SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended June 30, 2002

                                       OR

             [ ] 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: 0-28128

                             ELEGANT ILLUSIONS, INC.
-------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

                    DELAWARE                                     88-0282654
         -------------------------------                   --------------------
         (State or other jurisdiction of                   (I.R.S. Employer
         incorporation or organization)                    Identification No.)

              542 Lighthouse Ave., Suite 5, Pacific Grove, CA 93950
 -------------------------------------------------------------------------------
                    (Address of principal executive offices)

Issuer's telephone number, including area code:      (831) 649-1814
                                                     --------------

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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
                               -----               ---------

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.

                Class                               Outstanding at June 30, 2002
------------------------------------               ----------------------------
  Common Stock, par value                                  6,084,379 Shares
       $.001 per share

         Transitional Small Business Format (check one);  Yes        No  X
                                                              ---       ---


<PAGE>


                          PART I. FINANCIAL INFORMATION


Item 1.  Financial Statements

         The accompanying financial statements are unaudited for the interim
periods, but include all adjustments (consisting only of normal recurring
accruals) which management considers necessary for the fair presentation of
results for the three and six months ended June 30, 2002.

         Moreover, these financial statements do not purport to contain complete
disclosure in conformity with generally accepted accounting principles and
should be read in conjunction with the Company's audited financial statements
at, and for the fiscal year ended December 31, 2001.

         The results reflected for the three and six months ended June 30, 2002
are not necessarily indicative of the results for the entire fiscal year.






























<PAGE>



ELEGANT ILLUSIONS, INC AND SUBSIDARIES
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                         December 31,              June 30,
                                                                             2001                    2002
                                                                             ----                    ----
                           ASSETS
CURRENT ASSETS
<S>                                                                     <C>                       <C>
         Cash and cash equivalents                                      $1,609,236                $1,373,681
         Accounts receivable                                               237,546                   187,186
         Inventory                                                       3,356,578                 3,751,246
         Prepaid Expenses                                                  306,869                   264,466
                                                                           -------                   -------

             TOTAL CURRENT ASSETS                                        5,510,229                 5,576,580
                                                                         ---------                 ---------


PROPERTY AND EQUIPMENT, NET                                              2,021,952                 1,919,358
                                                                         ---------                 ---------

OTHER ASSETS
         Deposits                                                           79,392                    81,647
         Patents and trademarks, net                                           533                       154
                                                                               ---                       ---
                                                                            79,925                    81,801
                                                                            ------                    ------
                                                                        $7,612,106                $7,577,739
                                                                        ==========                ==========

             LIABILITIES AND STOCKHOLDERS EQUITY

CURRENT LIABILITIES
         Current portion of long term debt                                 $11,062                   $11,567
         Accounts payable and accrued expenses                             213,860                   143,359
         Income taxes payable                                               47,760                     3,495
                                                                            ------                     -----
TOTAL CURRENT LIABILITIES                                                  272,682                   158,420
                                                                           -------                   -------

LONG TERM DEBT
         Mortgage payable                                                  452,963                   447,309
         Deferred income taxes                                             165,871                   165,871
                                                                           618,834                   613,180
                                                                           -------                   -------

                  TOTAL LIABILITES                                         891,516                   771,600
                                                                           -------                   -------

STOCKHOLDERS' EQUITY
         Common stock-authorized 30,000,000 shares,
                  $.001 per value, issued and outstanding
                  6,146,446 shares in 2001 and 2002                          6,147                     6,147
         Additional paid in capital                                      3,914,509                 3,914,509
         Retained earnings                                               2,883,942                 2,969,491
         Less treasury stock at cost (62,067 shares in
                  2001 and 2002)                                           (84,008)                  (84,008)
                                                                          --------                   --------
                                                                         6,720,590                 6,806,138
                                                                        ----------                ----------
                                                                        $7,612,106                $7,577,739
                                                                        ==========                ==========

</TABLE>


           See Accompanying Notes to Consolidated Financial Statements





                                       2
<PAGE>


ELEGANT ILLUSIONS, INC AND SUBSIDARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2002
<TABLE>
<CAPTION>


                                                                          2001                       2002

<S>                                                                    <C>                       <C>
REVENUES                                                               $4,524,906                $4,858,127

COST OF GOODS SOLD                                                      1,390,141                 1,433,379
                                                                      -----------               -----------

GROSS PROFITS                                                           3,134,765                 3,424,748
                                                                      -----------               -----------
EXPENSES
         SELLING, GENERAL AND ADMINISTRATION                            2,888,242                 3,041,161
         DEPRECIATION, AND AMORTIZATION                                   228,615                   223,111
         INTEREST EXPENSE                                                  24,862                    20,928
                                                                    -------------             -------------
                                                                        3,141,719                 3,285,200
                                                                      -----------                ----------


INCOME BEFORE INCOME TAXES                                                 (6,954)                  139,548

PROVISION FOR INCOME TAXES                                                 (3,000)                   54,000
                                                                    -------------               -----------
NET INCOME                                                                ($3,954)                  $85,548
                                                                    =============               ===========









WEIGHTED AVERAGE SHARES OUTSTANDING                                     6,084,379                 6,084,379
                                                                      ===========               ===========

BASIC AND DILUTED INCOME PER SHARE                                         ($0.00)                    $0.01
                                                                         ========                   =======







</TABLE>





                  See Accompanying Notes to Consolidated Financial Statements



                                       3
<PAGE>






                     ELEGANT ILLUSIONS, INC AND SUBSIDARIES
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                FOR THE THREE MONTHS ENDED JUNE 30, 2001 AND 2002

<TABLE>
<CAPTION>

                                                                          2001                   2002

<S>                                                                    <C>                       <C>
REVENUES                                                               $2,317,461                $2,490,504

COST OF GOODS SOLD                                                        699,699                   685,521
                                                                     ------------              ------------

GROSS PROFITS                                                           1,617,762                 1,804,983

EXPENSES
         SELLING, GENERAL AND ADMINISTRATION                            1,438,457                 1,509,089
         DEPRECIATION, AND AMORTIZATION                                   113,250                   114,299
         INTEREST EXPENSE                                                  10,634                    10,549
                                                                     ------------               -----------
                                                                        1,562,341                 1,633,936
                                                                     ------------               -----------


INCOME BEFORE INCOME TAXES                                                 55,421                   171,047

PROVISION FOR INCOME TAXES                                                 13,000                    61,000
                                                                      -----------              ------------
NET INCOME                                                                $42,421                  $110,047
                                                                      ===========              ============









WEIGHTED AVERAGE SHARES OUTSTANDING                                     6,084,467                 6,084,467
                                                                      ===========               ===========

BASIC AND DILUTED INCOME PER SHARE                                          $0.01                     $0.02
                                                                        =========                   =======


                  See Accompanying Notes to Consolidated Financial Statements

</TABLE>



                                       4
<PAGE>

<TABLE>
<CAPTION>


                     ELEGANT ILLUSIONS, INC AND SUBSIDARIES
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2002



                                                                                            2001                       2002

<S>                                                                                        <C>                       <C>
CASH FLOWS FROM OPERATING ACTIVITIES
                  Net income                                                                  ($3,954)                  $85,548
                  Adjustments to reconcile net income
                    To net cash provided by (used in)
                    operating activities
                           Depreciation and amortization                                      228,616                   223,111
                           Abandonment of property and equipment
                           Changes in operating assets and liabilities
                            (Increase) Decrease in :
                           Accounts receivable                                                 32,935                    50,360
                           Inventory                                                          (65,204)                 (394,668)
                           Prepaid expenses                                                    72,181                    42,403
                           Income tax receivable                                               (3,000)
                            Increase (Decrease in)
                           Accounts payable and accrued expenses                              (16,554)                  (70,051)
                           Income taxes payable                                                     0                   (44,265)
                                                                                        -------------              ------------

NET CASH PROVIDED BY OPERATIONS                                                               245,020                  (105,665)
                                                                                        -------------              ------------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property and equipment                                                           (152,672)                 (122,865)
Other assets                                                                                     (672)                   (1,876)
                                                                                        -------------              -------------

NET CASH USED IN INVESTING ACTIVITIES                                                        (153,344)                 (124,741)
                                                                                        -------------              -------------
CASH FLOW FROM FINANCING ACTIVITIES
                  Mortgages payable                                                            (5,560)                   (5,149)
                                                                                         ------------              -------------

NET CASH USED IN FINANCING ACTIVITIES                                                          (5,560)                   (5,149)
                                                                                          ------------             -------------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                                      86,116                  (235,555)

CASH AND CASH EQUIVALENT BALANCE
Beginning of period                                                                         1,899,722                 1,609,236
                                                                                           ----------                ----------
CASH AND CASH EQUIVALENT BALANCE
                  End of Period                                                            $1,985,838                $1,373,681
                                                                                           ==========                ==========

SUPPLEMENTAL CASH FLOW DISCLOSURE
                  Interest Paid                                                               $24,862                   $20,928
                  Income taxes paid                                                                $0                   $98,265


                  See Accompanying Notes to Consolidated Financial Statements

</TABLE>


                                       5
<PAGE>



ELLEGANT ILLUSIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS



1.       COMMENTS

         The accompanying unaudited consolidated condensed financial statements,
which are for interim  periods,  do not include all  disclosure  provided in the
annual consolidated financial statements. These unaudited consolidated condensed
financial  statements  should  be  read in  conjunction  with  the  consolidated
financial  statements  and footnotes  thereto  contained in the Annual Report on
Form 10-KSB for the year ended December 31, 2001 of Elegant Illusions, Inc. (the
"Company"),  as filed with the Securities and Exchange Commission.  The December
31,  2001  consolidated   condensed  balance  sheet  was  derived  from  audited
consolidated financial statements, but does not include all disclosures required
by generally accepted accounting principles.

         In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (which are of a normal
recurring nature) necessary for a fair presentation of the financial statements.
The results of operations for the three and six months ended June 30, 2002 are
not necessarily indicative of the results to be expected for the full fiscal
year.




                                       6
<PAGE>



Item 2. Management's  Discussion And Analysis Of Financial Condition And Results
Of Operations


Cautionary Statement on Forward-Looking Statements

         Except for the historical information contained herein, certain of the
matters discussed in this report are "forward-looking statements," as defined in
Section 21E of the Securities Exchange Act of 1934, which involve certain risks
and uncertainties, which could cause actual results to differ materially from
those discussed herein including, but not limited to, risks relating to changing
economic conditions, our shift in expansion plans and competitive pressures.

         We caution readers that any such forward-looking statements are based
on our current expectations and beliefs but are not guarantees of future
performance. Actual results could differ materially from those expressed or
implied in the forward-looking statements.

Results of Operations

         Sales for the quarter ended June 30, 2002 increased $173,043 or
approximately 7.5% when compared to the quarter ended June 30, 2001. Sales for
the six months ended June 30, 2002 increased $333,221 or approximately 7.4% when
compared to the six months ended June 30, 2002.

         We believe that the increase in sales during the three and six month
periods ended June 30, 2002 over the corresponding periods in the prior fiscal
year was due primarily to an increase in same store sales (see "Revenues Same
Store Locations" below).

         We believe that the increase in sales during the three and six months
ended June 30, 2002 also resulted from the opening of the Sarasota Gallery
(October 2001) and Elegant Illusions Gallery, Shops at Wailea, Hawaii (May 25,
2002). We note that sales increased even though two locations (Salt Lake City,
Utah and Grapevine Mills, Texas) which were open for the full first and second
quarters of fiscal 2001 were closed for the full second quarter of fiscal 2002.

         As of June 30, 2001, we operated 24 retail locations and as of June 30,
2002, we operated 25 retail locations. We opened our Sarasota Gallery in October
2001 and our Elegant Illusions Gallery, Shops at Wailea, Hawaii on May 25, 2002
and we closed our Salt Lake City store in August 2001.

         Costs of goods sold as a percentage of revenues decreased from 30.2%
during the quarter ended June 30, 2001 to 27.5% during the quarter ended June
30, 2002. We believe that this decrease during the three month periods was due
to increased retail prices and more efficiency in production of goods.
                                       7
<PAGE>

         Costs of goods sold as a percentage  of revenues  decreased  from 30.7%
during the six months  ended June 30, 2001 to 29.5%  during the six months ended
June 30, 2002. We believe that the decrease  during the six month period was due
to increased retail prices and more efficiency in production of goods.

         During the quarter ended June 30, 2002, selling, general and
administrative expenses increased when compared to the second quarter of 2001 by
$70,632, or approximately 4.9%. We believe that this increase in expenses was
the result of costs associated with the increase in revenues of $173,043. As a
percentage of sales, selling, general and administrative expenses decreased from
approximately 62.1% during the second quarter of 2001 to approximately 60.6%
during the second quarter of 2002.

         During the six months ended June 30, 2002, selling, general and
administrative expenses increased when compared to the six months ended June 30,
2001 by $152,919, or approximately 5.3%. We believe that this increase in
expenses was the result of the creation of a position for an additional
traveling manager which increased payroll costs, increased rent costs and
increased purchases of supplies over the first quarter of 2001, an increase in
executive compensation and costs associated with the increase in revenues of
$333,221. As a percentage of sales, selling, general and administrative expenses
decreased slightly from approximately 63.8% during the first six months of 2001
to approximately 62.6% during the first six months of 2002.

Revenues Same Store Locations.

         As of June 30, 2002, we operated 23 locations that were also in
operation at June 30, 2001: two in New Orleans, three in Monterey, one in
Sacramento, one in San Diego, one in Santa Barbara, two in San Francisco, one in
Palm Springs, one in Branson, one in Laughlin, one in Gilroy, two in St Croix,
one in St Thomas, one in Birch Run, one in Maui, one in Michigan City, one in
Orlando, one in Miromar and one in Vail. Revenues from these locations for the
quarter ended June 30, 2002, increased approximately 9.8% from the same period
in 2001. Revenues from these locations for the six months ended June 30, 2002,
increased approximately 10.3% from the same period in 2001.

Inventory Turnover Ratios

         During the first and second quarters of 2002, we maintained an
inventory that provided a turnover ratio of 0.78.

         We  believe  that  our  current  inventory  turnover  ratio  of 0.78 is
appropriate  for our plan of operation,  including  maintaining  our strategy of
replacing inventory sold at our retail locations within a 2-3 day time frame and
having a  sufficient  reserve  should  normal  business be  disrupted  by events
similar to September 11, 2001. We review items on hand, on a regular  basis,  to
determine slow moving items,  then discount the price of those items so they are
sold at prices  that still  generate  a positive  gross  margin.  The  inventory
turnover ratio for the second quarter of 2001 was 0.98.


                                       8
<PAGE>



Liquidity and Capital Resources

         As of June 30, 2002, we had $1,373,681 in cash and cash equivalents
down $235,555 from December 31, 2001 and down $163,125 from March 31, 2002.
Current assets exceeded our current liabilities by $5,418,160 up $180,613 from
December 31, 2001.

         We are licensing our Elegant  Illusions  trade name to permit others to
feature Elegant  Illusions  brand  copy  jewelry.  We are  structuring  these
transactions in a manner that management believes will not require  registration
under current franchising laws. In this regard, we have one licensee whose store
is operating under its own trade name in Pennsylvania.

         Our primary anticipated capital expenditures during the remainder of
fiscal 2002 include:

o        possibly  increasing  inventory  to  accommodate   supplying  potential
         licensees;
o        possibly opening one to three more fine art and/or copy jewelry stores;
         and
o        possibly acquiring a building to house our corporate facilities.

         We believe that we have sufficient capital reserves for all of the
foregoing activities except, possibly, for the purchase of real estate. We most
likely will mortgage some or all of the real estate that we acquire.




                                       9
<PAGE>



                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

                           None.

Item 2.  Changes in Securities and Use of Proceeds

                           None.

Item 3.  Defaults Upon Senior Securities

                           None.

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

                           None.

Item 5.  Other Information

                           None.

Item 6.  Exhibits and Reports on Form 8-K

a.       Exhibits.

Exhibit  99.1     Certification  Pursuant to 18 U.S.C.  Section  1350,  as
                  Adopted Pursuant to Section 906 of the  Sarbanes-Oxley  Act of
                  2002.

Exhibit  99.2     Certification  Pursuant to 18 U.S.C.  Section  1350,  as
                  Adopted Pursuant to Section 906 of the  Sarbanes-Oxley  Act of
                  2002.

b.Reports on Form 8-K during the quarter ended June 30, 2002.

                           None.



                                       10
<PAGE>


SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registration has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                        ELEGANT ILLUSIONS, INC.



Dated: August  9, 2002
                                        ----------------------------------------
                                        James Cardinal, Chief Executive Officer




                                        --------------------------------------
                                        Tamara Gear, Treasurer



















                                       11