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 June 30, 1997

[ ]   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.)

              17 Horton Plaza, Suite 251, San Diego, CA 92101
            (Address of principal executive offices)  (Zip Code)

                             (360) 414-5910
            (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 June 30, 1997 is 
2,270,368.

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

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Effective for the year ending December 31, 1996, the Company changed its 
method of accounting for the recognition of revenue.  In previous years, 
revenue was recognized using the percentage-of-completion method which 
recognizes income based on the percentage of costs completed to the total 
estimated cost of each yacht as production progresses.

The Company now records production costs of each yacht in a work-in-process 
inventory account and records deposits and billings on each yacht in a 
liability account.  Income and direct production costs are recognized on the 
Statement of Operations when a yacht is completed, shipped and title 
transferred.

The accompanying comparative financial statements for 1996 have been restated 
to give effect for this change and are comparable to the 1997 statements.

Tollycraft Yacht Corporation

Second Quarter - 1997



Balance Sheet

                                   December 31,    June 30,

                                       1996          1997
Current Assets
   Cash                                    677         9,988
   Accounts receivable                  32,000        40,000
   Inventory - Raw materials           288,313       292,009
   Inventory - Work-in-process       1,867,999     1,582,296
   Other current assets                  7,749       376,578
                                     2,196,738     2,300,871

Property and Equipment, net          2,731,394     2,730,282


Other Assets                           274,594       337,554

   Total Assets                      5,202,726     5,368,707


Current Liabilities
   Accounts payable                  1,426,644     1,353,504
   Accrued payroll & taxes           2,077,250     2,181,835
   Notes payable                     7,195,747     7,730,601
   Other current liabilities         1,652,186       361,197
   Customer deposits                   678,000       662,800
   Long-term debt - due within one     940,601     1,046,701
                                    13,970,428    13,336,638

Net Deferred Tax Liabilities           124,184       132,112

Long-term Debt                         534,289     1,111,323


Stockholders Equity (Deficit)
   Common Stock                      2,829,703     4,344,171
   Retained earnings (deficit)     (12,255,878)  (13,555,537)
                                    (9,426,175)   (9,211,366)

Total Liabilities and 
Stockholders Equity                  5,202,726     5,368,707

<TABLE>
<CAPTION>
Statement of Operations

                                   Three Months                 Six Months
                                   Ended June 30,              Ended June 30,
                                       1996          1997          1996          
1997
<S>                                  <C>             <C>        <C>                  
<C>
Net sales                            1,169,283       241,816     3,769,044       
756,770

Cost of sales                        1,549,926       208,763     5,205,151       
674,790

Gross Margin                          (380,643)       33,053    (1,436,107)       
81,980

Excess plant capacity                  211,999       253,182       211,999       
533,737

Selling expenses                        44,469        24,437       268,588        
77,721

General and administrative expenses    310,412       147,395       629,811       
268,238

Income (loss) from operations         (947,523)     (391,961)   (2,546,505)     
(797,716)

Other income (expenses):
   Interest, net                      (236,932)     (254,971)     (441,496)     
(501,943)
   Gain on sale of assets                    0             0             0             
0
   Other                                     0             0        (3,015)            
0
        Total other income (expense   (236,932)     (254,971)     (444,511)     
(501,943)

Income (loss) before provision for  (1,184,455)     (646,932)   (2,991,016)   
(1,299,659)

Provision for income taxes - deferr      7,721             0        64,457             
0

Net income (loss)                   (1,192,176)     (646,932)   (3,055,473)   
(1,299,659)



Statement of Cash Flows
                                    Six Months
                                   Ended June 30,
                                       1996          1997

Cash, January 1,                        19,878           677

Cash flows from operating activities:
   Net loss                         (3,055,473)   (1,299,659)
   Adjustments to reconcile net loss
   to net cash used by operations
       Depreciation                    182,547       193,019
   Change in assets and liabilities:
       Accounts receivable              23,038        (8,000)
       Material inventory               (5,000)       (3,695)
       Work-in-process inventory       156,937       285,703
       Other current assets            (91,820)     (368,829)
       Accounts payable                345,262       (73,140)
       Accrued payroll & taxes         737,153       104,585
       Customer deposits               572,350       (15,200)
       Other current liabilities       298,937    (1,290,989)
       Deferred tax liability           59,000         7,928
                                      (777,069)   (2,468,277)

Cash flows from investing activities:
   Purchase of other assets              5,457       (62,960)
   Purchases of equipment             (235,646)     (191,908)
                                      (230,189)     (254,868)

Cash flows from financing activities:
   Proceeds from notes payable       1,778,445       534,854
   Repayment of notes payable       (1,181,021)            0
   Proceeds from long-term debt        413,000       683,134
   Repayment of long-term debt         (23,000)            0
   Issuance of common stock                  0     1,514,468
                                       987,424     2,732,456

Net increase (decrease) in cash        (19,834)        9,311

Cash, June 30,                              44         9,988

TOLLYCRAFT YACHT CORPORATION
Notes to Financial Statements
For the Three Months Ended June 30, 1997

Note 1 - Basis of Presentation

The accompanying financial statements have been prepared by Tollycraft Yacht 
Corporation without audit, pursuant to the rules and regulations of the 
Securities and Exchange Commission.  Certain information and footnote 
disclosures normally included in financial statements prepared using generally 
accepted accounting principles have been condensed or omitted pursuant to such 
rules and regulations.

The financial information presented herein reflects all normal recurring 
adjustments which are, in the opinion of management, necessary for fair 
presentation of the results for the interim periods presented.  The results 
for the interim period are not necessarily indicative of the results to be 
expected for the full year.

The presentation of financial statements in conformity with generally accepted 
accounting principles requires management to make estimates and assumptions 
that affect reported amounts of assets, liabilities, income and expenses and 
disclosure of accounting information.  Future events could alter such 
estimates.

Note 2 - Summary of Significant Accounting Policies

The Company and Acquisitions
Tollycraft Yacht Corporation (the Company) was incorporated under the 
laws of the State of Minnesota on December 7, 1992.  In January of 1996, 
the Company acquired all of the outstanding stock of Tollycraft 
Acquisition Corporation (TAC), a Washington corporation incorporated on 
February 4, 1994.  The Company also changed its name from Child Guard 
Corporation to Tollycraft Yacht Corporation in connection with the 
acquisition.

The acquisition by the Company of TAC has been accounted for as a 
purchase.  Except where otherwise indicated, all references to the 
Company in these financial statements and notes thereto include the 
activities of TAC.

Nature of Business
The Company is engaged in the manufacture and distribution of luxury 
motor yachts.

Cash
The Company periodically throughout the period maintained cash balances 
in its bank accounts in excess of federally insured limits.

Inventories
Raw material inventories are valued at the lower of average cost or 
market.  Work-in-process inventories are valued at actual costs incurred 
including an allocation for manufacturing overhead.

Equipment
Equipment is valued at cost.  Depreciation of equipment is provided 
using the straight line method over the estimated useful life of the 
assets.  Additions and improvements, including patterns and molds for 
yacht production which have been produced internally, are capitalized at 
cost.

Accrued Warranty Reserve
The Company records an accrual on the sale of each yacht for estimated 
warranty claims.  There is a general one year warranty for parts and 
labor to the original owner for defects in material and workmanship.  
There is also a transferable 15 year warranty for structural defects in 
all Tollycraft built hulls, deck bridges, stringers, and bulkheads.

Revenue Recognition
The Company records production costs of each yacht in a work-in-process 
inventory account and records deposits and billings on each yacht in a 
liability account.  Income and direct production costs are recognized on 
the Statement of Operations when a yacht is completed, shipped and title 
transferred.

Pension and Profit Sharing Plans
Union and non-union employees participate in a pension plan which 
qualifies under Section 401(k) of the Internal Revenue Code.

Note 3 - Equipment
Equipment consists of the following

Manufacturing equipment	     		$    391,020
Office furniture and fixtures		     485,915
Yacht molds and patterns			       2,884,757
Vehicles						                       39,958
							                           3,801,650
Less accumulated depreciation		-  1,071,368
                        							$  2,730,282

Note 4 - Work-in-process Financing
The Company has a $3,000,000 line-of-credit with Caterpillar Financial 
Services Corporation (CFSC).  Under the terms of the agreement, 
borrowings are available to 75% of the dealer net price of each yacht.  
Advances are made at 1/3 upon commencement of the hull lamination, 1/3 
upon commencement of the assembly process, and 1/3 upon installation of 
the engines.  Interest on borrowings is payable monthly at a variable 
rate.  Borrowings are collateralized by specific vessels with assigned 
hull numbers upon which CFSC has advanced funds and filed specific UCC-
1's.  Outstanding borrowings at June 30, 1997 were $3,000,000.

The Company is also required to maintain a minimum level of stockholders 
equity and a ratio of total liabilities to stockholders equity.  At June 
30, 1997, the Company was in violation of these minimum requirements.

Note 5 - Notes Payable
The Company has other lines-of-credit with Vera Corporation, Commercial 
Factors, and California Factors and Finance for working capital 
purposes.  Interest on borrowings is payable monthly at a rate of 12%.  
Borrowings are collateralized by substantially all assets.

Note 6 - Long-term Debt
Long-term debt consists of various obligations assumed in 1994 by 
Tollycraft Acquisition Corporation in connection with the purchase of 
the yacht manufacturing business, tooling, molds, patterns and all 
rights and privileges to the name "Tollycraft".

Note 7 - Leases
The Company leases its manufacturing facilities in Kelso, Washington.  
Effective October 1, 1995, the Company entered into a twenty year lease 
at $29,500 per month.  The agreement calls for 7% increases at the end 
of each five year period of the lease.

Note 8 - Provision for Income Taxes
Deferred income taxes are recognized for all significant temporary 
differences between the tax and financial statement basis of assets and 
liabilities.  The classification of the resulting deferred tax assets 
and liabilities is based upon the classification of the related balance 
sheet asset or liability.  Deferred tax assets and liabilities result 
principally from the Company's net operating loss carryforwards, 
differences in depreciation methods for tax purposes and other temporary 
differences.

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

During the second quarter of 1997, Tollycraft Yacht Corporation was operating 
at limited capacity as a result of insufficient working capital and ongoing 
financial difficulties.  The management group has identified specific goals 
for the next 12 to 24 month period including:

1. Obtain additional debt or equity financing to continue operations
2. Maintain customer and dealer relationships
3. Shape maximum customer confidence
4. Invest in updating and redesigning the current product line
5. Complete development of a new series of yachts
6. Expand the dealer network
 
Significant expenses have been incurred to date to implement these goals.  In 
order for the Company to meet its cash requirements and continue operating, 
the Company must achieve profitable operations and/or obtain additional debt 
or equity financing.

Results of Operations

Current results reflect the difficulty the Company has had in raising the 
necessary working capital to proceed with its plan to restart production at a 
profitable level.

In June, the Company negotiated the sale of a partially completed motor yacht 
with an accompanying contract to complete the construction to Tollycraft 
standards.  Accordingly, net sales for the quarter were $241,816.  The 
construction contract revenue will be recognized in the third quarter.  Sales 
for the corresponding quarter in 1996 were $1,169,283.

Excess plant capacity expenses for the second quarter were categorized and 
amounted to $253,182.  First quarter excess plant capacity expenses were 
$280,557.  Ongoing fixed costs and wages for essential employees resulted in a 
quarterly net loss of $(646,932).  This compares to a net loss of $(1,192,176) 
for the comparative period in 1996.

Financial Condition

The cumulative losses of the Company continue to be financed with accompanying 
increases to current liabilities.  Current liabilities of $13,336,638 exceed 
current assets of $2,300,871 resulting in a current ratio of .17.  The current 
ratio at December 31, 1996 was .16.  The improvement was realized in the first 
quarter when the Company issued 270,411 shares of common stock pursuant to an 
employee benefit plan.  The value of the stock issued was $1,514,468 and 
proceeds were used to retire employee related liabilities and pay for future 
services by consultants and advisors.  In addition, a deferred payment 
arrangement was negotiated with the State Department of Labor and Industries 
and the State Department of Employment Security.  Payroll related liabilities 
of $479,299 were reclassified as long-term debt.

When the Company is able to raise the necessary working capital to begin 
production, management is planning an emphasis on improvement in the following 
areas.

1. Increase basic pricing on each yacht to reflect the improved product 
being produced.
2. Select new materials to continue upgrading the quality of each yacht 
while emphasizing production efficiency.
3. Redesign manufacturing processes to produce yachts more efficiently 
and with greater profit margins.
4. 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.
5. Develop relationships with dealers that are able to provide their own 
inventory financing.
6. Increase the dealer network to increase sales volume and reach 
economies of scale.
7. Implement a labor tracking information system to monitor and reduce 
direct labor costs.

Necessary investments in capital assets have been slowed down or postponed due 
to a lack of capital.  In order to establish the Company as a viable 
competitor in the industry, management has developed a plan to upgrade 
existing tooling and molds and manufacture new tooling and molds for a newly 
designed line of yachts.  Total capital expenditures necessary for the 
completion of the product line upgrade and expansion is $2,650,000.  The 
Company is dependent on external sources of funding to complete the capital 
expenditure plan.

The Company is unable to make timely payments to its landlord, trade 
suppliers, material vendors, and various taxing authorities.  When production 
resumes, most trade vendors will continue to supply the Company on a COD 
basis.  There is no expectation that material shortages will occur since 
materials used are available from many sources.  Deferred payment terms are 
being negotiated with various taxing authorities.  State and local taxing 
authorities have agreed to payment terms on respective delinquent tax 
liabilities.  Federal authorities have not approved a recently negotiated 
payment schedule and negotiations continue for payment of federal tax 
obligations.

The Company is considering numerous alternatives to improve its financial 
position, meet trade obligations, pay delinquent tax balances, and fund 
capital expenditure requirements.  These include converting current debt to 
equity through the issuance of common shares and the sale of common shares to 
raise working capital.  The Company has engaged the services of professional 
advisors to perform the financing activities.  

In order to begin production, the Company is in need of additional funding to 
acquire material inventory, and provide working capital.  The Company is 
dependent on external sources for financing until projected levels of 
production and improvements in direct costs are achieved which will return the 
Company to profitability and a positive cash flow.  A material commitment for 
capital expenditures is necessary to meet the projected levels of production.  
The expected source for a majority of the funds is from private placement 
financing arrangements and a public offering of common shares.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Kenneth N. Findley and Island Dreamer, Inc. v. Tollycraft Yacht Corporation
125th Judicial District, Harris County, Texas
Original File Date: 1995
Claim for breach of express and implied warranties resulting from water damage 
caused by plugged drains and associated loss of market value. Default judgment 
set aside.  Amended petition relief sought in the amount of $100,000 plus 
three times actual damages and legal costs..  Set for trial on May 25, 1998.

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.

Estate of Nora Folkenflik v. Tollycraft Yacht Corporation
King County, Washington Superior Court,
Original File Date: January 13, 1997
Alleged wrongful death suit relating to liquor liability as a result of an 
individual's auto accident after attending an open house co-sponsored by 
Tollycraft.  Relief sought to be determined by the court.

Item 2. Changes in Securities and Use of Proceeds

During the quarter ended June 30, 1997, the Company sold 2,720 Units in a 
private offering to accredited investors in accordance with Rule 505 
promulgated under the Securities Act.  Each Unit was priced at $5.00 with 
selling agent/finders fees of $.50 deducted therefrom.  Each Unit consists of 
one common share, one "C" warrant exercisable until March 5, 1998 for one 
common share at $6.00 and one "D" warrant exercisable until March 5, 1999 for 
one common share at $8.00.  The proceeds were used for general working 
capital.

Item 3. Defaults Upon Senior Securities

Caterpillar Financial Services Corporation
The Company has not made timely payments as required by the debt 
agreement.  Total debt is $3,342,421 including accrued interest in 
arrears of $342,421.

Vera Corporation
The Company has not made timely payments as required by the debt 
agreement.  Total debt is $3,242,616 including accrued interest in 
arrears of $667,979.

Commercial Factors of Portland
The Company has not made timely payments as required by the debt 
agreement.  Total debt is $142,182 including accrued interest in arrears 
of $22,182.

California Factors & Finance
The Company has not made timely payments as required by the debt 
agreement.  Total debt is $295,517 including accrued interest in arrears 
of $45,417.

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

None

Item 5. Other Information

Item 6. Exhibits and Reports on Form 8-K

     (a) Exhibit Table:

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: 11-18-97


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

</TABLE>