U.S. Securities and Exchange Commission
                         Washington, D.C.  20549

                              Form 10-QSB

[X]   QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES 
EXCHANGE 
ACT OF 1934 For the quarterly period ended March 31, 1999

[ ]   TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 
1934 For the transition period from  . . . . to . . . .  

                     Commission file number 0-21087

                      Tollycraft Yacht Corporation
      Exact name of small business issuer as specified in its charter)

                 Nevada                          86-0849925
        (State or other jurisdiction of        (I.R.S. Employer
        incorporation or organization)         Identification No.)


           8201 Peters Road, Suite 1000, Plantation, Florida 33324
            (Address of principal executive offices)  (Zip Code)

                             (253) 884-5750 
            (Registrant's telephone number, including area code)

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

The number of shares of common stock outstanding as of March 31, 1999 is 
8,117,476.

Transitional Small Business Disclosure Format (check one): Yes ... No .X.


                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements


Tollycraft Yacht Corporation
First Quarter - 1999

Balance Sheet
                                   December 31,                      March 
31,
                                        1998                           1999
Current Assets
Cash                                       145                            145
Accounts receivable                                                        -
Raw material inventories                303,508                       303,508
Work-in-progress inventories             96,909                        96,909
            Prepaid expenses                                              -
                                        400,562                       400,562

Property and Equipment, net           2,374,292                     2,359,292

Other Assets                          2,382,000                     2,472,000

Total Assets                          5,156,854                     5,231,854

Current Liabilities                         -                          

Net deferred tax liabilities            330,498                       330,498 

Stockholders Equity (Deficit)
Preferred stock to be issued         11,616,300                    11,616,300
Common stock                          9,654,206                     9,744,206
Retained earnings (deficit)         (16,444,150)                  
(16,459,150)

Total Liabilities and 
Stockholders Equity                   5,156,854                     5,231,854



Statement of Operations

                                                     Three Months
                                                    Ended March 31,
                                               1998                 1999

Net sales                                         0                    0

Cost of sales                                     0                    0

Gross Margin                                      0                    0

Excess plant capacity                             0                    0

Selling expenses                                  0                    0

General and administrative expenses         205,142               15,000

Income (loss) from operations              (205,142)             (15,000)

Other income (expenses):
Interest, net                              (248,658)                   0

Total other income (expenses)              (248,658)                   0

Income (loss) before provision 
for income tax                            (453,800)              (15,000)

Net income (loss)                         (453,800)              (15,000)




                                               Statement of cash flows
                                                   Three Months
                                                  Ended March 31,
                                                1998              1999

Cash, January 1,                                2,199               145

Cash flows from operating activities:
Net loss                                     (453,800)          (15,000)
Adjustments to reconcile net loss
to net cash used by operations
Depreciation                                   16,290            15,000
Change in assets and liabilities
Other current assets                              231                 0
Accounts payable                               48,545                 0
Accrued payroll & taxes                        27,219                 0
Other current liabilities                      77,724                 0
                                             (223,791)                0

Cash flows from financing activities:
Proceeds from notes payable                   147,350                 0
Proceeds from long-term debt                   22,238                 0
Issuance of common stock                      114,132                 0
                                              283,720                 0

Net increase (decrease) in cash                   (71)                0

Cash, March 31                                  2,128               145



TOLLYCRAFT YACHT CORPORATION
Notes to Financial Statements

1.  Basis of Presentation and Summary of significant accounting policies
The unaudited interim condensed financial statements and related notes 
have been prepared pursuant to the rules and regulations of the 
Securities and Exchange Commission. Accordingly, certain information 
and footnote disclosures normally included in the financial statements 
prepared in accordance with generally accepted accounting principles 
have been omitted pursuant to such rules and regulations.  However, in 
the opinion of management, the accompanying unaudited financial 
statements contain all adjustments (consisting of only normal 
recurring accruals) considered necessary to present fairly the results 
for the interim periods presented.

The accompanying condensed financial statements and related notes should 
be read in conjunction with the Company's audited financial statements 
included in its Annual Report on Form 10-KSB for the year ended December 
31, 1998. The results of operations for the three months ended March 31, 
1999 are not necessarily indicative of the results to be expected for the
full calendar year.

Nature of business: Tollycraft Yacht Corporation, (the "Company") is 
engaged in the manufacture and distribution of luxury motor yachts.  The 
Company grants credit to its customers.  The ability to collect its 
accounts receivable is affected by economic fluctuations in the 
geographic areas served by the Company.

Inventories: Inventories are valued at the lower of average cost of 
market.

Equipment: Equipment is carried at cost.  Additions and improvements to 
jigs, patterns and molds are capitalized.  Depreciation is computed 
using the straight-line method over the estimated useful lived of the 
assets, which range from three to ten years.

Revenue recognition: Revenue is recognized upon completion, shipment and 
title transfer of each yacht.  Accordingly, revenue and costs of 
individual yachts are included in operations in the year during which 
they are completed.

Estimated warranties: The Company records a warranty accrual at the time 
of sale for estimated claims, based on actual claims experience.  There 
is a general one-year parts and labor warranty to the original owner for 
defects in all Tollycraft built hulls, desk bridges, stringers and 
bulkheads.

Advertising: The Company expenses the cost of advertising as incurred.  

Pension and profit sharing plan: Union employees of the Company 
participate in a pension plan, which qualifies under Section 401 (k) of 
the Internal Revenue Code.  The Company is required by the union 
contract to make annual contributions of $.05 per labor hour.  The 
Company contributed $24,132 to the plan in 1998.  No contributions were 
made to the plan in 1997.  The Company is in the process of terminating 
the pension and profit sharing plans.

Income taxes: Income taxes are accounted for and reported using an asset 
and liability approach.  Deferred income tax assets and liabilities are 
computed annually for differences between the financial statement and 
tax bases of assets and liabilities that will result in taxable or 
deductible amounts in the future based on enacted tax laws and rates 
applicable to the periods in which the differences are expected to 
effect taxable income.
	
Valuation allowances are established when necessary to reduce deferred 
tax assets to the amount expected to be realized.  Income tax expense is 
the tax payable or refundable for the period plus or minus the change 
during the year in deferred tax assets and liabilities.

Deferred tax assets result principally from the Company's differences 
for recording warranty reserves for financial statement purposes and 
from net operating losses not yet utilized for tax purposes.  Valuation 
allowances have been provided for those deferred tax assets as their 
utilization are uncertain.  Deferred tax liabilities result principally 
from the use of accelerated depreciation for tax purposes.
	
Net loss per common share: Net loss per share is computed by dividing 
net loss by the weighted average number of common shares outstanding 
during the period. Preferred stock to be issued and convertible notes, 
debentures, options and warrants are not considered common stock 
equivalents, as the affect would be anti-divutive.

Significant risks and uncertainties: The process of preparing financial 
statements in conformity with generally accepted accounting principles 
requires the use of estimates and assumptions regarding certain types of 
assets, liabilities, revenues and expenses. Management of the Company 
has made certain estimates and assumptions regarding the reserve for 
warranty expenses, costs of work-in-process inventory, contingent 
liabilities regarding their inventories and equipment, and federal 
penalties on unpaid payroll taxes.  Such estimates and assumptions 
primarily relate to unsettled transactions and events as of the date of 
the financial statements.  Accordingly, upon settlement, actual results 
may differ from estimated amounts.

2. Operations
The Company has devoted substantial efforts during 1998 and continuing into 
1999, in relocating their corporate administrative and sales offices to 
Plantation, Florida,its manufacturing facilities to Merida, Yucatan, Mexico 
and restructuring debt, rather than in the marketing and manufacturing of 
luxury motor yachts.  Management believes that the efficiencies expected 
to be achieved by relocating to the Eastern United States, which is 
closer to the geographic area most served by the Company, and the lower 
operating overhead expected by relocating their manufacturing to Mexico 
will enable the Company to achieve profitably.  The Company expects the 
construction of their new manufacturing plant to be completed by the 
third quarter of fiscal 1999.  At that time the Company will be able to 
commence manufacturing again.  Marketing efforts will begin in the 
spring of 1999.

The accompanying financial statements have been prepared on a basis of 
going concern, which basis contemplates the realization of assets and 
the satisfaction of liabilities as they become due through continuing 
operations.  No adjustments have been made to the accompanying financial 
statements should the Company be unable to continue in existence, as the 
outcome of management's plan is uncertain.

3. Capital stock
In June 1998, the Company board of directors authorized the issuance of 
5,000,000 shares of $.001 par value preferred stock and offered each debtor 
one share of preferred stock of the Company for each ten dollars of debt they 
were owed.  Notes payable, accounts payable, accurued liabilities, convertible 
promissory notes payable, and other long-term debtors were offered the 
conversion.  The offering required a majority of the debtors to agree to
the terms of the conversion. In July 1998, a majority of the debtors 
agreed to the offering and, accordingly, all of the then outstanding 
debt was converted to preferred stock.  The Company is in the process 
of issuing the preferred stock.

In October 1998, the Company entered into an "Agreement for Payment of 
Tax Obligations" with a Mexican corporation known as Grupo Clima S.A 
DE C.V. ("Grupo").  Under the agreement, the Company issued 3,000,000 
shares of the common stock to Grupo.  In exchange, Grupo has agreed to 
satisfy all of the claims with the Federal, State of Washington, Cowlitz
County, Washington, and any local taxing authorities against the Company.
Grupo intends to negotiate a settlement with each of the taxing 
authorities, sale the common stock and use the proceeds to satisfy the
tax claims, and obtain a full release of liability for the Company and
any of its officers.  Under the agreement, no additional shares may be
issued should the amount of the claims exceed the proceeds form the sale 
of the common stock, nor is Grupo obligated to return to the Company any 
proceeds in excess of the aggregate calims.  The Company may be 
contingently iliable for some or all of the taxing authorities claims 
should Grupo not be able to obtain a full release of liability for the 
Company and any of its officers.

In 1997, in a private placement, the Company issued $550,350 of notes 
payable net of $104,626 of deferred financing costs.  In 1998, the
Company converted the notes payable to preferred stock as part of the
debt conversion.

In January 1999 the Company issued 10,000 shares of common stock for prepaid 
legal services and 20,000 shares of common stock for prepaid administrative 
expenses.

In March 1999 the Company granted a stock option pursuant to the 1996 
Employees 
Stock Option Plan in the amount of 100,000 common shares each at an exercise 
price of $1.625 per share and an exercise period of five years.

4.	Commitment and contingencies
In September 1998, the Company entered into an agreement with a 
Mexican corporation known as Yachts of the Americas' S.A. DE C.V.
("Yachts of the Americas").  Under the agreement, Yachts of the
Americas has agreed to build a manufacturing plant and facilities
and to manufacture boats and luxury motor yachts in strict compliance
with the specifications of the Company.  The plant and all machinery
it builds or purchaes will remain in the ownership of Yachts of the 
Americas.  The primary reason for entering into this agreement by the 
Company and Yachts of the Americas is to take advantage of the NAFTA
treaty benefits between the two countries.  The Company expects to be
more competitive in the United States markets as a results of this 
manufacturing agreement.

During 1998, the Company issued to Yachts of the Americas, 2,000,000
shares of its common stock in accorance with the agreement.  In 
exchange, Yachts of Americas has agreed to provide to the Company 
$2,000,000 of future manufacturing services at their cost plus 20%.

In October 1997, the previous landlord of the building in which the 
Company leased its office and manufacturing facilities seized 
substantially all of the Company's personal property consisting of all 
work-in-process inventories, raw material inventories and all 
manufacturing equipment, office furniture and fixtures, and molds and 
patterns for failure to pay rent under their lease agreement.  The 
landlord also filed a claim against the Company for approximately 
$291,000.  In December 1997, the landlord held a lien foreclosure sale 
and sold all personal property it had seized.  

The company believes it has a substantial claim against the landlord for 
unlawfully conducting a landlord's lien foreclosure sale at a time after 
the landlord's lien had expired.  The Company also believes that certain 
equipment; molds and patterns sold had preferential liens against them. 
 Based on a third party appraisal, the value of the molds and patterns 
alone was approximately $5,900,000.  The Company is vigorously pursuing 
the matter and believes it has a reasonable possibility of a favorable 
outcome.  No adjustments have been made in the accompanying financial 
statements for any gain or loss contingency, as the outcome of the 
matter is uncertain.

In February 1997, the Company entered into a retainer agreement relating 
to legal services for securities matters with compensation at a rate of 
$6,000 per month payable either in common stock of the Company 
registered with the Securities and Exchange Commission under Regulation 
S-8, if available, and valued at the lowest bid price during the month 
payable, or in restricted common stock valued at 50% of the lowest bid 
during the month payable.


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

FORWARD LOOKING STATEMENTS 

This discussion may contain statements that could be deemed 
forward-looking statements within the meaning of Section 21E of the 
Securities Exchange Act of 1934 and the Private Securities Litigation 
Reform Act, which statements are inherently subject to risks and 
uncertainties. Forward-looking statements are statements that include 
projections, predictions, expectations or beliefs about future events 
or results or otherwise are not statements of historical fact. 
Such statements are often characterized by the use of qualifying words 
(and their derivatives) such as "expect," "believe," "estimate," "plan,"
 "project," "anticipate," or other statements concerning opinions or 
judgment of the Company and its management about future events.  
Factors that could influence the accuracy of such forward-looking 
statements include, but are not limited to, the financial success or 
changing strategies of the Company's customers, actions of government 
regulators, the level of market interest rate and general economic 
conditions. All forward-looking statements included herein are based 
on information available to the Company on the date hereof, and the 
Company assumes no obligation to update any such forward-looking 
statements. It is important to note that the Company's actual results 
could differ materially from those in such forward-looking statements 
due to the factors cited above.  As a result of these factors, there 
can be no assurance the Company will not experience material 
fluctuations in future operating results on a quarterly or annual 
basis, which would materially and adversely affect the Company's 
business, financial condition and results of operations.

GENERAL INFORMATION

Since August of 1997 and continuing currently the company has continued 
its efforts in relocating their manufacturing facilities to Merida, 
Yucatan, Mexico and its corporate administrative and sales offices to 
Plantation, Florida.  The Company was not involved with manufacturing 
activities. For a more complete discussion of the Company's relocation 
plans see the Sections entitled "Relocation of Corporate Headquarters" 
and "Relocation of Manufacturing and Production".  

The Company has also redesigned existing yachts, added complementary models 
to the product line and developed manufacturing systems and procedures to 
greatly reduce total costs of yacht construction.  

Improvements are outlined as follows:

- Consolidated existing yacht models so the Company produces yachts that 
  have an acceptable profit margin.
- Designed and tested new yacht models that enhance the existing product 
  line and have a projected profit margin of at least 20%
- Developed production sequencing, staging, tasking, and man loading 
  systems that management believes will greatly increase production 
  efficiency and overall quality of the yachts while reducing direct costs
- Developed a management information system that will track labor and 
  material costs for each yacht under construction and produce internal 
  reports for proper control of production costs
- Identified key personnel positions with necessary experience to 
  implement and manage improved production methods
- Identified subcontractors who are capable of supplying major pre-
  manufactured components.  Component manufacturing and modular 
  construction techniques will greatly reduce direct labor costs and 
  overall costs of construction
- Prepared to implement environmentally safe SCRIMP laminating process for 
  additional labor and material cost savings
- Developed plan through Yachts of the Americas, it's joint venture 
  partner in Mexico, to utilize CNC router equipment to dramatically speed 
  up design and construction of molds and tooling at significantly lower 
  costs
- Redesigned and upgraded interior fit and finish of the yachts and 
  modernized mechanical and electrical systems in all models.
- Prior to plant shutdown, generated a backlog of $30,000,000 in orders 
  for new yachts at prices up to 40% higher than ever before charged in 
  the history of the Company.  These prices have been realized while only 
  increasing the direct cost of the yachts by a modest 10%

The internal and external costs of developing these improvements to 
Tollycraft's product line and manufacturing processes have been expensed when 
incurred in prior financial periods. 

Relocation of Corporate Headquarters to Florida

In recent years, 80% of the larger yachts produced by the Company have been 
sold to clients located on the East Coast.  The majority of these yachts were 
delivered into Florida.  Florida is well known throughout the world as "The 
Yacht Capital of the World".  

Tollycraft Yacht Corporation has announced that the Company's corporate 
headquarters will be relocated from southwest Washington to southern Florida. 
This southern Florida location will give Tollycraft a much needed presence 
where high demand exists for yachts of Tollycraft quality.  An office in this 
area will also give the Company access to some of the most talented 
marketing, engineering, design, and administrative employees in the industry. 

Relocation of Manufacturing and Production to Mexico

In the past, the Company's manufacturing employees have been organized under 
a union contract.  Even with concessions negotiated in the most recent labor 
contract, research has determined that existing contract rates are still 
among the highest in the industry.  With thousands of man-hours required 
to produce each vessel, Tollycraft's yachts would become some of the most
expensive yachts to produce in their class.  With retail prices increased 
to cover these costs it became evident that Tollycraft must reduce costs 
or price itself out of existence.

The most significant costs savings available to Tollycraft Yacht Corporation 
will result from the Company's planned relocation of it's manufacturing 
facilities from southwest Washington to a marine oriented industrial complex 
in Progresso, Mexico.  Tollycraft has been exploring several international 
locations and has selected Progresso, Mexico over other sites considered for 
several reasons.

1.  Location on the Gulf of Mexico and proximity to Florida
2.  The availability of an adequately trained work force 
3.  The area work force has a labor rate equivalent of $1.051 to $2.50 US  
    dollars per hour
4.  Governmental and investor support to develop facilities to Tollycraft 
    specifications.
5.  An approximate 50% reduction in the burdened costs of comparable       
    facilities in the U.S

Joint Venture

Once the decision was made to relocate the Company to Mexico under NAFTA, 
Tollycraft then needed to determine whether a Joint Venture with an existing 
boat builder was going to be a viable option. Unfortunately after almost 6 
months it was determined that either the candidates were to weak financially 
or lacked the sophistication to be able to go forward with such a project. 
Instead a group of Mexican businessmen put together a company called Yachts 
of the Americas, S.A. de C.V. and with Tollycraft's expertise and name have 
acquired land and are building a state of the art manufacturing facility to 
begin and attract production from not just Tollycraft but other USA yacht 
manufacturers. 

Tollycraft Yacht Corporation has signed a Joint Venture Agreement with 
"Yachts of the Americas" a Mexican Corporation to produce its vessels in 
Progreso, Mexico.  The vessels will be produced in a new 100,000-sq. ft. 
facility presently being designed for Tollycraft.  The building will be 
situated in a new marine business park that is presently being developed 
by the Governor of the State of Yucatan.  The property comes with 240 feet of 
waterfront that will feature an all-concrete wharf as well as a rail system 
for the launching and haul out of vessels up to 150' in length.  The joint 
venture partners will provide the following:
   - Construct manufacturing space in a new marine orientated to Tollycraft 
     specifications.
   - Locate and prescreen the local work force to fill required production 
     hourly and salaried positions with adequately trained workers
   - Fund manufacturing labor costs and provide payroll and other 
     administrative functions relating to the local work force as well as 
     obtain all necessary government permits

Tollycraft Yacht Corporation projects a fully burdened labor rate of $4.00 to 
$8.00 US per hour.  Fully burdened labor rates include hourly and salaried 
employees in the Mexico facilities, manufacturing facilities costs, 
electricity and utilities, Mexico MRO expenses, communication, and travel 
expenses.  This compares to Tollycraft's previous fully burdened labor rate 
at its closed U.S. facility of approximately $27.00 per labor hour.  It is 
anticipated that the Mexican joint venture will fund all of the direct labor 
and costs of the production buildings in Mexico.

As part of the joint venture agreement, 2,000,000 shares of Tollycraft Yacht 
Corporation common stock was issued to Yachts of America.  Yachts of America 
have credited the company $2,000,000 in prepaid manufacturing costs.

The Company plans to build 39' to 125' yachts in Mexico, with the yachts 
being built to the same standards of quality control as the products previously 
manufactured by Tollycraft.  Materials used in construction would remain the 
same quality, with a majority of the materials being shipped from the United 
States.  Major savings would result from lower direct labor costs as well as 
cost reductions in general and administrative expenses.  In addition, this 
will allow the Company to broaden its product line and again offer smaller 
Tollycraft vessels that had previously been discontinued because domestic 
manufacturing costs became prohibitive.  

While the electronic, auto, appliance and textile industries have been part 
of NAFTA and have had plants for years in Mexico this is a first for a premier 
yacht builder.  Tollycraft vessels have long enjoyed an excellent reputation 
for quality this move will more then insure that it will enjoy a reputation 
as an excellent value as well.

Results of Operations

Current operating results were as expected and budgeted by management.  All 
production has been discontinued and all non-essential personnel have been 
laid off.  A net loss of $(15,000) was incurred for the quarter ended March 
31, 1999, due to depreciation of property, plant and equipment.  For the 
quarter ended March 31, 1998 the net loss had been $453,800.

Management has emphasized the following areas to improve the operations of 
the Company:

- Relocate manufacturing operations to the Yucatan Peninsula area of 
  Mexico which will result in a projected 80% reduction in labor costs.
- Relocate administrative offices to southern Florida.
- Increase basic pricing on each yacht to improve gross margins and 
  reflect the improved product being manufactured.
- Redefine manufacturing processes to produce yachts more efficiently 
  and with greater profit margins.
- Select new materials to continue upgrading the quality of each yacht 
  while emphasizing production efficiency.
- Implement a labor tracking information system to monitor and reduce 
  direct labor costs.
- Design a new line of yachts to augment the current models offered.  
  The new yachts will utilize updated manufacturing techniques and have 
  greater profit margins.
- Develop relationships with dealers that are able to provide their own 
  inventory financing.
- Increase the dealer network to increase sales volume and reach 
  economies of scale.
- Utilize CNC equipment to lower costs and expedite manufacturing of 
  molds and tooling and production of finished yachts.
- Implements new SCRIMP laminating process to reduce labor and material 
  production costs.

Tollycraft Yacht Corporation, in its various business forms, has been 
manufacturing high quality watercraft for over 64 years.  In that period of 
time the Company has produced some of the finest motor yachts available.  
However, historically unprofitable operations and the circumstances 
surrounding the Company's manufacturing facilities and landlord, require 
Tollycraft management to make significant changes to the way it does 
business.

Financial Condition

The management of Tollycraft is continuing efforts to raise funds in order to 
proceed with this business plan. Alternatives being considered to improve the 
Company's financial position include converting current debt to equity 
through the issuance of preferred shares and the sale of common shares to raise 
working capital.

In June 1998, the Company offered each debtor one share of preferred stock 
for each $10 of debt they were owed.  Notes payable, accounts payable, accrued 
liabilities, and long-term debtors were offered this conversion.  The 
offering required a majority of the debtors to agree to the terms of the 
conversion.  

In July 1998, a majority of the debtors agreed to the offering and, 
accordingly, all of the then outstanding debt was converted to preferred 
stock.  The Company is in the process of authorizing and issuing the 
preferred stock.

As of March 31, 1999, the Company's current assets equaled $400,562.  In 
1997, the Company's internally generated cash flow has not been sufficient to 
finance its operations.  The cumulative losses of the Company continued to be 
financed through current liabilities. As stated above, in 1998, the 
Company converted substantially all of its liabilities to preferred 
stock.  As of March 31, 1999, current liabilities total $330,498.
 
Despite the Company's past difficulties in making timely payments to its 
creditors, the Company does not expect any difficulties in obtaining raw 
materials once production returns to a regular level.

There were no significant capital expenditures for equipment during the 
quarter ended March 31, 1999.
 
In order to begin production at regular capacity the Company continues to be 
in need of additional capital to build production tooling, finance inventory 
and provide working capital.  The Company is dependent on external sources of 
liquidity until projected levels of production and improvements in direct 
costs and production efficiencies are achieved which will return the Company 
to profitability and a positive cash flow.  A material commitment for capital 
expenditures and working capital is necessary to meet the projected sales and 
production goals.  The expected source for a majority of the funds is from 
financing provided by joint venture production partners for Mexico 
manufacturing activities. There can be no assurance that the Company can 
achieve the anticipated aforementioned improvements in operations on 
acceptable terms.

In 1997 the Company signed an Investment Banking Agreement with Lloyd Wade 
Securities of Dallas, Texas, for a Private Placement of $2,500,000 to provide 
the necessary capital for Tollycraft to go forward with its plans.
 
Marketing efforts will begin again in the spring of 1999.  The new 
manufacturing facilities are expected to be operational by early summer 
1999 when the Company expects to begin manufacturing once again.  The 
months ahead will set the course for the next decade of Tollycraft Yachts.
It is the goal of management to have a company that is very profitable, 
debt free, and for the first time have a surplus of cash in the bank.

YEAR 2000 COMPLIANCE

The Company is aware of the issues associated with the programming code in 
existing computer systems as the Year 2000 approaches. The "Year 2000" 
problem is concerned with whether computer systems will properly recognize date 
sensitive information when the year changes to 2000. Systems that do not 
properly recognize such information could generate erroneous data or cause a 
system to fail. The Year 2000 problem is pervasive and complex as the 
computer operation of virtually every company will be affected in some way.

The Company, like most owners of computer software, will be required to 
modify significant potions of its software so that it will function 
properly in the Year 2000. Preliminary estimates of the total costs to 
be incurred by the Company to resolve this problem range from $5,000 to 
$10,000. Maintenance or modification costs will be expensed as incurred, 
while the costs of new software will be capitalized and amortized over 
the software's useful life.

Since the Company mainly uses third party "off-the-shelf" software, it does 
not anticipate a problem in resolving the Year 2000 problem in a timely 
manner. The Company is currently taking steps to ensure that its computer 
systems and services will continue to operate on and after January 1, 2000. 
However, there can be no assurance that Year 2000 problems will not occur 
with respect to the Company's computer systems. Furthermore, the Year 
2000 problem may impact other entities with which the Company transacts 
business, and the Company cannot predict the effect of the Year 2000 
problem on such entities or the resulting effect on the Company. The 
cost to be incurred by the Company related to externally maintained 
systems is expected to be minimal. 


                         PART II - OTHER INFORMATION

Item 1. Legal Proceedings

D & C Lemmons v. Tollycraft
Cowlitz County, Washington
Stipulated Judgement in the amount of $291,048.00
Tollycraft believes it has a substantial offsetting claim against D & C 
Lemmons for unlawfully conducting a landlord's lien foreclosure.  Based upon 
the law regarding landlord liens, the Company has been advised by counsel 
that it has a strong chance of success in its claim against D&C Lemmons.

Larry and Vicki Castello v. Searock, Inc., d/b/a The Allied Marine Group, 
Tollycraft Yachts, and D.R. Cooley, individually.
17th Judicial Circuit Court, Broward County, Florida
Original File Date: October 11, 1996
Claim for treble damages in excess of $2,700,000 plus attorney fees and costs 
for failure to deliver a 57-foot yacht as scheduled.  Answers by all 
Defendants have been filed and motions to dismiss have been filed and heard.  
No decision has been rendered on the Defendants Motion to Dismiss.

Dennis Pursley v. Tollycraft Yacht Corporation and 35 others
San Diego Superior Court, San Diego County, California
Claim for intentional misrepresentation, sale of security not qualified for 
sale, and fraudulent transfer. While Mr. Pursley is a shareholder and a note 
holder in Tollycraft, he was never contacted by any of the 35 defendants to 
invest in the Company.  Mr. Pursley's funds all came via the solicitation of 
his own registered stockbroker who was with a licensed brokerage firm.  It is 
interesting to note that neither the broker nor the firm has been named as 
defendants in the suit.  The Company believes the suit has no merit and will 
defend itself vigorously.

Item 2. Changes in Securities

Pursuant to a debt conversion, the Company will issue in a private 
transaction pursuant to Section 3(a)(9) of the Securities Act of 1933, up 
to 1,500,000 shares of series A preferred shares of its capital stock 
proportionately to all debt holders of record as of June 29, 1998.  Each 
preferred share to carry a series of warrants convertible to one share of 
the Corporations common stock as follows:
     "A" warrants exercisable at $2.25 after 12 months,
     "B" warrants exercisable at $2.00 after 24 months,
     "C" warrants exercisable at $1.25 after 36 months,
In the event of liquidation, the preferred shares have preference over the 
common shares.  The preferred shares have no dividend preference and no 
voting rights, except in matters which affect the priority of the shareholders. 

In January 1999 the Company, issued, as part of the S-8 registration 
statement already filed with the Securities and Exchange Commission, 
10,000 shares of common stock for prepaid legal services and 20,000 
shares of common stock to an officer of the Company for prepaid 
administrative expenses.

In March 1999 the Company granted a stock option pursuant to the 1996 
Employees Stock Option Plan in the amount of 100,000 common shares each 
at an exercise price of $1.625 per share and an exercise period of five 
years.


Item 3. Defaults Upon Senior Securities

Pursuant to action taken June 29, 1998, the Board of Directors of Tollycraft 
Yacht Corporation resolved to convert all debt, secured and unsecured, to 
equity through the issuance of capital stock.  The Company is currently in the 
process of achieving this conversion.

The Company will issue up to 1,500,000 shares of series A preferred 
shares of its capital stock proportionately to all debt holders of 
record as of June 29, 1998.  Each preferred share to carry a series 
of warrants convertible to one share of the Corporations common stock 
as follows:
     "A" warrants exercisable at $2.25 after 12 months,
     "B" warrants exercisable at $2.00 after 24 months,
     "C" warrants exercisable at $1.25 after 36 months,


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) Exhibit Table:

5.1 TERMS OF $10 PREFERRED SHARES, SERIES A
5.2 "A" WARRANT CERTIFICATE TO PURCHASE COMMON STOCK
5.3 "B" WARRANT CERTIFICATE TO PURCHASE COMMON STOCK
5.4 "C" WARRANT CERTIFICATE TO PURCHASE COMMON STOCK

27 Financial Data Schedule

     (b) No reports on Form 8-K were filed during the quarter.

                            [Signatures]

In accordance with the requirements of the Exchange Act, the registrant 
caused this report to be signed on its behalf by the undersigned, 
thereunto duly authorized.

Tollycraft Yacht Corporation
    (Registrant)


Date: May 14, 1999


By:/s/_______________________________
   D.R. Cooley, President
   Chief Operating Officer
   Chief Financial Officer