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 June 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 June 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) - June 30, 1998 ......................  1

      (b)   Statements of Operations (Unaudited) - Six Months ended
            June 30, 1998 and 1997 Period from Inception (December 1,
            1987) to June 30, 1998 .........................................  2

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

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

      (e)   Statements of Cash Flows (Unaudited) - Six Months ended June
            30, 1998 and 1997 and Period from Inception (December 1, 1987)
            to June 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


                                       ii
<PAGE>

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

                                                                  June 30, 1998
                                                                  -------------
Assets

  Current Assets

    Cash and equivalents                                            $   335,805
    Merchandise Inventory                                                70,866
    Deposits paid and other assets                                       10,143
                                                                    -----------
    Total Current Assets                                            $   416,814

  Equipment, Furniture & Fixtures, net of accum. depr. $23,319           22,110
                                                                    -----------
  Total Assets                                                      $   438,924
                                                                    ===========

Liabilities and Stockholders Equity

  Current Liabilities
    Accounts payable                                                $       366
    Taxes payable                                                           485
                                                                    -----------
    Total current liabilities                                       $       851

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

    Additional paid in capital                                        1,375,444

    Deficit accumulated during the development stage                   (939,771)

    Total stockholder's equity                                          438,073

  Total liabilities and stockholder's equity                        $   438,924
                                                                    ===========


                 See accompanying notes to financial statements                1
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                     Period from
                                                                              Inception (Dec.1, 1987)
                                                                                          to      
                                                   Six Months Ended June 30,            June 30,  
                                                     1998           1997                 1998     
                                                     ----           ----                 ----     
<S>                                             <C>            <C>                  <C>           
Sales                                                 5,292          4,622               31,790   
Cost of Goods Sold                                    2,772          1,740               13,925   
                                                -----------    -----------          -----------   
Gross Profit                                          2,520          2,882               17,865   
                                                                                                  
Selling, general, and administrative expenses       132,342        169,455            1,048,956   
                                                -----------    -----------          -----------   
(Loss) from operations                             (129,822)      (166,573)          (1,031,091)  
                                                                                                  
Interest Income                                       9,978         15,937               74,521   
                                                                                                  
Litigation settlement income                                                             20,000   
                                                                                                  
Loss before provision for income taxes             (119,844)      (150,636)            (936,570)  
                                                                                                  
Provision for income taxes                                                                4,000   
                                                                                                  
Net Loss                                        $  (119,844)   $  (150,636)         $  (940,570)  
                                                ===========    ===========          ===========   
Net Loss per share                              $      (.01)   $     (.006)
                                                ===========    ===========
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>
                                                        Second Quarter          First Quarter
                                                        Ended June 30,          March 31,

                                                     1998           1997            1998
                                                     ----           ----            ----
<S>                                             <C>             <C>             <C>          
Sales                                                  3,092           1,827           2,199
Cost of Goods Sold                                     1,601             642           1,170
                                                ------------    ------------    ------------
Gross Profit                                           1,491           1,185           1,029

Selling, general, and administrative expenses         75,246          79,945          57,096
                                                ------------    ------------    ------------
(Loss) from operations                               (73,755)        (78,760)        (56,067)

Interest Income                                        4,627           8,118           5,351

Loss before provision for income taxes               (69,128)        (70,642)        (50,716)

Provision for income taxes

Net Loss                                        $    (69,128)   $    (70,642)        (50,716)
                                                ============    ============    ============
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 March 31, 1997
                                   (Unaudited)

<TABLE>
<CAPTION>
                               Preferred Stock            Common Stock
                            -------------------     ----------------------                              Deficit
                                                                            Additional       MMI       During the       Total
                              Number                   Number                Paid-In      Settlement   Development  Shareholder's
                            of Shares    Amount      of Shares     Amount    Capital      Agreement      Stage         Equity
                            ---------  ---------   ------------   -------   ----------   -----------   -----------  -------------
<S>                         <C>        <C>         <C>            <C>       <C>          <C>           <C>          <C>        
Net loss from the
 inception through
 December 31, 1992                --   $      --             --   $    --   $       --   $        --   $ (29,178)   $   (29,178)
Net Loss, 1993                    --          --             --        --           --            --      (7,462)        (7,462)
                            --------   ---------   ------------   -------   ----------   -----------   ---------    -----------
Balance, Dec. 31, 1993            --          --             --        --           --            --     (36,640)       (36,640)
 Common Stock Issued
 In reorganization                --          --     20,000,000     2,000       34,754            --          --         36,754
Common Stock Issued in IPO        --          --      1,000,000       100       90,990            --          --         91,090
Preferred Stock exchanged
 for Common Stock per IPO    100,000         100    (20,000,000)   (2,000)       1,900            --          --           --
Exercise of A Warrants            --          --      1,000,000       100      249,900            --          --        250,000
MMI Settlement Agreement          --          --             --        --           --      (250,000)         --       (250,000)

Net Loss, 1994                    --          --             --        --           --            --     (58,052)       (58,052)
                            --------   ---------   ------------   -------   ----------   -----------   ---------    -----------
Balance, Dec. 31, 1994       100,000         100      2,000,000       200      377,544      (250,000)    (94,692)        33,152

Exercise of B Warrants            --          --      2,000,000       200      999,800            --          --      1,000,000
MMI settlement agreement          --          --             --        --           --    (1,000,000)         --     (1,000,000
Cash received from MMI            --          --             --        --           --       849,875          --        849,875
Net loss, 1995                    --          --             --        --           --            --    (126,518)      (126,518)
                            --------   ---------   ------------   -------   ----------   -----------   ---------    -----------
Balance, Dec. 31, 1995       100,000         100      4,000,000       400    1,377,344      (400,125)   (221,210)       756,509
Cash received from MMI            --          --             --        --           --       400,125          --        400,125
Net Loss                          --          --             --        --           --            --         (--)           (--)
                            --------   ---------   ------------   -------   ----------   -----------   ---------    -----------
Cash received from MMI            --          --             --        --           --            --     400,125        400,125
Common Stock exchanged
 for Preferred Stock        (100,000)       (100)    20,000,000     2,000       (1,900)
Net Loss                                                                                                (308,137)      (308,137)
                            --------   ---------   ------------   -------   ----------   -----------   ---------    -----------
Balance Dec. 31, 1996             --   $      --     24,000,000   $ 2,400   $1,375,444   $        --   $(529,347)   $   848,497
Net Loss                                                                                                (290,579)      (290,579)
                            --------   ---------   ------------   -------   ----------   -----------   ---------    -----------
Balance Dec. 31, 1997             --   $      --     24,000,000   $ 2,400   $1,375,444   $        --   $(819,926)   $   557,918
Net Loss 6 months                 --   $      --                  $         $                          $(119,844)   $  (119,844)
                            --------   ---------   ------------   -------   ----------   -----------   ---------    -----------
Balance June 30, 1998             --   $      --     24,000,000   $ 2,400   $1,375,444   $        --   $(939,771)   $   438,073
                            ========   =========   ============   =======   ==========   ===========   =========    ===========
</TABLE>


4                See accompanying notes to financial statements
<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
                                                                 June 30,        December 31, 1987 -
                                                            1998        1997       June 30, 1998
                                                          --------    -------------------------------
<S>                                                       <C>         <C>           <C>        
Cash flows from operating activities
 Net loss                                                 $(69,128)   $(79,994)     $ (939,770)
  Adjustments to reconcile net loss to net cash used in                             
   operating activities                                                             
       Depreciation                                          2,263       2,154          23,319
    (Increase) decrease in                                                          
       Inventory                                               647       1,663         (70,856)
       Prepaid expenses & other assets                        (674)     (4,412)         (8,014)
       Deposits                                               1600          70          (2,130)
    (Increase) decrease in                                                          
       Accounts Payable & accrued expenses                      (4)        185             842
                                                          --------    --------      ----------
       Net cash used in operating activities              $(65,296)   $(80,334)     $ (996,609)
                                                          --------    --------      ----------
Cash flows from investing activities                                                
       Purchase of Equipment                                  (736)     (1,783)        (45,430)
       Leasehold Improvements                                   (0)       (129)     
                                                                      --------
       Net cash used in investing activities                  (736)     (1,912)        (45,430)
                                                                                    
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
        equivalents                                       $(66,032)   $(82,246)     $  335,805
                                                          --------    --------
Cash & cash equivalents, beginning of period              $401,837    $665,484         862,776
                                                          --------    --------      ----------
Cash & cash equivalents, end of period                    $335,805    $583,238      $  796,744
                                                          ========    ========      ==========
Interest received                                         $  4,627    $      0      $   74,521
                                                          ========    ========      ==========
Taxes paid                                                $    800    $      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 June 30, 1998 and for the periods ended
      June, 1998 and 1997 included herein are unaudited; however, such
      information reflects all adjustments consisting of normal recurring
      adjustments, which are, in the opinion of management, necessary for a fair
      presentation of the information for such periods. In addition, the results
      of operation for the interim periods are not necessarily indicative of
      results for the entire year. The accompanying financial statements should
      be read in conjunction with the Company's annual report filed on Form
      10-KSB.

3. Warrants and related settlement agreement

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

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

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

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

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


                                                                               6
<PAGE>

3. Warrants and related settlement agreement (continued)

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

4. Legal proceedings

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

5. Leases

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


                                                                               7
<PAGE>

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

      Material Changes in Results of Operations

      The 1998 Second Quarter revenues slightly exceeded those of 1997, although
      Cost of Goods Sold was slightly higher in 1998, which was due to a
      reduction of retail prices on the lingerie. Selling, general, and
      administrative expenses for the 1998 Second Quarter year to date period
      were slightly lower than 1997's Second Quarter year-to-date.

      Material Changes in Financial Condition

      During the three month period ended June 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 slightly lower from year-end 1997 due to
      sales.

      The Company's available cash at June 30, 1998 is expected to be sufficient
      to defray the Company's operating expenses through calendar year 1998. The
      Company's continued existence will be dependent on its ability to generate
      significant product sales and ultimately to achieve profitable operations.


                                                                               8
<PAGE>

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 2. Changes in Securities

            Inapplicable.

Item 3. Defaults Upon Senior Securities

            Inapplicable.

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

            Inapplicable.

Item 5. Other Information

            On 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 June 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: August 13, 1998            By: /s/ Raquel Zepeda
                                     -------------------------------------------
                                     Raquel Zepeda, Chief Financial Officer


                                                                              10