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, 2003

[ ]  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 March 31, 2003, 31,161,851 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) -March 31, 2003 ...................1

     (b)      Statements of Operations (Unaudited) - Three months
              ended March 31, 2003 and 2001 Period from
              Inception (December 1, 1987) to March 31, 2003...............2

     (c)      Statement of Stockholder's Equity (Unaudited) -
              Period from Inception (December 1, 1987) to March 31, 2003...3

     (d)      Statements of Cash Flows (Unaudited) - Three months
              ended March 31, 2003 and Period from
              Inception (December 1, 1987) to March 31, 2003...............4

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

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


PART II - OTHER INFORMATION................................................9


<PAGE>

                               XYNERGY CORPORATION
                        (formerly known as Raquel, Inc. )
                          (A Development Stage Company)
                                  Balance Sheet
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                                          March 31, 2003
                                                                                                          --------------
Assets

         Current Assets

<S>                                                                                                      <C>
                                                                             Cash and equivalents        $     63
                                                                            Merchandise Inventory           8,870
                                                                   Deposits paid and other assets         266,792
                                                                                    Capital Stock          13,665
--------------------------------------------------------------------------------------------------       --------
                                                                             Total Current Assets         289,390

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

         Total Assets                                                                   $ 289,390
                                                                                         ========


Liabilities and Stockholders Equity

         Current Liabilities
                                                                 Accounts payable & Taxes payable       $  62,941

                                                                        Total current liabilities       $  62,941

         Stockholder's equity
                                   Common stock - $.001 par value, 250,000,000 shares authorized,
                                                       31,161,851   shares issued and outstanding          31,161

                                                                       Additional paid in capital       1,653,190

                                                 Deficit accumulated during the development stage      (1,457,903)

                                                                       Total stockholder's equity        226, 449

         Total liabilities and stockholder's equity                                      $289,390
                                                   ==============================================

                 See accompanying notes to financial statements


                                      -1-

<PAGE>



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




                                                              Three Months                         Inception 12/87 to
                                                              Ended March 31,                          March 31,
                                                                                                        2003
--------------------------------------------------------------------------------------------------------------------
                                                           2003                2002
-------------------------------------------------------------------------------------------------------------------
Sales                                                       49                  115                          49,528
Cost of Goods Sold                                          --                   --                          24,627
                  -------------------------------------------------------------------------------------------------

Gross Profit                                                                    115                          24,901

Selling, general, and administrative expenses            5,536                7,334                       1,567,092
                                                         ----------------------------------------------------------

(Loss) from operations                                  (5,487)              (7,219)                     (1,534,191)

Other Income                                                --                   --                         119,148

Loss before provision for income taxes                  (5,487)              (7,219)                     (1,415,043)

Provision for income taxes                                  --                  800                          (7,200)

Net Loss                                               ($5,487)             ($8,019)                    ($1,422,243)
                                                      =============================================================

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

Weighted average number of common shares            31,161,851           12,315,697
                                        ============================================================================


                 See accompanying notes to financial statements


                                      -2-



<PAGE>



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




                                                                                        Deficit
                                                                       Addt'l           During the
                                    Common Stock                       Paid In          Development
                                    Shares           Amount            Capital          Stage             Total
                                    ------           ------            -------          -----             -----
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                  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                     315,697      $    32
                                    ==========================
Increase in par value to .001                        $   316

Common Stock issued                  40,346,000      $ 40,346           $ 170,000
Common Stock canceled                 9,500,000      $  9,500
Net Loss year ended
December 31, 2002                                                                       $   (34,388)         (34,388)
                                    -----------      ----------        -----------      -----------------------------
Balance, December 31, 2002          31,161,697       $31,162           $ 1,653,190      $(1,452,415)       $ 231,936

Net Loss, Quarter End, 3/03                                                             $    (5,487)       $  (5,487)
                                    ----------       ----------        -----------      -----------------------------
Balance, March 31, 2003             31,161,697       $31,162           $ 1,653,190      $(1,457,902)       $ 226,449



                 See accompanying notes to financial statements

                                      -3-

<PAGE>



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


                                                                               For the Three Month        Period from Inception
                                                                                     Period Ended            December 31, 1987
                                                                                     March 31,                    to Current
                                                                                        2003                   March 31, 2003
                                      -------------------------------------------------------------------------------------------
Cash flows from operating activities
 Net loss                                                                                 $ (5,487)             $( 1,457,902)
Adjustments to reconcile net loss to net cash used in
 operating activities
                                                                    Depreciation                 0                    47,720
     (Increase) decrease in Inventory                                                       (8,870)
                                                 Prepaid expenses & other assets              (500)                  (265,640)

     Increase (decrease) in
                                             Accounts Payable & accrued expenses              5,903                    62,941
                                                                                          -------------------------------------
                                           Net cash used in operating activities            $  (84)             $  (1,621,751)
                                                                                          -------------------------------------


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                                                          -                    382,782
     Payments for offering costs                                                                 -
Loans & paid-in capital from  stockholder                                                        -                     36,754
                                                                                           -----------------------------------

     Net cash provided by financing activities                                                   -                 $1,669,536
                                                                                           ----------------------------------

     Net increase(decrease) in cash and cash equivalents                                       (84)
                                                                                           ----------

Cash & cash equivalents, beginning of period                                                 $ 148
                                                                                           ----------

Cash & cash equivalents, end of period                                                       $  64
                                                                                           ==========
</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."] 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."

During the year 2001,  the Company  changed its strategy and mission.  Since the
company's  products were not producing  revenues,  a new approach was taken:  to
acquire companies whose revenues or innovative value would amplify the Company's
overall  worth.  In  January,  2002,  the  company  changed  its name to Xynergy
Corporation.  Xynergy  expanded its plan of operation  substantially,  since its
change  in  strategy  as  a  holding  Company.   Xynergy's  mission  is  revenue
enhancement  through an integration of companies in growth and emerging markets.
Xynergy  believes that this plan of operations will protect its value as markets
change and fluctuate.

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.

During 2002,  Xynergy  completed  the  acquisitions  of Web  Marketing  Network,
Corporate  Space Power  Industries  & Electric,  Inc.,  and  Voyaware,  LLC. For
reasons that management believes are in the best interests of Xynergy, all three
of these acquisitions were dissolved.

In April,  2003,  Xynergy  established  relationships  with  enterprises  in the
entertainment  industry.  Xynergy  has  signed  letters  of  intent  with  NPOWR
Database,  Inc.  and  Sound  Pictures  LLC  and is now  negotiating  acquisition
agreements with both  companies.  These two  enterprises  represent  substantial
revenue growth potential along with a wealth of management talent.

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

2. Unaudited financial statements

The financial statements as of March 31, 2003 and March 30, 2001 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.

                                      -5-


<PAGE>

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 has two subsidiaries.  In April, 2003,
Xynergy  signed  letters of intent to acquire  NPOWR  Database,  Inc.  and Sound
Pictures,  LLC. See  Management's  Discussion  and Analysis Or plan of Operation
section on Page 7.

4.  Legal proceedings

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 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

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.  Additionally,  the company rents two
warehouse spaces to house its cosmetics inventory and furniture and fixtures.


                                      -6-

<PAGE>


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

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

Plan of Operation

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.

Xynergy  now has two  subsidiaries,  Raquel of  Beverly  Hills  and Think  Blots
greeting cards. In April 2003, Xynergy signed letters of intent to acquire NPOWR
Database,  Inc.  and  Sound  Pictures  LLC  and is now  negotiating  acquisition
agreements with both  companies.  These two  enterprises  represent  substantial
revenue growth potential along with a wealth of management talent.

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

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.

                                      -7-

<PAGE>

Think Blots(TM) greeting card line was the Company's first acquisition which was
consummated  in  September  2001.  THINK  BLOTS(TM)  is  a  totally  unique  and
entertaining  concept  in  greeting  cards.  In  addition,  introduced  Demented
Diagnosis(C),   a  "mental  test"  as  a  promotinal   tool.   Through  Demented
Diagnosis(C)  tests,  people will  acquaint  themselves  with unique  concept of
self-discovery  from ink blot art.  Eventually,  the Company  plans to syndicate
Demented  Diagnosis  so  that  they  may  be  placed  alongside  horoscopes  and
cross-word puzzles.

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

In April,  2003,  Xynergy  established  relationships  with  enterprises  in the
entertainment  industry.  Xynergy  has  signed  letters  of  intent  with  NPOWR
Database,  Inc.  and  Sound  Pictures  LLC  and is now  negotiating  acquisition
agreements with both  companies.  These two  enterprises  represent  substantial
revenue  growth  potential  along with a wealth of  management  talent.  Xynergy
management  also believes that the  entertainment  industry may also lead to new
avenues of distribution  for its subsidiary's  products,  cosmetics and greeting
cards.

NPOWR has a  patented  software  technology  that  automates  the  creation  and
delivery of personalized television programming.  In short, this technology will
provide television viewers with  "personalized  television,"  through what NPOWR
refers to as their  stimTV(TM)  Network.  NPOWR will be  building  a  nationwide
network of servers that will have a reach of over 24 million US-based  broadband
viewers  when  it  is  deployed.  NPOWR's  patented  System  for  the  Automated
Generation of Media along with its methodology for aggregating  free content for
promotional  purposes make the creation of a network featuring  entertaining and
revenue-driving   direct  marketing  (a  1.7  trillion  dollar  industry)  media
relatively inexpensive.


                                      -8-

<PAGE>

NPOWR's  management  team consists of Robert  Whitmore,  CEO,  Rowland  Perkins,
Chairman,  and Dwight Marcus,  CTO and Inventor.  With more than 20 years in the
entertainment  industry, Mr. Whitmore is a three-time Golden Globe award winner,
and was nominated for three Academy Awards.  Mr. Perkins,  the Chairman of NPOWR
and  founding  president  of  Creative  Artists  Agency  ("CAA"),  has  been  an
entertainment  industry  leader and innovator  for more than 30 years.  Prior to
working with CAA, Mr. Perkins worked as Director of the TV Talent department and
Vice  President  at  the  William  Morris  Agency.  Mr.  Marcus,  NPOWR's  Chief
Technology  Officer  and  Inventor  of NPOWR's  technology  has been  engaged in
creating technological  innovations in the entertainment industry since 1986. An
award-winning  media and  advertising  producer,  Mr. Marcus'  designs have been
impacting  the   entertainment   industry  for  over  two  decades.   (For  more
information,  refer to Xynergy's 4/23/03 press release posted on the internet at
http://biz.yahoo.com/prnews/030423/-law075_1.html.)

Sound Pictures,  LLC  specializes in feature film and television  production for
theatrical  and home release.  Sound  Pictures,  LLC was formed by veteran media
producers Robert Whitmore and Dwight Marcus to develop feature films, as well as
made-for-DVD,  and television movies along with their ancillary properties.  The
mission  of  Sound   Pictures  is  to  make  extensive  use  of  new  filmmaking
technologies to create  entertainment  properties with maximum  production value
for the dollars expended and with optimal aftermarket life.

Sound  Pictures,  LLC entered into a letter  agreement  with Jackson  Securities
(www.jacksonsecurities.com) and the Jackson Logo Entertainment Partners on April
24, 2003. Jackson Logo  Entertainment  Partners is in the process of raising $20
million  to be used for the  development  of a  variety  of film and  television
projects. It is expected that the properties acquired with the funds assets will
leverage  a  minimum  of  $100  million  in  production  financing.   (For  more
information,  refer to Xynergy's  4/25/03 press  release  posted on the internet
http://biz.yahoo.com/prnews/030425/laf029_1.html.)  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.


                                      -9-

<PAGE>

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,
Page 8)

Think  Blots will be  distributed  through  retail  outlets.  Additionally,  the
company is seeking  syndication of Demented Diagnosis in periodicals which would
give Think Blots greeting card line additional exposure.

The above statements,  in Plan of Operation and Distribution (pages 7 and 8) are
based on the Company's  ability to obtain  appropriate  financing to execute its
marketing  plans.  This   information,   therefore,   contains   forward-looking
statements.  As such,  the  Company is  including  the  following:  Safe  Harbor
Statement  under the  Private  Securities  Litigation  Reform  Act of 1995:  The
statements  contained  herein which are not historical fact are  forward-looking
statements that are subject to risks and  uncertainties  that could cause actual
results  to  differ  materially  from  those  expressed  in the  forward-looking
statements.

Material Changes and Analysis of Financial Condition

The Company's  cash  position has decreased  during the three month period ended
March 31, 2003 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 March 31, 2003.  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.

                                      -10-

<PAGE>

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  December,  2002 the Company had issued  common
stock in exchange for consulting services, via S-8 filings. Some of these shares
were canceled due to litigation for non-performance on the part of some of these
consultants (see "Legal Proceedings").  In January of 20021, the company changed
its  amount  of  authorized  stock,  common  to  250,000,000  and  preferred  to
50,000,000.   In  February,  2002  the  Company  changed  its  name  to  Xynergy
Corporation and affected a 100 to 1 reverse  stock-split.  A 14C211 was filed to
execute  these  changes.  The name  change was due to its  expansion  into other
markets and  acquisitions of other  companies.  (See Page 6, 1. Business.) As of
March 31, 2003,  the Company had  31,161,851  shares  outstanding.  (See Page 3,
Statement of Shareholder's Equity.)


Item 3.  Defaults Upon Senior Securities

Inapplicable.

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

Inapplicable.

Item 5.  Other Information

Inapplicable.

                                      -11-

<PAGE>


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..

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

         Form 8K and subsequent 8-KA were filed on May 2003, reporting Xynergy's
         change in auditor from Todd Beutel to Henry Schiffer, C.P,A.


                                      -12-


<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: May 19, 2003                       By:   /s/ Raquel Zepeda
                                                -------------------------------
                                                Raquel Zepeda, Chief Financial
                                                   Officer & Chairman
The signing officer has reviewed the report;

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

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

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

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

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

                                      -13-