for income taxes              (50,716)       (70,642)       (64,595)
  
Provision for income taxes                                                   

Net Loss                                           ($50,716)      ($70,642)       (64,595)
                                                   ---------      ---------       --------
                                                   ---------      ---------       --------

Net Loss per share                                   ($.01)        ($.0025)        ($.001)
                                                     ------        --------        -------
                                                     ------        --------        -------

Weighted average number of common shares          24,000,000     24,000,000     24,000,000
                                                  ----------     ----------     ----------
                                                  ----------     ----------     ----------

</TABLE>


                   See accompanying notes to financial statements.             3

<PAGE>
                                          
                            COLECCIONES DE RAQUEL, INC.
                           (A Development Stage Company)
                         STATEMENT OF STOCKHOLDERS' EQUITY
           FOR THE PERIOD FROM DECEMBER 1, 1987 (INCEPTION) TO MARCH 31, 1997
                                    (Unaudited)
                                          
<TABLE>
<CAPTION>
                                    Preferred Stock        Common Stock                                 
                                  ------------------   -------------------                              Deficit
                                                                                Additional     MMI     During the        Total
                                    Number                Number                 Paid-In    Settlement  Development  Shareholder's
                                  of Shares   Amount    of Shares    Amount      Capital     Agreement      Stage         Equity
                                  ---------   ------   -----------  -------    -----------  ----------  -----------  -------------
<S>                               <C>         <C>       <C>         <C>        <C>          <C>          <C>           <C>        
Net loss from the
 inception through
 December 31, 1992                     -      $  -           -       $  -      $   -        $    -       ($  29,178)   ($  29,178)
Net loss, 1993                         -         -           -          -          -             -           (7,462)       (7,462)
                                  ---------   -------   -----------  -------   ---------    ----------   -----------   -----------

Balance, Dec. 31, 1993                 -         -           -          -          -             -       (   36,640)   (   36,640)
 Common Stock Issued   
 In reorganization                     -         -       20,000,000    2,000      34,754         -             -           36,754
Common Stock Issued in IPO             -         -        1,000,000      100      90,990         -             -           91,090
Preferred Stock exchanged for
 Common Stock per IPO               100,000       100   (20,000,000)  (2,000)      1,900         -             -             -
Exercise of A Warrants                 -         -        1,000,000      100     249,900         -             -          250,000
MMI Settlement Agreement               -         -           -          -           -       (  250,000)        -       (  250,000)
 
Net Loss, 1994                         -         -           -          -           -            -       (   58,052)   (   58,052)
                                  ---------   -------   -----------  -------   ---------    ----------   -----------   -----------
Balance, Dec. 31, 1994              100,000       100     2,000,000      200     377,544    (  250,000)  (   94,692)       33,152

Exercise of B Warrants                 -         -        2,000,000      200     999,800         -             -        1,000,000
MMI settlement agreement               -         -           -          -           -       (1,000,000)        -       (1,000,000)
Cash received from MMI                 -         -           -          -           -          849,875         -          849,875
Net loss, 1995                         -         -           -          -           -            -       (  126,518)   (  126,518)
                                  ---------   -------   -----------  -------   ---------    ----------   -----------   -----------

Balance, Dec. 31, 1995              100,000       100     4,000,000      400   1,377,344    (  400,125)  (  221,210)      756,509
Cash received from MMI                 -         -           -          -           -          400,125         -          400,125
Net Loss                               -         -           -          -           -            -       (     -   )   (     -   )
                                  ---------   -------   -----------  -------   ---------    ----------   -----------   -----------

Cash received from MMI                 -         -           -          -           -            -          400,125       400,125
Common Stock exchanged
 for Preferred Stock              (100,000)      (100)   20,000,000    2,000      (1,900)    
Net Loss                                                                                                 (  308,137)   (  308,137)
                                  ---------   -------   -----------  -------   ---------    ----------   -----------   -----------

Balance Dec. 31, 1996                 -      $   -       24,000,000   $2,400   $1,375,444    $   -       ($ 529,347)    $ 848,497
Net Loss                                                                                                 (  290,579)   (  290,579)
                                  ---------   -------   -----------  -------   ---------    ----------   -----------   -----------

Balance Dec. 31, 1997                 -      $   -       24,000,000   $2,400   $1,375,444    $   -       ($ 819,926)    $ 557,918
                                  ---------   -------   -----------  -------   ---------    ----------   -----------   -----------

Balance March 31, 1998                -      $   -       24,000,000   $2,400   $1,375,444    $   -       ($ 870,643)    $ 507,201
                                  ---------   -------   -----------  -------   ---------    ----------   -----------   -----------
                                  ---------   -------   -----------  -------   ---------    ----------   -----------   -----------
</TABLE>


                SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS                4

<PAGE>
                                          
                            COLECCIONES DE RAQUEL, INC.
                           (A Development Stage Company)
                              STATEMENTS OF CASH FLOWS
                                    (Unaudited)
                                          
<TABLE>
<CAPTION>
                                                                                               Period from
                                                                    For the Period Ended   Inception to Current
                                                                          March 31,         December 31, 1987 -
                                                                     1998           1997     March 31, 1998
                                                                 ----------    -----------  -------------------
<S>                                                              <C>            <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                                      $ (50,716)      $ (70,642)       $(870,642)
    Adjustments to reconcile net loss to net cash used in
      operating activities
        Depreciation                                                2,235           2,087           21,056
      (Increase) decrease in
        Inventory                                                   1,557             618          (71,503)
        Prepaid expenses & other assets                              (570)             93           (7,340)
        Deposits                                                   (1,600)              0           (3,730)
      (Increase) decrease in 
        Accounts Payable & accrued expenses                        (9,822)         (7,990)             846
                                                                 --------        --------         --------

        Net cash used in operating activities                    $(58,916)       $(75,834)       $(931,313)
                                                                 --------        --------         --------

CASH FLOWS FROM INVESTING ACTIVITIES
        Purchase of Equipment                                        (186)         (2,747)         (44,694)
    
                  Net cash used in investing activities              (186)         (2,747)         (44,694)
 
CASH FLOWS FROM FINANCING ACTIVITIES
        Proceeds from MMI settlement agreement                          -               -       $1,250,000
        Proceeds from sale of common stock                              -               -           91,090
        Payments for offering costs                                     -               -                -
        Loans & paid-in capital from preferred stockholder              -               -           36,754
                                                                 --------        --------         --------
 
        Net cash provided by financing activities                       -               -       $1,377,844
                                                                 --------        --------         --------

        Net increase(decrease) in cash and cash                 ($ 59,102)      ($ 78,581)        $401,837
          equivalents                                            --------        --------

CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD                     $460,939        $744,065         $460,939
                                                                 --------        --------         --------

CASH & CASH EQUIVALENTS, END OF PERIOD                           $401,837        $665,484         $401,837
                                                                 --------        --------         --------
                                                                 --------        --------         --------

INTEREST RECEIVED                                                $  5,351        $  8,118         $ 69,894
                                                                 --------        --------         --------
                                                                 --------        --------         --------

TAXES PAID                                                       $      0        $      0         $  3,200
                                                                 --------        --------         --------
                                                                 --------        --------         --------
</TABLE>

                                                                               5

<PAGE>
                                          
                            COLECCIONES DE RAQUEL, INC.
                           (A Development Stage Company)
                           NOTES TO FINANCIAL STATEMENTS
                                    (Unaudited)


1. BUSINESS

         COLECCIONES DE RAQUEL, INC. (The "Company") designs and markets 
         cosmetics, skin care, fragrance, and lingerie.  The Company's 
         cosmetics line is specifically designed for golden skin tones such 
         as sallow and olive complexions.

2.  UNAUDITED FINANCIAL STATEMENTS

         The financial statements as of March 31, 1998 and for the periods 
         ended March, 1998 and 1997 included herein are unaudited; however, 
         such information reflects all adjustments consisting of normal 
         recurring adjustments, which are, in the opinion of management, 
         necessary for a fair presentation of the information for such 
         periods.  In addition, the results of operation for the interim 
         periods are not necessarily indicative of results for the entire 
         year.  The accompanying financial statements should be read in 
         conjunction with the Company's annual report filed on Form 10-KSB.

3.  WARRANTS AND RELATED SETTLEMENT AGREEMENT

         In August 1994, the Company completed an initial public offering of 
         its securities.  The Company sold 1,000,000 units at $.10 per unit 
         for gross proceeds of $100,000 on a self-underwritten basis.  
         Expenses of the offering were $8,910.  Each unit consists of one 
         share of common stock and one Class A Warrant.  The Class A Warrants 
         were exercisable for one share of common stock and two Class B 
         Warrants at a price of $.25 each.  The Class B Warrants were 
         exercisable for one share of common stock and one Class C Warrant at 
         a price of $.50 each.  The Class C warrants were to be exercisable 
         for one share of common stock at a price of $1.00 each.

         In February 1995, all of the B Warrants were exercised in a 
         transaction which the Company claims was fraudulent.  Although the 
         Company received no portion of the $250,000 exercise price, Units 
         consisting of one share of common stock and two B Warrants were 
         issued by the Company's transfer agent without the knowledge of the 
         Company's officers or directors to persons purportedly exercising 
         the A Warrants.

         In February 1995, all of the B Warrants were exercised in a 
         transaction which the Company claims was fraudulent.  Although the 
         Company received no portion of the $1,000,000 exercise price, Units 
         consisting of one share of common stock and one C warrant were 
         issued by the Company's transfer agent without the knowledge of the 
         Company's officers or directors to persons purportedly exercising 
         the B Warrants.

         The shares of common stock issued in the Company's initial public 
         offering and upon exercise of the A Warrants and B Warrants 
         (collectively, "Shares") have been publicly traded.  The C Warrants 
         were also purportedly exercised without the receipt by the Company 
         of the exercise price, the Company believes that the shares issued 
         upon exercise of the C Warrants were not traded and the Company has 
         canceled the C Warrants and the shares issued upon their exercise.

         In September 1995, the Company entered into an Agreement with Moore 
         McKenzie, Inc., a Philippine corporation ("MMI"), which purchased 
         and resold the shares following their exercise by third party 
         entities.  MMI has expressly denied any involvement in the exercise 
         of the A Warrants, B Warrants, and C Warrants.  Solely for the 
         purpose of protecting and preserving its investment in the Shares 
         and its reputation and goodwill, MMI agreed to pay the Company the 
         exercise price of the A Warrants ($250,000) and B Warrants 
         ($1,000,000).  As of February  29, 1996, the Company had received 
         all of the settlement.


                                                                              6

<PAGE>

3.  WARRANTS AND RELATED SETTLEMENT AGREEMENT (CONTINUED)

         Further, the  Company agreed to sell MMI an additional 1,000,000 
         shares of common stock  at a price of $1.00 per share in place of 
         the shares which could have been purchased upon exercise of the 
         canceled C Warrants.  The option to purchase the additional 
         1,000,000 shares at $1.00 per share expired in September, 1996.   
         MMI did not purchase the additional 1,000,000 and no additional 
         shares were issued.   As part of the Agreement with MMI, the Company 
         agreed to assist and cooperate with MMI in any action against third 
         parties to recover MMI's damages suffered as a result of or in 
         connection with MMI's purchase of the Shares.

4.  LEGAL PROCEEDINGS

         There are no material pending legal proceedings to which the Company 
         or the property of the Company are subject.  In addition, no 
         proceedings are known to be contemplated by a governmental authority 
         against the Company or any officer or director of the Company.

5.  LEASES

         On October 1, 1995, the Company entered into a two  year lease for a 
         store front located in Beverly Hills, California.  In October, 1997 
         this lease was renewed for another 2 years.  The space is 
         approximately 700 square feet, and the monthly rent is  $1,100.  In 
         May 1996, the Company entered into a three year lease for a 900 
         square foot store front in downtown Los Angeles, California.  
         Monthly rent for the space, which the Company is utilizing for its 
         second showroom/boutique location, is $1,451 per month, this lease 
         ends on June 30, 1999.


                                                                              7

<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
     
         MATERIAL CHANGES IN RESULTS OF OPERATIONS

         The 1998 First Quarter revenues slightly exceeded those of 1997, 
         although Cost of Goods Sold was slightly higher in 1998, which was 
         due to a reduction of retail prices on the lingerie.  Selling, 
         general, and administrative expenses for the 1998 First Quarter year 
         to date period were slightly lower than 1997's First Quarter 
         year-to-date. This decrease of 20 percent in General and 
         Administrative expenses is largely  attributed to a decrease  in 
         personnel and expenses.
    
         MATERIAL CHANGES IN FINANCIAL CONDITION

         During the three month period ended March 31, 1998 the Company's 
         cash position decreased due to the continued low level of sales 
         relative to its cost of operations, and lack of offsetting inflows 
         from financing activities.  Inventory levels were slightly lower 
         from year-end 1997 due to sales. 

         The Company's available cash at March 31, 1998 is expected to be 
         sufficient to defray the Company's operating expenses through 
         calendar year 1998.  The Company's continued existence will be 
         dependent on its ability to generate significant product sales and 
         ultimately to achieve profitable operations.


                                                                            8
                                          
<PAGE>

                            PART II - OTHER INFORMATION 
                                          
                                          
Item 1.  LEGAL PROCEEDINGS

         There are no other material pending legal proceedings to which the 
         Company or the property of the Company are subject.  In addition, no 
         proceedings are known to be contemplated by a governmental authority 
         against the Company or any officer or director of the Company.

Item 2.  CHANGES IN SECURITIES

         Inapplicable.  

Item 3.  DEFAULTS UPON SENIOR SECURITIES

         Inapplicable.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Inapplicable.

Item 5.  OTHER INFORMATION

     On March 6, 1998, the Company entered into a twelve month distribution 
agreement with R-Town Entertainment for the sale of both the CD entitled 
"Sabor A Mi" featuring the Artist "Raquel Zepeda" and the fragrance "Sabor A 
Mi".  R-Town Entertainment specializes in distributing music by Latino 
Artists throughout the U.S. And Mexico.  Additionally, the Company continues 
to sell its products through its two locations in Beverly Hills and downtown 
Los Angeles.

     Further, the Company is approaching local boutiques for sales and 
distribution of its products.  As of March 1998, the Company has received 
minimal orders.
     
Item 6.   EXHIBITS AND REPORTS ON FORM 8K

     (a)  EXHIBITS

          Inapplicable.

     (b)  REPORTS ON FORM 8-K

          No reports on Form 8-K were filed during the period covered by this
          report.


                                                                              9

<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.

                                                    COLECCIONES DE RAQUEL, INC.
                                                    (Registrant)



Dated:  May 15, 1998                                By: /s/ RAQUEL ZEPEDA 
                                                        ------------------------
                                                        Raquel Zepeda, 
                                                        Chief Financial Officer


                                                                              10