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, 2000

                                       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, 2000
------------------------------------               ----------------------------
  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, 2000.

         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, 1999.

         The results  reflected for the three and six months ended June 30, 2000
are not necessarily indicative of the results for the entire fiscal year.









                                      -2-
<PAGE>
                    ELEGANT ILLUSIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                              December 31,    March 31,
                                                                                  1999          2000
                                                                                  ----          ----
                                                                             (Derived from   (Unaudited)
                                                                                Audited
                                                                               Financial
                                                                              Statements)


                                          ASSETS

<S>                                                                            <C>           <C>
CURRENT ASSETS
          Cash and cash equivalents                                            $1,760,254    $1,640,903
          Accounts receivable (net of allowance for
          doubtful      accounts of $16,000 in 1999 and 2000)                     415,353       316,786
          Income tax receivable                                                    88,130             0
          Inventory                                                             2,597,635     2,903,453
          Prepaid expenses                                                        299,227       172,057
                                                                                ---------     ---------

                  TOTAL CURRENT ASSETS                                          5,160,599     5,033,189
                                                                                ---------     ---------

PROPERTY AND EQUIPMENT, NET                                                     1,892,119     2,314,995
                                                                                ---------     ---------

OTHER ASSETS

          Deposits                                                                 65,105       309,903
          Trade marks and other, net of accumulated amortization                    2,430         2,052
          Excess cost over net assets acquired, net of accumulated
          amortization                                                             18,191        15,003
                                                                                ---------     ---------
                                                                                   85,726       326,958
                                                                                ---------     ---------
                                                                               $7,138,444    $7,675,152
                                                                                =========     =========

                   LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
          Current portion of mortgage payable                                                    $8,367
          Accounts payable and accrued expenses                                  $240,358       179,011
          Income taxes payable                                                          0        55,000
                                                                                ---------     ---------
                                                                                  240,358       242,378

LONG TERM LIABILITIES

          Mortgage Payable                                                                      468,794
          Deferred Income taxes payable                                           213,871       213,871
                                                                                ---------     ---------
                                                                                  213,871       682,665

                    TOTAL LIABILITIES                                             454,229       925,042
                                                                                ---------     ---------

STOCKHOLDERS' EQUITY
          Common stock-authorized 30,000,000 shares,
              $.001 par value, issued and outstanding
               6,146,446 shares in 2000 and 1999                                    6,146         6,146
          Additional paid in capital                                            3,914,509     3,914,509
          Retained earnings                                                     2,847,568     2,913,463
          Less treasury stock at cost
               (62,067 shares in 2000 and 1999)                                   (84,008)      (84,008)
                                                                                ---------     ---------
                                                                                6,684,215     6,750,110
                                                                                ---------     ---------
                                                                               $7,138,444    $7,675,152
                                                                                =========     =========
</TABLE>

          See Accompanying Notes to Consolidated Condensed Financial Statements


                                      -3-
<PAGE>


                    ELEGANT ILLUSIONS, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                 FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 2000

<TABLE>
<CAPTION>
                                                                                 1999          2000
                                                                                 ----          ----
                                                                             (Unaudited)    (Unaudited)

<S>                                                                            <C>           <C>
REVENUES                                                                       $4,905,056    $5,155,304

COST OF GOODS SOLD                                                             $1,559,691    $1,491,842
                                                                                ---------     ---------
GROSS PROFITS                                                                   3,345,385     3,663,462
                                                                                ---------     ---------

EXPENSES
              SELLING, GENERAL AND ADMINISTRATION                               3,126,432     3,280,063
              DEPRECIATION AND AMORTIZATION                                       199,469       216,296
              INTEREST EXPENSE                                                         42        26,543
                                                                                ---------     ---------
                                                                                3,325,943     3,522,902

INCOME(LOSS) BEFORE INCOME TAXES                                                   19,422       140,560

PROVISION FOR INCOME TAXES                                                          8,000        74,665
                                                                                ---------     ---------
NET INCOME(LOSS)                                                                  $11,422       $65,894
                                                                                =========     =========


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

BASIC AND DILUTED INCOME(LOSS) PER SHARE                                            $0.00         $0.01
                                                                                   ======        ======
</TABLE>

















      See Accompanying Notes to Consolidated Condensed Financial Statements



                                      -4-
<PAGE>

                    ELEGANT ILLUSIONS, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                FOR THE THREE MONTHS ENDED JUNE 30, 1999 AND 2000

<TABLE>
<CAPTION>
                                                                                  1999          2000
                                                                                  ----          ----
                                                                              (Unaudited)    (Unaudited)

<S>                                                                            <C>           <C>
REVENUES                                                                       $2,650,104    $2,550,719

COST OF GOODS SOLD                                                                914,781       799,919
                                                                                ---------     ---------
GROSS PROFITS                                                                   1,735,433     1,750,800
                                                                                ---------     ---------

EXPENSES
              SELLING, GENERAL AND ADMINISTRATION                               1,559,241     1,547,949
              DEPRECIATION AND AMORTIZATION                                       101,779        89,447
              INTEREST EXPENSE                                                          0        19,652
                                                                                ---------     ---------
                                                                                1,661,020     1,656,958

INCOME(LOSS) BEFORE INCOME TAXES                                                   74,413        93,843

PROVISION FOR INCOME TAXES                                                         27,000        58,665
                                                                                ---------     ---------
NET INCOME(LOSS)                                                                  $47,413       $37,178
                                                                                =========     =========


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

BASIC AND DILUTED INCOME(LOSS) PER SHARE                                            $0.01         $0.01
                                                                                   ======        ======
</TABLE>

















      See Accompanying Notes to Consolidated Condensed Financial Statements


                                      -5-
<PAGE>

                    ELEGANT ILLUSIONS, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                 FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 2000

<TABLE>
<CAPTION>
                                                                                  1999           2000
                                                                                  ----           ----
                                                                               (Unaudited)    (Unaudited)
<S>                                                                             <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
          Net income(loss)                                                        $11,423       $65,894
          Adjustments to reconcile net income
              to net cash provided by (used in)
             operating activities:
                      Depreciation and amortization                               199,469       216,296
                       Issuance of stock for                                            0             0
                      Changes in operating assets and liabilities:

                        (Increase) Decrease in:
                          Accounts receivable                                      27,627        98,567
                          Inventory                                              (35,912)     (305,818)
                          Prepaid expenses                                         25,076       127,170
                        Income tax receivable                                           0        88,130
                        Increase (Decrease in):
                          Accounts payable and accrued expenses                  (47,282)      (61,347)
                          Income taxes payable                                     27,839        55,000
                                                                                ---------     ---------
NET CASH PROVIDED BY OPERATIONS                                                   208,240       283,893
                                                                                ---------     ---------
CASH FLOW FROM INVESTING ACTIVITIES
          Purchase of property and equipment                                    (321,469)     (636,769)
          Other assets                                                              5,699     (243,636)
                                                                                ---------     ---------
NET CASH USED IN INVESTING ACTIVITIES                                           (315,770)     (880,404)
                                                                                ---------     ---------
CASH FLOW FROM FINANCING ACTIVITIES
          Mortgage Payable                                                              0       477,160
                                                                                ---------     ---------
NET CASH USED IN FINANCING ACTIVITIES                                                   0       477,160
                                                                                ---------     ---------
NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS                             (107,530)     (119,352)

CASH AND CASH EQUIVALENT BALANCE,
          Beginning of period                                                   1,560,403     1,760,254
                                                                                ---------     ---------
CASH AND CASH EQUIVALENT BALANCE,
          End of period                                                        $1,452,873    $1,640,902
                                                                                =========     =========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
          Interest Paid                                                                $0       $26,543
          Income taxes paid                                                            $0       $19,600

NON-CASH FINANCING ACTIVITY:
          Issuance of shares for services                                              $0
</TABLE>


      See Accompanying Notes to Consolidated Condensed Financial Statements


                                      -6-
<PAGE>

                    ELEGANT 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  Audited  financial  statements and
         footnotes  thereto  contained in the  Company's  Annual  Report on Form
         10-KSB  for the  year  ended  December  31,  1999  as  filed  with  the
         Securities and Exchange Commission.  The December 31, 1999 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  March 31,  2000 are not  necessarily  indicative  of the
         results to be expected for the full fiscal year.










                                      -7-
<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, 2000  decreased  $99,475 or 3.8%
when  compared to the quarter  ended June 30, 1999. We believe that the decrease
in sales was due primarily to the closing of the following locations:

Location                Closing Date
---------               -------------
Kenosha                 August 1999;
Oahu                    January 2000;
Tulare                  February 2000; and
Mall of America         June 2000.

         Sales for the six months ended June 30, 2000 increased $250,248 or 5.1%
when  compared to the quarter  ended June 30, 1999.  We believe this is increase
was due primarily to same store sales increases for the period.

         As of June 30, 1999, we operated 30 retail locations and as of June 30,
2000, we operated 26 retail locations.

         Costs of goods sold as a percentage of revenues decreased from 34.5% in
the quarter  ended June 30, 1999 to 31.4% in the  quarter  ended June 30,  2000.
Costs of goods sold as a percentage of revenues  decreased from 31.8% in the six
months  ended June 30,  1999 to 28.9% in the six months  ended June 30,  2000 We
believe that these decreases were due to our ongoing efforts to reduce costs.


                                      -8-
<PAGE>

         During  the  quarter  ended  June  30,  2000,   selling,   general  and
administrative  expenses decreased by $11,292,  approximately 0.7% when compared
to the second  quarter of 1999.  We believe that this decrease was due primarily
to the  closing  of the  locations  mentioned  above,  offset  by  increases  in
management  salaries and the expenses  associated  with closing Mall of America,
Oahu and Tulare and abandoning certain assets, primarily certain improvements at
these closed locations. However, selling, general and administrative expenses as
a percentage of sales  increased  slightly from  approximately  58.8% during the
second quarter of 1999 to approximately 60.7% during the second quarter of 2000.
We believe that the increase in selling,  general and administrative expenses as
a  percentage  of sales was  primarily  the  result  of  decreased  revenues  as
discussed above and

        o        increased salaries for management,
        o        costs associated with closing locations,
        o        costs  associated with relocating the Branson and  Ghirardelli,
                 San Francisco locations,  and
        o        costs of maintaining and training new staff in this very tight
                 labor market.

         During  the six  months  ended  June 30,  2000,  selling,  general  and
administrative expenses increased by $153,631, approximately 4.9%, when compared
to the first six months of 1999. We believe that this increase was due primarily
to expenses associated with the increase in sales that we experienced during the
first  quarter  of 2000.  Selling,  general  and  administrative  expenses  as a
percentage of sales did not change materially between the periods: approximately
63.7% during the first six months of 1999 and approximately 63.6% during the six
months ended June 30, 2000.

Revenues Same Store Locations.
-----------------------------

         As of June 30,  1999,  we  operated  26  locations  that  were  also in
operation  at June 30,  2000:  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 Salt Lake City, one in Branson, one in Minneapolis,  one in
Laughlin,  one in Gilroy, two in St Croix, three in St Thomas, one in Birch Run,
one in Grapevine, one in Maui, one in Michigan City and one in Miromar.

Revenues from these  locations  for the quarter  ended June 30, 2000,  increased
approximately  1.4% from the same  period in 1999.  Revenues  for the six months
ending  June 30,  2000,  increased  approximately  8.23% from the same period in
1999.  We believe that the overall  increase in same store  revenues  during the
second quarter of 2000 was due to increased customer service, management's focus
in producing greater sales and increased retail prices on selected products.

Inventory Turnover Ratios
-------------------------

         During the second  quarter of 2000,  we  maintained  an inventory  that
provided a turnover ratio of 1.16. We do not believe that our current  inventory
turnover is indicative  of impaired or  slow-moving  inventory.  We note that we
have  increased  inventory  from the quarter ended March 31, 2000 to the quarter
ended June 30, 2000 by $305,818 or  approximately  11.8%.  This  increase is the
result of purchases of art in anticipation of opening our Vail Gallery.


                                      -9-
<PAGE>

         We  believe  that  our  current  inventory  turnover  ratio  of 1.16 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. 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 2nd quarter of
1999 was 1.18.

Liquidity and Capital Resources

         As of June 30, 2000,  we had  $1,640,903  in cash and cash  equivalents
down  $119,351  from  December  31,  1999 and up $189,395  from March 31,  2000.
Current assets exceeded our current liabilities by $4,790,821 down $129,420 from
December 31, 1999. We believe that these decreases primarily represent a deposit
for the purchase of real estate.

         In 1999,  we  elected  to shift our  primary  focus  from  opening  new
locations to bolstering  revenues from existing stores and exploring other sales
mediums and products that  potentially  could generate  greater  returns to cash
with less capital exposure.

         In this regard we are expanding the Art Gallery  concept and adding art
reproductions to already existing stores:

|X|               We plan to begin  distributing  our art  reproductions  in our
                  existing jewelry and art stores in September 2000.

|X|               We anticipate that our first two Reproduction  Galleries;  one
                  in  Ghiradelli  square in San  Francisco  and one in  Branson,
                  Missouri, will open by September 30, 2000. To accomplish this,
                  we  relocated  our copy jewelry  stores in these  locations in
                  June and July 2000.  We moved the Branson copy  jewelry  store
                  from the Falls Center to downtown  Branson and the Ghirardelli
                  Square store to the Main Plaza within  Ghiradelli  Square.  We
                  leased  additional  space  adjacent  to our new  copy  jewelry
                  operation in downtown Branson and we retained our lease at the
                  former copy jewelry  location in Ghiradelli  Square for use as
                  reproduction art galleries.

         As  discussed  in our annual  report on form  10-KSB for the year ended
December  31,  1999,  on January 31,  2000,  we  purchased a retail site in Vail
Colorado where we plan to open a fine art gallery. We leased these premises back
to the seller through April 30, 2000 and regained  possession on May 1, 2000. We
plan to prepare the premises for use as a fine art gallery and, at this time, we
anticipate that the gallery will open in September 2000.

         We have finalized a lease for a new location in Warrenton, Missouri. We
anticipate  opening  this  location  in the  Fall  of  2000.  We  are  utilizing
furniture,  fixtures,  equipment and inventory  from our recently  closed Tulare
store.  The cost of moving these assets from Tulare to Warrenton was incurred in
and is reflected in the  financial  statements  for the first  quarter of fiscal
2000.


                                      -10-
<PAGE>

         As noted above, in June 2000, we closed our Mall of America location in
Bloomington.  On July 1, 2000,  subsequent to the end of the second quarter,  we
closed our Royal Dane location in St.  Thomas.  These stores were not performing
up to expectations.

         Although we have  curtailed  our rapid  expansion  plans,  we are still
looking for new locations to open copy jewelry  and/or fine art stores.  As with
the forthcoming Vail location, we may purchase rather than rent properties where
we believe owning properties will be more advantageous than leasing  properties.
By purchasing  rather than leasing  properties,  we hope to avoid increased base
rents, sales percentage rents an, common area maintenance  expenses while taking
advantage of appreciation of real estate values.

         In addition, we are actively negotiating to purchase an office building
to house our corporate and executive  offices.  Depending  upon the cost, we may
purchase the building alone or with others.

         Our primary  anticipated  capital  expenditures during the remainder of
fiscal 2000 include:

o        the opening of the Warrenton store;
o        the opening of our fine art gallery in Vail;
o        the opening of our Branson reproduction art gallery;
o        the opening of our San Francisco reproduction art gallery;
o        the possible opening of one to three more fine art and/or copy jewelry
         stores;
o        the acquisition of real estate to house these new stores;
o        art  reproduction inventory; and
o        the acquisition of an office building.

         We believe  that we have  sufficient  capital  reserves  for all of the
foregoing activities, except, possibly, for the purchase of real estate.

         We are in the process of finalizing a $2,000,000  line of credit with a
bank.  We plan to use this line of credit,  if needed,  for the  acquisition  of
store  locations  and an office  building.  In  addition,  we most  likely  will
mortgage some or all of the properties that we acquire.

         In   September    1999,   we    established    an    e-commerce    site
(www.elegantillusions.com)  to sell our products over the internet.  However, to
date internet sales have not made a material  contribution to revenues.  In June
2000, we entered into an internet alliance with Vcommerce Corporation to provide
for the sale of certain of our jewelry and art reproductions  over the internet.
We anticipate that our products will be available on the internet as a result of
this alliance in late August or September 2000. We hope, but cannot assure, that
this arrangement will result in increased revenues from internet sales.



                                      -11-
<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

We held our annual stockholders' meeting on June 1, 2000.  At that meeting, we

         o        reelected management's slate of directors:

                         In Favor         Withhold Authority       Abstain
                         --------         ------------------       -------
James Cardinal          5,041,513                  334              4,568
Gavin Gear              5,041,513                  334              4,568
Tamara Gear             5,041,513                  334              4,568
Janet Heinze            5,041,513                  334              4,568
Keith Brandon           5,041,513                  334              4,568

and

         o        ratified  the  appointment  of Jeffrey  S.  Gilbert,  CPA,  as
                  auditor  for  the  fiscal  year  ending   December  31,  2000:
                  5,043,668 in favor, 834 opposed and 1,913 abstained.

Item 5.  Other Information

                           None.

Item 6.  Exhibits and Reports on Form 8-K

                           None.





                                      -12-
<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, 2000               /s/ James Cardinal
                                     --------------------------
                                     James Cardinal, Chief Executive Officer

                                     /s/Tamara Gear
                                     --------------------------
                                     Tamara Gear, Treasurer














                                      -13-