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, 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 September 30, 1998, 24,000,000 shares of the Company's $.0001 par value
common stock were outstanding.
<PAGE>

PART 1 - FINANCIAL INFORMATION

ITEM 1.  Financial Statements                                               PAGE
                                                                            ----

      (a)   Balance Sheet (Unaudited) -September 30, 1998 .................   1

      (b)   Statements of Operations (Unaudited) - Nine months ended 
            September 30, 1998 and 1997 Period from Inception (December 1, 
            1987) to September 30, 1998....................................   2

      (c)   Statements of Operations (Unaudited) -Third Quarter ended 
            September 30, 1998 and 1997 and Prior 1998 First Quarter.......   3

      (d)   Statement of Stockholder's Equity (Unaudited) Period from 
            Inception (December 1, 1987) to September 30, 1998 ............   4

      (e)   Statements of Cash Flows (Unaudited) - Nine months ended 
            September 30, 1998 and 1997 and Period from Inception 
            (December 1, 1987) to September 30, 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
<PAGE>

                           Colecciones de Raquel, Inc.
                          (A Development Stage Company)
                                  Balance Sheet
                                   (Unaudited)

                                                              September 30, 1998
                                                              ------------------
Assets

   Current Assets

      Cash and equivalents                                           $  283,758
      Merchandise Inventory                                              70,243
      Deposits paid and other assets                                     10,698
                                                                     ----------

      Total Current Assets                                           $  364,699

   Equipment, Furniture & Fixtures, net of accum. depr. $25,587          19,982
                                                                     ----------

   Total Assets                                                      $  384,681
                                                                     ==========

Liabilities and Stockholders Equity

   Current Liabilities
      Accounts payable                                               $      950
      Taxes payable                                                         548
                                                                     ----------

         Total current liabilities                                   $    1,498

   Stockholder's equity
      Common stock - $.0001 par value, 50,000,000 shares 
      authorized, 24,000,000 shares issued and outstanding                2,400

      Additional paid in capital                                      1,375,444

      Deficit accumulated during the development stage                 (994,661)

      Total stockholder's equity                                        383,184

   Total liabilities and stockholder's equity                        $  384,681
                                                                     ==========
<PAGE>

                           Colecciones de Raquel, Inc.
                          (A Development Stage Company)
                            Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                Period from
                                                                                 Inception
                                                                               (Dec. 1, 1987)
                                                         Nine Months                 To
                                                         Ended, Sept.            September

                                                        1988            1997            1998
                                                        ----            ----            ----
<S>                                             <C>             <C>             <C>          
Sales                                                  6,357           5,787          32,865
Cost of Goods Sold                                     3,285           2,293          14,439
                                                ------------    ------------    ------------ 

Gross Profit                                           3,072           3,494          18,426

Selling, general, and administrative expenses        191,719         241,837       1,108,294
                                                ------------    ------------    ------------ 

(Loss) from operations                              (188,647)       (238,342)     (1,090,491)

Interest Income                                       13,914          23,111          78,457

Litigation settlement income                                                          20,000

Loss before provision for income taxes              (174,734)       (215,231)       (992,034)

Provision for income taxes                                                             4,000

Net Loss                                        $   (174,734)   $   (215,231)   $   (996,034)
                                                ============    ============    ============ 

Net Loss per share                              $       (.01)   $      (.001)
                                                ============    ============

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>
                                                     Third Quarter             Second Quarter
                                                     Ended September 30,       June 30,

                                                        1998            1997            1998
                                                        ----            ----            ----

<S>                                             <C>             <C>             <C>          
Sales                                                  1,065           1,166           3,092
Cost of Goods Sold                                       514             552           1,601
                                                ------------    ------------    ------------ 

Gross Profit                                             552             614           1,491

Selling, general, and administrative expenses         59,378          72,382          75,246
                                                ------------    ------------    ------------ 

(Loss) from operations                               (58,826)        (71,768)        (73,755)

Interest Income                                        3,936           7,173           4,627


Loss before provision for income taxes               (54,890)        (64,595)        (69,128)

Provision for income taxes

Net Loss                                        $    (54,890)   $    (64,595)        (69,128)
                                                ============    ============    ============ 

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

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 September 30, 1998
                                   (Unaudited)

<TABLE>
<CAPTION>
                                     Preferred Stock             Common Stock
                                  -----------------------   ------------------------                                 Deficit
                                                                                        Additional       MMI        During the  
                                    Number                    Number                     Paid-In      Settlement    Development 
                                  of Shares      Amount      of Shares      Amount       Capital       Agreement       Stage    
                                  ---------      ------      ---------      ------      ----------    ----------    ----------- 
<S>                               <C>          <C>           <C>           <C>         <C>            <C>            <C>        
Net loss from the
inception through
  December 31, 1992                      --    $      --             --    $     --    $        --    $        --    $ (29,178) 
Net Loss, 1993                           --           --             --          --             --             --       (7,462) 
                                   --------    ---------     ----------    --------    -----------    -----------    ---------  

Balance, Dec. 31, 1993                   --           --             --          --             --             --      (36,640) 
  Common Stock Issued
  In reorganization                      --           --     20,000,000       2,000         34,754             --           --  
Common Stock Issued in IPO               --           --      1,000,000         100         90,990             --           --  
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             --           --  
MMI Settlement Agreement                 --           --             --          --             --       (250,000)          --  

Net Loss, 1994                           --           --             --          --             --             --      (58,052) 
                                   --------    ---------     ----------    --------    -----------    -----------    ---------  
Balance, Dec. 31, 1994              100,000          100      2,000,000         200        377,544       (250,000)     (94,692) 

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

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

Cash received from MMI                   --           --             --          --             --             --      400,125  
Common Stock exchanged
  for Preferred Stock              (100,000)        (100)    20,000,000       2,000         (1,900)
                                   --------    ---------     ----------    --------    -----------    -----------    ---------  
Net Loss                                                                                                              (308,137) 
Balance Dec. 31, 1996                    --    $      --     24,000,000    $  2,400    $ 1,375,444    $        --    $(529,347) 
                                   --------    ---------     ----------    --------    -----------    -----------    ---------  
Net Loss                                                                                                              (290,579) 
                                   --------    ---------     ----------    --------    -----------    -----------    ---------  

Balance Dec. 31, 1997                    --    $      --     24,000,000    $  2,400    $ 1,375,444    $        --    $(819,926) 
Net Loss 6 months                        --    $      --                   $           $              $              $(119,844) 
                                   --------    ---------     ----------    --------    -----------    -----------    ---------  

Balance Sept. 30, 1998                   --    $      --     24,000,000    $  2,400    $ 1,375,444    $        --    $(939,771) 
                                   ========    =========     ==========    ========    ===========    ===========    =========  
</TABLE>

                                        Total
                                    Shareholder's
                                        Equity
                                    -------------
Net loss from the
inception through
  December 31, 1992                 $   (29,178)
Net Loss, 1993                           (7,462)
                                    -----------

Balance, Dec. 31, 1993                  (36,640)
  Common Stock Issued
  In reorganization                      36,754
Common Stock Issued in IPO               91,090
Preferred Stock exchanged for
  Common Stock per IPO                       --
Exercise of A Warrants                  250,000
MMI Settlement Agreement               (250,000)

Net Loss, 1994                          (58,052)
                                    -----------
Balance, Dec. 31, 1994                   33,152

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

Balance, Dec. 31, 1995                  756,509
Cash received from MMI                  400,125
Net Loss                                    (--)
                                    -----------

Cash received from MMI                  400,125
Common Stock exchanged
  for Preferred Stock             
                                    -----------
Net Loss                               (308,137)
Balance Dec. 31, 1996               $   848,497
                                    -----------
Net Loss                               (290,579)
                                    -----------

Balance Dec. 31, 1997               $   557,918
Net Loss 6 months                   $  (174,734)
                                    -----------

Balance Sept. 30, 1998              $   384,681
                                    ===========


                 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
                                                                  September 30,            December 31, 1987 -
                                                              1998          1997             Sept. 30, 1998
                                                          -----------    -----------      --------------------
<S>                                                       <C>            <C>                  <C>           
Cash flows from operating activities
  Net loss                                                $   (54,890)   $   (64,594)         $  (994,660)  
  Adjustments to reconcile net loss to net cash used in                                      
    operating activities                                                                     
        Depreciation                                            2,268          2,181               25,587
      (Increase) decrease in                                                                 
        Inventory                                                 623            304              (70,233)
        Prepaid expenses & other assets                         3,477         (3,099)              (4,537)
        Deposits                                                 (750)             0               (2,880)
      (Increase) decrease in                                                                 
        Accounts Payable & accrued expenses                      (647)           644                  195
                                                          -----------    -----------          -----------   
                                                                                             
        Net cash used in operating activities             $   (49,919)   $   (64,564)         $(1,046,528)
                                                          -----------    -----------          -----------   
                                                                                             
Cash flows from investing activities                                                         
        Purchase of Equipment                                  (2,128)            98              (47,558)
        Leasehold Improvements                                     (0)             0                   --
                                                                                             
        Net cash used in investing activities                  (2,128)            98              (47,558)
                                                                                             
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             $   (52,047)   $   (64,466)         $(1,094,086)
        equivalents                                                                          
                                                          -----------    -----------          -----------   
Cash & cash equivalents, beginning of period              $   335,805    $   583,238              335,805
                                                          ===========    ===========          ===========
                                                                                             
Cash & cash equivalents, end of period                    $   283,758    $   518,772          $   283,758
                                                          ===========    ===========          ===========
                                                                                             
Interest received                                         $     3,936    $     7,173          $    78,457
                                                          ===========    ===========          ===========
                                                                                             
Taxes paid                                                $         0    $         0          $     4,000
                                                          ===========    ===========          ===========
</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 September 30, 1998 and for the periods
      ended September, 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


                                                                               6
<PAGE>

      ($250,000) and B Warrants ($1,000,000). As of February 29, 1996, the
      Company had received all of the settlement.

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 September 30, 1999.


                                                                               7
<PAGE>

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

            Material Changes in Results of Operations

            The 1998 Third Quarter revenues slightly exceeded those of 1997,
            although Cost of Goods Sold was slightly higher in 1998. Selling,
            general, and administrative expenses for the 1998 Third Quarter year
            to date period were 20.7% lower than 1997's Third Quarter
            year-to-date.

            Material Changes in Financial Condition

            During the nine month period ended September 30, 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 lower from year-end
            1997 due to sales.

            The Company's available cash at September 30, 1998 is expected to be
            sufficient to defray the Company's operating expenses through
            calendar year 1999. 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 May 10, 1998, the Company entered into a Consulting Service
Agreement with Mr. John Vanover. (See S/8 filing on 6/17/98)

            On May 20, 1998, the Company entered into a sales contract with Con
Estilo Latino. The Company's products will be featured in high-quality, full
color Spanish language catalog that will be issued in the Fall of 1998. The
proceeds will be divided on a 50/50 basis for each sale. The catalog's
circulation is 125,000 and targets the Hispanic Market.

            On September 1, 1998, the Company entered into a Consulting Service
Agreement with A. R. Hardy and Associates. (See S/8 filing on 6/17/98)

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: December 14, 1998              By: /s/ Raquel Zepeda
                                          -------------------------------------
                                          Raquel Zepeda, Chief Financial Officer