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 March 31, 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 March 31, 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 months ended March 31, 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 months ended March 31, 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    $1,451,508
          Accounts receivable (net of allowance for
          doubtful accounts of $16,000 in 1999 and 2000)                          415,353       363,467
          Income tax receivable                                                    88,130        70,130
          Inventory                                                             2,597,635     2,536,667
          Prepaid expenses                                                        299,227       293,599
                                                                                ---------     ---------

                  TOTAL CURRENT ASSETS                                          5,160,599     4,715,372
                                                                                ---------     ---------

PROPERTY AND EQUIPMENT, NET                                                     1,892,119     2,339,803
                                                                                ---------     ---------

OTHER ASSETS

          Deposits                                                                 65,105       515,104
          Trade marks and other, net of accumulated amortization                    2,430        11,417
          Excess cost over net assets acquired, net of accumulated
          amortization                                                             18,191        17,179
                                                                                ---------     ---------
                                                                                   85,726       543,700
                                                                                ---------     ---------
                                                                               $7,138,444    $7,598,875
                                                                                =========     =========

                   LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
          Current portion of mortgage payable                                                     8,705
          Accounts payable and accrued expenses                                  $240,358       192,071
          Income taxes payable                                                          0             0
                                                                                                      -
                                                                                  240,358       200,776

LONG TERM LIABILITIES

          Mortgage Payable                                                                      471,295
          Deferred Income taxes payable                                           213,871       213,871
                                                                                ---------     ---------
                                                                                  213,871       685,166

                    TOTAL LIABILITIES                                             454,229       885,942
                                                                                ---------     ---------

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     2,876,285
          Less treasury stock at cost
               (62,067 shares in 1999 and 1998)                                  (84,008)      (84,008)
                                                                                ---------     ---------
                                                                                6,684,215     6,712,932
                                                                                ---------     ---------
                                                                               $7,138,444    $7,598,875
                                                                                =========     =========
</TABLE>

      See Accompanying Notes to Consolidated Condensed Financial Statements


                                     - 3 -
<PAGE>

                    ELEGANT ILLUSIONS, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999

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

<S>                                                                            <C>           <C>
REVENUES                                                                       $2,254,863    $2,604,585

COST OF GOODS SOLD                                                             $  644,930    $  691,923
                                                                                ---------     ---------
GROSS PROFITS                                                                   1,609,933     1,912,662
                                                                                ---------     ---------

EXPENSES

              SELLING, GENERAL AND ADMINISTRATION                               1,564,642     1,732,115
              DEPRECIATION AND AMORTIZATION                                        97,690       126,849
              INTEREST EXPENSE                                                         42         6,981
                                                                                ---------    ----------
                                                                                1,662,374     1,865,945
                                                                                ---------    ----------
INCOME(LOSS) BEFORE INCOME TAXES                                                 (52,441)        46,717

PROVISION FOR INCOME TAXES                                                       (19,000)        18,000
                                                                                ---------    ----------
NET INCOME(LOSS)                                                               $  (33,441)  $    28,717
                                                                                =========    ==========


WEIGHTED AVERAGE SHARES OUTSTANDING                                             6,146,446     6,146,446
                                                                                =========     =========

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


          See Accompanying Notes to Consolidated Condensed Financial Statements


                                     - 4 -
<PAGE>

                    ELEGANT ILLUSIONS, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999

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

<S>                                                                             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
          Net income(loss)                                                      ($33,441)       $28,717
          Adjustments to reconcile net income
              to net cash provided by (used in)
             operating activities:
                      Depreciation and amortization                                97,690       126,849
                       Issuance of stock for                                            0
                      Changes in operating assets and liabilities:

                        (Increase) Decrease in:
                          Accounts receivable                                    (48,639)        51,886
                          Inventory                                                23,108        60,968
                          Prepaid expenses                                        (9,228)         5,628
                        Income tax receivable                                           0        18,000
                        Increase (Decrease in):
                          Accounts payable and accrued expenses                  (20,593)      (48,287)
                          Income taxes payable                                   (19,000)             0
                                                                            ------------- -------------
NET CASH PROVIDED BY OPERATIONS                                                  (10,103)       243,761
                                                                            ------------- -------------
CASH FLOW FROM INVESTING ACTIVITIES
          Purchase of property and equipment                                    (205,778)     (574,533)
          Other assets                                                              5,300     (457,974)
                                                                            ------------- -------------
NET CASH USED IN INVESTING ACTIVITIES                                           (200,478)   (1,032,507)
                                                                            ------------- -------------
CASH FLOW FROM FINANCING ACTIVITIES
          Mortgage loan                                                                 0       480,000
                                                                            ------------- -------------
NET CASH USED IN FINANCING ACTIVITIES                                                   0       480,000
                                                                            ------------- -------------
NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS                             (210,581)     (308,746)

CASH AND CASH EQUIVALENT BALANCE,
          Beginning of period                                                   1,560,403     1,760,254
                                                                            ------------- -------------
CASH AND CASH EQUIVALENT BALANCE,
          End of period                                                     $   1,349,822  $  1,451,508
                                                                            =============  ============
SUPPLEMENTAL CASH FLOW DISCLOSURE:
          Interest Paid                                                               $42        $6,981
          Income taxes paid                                                            $0            $0
</TABLE>

          See Accompanying Notes to Consolidated Condensed Financial Statements


                                     - 5 -
<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  financial  statements and footnotes
         thereto  contained  in the  Annual  Report on Form  10-KSB for the year
         ended December 31, 1999 of Elegant Illusions,  Inc. (the "Company"), 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
         normal  recurring  nature),  necessary for a fair  presentation  of the
         financial  statements.  The results of operations  for the three months
         ended March 31, 2000 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 March 31, 2000 increased  $349,722 or 15.5%
when compared to the quarter ended March 31, 1999.

         We believe that the increase in sales was due primarily to:

         o        increased revenues from locations that were open and operating
                  for the full three months of the first  quarter of both fiscal
                  1999 and 2000;

         o        the operation of the Royal Dane location, which opened January
                  29, 1999, for the full three months of 2000;

         o        increases in the retail prices of selected products.

offset by the closing of our Portland,  Ontario and Kenosha locations in January
1999, April 1999 and August 1999, respectively,  and the closing of our Oahu and
Tulare locations in January 2000, and February 2000, respectively.

         As of March 31, 1999,  we operated 30 retail  locations and as of March
31, 2000, we operated 27 retail locations. Although we added two stores in 1999,
as noted above, we closed three stores in 1999 and two stores in 2000.

         Costs of goods sold as a percentage of revenues decreased slightly from
28.6% in the quarter  ended  March 31, 1999 to 26.6% in the quarter  ended March
31, 2000. We believe that this decrease was due to our ongoing efforts to reduce
costs.


                                     - 7 -
<PAGE>

         During  the  quarter  ended  March  31,  2000,  selling,   general  and
administrative  expenses increased when compared to the first quarter of 1999 by
$167,473,  or  approximately  10.7%.  We  believe  that  this  increase  was due
primarily  to expenses  associated  with the  increase in sales.  However,  as a
percentage of sales, selling, general and administrative expenses decreased from
approximately  69.4%  during the first  quarter of 1999 to  approximately  66.5%
during the first  quarter of 2000.  We believe  that the  decrease  in  selling,
general and  administrative  expenses as a percentage of sales was primarily the
result of:

         o        increased  revenues at locations open and operating during the
                  entire three  months of the first  quarter of both fiscal 1999
                  and 2000;
         o        increased  revenues company wide even though we operated three
                  fewer locations;
         o        operating three fewer locations;
         o        reduced advertising  expenses;  and o reduced costs associated
                  with hiring staff.


Revenues Same Store Locations.

         As of March  31,  1999,  we  operated  26  locations  that were also in
operation at March 31,  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  March  31,  1999,   increased
approximately 15.8% from the same period in 1999.

         We believe that the overall  increase in same store revenues during the
first 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 first  quarter of 2000,  we  maintained  an  inventory  that
provided a turnover ratio of 1.08. We do not believe that our current  inventory
turnover is indicative of impaired or slow-moving inventory.

         We  believe  that  our  current  inventory  turnover  ratio  of 1.08 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 first quarter of
1999 was 0.98.


                                     - 8 -
<PAGE>

Liquidity and Capital Resources

         As of March 31, 2000, we had $ 1,451,508 in cash and cash  equivalents,
down  $308,746  from  December 31,  1999,  and our current  assets  exceeded our
current  liabilities  by  $4,514,596,  down  $405,645 from December 31, 1999. We
believe that these decreases primarily  represents two deposits for the purchase
of real estate.  One of these  deposits for $200,000 was returned to us in April
2000.

         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.  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 are finalizing a lease for a new location in Warrenton, Missouri. If
the lease is finalized, 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.

         In June 2000, we plan to close two additional locations - Royal Dane in
St.  Thomas and Mall of  America  in  Bloomington.  These  stores  have not been
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.


                                     - 9 -
<PAGE>

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

         o        the opening of the Warrenton store;
         o        the relocation of our Branson store;
         o        the opening of our fine art gallery in Vail;
         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.  We are
actively seeking an internet alliance to sell our jewelry and art reproductions.



                                     - 10 -
<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

                           None.





                                     - 11 -
<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: May 10, 2000                      s/James Cardinal
                                         ---------------------------------------
                                         James Cardinal, Chief Executive Officer


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










                                     - 12 -