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 September 30, 1997

                                       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:(408) 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 _____

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

          Class                           Outstanding at September 30, 1997
--------------------------                ---------------------------------

  Common Stock, par value                          17,434,338 Shares
     $.001 per share

       Transitional Small Business Format (check one); Yes _____ No __X__

                                      -1-

<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 nine months ended September 30, 1997.

      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, 1996.

      The results  reflected  for the three and nine months ended  September 30,
1997 are not necessarily indicative of the results for the entire fiscal year.

                                      -2-

<PAGE>


                    ELEGANT ILLUSIONS, INC. AND SUBSIDIARIES
                     CONSOLIDATED CONDENSED BALANCE SHEETS
                                   (UNAUDITED)

                                              September 30,   December 31,
                                                  1997           1996
                                              ------------   ------------

                                     ASSETS

CURRENT ASSETS
  Cash and cash equivalents                   $ 1,284,469    $ 1,886,297
  Accounts receivable                             294,461        190,270
  Prepaid income taxes                            184,634
  Inventory                                     2,222,548      1,990,174
  Prepaid expenses                                105,223         45,643
                                              ------------   ------------
    TOTAL CURRENT ASSETS                        4,091,335      4,112,384

PROPERTY AND EQUIPMENT, NET                     1,166,327        884,707

OTHER ASSETS                                       82,188         85,853
                                              ------------   ------------
                                              $ 5,339,850    $ 5,082,944
                                              ============   ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable and accrued expenses       $    99,308    $    92,827
  Income taxes payable                                            71,915
                                              ------------   ------------
    TOTAL CURRENT LIABILITIES                      99,308        164,742

NOTE PAYABLE                                                      20,000

DEFERRED INCOME TAXES                              95,871         95,871
                                              ------------   ------------
    TOTAL LIABILITIES                             195,179        280,613

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
  Common stock - authorized 30,000,000
   shares, $.001 par value,issued and
   outstanding 17,434,338 shares                   17,434         17,434
  Additional paid-in capital                    2,978,221      2,978,221
  Retained earnings                             2,149,016      1,806,676
                                              ------------   ------------
    TOTAL STOCKHOLDERS' EQUITY                  5,144,671      4,802,331
                                              ------------   ------------
                                              $ 5,339,850    $ 5,082,944
                                              ============   ============


   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 SEPTEMBER 30, 1997 AND 1996 (UNAUDITED)

                                                  1997           1996
                                              ------------   ------------

REVENUES                                      $ 2,134,037    $ 1,888,661

COST OF GOODS SOLD                                708,584        568,472
                                              ------------   ------------

GROSS PROFIT                                    1,425,453      1,320,189

SELLING, GENERAL AND ADMINISTRATIVE             1,185,931        996,864
                                              ------------   ------------

INCOME BEFORE INCOME TAXES                        239,522        323,325

PROVISION FOR INCOME TAXES                         96,000        131,000
                                              ------------   ------------

NET INCOME                                    $   143,522    $   192,325
                                              ============   ============

WEIGHTED AVERAGE SHARES OUTSTANDING            17,434,000     17,434,000
                                              ============   ============

NET INCOME PER COMMON SHARE                   $       .01    $       .01
                                              ============   ============


   See accompanying Notes to Consolidated Condensed Financial Statements.

                                      -4-

<PAGE>


                   ELEGANT ILLUSIONS, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
         FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED)

                                                  1997           1996
                                              ------------   ------------

REVENUES                                      $ 5,998,393    $ 5,084,665

COST OF GOODS SOLD                              1,857,812      1,544,698
                                              ------------   ------------

GROSS PROFIT                                    4,140,581      3,539,967

SELLING, GENERAL AND ADMINISTRATIVE             3,569,241      2,890,493
                                              ------------   ------------

INCOME BEFORE INCOME TAXES                        571,340        649,474

PROVISION FOR INCOME TAXES                        229,000        261,000
                                              ------------   ------------

NET INCOME                                    $   342,340    $   388,474
                                              ============   ============

WEIGHTED AVERAGE SHARES OUTSTANDING            17,434,000     17,188,000
                                              ============   ============

NET INCOME PER COMMON SHARE                   $       .02    $       .02
                                              ============   ============


   See accompanying Notes to Consolidated Condensed Financial Statements.

                                      -5-

<PAGE>


                   ELEGANT ILLUSIONS, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
         FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED)

                                                  1997           1996
                                              ------------   ------------

CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                  $   342,340    $   388,474
  Adjustments to reconcile net income
   to net cash provided by (used in)
   operating activities:
    Depreciation and amortization                 211,246        169,330
    Changes in operating assets and liabilities:
     (Increase) Decrease in:
      Accounts receivable                        (104,191)        30,870
      Inventory                                  (232,374)      (413,843)
      Prepaid expenses                            (59,580)       (34,296)
     Increase (Decrease) in:
      Accounts payable and accrued expenses         6,481        (24,089)
      Income taxes payable                       (256,549)        13,523
                                              ------------   ------------

NET CASH PROVIDED BY OPERATING ACTIVITIES         (92,627)       129,969
                                              ------------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of property and equipment             (489,620)      (232,643)
  Other assets                                        419         (7,890)
                                              ------------   ------------

NET CASH USED IN INVESTING ACTIVITIES            (489,201)      (240,533)
                                              ------------   ------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Repayment of borrowing from bank credit line                  (750,000)
  Repayment of note payable                       (20,000)       (80,000)
  Sale of common stock                                           950,000
                                              ------------   ------------

NET CASH PROVIDED BY FINANCING ACTIVITIES         (20,000)       120,000
                                              ------------   ------------

NET INCREASE IN CASH AND CASH EQUIVALENTS        (601,828)         9,436

CASH AND CASH EQUIVALENTS BALANCE,
 Beginning of period                            1,886,297      1,699,110
                                              ------------   ------------

CASH AND CASH EQUIVALENTS BALANCE,
 End of period                                $ 1,284,469    $ 1,708,546
                                              ============   ============


   See accompanying Notes to Consolidated Condensed Financial Statements.

                                      -6-

<PAGE>


                    ELEGANT ILLUSIONS, INC. AND SUBSIDIARIES
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
         THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996

1. COMMENTS

The accompanying unaudited  consolidated  condensed financial statements,  which
are for interim periods,  do not include all disclosures  provided in the annual
consolidated  financial  statements.   These  unaudited  consolidated  condensed
financial  statements  should  be  read in  conjunction  with  the  consolidated
financial statements and the footnotes thereto contained in the Annual Report on
Form 10-KSB for the year ended December 31, 1996 of Elegant Illusions, Inc. (the
"Company"),  as filed with the Securities and Exchange Commission.  The December
31,  1996  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 nine months ended September 30, 1997 are
not  necessarily  indicative  of the results to be expected  for the full fiscal
year.

Reclassifications - Certain 1996 balances have been reclassified to conform with
1997 presentation.

                                      -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 quarterly 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,  the Company's  expansion  plans and
competitive pressures.

      The Company cautions readers that any such forward-looking  statements are
based on management's 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 three months ended September 30, 1997 increased  $245,376 or
approximately 13.0% when compared to the three months ended September 30, 1996.

      Management  believes  that the  increase in sales was due to the fact that
the Company  opened the following  four new locations  subsequent to the quarter
ended September 30, 1996: Laughlin,  Nevada (November 1996); Gilroy,  California
(April 1997); Kenosha,  Wisconsin (June 1997); and Tulare, California (September
1997).

      As of September 30, 1996, the Company  operated 20 retail locations and as
of September 30, 1997, the Company operated 23 retail locations.

      The  Costs  of  goods  as  a  percentage   of  revenues   increased   from
approximately 30% during the three months ended September 30, 1996 to 33% during
the three months ended September 30, 1997.

      During the three months ended  September  30, 1997,  selling,  general and
administrative  expenses  increased  when  compared  to the three  months  ended
September 30, 1996 by $189,067  (approximately  19%).  Management  believes that
this increase was  primarily  the result of (1)  operating the Laughlin,  Nevada
location, which opened during the quarter ended September 30, 1996, for the full
quarter ended September 30, 1997; (2) opening and operating the new locations in
Kenosha,  Wisconsin,  Gilroy, California and Tulare, California; (3) replacement
of  non-performing  store managers and training of their  successors and (4) the
costs  associated  with new public  relations and advertising  activities.  With
regard to opening and commencing operations at new stores, management notes that
all one-time  expenses  incurred in such  activities are expensed at the time of
such activities and are not amortized or depreciated.  As a percentage of sales,
selling,  general and  administrative  expenses increased from approximately 53%
during the three months ended September 30, 1996 to approximately 56% during the
three months ended September 30, 1997.

                                    - 8 -

<PAGE>


Revenues same store locations.

      As of September 30, 1996, the Company operated 19 locations that were also
in operation at September 30, 1997: two in New Orleans, four 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 Portland,  one in Branson,  one in
Minneapolis,  two in St Croix and one in Oahu. The Company's  Pavilions store in
Sacramento,  which was operating on September 30, 1996,  closed in January 1997.
Revenues  from the above  mentioned  19  locations  for the three  months  ended
September 30, 1997,  decreased  approximately  10% from the same period in 1996.
Management  believes that this decrease in same store revenues was due, in part,
to the unusually  good weather  conditions  for the time of year.  The Company's
non-tourist area locations depend, to a significant extent, on foot traffic. The
better than average weather adversely affected foot traffic. Management believes
that the decrease compared to the comparable 1996 quarter also was due, in part,
to the fact that, during the 1996 quarter, the Company's four Monterey locations
experienced  greater than usual revenues due to the activities  surrounding  the
opening of the new portion of the nearby Monterey Bay Aquarium.


Liquidity and Capital Resources


      As of September  30,  1997,  the Company had  $1,284,469  in cash and cash
equivalents  and  its  current  assets  exceeded  its  current   liabilities  by
$4,181,094.

      During the quarter ended September 30, 1997, the Company opened a new copy
jewelry store located in Tulare, California.

      The Company has signed a lease for a location at Port of Sale, St. Thomas,
U.S. Virgin Islands and anticipates that this location will open in mid December
1997.

      The Company also has signed a lease with Universal  Studios Florida as one
of a select few specialty shops to operate at the popular  entertainment resort.
The store  will be  prominently  located  on  Universal  City's  "City  Walk," a
dynamic, new, high-energy  entertainment complex, billed as the "Gateway" to the
entire  Universal City Orlando,  Florida resort.  The store opening in Universal
City Florida is part of the Company's strategic plan to locate its new stores in
unique  shopping  venues with the potential for greater than average  growth and
attention. The new store is scheduled to open in October 1998.

      Management believes that it will cost approximately $375,000 to open these
two new stores.  Management  believes  that the cost of opening these new stores
will be paid from current cash reserves.

                                    - 9 -

<PAGE>


      The Company plans a 50 store  expansion.  To date,  the Company has opened
one store (Tulare,  California) and anticipates  opening a second store (Port of
Sale, St.  Thomas,  U.S.  Virgin  Islands) in December 1997 under this expansion
plan.  The Company is funding the opening of these two  locations  from  current
cash reserves. However, the Company is exploring possible equity funding options
to finance most of the remainder of its  expansion  plan. If the Company is able
to raise sufficient funds,  management believes that the Company will be able to
open the remaining 48 new stores over a 30 month period.

      No assurance can be given that the Company will be able to raise the funds
required for the 50 store expansion.  In addition,  no assurance can be given as
to the actual  number or location  of stores  that the Company  will open in the
future.

      The Company has a $1,000,000 line of credit with a bank effective December
1996 due on demand.  Interest  is at annual base rate as  announced  by the bank
(initial base rate was 8.25%) plus 1.75%.  This line of credit is collateralized
by the Company's accounts receivable,  inventory and equipment. The Company also
is required to maintain certain financial ratios and covenants.  As of September
30, 1997 and the date hereof,  no funds had been advanced on the line of credit.
As of the date hereof,  the Company is in compliance  with all financial  ratios
and covenants.

                                    - 10 -

<PAGE>


                          PART II - OTHER INFORMATION


Item 1.     Legal Proceedings

                  None.


Item 2.     Changes in Securities

                  None.


Item 3.     Defaults Upon Senior Securities

                  None.


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

                  None.


Item 5.     Other Information

                  The  Company  recently  established  a  site on  the internet.
            The internet address is: www.copyjewels.com.


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: November 13, 1997        /s/ James Cardinal
                                    --------------------
                                    James Cardinal, Chief Executive Officer




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

                                      -12-