<PAGE>

                                           

                       U.S. SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C.  20549
                                           
                                     FORM 10-QSB
(Mark One)
    [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
          THE SECURITIES AND EXCHANGE ACT OF 1934
                                           
For the quarterly period ended June 30, 1997

    [ ]  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 of                  (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, 1997, 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, 1997..........................   1

    (b)  Statements of Operations (Unaudited) - Six Months
         ended June 30, 1997 and 1996 Period from
         Inception (December 1, 1987) to June 30, 1997.....................   2

    (c)  Statement of Stockholder's Equity (Unaudited) -
         Period from Inception (December 1, 1987) to June 30, 1997.........   3

    (d)  Statements of Cash Flows (Unaudited) - Six Months
         ended June 30, 1997 and 1996 and Period from
         Inception (December 1, 1987) to June 30, 1997.....................   4

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

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


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


ii
<PAGE>

                             COLECCIONES DE RAQUEL, INC.
                            (A Development Stage Company)
                                    BALANCE SHEET
                                     (Unaudited)

                                                                   June 30, 1997
                                                                   -------------
ASSETS

    Current Assets 

         Cash and equivalents                                         $583,238
         Inventory                                                      73,394
         Deposits paid and other assets                                 17,460

         Total Current Assets                                         $674,092

    Equipment, Furniture & Fixtures, net of accum. depr. $14,427        29,233
                                                                     ---------

    Total Assets                                                      $703,325
                                                                     ---------
                                                                     ---------


LIABILITIES AND STOCKHOLDERS EQUITY

    Current Liabilities
         Accounts payable                                               $4,912
         Taxes payable                                                     553

         Total current liabilities                                      $5,465

    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             (679,984)

         Total stockholder's equity                                    697,860

    Total liabilities and stockholder's equity                        $703,325
                                                                     ---------
                                                                     ---------


                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, 
                                                              1997           1996                1997
                                                           ----------      ---------           ---------
<S>                                                        <C>             <C>                 <C>
Sales                                                           4,622          2,923              25,626         
Cost of Goods Sold                                              1,740            848               8,990         
                                                           ----------      ---------           ---------

Gross Profit                                                    2,882          2,075              16,636         
                                                                                                                 
Selling, general, and administrative expenses                 169,455        170,671             843,966         
                                                           ----------      ---------           ---------
                                                                                                                 
(Loss) from operations                                       (166,573)      (168,596)           (827,330)        
                                                                                                                 
Interest Income                                                15,937         14,919              59,105         
                                                                                                                 
Litigation settlement income                                                                      20,000         
                                                                                                                 
Loss before provision for income taxes                       (150,636)      (153,677)           (748,225)        
                                                                                                                 
Provision for income taxes                                                                         2,400         
                                                                                                                 
Net Loss                                                    ($150,636)     ($153,677)          ($750,625)        
                                                           ----------      ---------           ---------
                                                           ----------      ---------           ---------

Net Loss per share                                             ($.006)         ($.04)
                                                           ----------      ---------
                                                           ----------      ---------

Weighted average number of common shares                   24,000,000      4,000,000
                                                           ----------      ---------
                                                           ----------      ---------
</TABLE>

                See accompanying notes to financial statements                 2

<PAGE>


                                COLECCIONES DE RAQUEL, INC.
                          (A Development Stage Company)
                           STATEMENT OF STOCKHOLDERS' EQUITY
         FOR THE PERIOD FROM DECEMBER 1, 1987 (INCEPTION) TO JUNE 30, 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 6 MONTHS                                                                                         ($150,637)               
                                                                                                                                   
BALANCE JUNE 30, 1997              -        $  -      24,000,000    $2,400    $1,375,444    $     -       ($679,984)    $  697,860 
                               --------     ------    ----------    ------    ----------    ----------    ---------     ----------
                               --------     ------    ----------    ------    ----------    ----------    ---------     ----------
</TABLE>

<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 -
                                                                         1997          1996       JUNE 30, 1997   
                                                                      ---------     ----------  -----------------
<S>                                                                   <C>           <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                           $ (79,994)    $ (153,677)     $(679,983)      
   Adjustments to reconcile net loss to net cash used in                                                           
       operating activities                                                                                         
      Depreciation                                                         2154          1,686         14,426       
   (Increase) decrease in                                                                                        
      Inventory                                                           1,663        (36,053)       (73,394)      
      Prepaid expenses & other assets                                    (4,412)        22,902        (13,878)      
      Deposits                                                               70         (5,670)        (3,581)      
   (Increase) decrease in                                                                                         
      Accounts Payable & accrued expenses                                   185        (28,478)         5,464       
                                                                       --------      ---------      ---------
                                                                                                                    
      Net cash used in operating activities                            $(80,334)     $(199,290)     $(750,946)               
                                                                       --------      ---------      ---------
                                                                                                                    
CASH FLOWS FROM INVESTING ACTIVITIES                                                                                
      Purchase of Equipment                                              (1,783)        (6,805)       (43,531)      
      Leasehold Improvements                                               (129)        (9,716)          (129)               
                                                                       --------      ---------      ---------
                                                                                                                    
                  Net cash used in investing activities                  (1,912)       (16,521)       (43,660)      
                                                                                                                    
CASH FLOWS FROM FINANCING ACTIVITIES                                                                                
      Proceeds from MMI settlement agreement                                  -       $400,125     $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                               -       $400,125     $1,377,844       
                                                                       --------      ---------      ---------
                                                                                                                    
      Net increase in cash and cash equivalents                         (82,246)      $184,314       $583,238       
                                                                                                                    
CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD                           $665,484       $705,707       $665,484       
                                                                       --------      ---------      ---------
                                                                                                                    
CASH & CASH EQUIVALENTS, END OF PERIOD                                 $583,238       $890,021       $583,238       
                                                                       --------      ---------      ---------
                                                                       --------      ---------      ---------
</TABLE>




                                                                               4


<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, 1997 and for the periods ended
    June, 1997 and 1996 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.  Although 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.


                                                                              5
<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

    On December 8, 1993, Raquel Zepeda dba Colecciones de Raquel, a California
    sole proprietorship, filed a civil action in the State of California
    Superior Court, Los Angeles County, against Rixima, Inc. ("Rixima") and
    J.C. Penny, Inc., alleging violation of the Lanham Act, trade name
    infringement , unfair competition, invasion of privacy and conspiracy,
    claiming that Rixima had used Ms. Zepeda's likeness in connection with the
    marketing of cosmetic products using its "Raquel" and "Raquelle"
    trademarks.  Ms. Zepeda also filed an objection to the trademark
    applications filed by Rixima.  Rixima removed the action to the United
    States District Court, Central District of California.

    On June 20, 1995, Ms. Zepeda entered into a Settlement Agreement and
    General Mutual Release with Rixima pursuant to which Ms. Zepeda agreed to
    dismiss the action brought against Rixima and the objection to Rixima's
    pending trademark applications for "Raquel" and "Raquelle" trademark
    applications for "Raquel" and "Raquelle" in consideration of payment by
    Rixima of the sum of $20,000.  The parties also agreed to a covenant not to
    sue which obligates Rixima not to sue Ms. Zepeda or the Company for
    trademark infringement or unfair competition in connection with the sale of
    its line of cosmetic products to Hispanic women.  

    On December 17, 1996, the United States District Court, Central District of
    California, denied a motion by Rixima for an order declaring that
    Colecciones de Raquel, Inc. is a party to the covenant not to sue.

    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.

5.  LEASES

    On October 1, 1995, the Company entered into a two  year lease for a store
    front located in Beverly Hills, California.  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.

                                                                               6
<PAGE>


ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

    
    MATERIAL CHANGES IN RESULTS OF OPERATIONS

    The 1997 Second Quarter revenues slightly exceeded those of 1996.  The
    increase in sales is largely attributed to the Company's efforts to promote
    product sales.  Selling, general, and administrative expenses for the 1997
    Second Quarter period were approximately the same as the Second Quarter of
    1996.  
     
    
    MATERIAL CHANGES IN FINANCIAL CONDITION

    During the six month period ended June 30, 1997 the Company's cash position
    decreased due to the continued low level of sales relative to its cost of
    operations, without any offsetting inflows from financing activities. 
    Inventory levels were slightly lower from year-end 1996 due to sales.  In
    comparison to Second Quarter 1996, Inventory levels were much higher due to
    production of cosmetics and stocking of lingerie.   

    The Company's available cash at June 30, 1997 is expected to be sufficient
    to defray the Company's operating expenses through calendar year 1997.  The
    Company's continued existence will be dependent on its ability to generate
    significant product sales and ultimately to achieve profitable operations.














                                                                               7
<PAGE>
                                           
                                           
                             PART II - OTHER INFORMATION 
                                           
                                           
Item 1.  LEGAL PROCEEDINGS

    On December 8, 1993, Raquel Zepeda dba Colecciones de Raquel, a California
    sole proprietorship, filed a civil action in the State of California
    Superior Court, Los Angeles County, against Rixima, Inc. ("Rixima") and
    J.C. Penny, Inc., alleging violation of the Lanham Act, trade name
    infringement , unfair competition, invasion of privacy and conspiracy,
    claiming that Rixima had used Ms. Zepeda's likeness in connection with the
    marketing of cosmetic products using its "Raquel" and "Raquelle"
    trademarks.  Ms. Zepeda also filed an objection to the trademark
    applications filed by Rixima.  Rixima removed the action to the United
    States District Court, Central District of California.

    On June 20, 1995, Ms. Zepeda entered into a Settlement Agreement and
    General Mutual Release with Rixima pursuant to which Ms. Zepeda agreed to
    dismiss the action brought against Rixima and the objection to Rixima's
    pending trademark applications for "Raquel" and "Raquelle" trademark
    applications for "Raquel" and "Raquelle" in consideration of payment by
    Rixima of the sum of $20,000.  The parties also agreed to a covenant not to
    sue which obligates Rixima not to sue Ms. Zepeda or the Company for
    trademark infringement or unfair competition in connection with the sale of
    its line of cosmetic products to Hispanic women.  

    On December 17, 1996, the United States District Court, Central District of
    California, denied a motion by Rixima for an order declaring that
    Colecciones de Raquel, Inc. is a party to the covenant not to sue.

    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.


                                                                              8
<PAGE>


Item 5.  OTHER INFORMATION

    Inapplicable.

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.

                                   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 11, 1997              By: /s/ Raquel Zepeda
                                          ------------------------------
                                          Raquel Zepeda, Chief Financial
                                          Officer


                                                                               9