U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB
                                 AMENDMENT NO. 1

(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 June 30, 2002

             |_|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  |_|

At June 30, 2002, 36,431,000 shares of the Company's $.001 par value common
stock were outstanding.

<PAGE>

PART 1 - FINANCIAL INFORMATION

ITEM 1.   Financial Statements                                             PAGE
                                                                           ----

     (a)  Balance Sheet (Unaudited) - June 30, 2002 ......................... 1

     (b)  Statements of Operations (Unaudited) - Three months
          ended June 30, 2002 and 2001 Period from
          Inception (December 1, 1987) to June 30, 2002 ..................... 2


     (c)  Statement  of  Stockholder's   Equity   (Unaudited) - Period
          from Inception (December 1, 1987) to June 30, 2002 ................ 3

     (d)  Statements of Cash Flows (Unaudited) - Three months
          ended June 30, 2002 and Period from
          Inception (December 1, 1987) to June 30, 2002 ..................... 4

     (e)  Notes to Unaudited Financial Statements ........................... 5

ITEM 2.   Management's Discussion and Analysis or
          Plan of Operation ................................................. 7


PART II - OTHER INFORMATION ................................................. 8


                                                                              ii

<PAGE>

                               XYNERGY CORPORATION
                        (formerly known as Raquel, Inc.)
                          (A Development Stage Company)
                                  Balance Sheet
                                   (Unaudited)

                                                                   June 30, 2002
                                                                   -------------
Assets

      Current Assets

            Cash and equivalents                                    $       129
            Merchandise Inventory                                         8,870
            Deposits paid and other assets                              369,319
                                                                    -----------

            Total Current Assets                                        351,252

      Equipment, Furniture & Fixtures, net of accum. depr. $34,019          -0-
                                                                    -----------

      Total Assets                                                  $   378,318
                                                                    ===========

Liabilities and Stockholders Equity

      Current Liabilities
            Accounts payable & Taxes payable                        $    43,425

            Total current liabilities                               $    43,425

      Stockholder's equity
            Common stock - $.001 par value, 250,000,000 shares
            authorized, 36,365,697 shares issued and outstanding         36,431

            Additional paid in capital                                1,728,040

            Deficit accumulated during the development stage         (1,429,578)

            Total stockholder's equity                                  334,893

      Total liabilities and stockholder's equity                    $   378,318
                                                                    ===========


                      See accompanying notes to financial statements
                                                                               1

<PAGE>

                               XYNERGY CORPORATION
                        (formerly known as Raquel, Inc.)
                          (A Development Stage Company)
                            Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                       Six Months         Inception 12/87
                                                     Ended June 30,         to  June 30,
                                                   2002          2001           2002
                                                ----------    ----------    -----------
<S>                                             <C>           <C>           <C>
Sales                                                  205         1,467         48,279
Cost of Goods Sold                                      --           343         24,627
                                                ----------    ----------    -----------

Gross Profit                                           205         1,124         23,652

Selling, general, and administrative expenses       11,755        21,387      1,565,388
                                                ----------    ----------    -----------

(Loss) from operations                             (11,550)      (20,263)    (1,541,736)

Other Income                                            --           217        119,148

Loss before provision for income taxes             (11,550)      (29,091)    (1,428,988)

Provision for income taxes                              --           800         (6,400)

Net Loss                                          ($11,550)     ($20,091)   ($1,428,988)
                                                ==========    ==========    ===========

Net Loss per share                                   ($.01)        ($.01)
                                                ==========    ==========

Weighted average number of common shares        36,365,697    28,700,000
                                                ==========    ==========
</TABLE>


                      See accompanying notes to financial statements

                                                                               2

<PAGE>

                               XYNERGY CORPORATION
                        (formerly known as Raquel, Inc.)
                          (A Development Stage Company)
                        Statement of Stockholders' Equity
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                         Deficit
                                                                                        Addt'l           During the
                                                   Common Stock                         Paid In          Development
                                                   Shares              Amount           Capital          Stage             Total
                                                   ------              ------           -------          -----             -----
<S>                                                <C>                <C>               <C>             <C>                <C>
Balance, December 31, 1998                         27,300,000           2,730           $1,375,444       (1,027,508)        340,666

Common stock canceled                              (2,600,000)           (260)                                                    0

Net Loss                                                                                                   (169,677)       (169,677)
                                                   ----------         -------           ----------      ------------       --------

Balance, December 31, 1999                         24,700,000         $ 2,470           $1,375,704      $(1,207,185)       $170,989

Net Loss                                                                                                    (97,675)        (97,675)
                                                   ----------         -------           ----------      ------------       --------

Balance December 31, 2000                          24,700,000         $ 2,470           $1,375,704      $(1,304,860)       $ 73,314

Net Loss for 12/31/01                                                                                      (113,167)       (113,167)
                                                   ----------         -------           ----------      ------------       --------

Balance December 31, 2001                          30,100,000         $ 3,010           $1,445,690      $(1,418,027)       $ 30,673

Common Stock Issued for options                     1,500,000         $   150           $   37,500
                                                   ----------         -------           ----------
Total Before Reverse                               31,600,000         $ 3,160           $1,483,190

Reverse-split (100 to 1)                          (31,284,303)        $(3,128)
                                                   ----------         -------
Total After Reverse                                       315         $    32
                                                                      =======
Increase in par value to .001                                            $316

Common Stock issued for option                      3,500,000         $ 3,500           $  237,500
Common Stock, 144 restricted issued                11,500,000         $11,500
Common Stock issued                                21,050,000         $21,050
Net Loss June 30, 2002                                                                                  $   (7,219)
                                                   ----------         -------           ----------      ------------       --------
Balance, June 30, 2002                             36,365,697         $15,316           $1,720,690      $(1,425,24)        $310,760
</TABLE>


                      See accompanying notes to financial statements

                                                                               3

<PAGE>

                               XYNERGY CORPORATION
                        (formerly known as Raquel, Inc.)
                          (A Development Stage Company)
                            Statements of Cash Flows
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                    For the Three    Period from Inception
                                               Month Period Ended        December 31, 1987
                                                         June 30,               to Current
                                                             2002            June 30, 2001
                                                       ----------            -------------
<S>                                                     <C>                   <C>
Cash flows from operating activities
 Net loss                                               $ (11,550)            $(1,429,577)
Adjustments to reconcile net loss to net cash used in
 operating activities
         Depreciation                                           0                  42,369
      (Increase) decrease in
         Inventory                                         (8,870)
         Prepaid expenses & other assets                 (326,452)               (363,969)

      Increase (decrease) in
         Accounts Payable & accrued expenses                4,822                  43,425
                                                                              -----------

         Net cash used in operating activities          $(333,180)            $(1,716,622)
                                                        ---------             -----------
Cash flows from investing activities
         Purchase of Equipment & Improvements                  (0)                (47,721)

         Net cash used in investing activities                 (0)            $   (47,721)
                                                                              -----------
Cash flows from financing activities
      Proceeds from MMI settlement agreement                   --             $ 1,250,000
      Proceeds from sale of common stock                  330,587                 433,936
      Payments for offering costs                              --

Loans & paid-in capital from  stockholder                      --                  36,754
                                                        ---------             -----------

      Net cash provided by financing activities           330,587             $ 1,720,690
                                                        ---------             -----------

      Net increase(decrease) in cash and cash
         equivalents                                      ($2,593)
                                                        ---------
Cash & cash equivalents, beginning of period            $   2,721
                                                        ---------

Cash & cash equivalents, end of period                  $     128
                                                        =========
</TABLE>


                 See accompanying notes to financial statements

                                                                               4
<PAGE>

                               XYNERGY CORPORATION
                        (formerly known as Raquel, Inc.)
                          (A Development Stage Company)
                          Notes to Financial Statements
                                   (Unaudited)

1. Business

XYNERGY CORPORATION (formerly known as Raquel, Inc.) (the "Company") 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(TM)greeting cards and
Web Marketing Network, Inc., Raquel, Inc. became Xynergy Corporation. Xynergy is
now a holding company for the following subsidiaries: Raquel of Beverly Hills
cosmetics (www.Raquelinc.com), Think Blots(TM)greeting cards
(www.demented-diagnosis.com), and Web Marketing Network, Inc.
(www.TargetPlanet.com), and Corporate Space Power Industries & Electric.

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. The line is currently available on the internet at
www.dementeddiagnosis.com.

Web Marketing Network, Inc. of Canada, ("WMN"), an e-commerce marketing company,
was acquired in January 2002. WMN is 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 (MLM) customer acquisition programs.

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
acquisiition. 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. The dissolution agreement is was
executed this sometime this month and has been signed and atached hereto as
Exhibit 10.30.

Xynergy Corporation announced its issuance of a non-binding letter of intent to
acquire Voyaware, LLC in July, 2002. VoyaWare develops innovative mobile
solutions for Direct Sales Professionals. Their flagship product, "Voyaware
Direct Sales," is software for "PDA" hardware, designed for mobile sales
professionals. This product was developed under the Windows CE platform which
the Company believes is quickly becoming the industry standard. The software
offers order entry, inventory management, customer & product tracking, mobile
printing, a variety of wizards and reporting options, as well as built-in
integration with Microsoft Pocket Outlook. The product is very competitively
priced at only $49.95, and there is also an enhanced Professional version for
only $30 more. Voyaware Partners include Microsoft (MSFT), Seiko Instruments,
Inc. (SKCKF), Field Software Products, and SiPix, Inc. Additional information on
the company is located at http://www.voyaware.com.

For more information on Xynergy's subsidiaries, see Managment's Plan of
Operation.

                 See accompanying notes to financial statements

                                                                               5

<PAGE>

2. Unaudited financial statements

The financial statements as of June 30, 2002 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. Historical Development & Public Offering

Historical Development. Raquel Zepeda, Chairman 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.

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.

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.

In 2001, the Company changed its strategy to diversify by acquiring companies in
various growth markets. To date, Xynergy owns four subsidiaries. See Business
section above.

4. 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.

The Company filed a lawsuit on November 5, 2001 against Rainmaker Development
Corporation

                                                                               6

<PAGE>

("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 and 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. Xynergy's Application for the trademark may not be
granted. However, the Company will continue to assert its copyrights to market
the greeting card line under the provisions for copyright law.

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

5. Leases

The Company leases space for storage of product at locations in Los Angeles,
CA.As of June 30, 2000, the Company moved its offices, the mailing address is
269 So. Beverly Drive, Suite 938, Beverly Hills, California 90212, telephone
number (310) 274-0086, fax number (310) 274-0161.

ITEM 2. 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(TM)greeting card line, Web Marketing Network, Inc., and Corporate Space
Power Industries & Electric, Inc. These companies represent various market
segments that will allow Xynergy to maintain its position in the future, no
matter how industries and commerce fluctuate. Below are marketing plans for
Xynergy's subsidiaries.

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


                                                                               7
<PAGE>

industry such as Avon and Jafra reported earnings of $1.343 billion and $76.6
million, respectively for the third quarter of 2000.

By implementing its marketing plan, RAQUEL OF BEVERLY HILLS projects sales
exceeding $80 million within 5 years. This represents slightly over 1% of its
focus market in the U.S. and Latin America. 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. RAQUEL OF BEVERLY HILLS further
anticipates a market share of non-Hispanic, golden-skinned consumers such as
Asians, Mediterraneans and some Europeans.

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, we will be introducing
Demented Diagnosis(C), a "mental test" as an advertising campaign. Through
Demented Diagnosis(C) 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.

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.

Xynergy has retained counsel and consultants to execute a second round of
financing to obtain working capital for Xynergy and its subsidiaries.

Distribution

Raquel of Beverly Hills changed its marketing structure to direct sales. The
Company's management believes that this structure would better serve its
consumers. Further, direct sales has been very successful among its target
market, Hispanics. Direct cosmetics companies such as Avon, Mary Kay, and Jaffra
have a strong presence and continue to expand in many Latin American countries.

According to statistics, direct sales in 1999 in the United States totaled
$24.54 billion, with the personal care category representing 24.9%; an
equivalent of $6.11 billion. Raquel, Inc. expects that this new avenue of sales
and distribution will ultimately increase its revenues. See Plan of Operation
and above.

Think Blots(TM) is currently marketed on the internet on the website
www.dementeddiagnosis. The Company is also in the process of obtaining
syndication of its Demented Diagnosis tests in newspapers for further marketing
of the greeting card line. See Plan of Operation above.

Web Marketing Network, Inc. ("WMN") advertises and distributes its services via
several sites:TargetPlanet.com, ElectricMarketing.com,Going2Advertise.com,
2MinuteMarekting.com, and RussellRockefellerr,com providing a wide variety of
marketing services that generate unlimited sales leads,

                                                                               8
<PAGE>

handle e-commerce such as credit card fulfillment, check by fax, on-line or by
phone, ach debit and similar transactions

Material Changes and Analysis of Financial Condition

The Company's cash position has decreased during the six month period ended June
30, 2002 due to the continued low level of revenue relative to its cost of
operations, and lack of offsetting inflows from financing activities.

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 period ended June 30, 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.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

On June 27, 2000, a Complaint against Angela Z. Hardy and Corporate Image
Builders was filed in Santa Monica Superior Court for several causes of action.
The Company was awarded stock in January, 2001.

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.

Previously, March 2001, Rainmaker Corporation filed and 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.

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

From the period of 1998 through February, 2002 the Company had issued common
stock in exchange for

                                                                               9
<PAGE>

consulting services, via S-8 filings; totaling in excess of 7 million shares.
Some of these shares were canceled due to litigation for non-performance on the
part of some of these consultants (see "Legal Proceedings").

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. (See Page 6, 1. Business.)

In March, 2002 options were exercised for 3,500,000 shares, and 11,500,000
shares of restricted 144 stock were issued to subsidiaries and principals for
compensation.

The company fiiled an S-8 on June 11, 2002 and issued an additional stock, as of
June 30, 2002, the Company had 36,365,697 shares outstanding.

Item 3. Defaults Upon Senior Securities

Inapplicable.

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

Inapplicable.

Item 5. Other Information

Inapplicable.

Item 6. Exhibits and Reports on Form 8K

(a)   Exhibits

Inapplicable.

(b)   Reports on Form 8-K

      8-K filing dated January 23, 2002 reports acquisition of Web Marketing
      Network, Inc. 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..

                                                                              10

<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: August 20, 2002

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

                                                                              11