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, 1998

[ ]   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, Plantation, Florida 33324
            (Address of principal executive offices)  (Zip Code)

                             (800) 999-9381
            (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, 1998 is 
5,199,352.

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


                    PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Tollycraft Yacht Corporation
Second Quarter - 1998

Balance Sheet
                                   December 31,    June 30,
                                       1997          1998
Current Assets
   Cash                                  2,199         2,241
   Accounts receivable                   4,280             0
   Inventory - Raw materials           303,508       303,508
   Inventory - Work-in-process          96,909        96,909
   Other current assets                    385             0
                                       407,281       402,658

Property and Equipment, net          2,478,855     2,446,830


Other Assets                           382,000       382,000

   Total Assets                      3,268,136     3,231,488


Current Liabilities
   Accounts payable                  1,346,311             0
   Accrued payroll & taxes           2,759,710             0
   Notes payable                     6,898,033             0
   Other current liabilities           768,212             0
   Customer deposits                   598,000             0
   Long-term debt - due within one     451,627             0
                                    12,821,893             0

Net Deferred Tax Liabilities           222,542             0

Long-term Debt                       1,154,809             0


Stockholders Equity (Deficit)
   Preferred Stock                           0    14,833,181
   Common Stock                      4,366,171     4,540,303
   Retained earnings (deficit)     (15,297,279)  (16,141,996)
                                   (10,931,108)    3,231,488

Total Liabilities and 
Stockholders Equity                  3,268,136     3,231,488

<TABLE>
<CAPTION>
Statement of Operations

                                            Three Months                 Six Months
                                           Ended June 30,              Ended June 30,
                                         1997          1998          1997          1998
<S>                                  <C>            <C>         <C>             <C>    
Net sales                              241,816             0       756,770             0

Cost of sales                          208,763             0       674,790             0

Gross Margin                            33,053             0        81,980             0

Excess plant capacity                  253,182             0       533,737             0

Selling expenses                        24,437             0        77,721             0

General and administrative expenses    147,395       134,844       268,238       339,985

Income (loss) from operations         (391,961)     (134,844)     (797,716)     (339,985)

Other income (expenses):
   Interest, net                      (254,971)     (256,073)     (501,943)     (504,732)
   Gain on sale of assets                    0             0             0             0
   Other                                     0             0             0             0
        Total other income (expense)  (254,971)     (256,073)     (501,943)     (504,732)

Income (loss) before provision for    (646,932)     (390 917)   (1,299,659)     (844,717)

Provision for income taxes - deferred        0             0             0             0

Net income (loss)                     (646,932)     (390,917)   (1,299,659)     (844,717)

</TABLE>

Statement of Cash Flows
                                              Six Months
                                             Ended June 30,
                                           1997          1998

Cash, January 1,                               677         2,199

Cash flows from operating activities:
   Net loss                             (1,299,659)     (844,717)
   Adjustments to reconcile net loss
   to net cash used by operations
       Depreciation                        193,019        32,025
   Change in assets and liabilities:
       Accounts receivable                  (8,000)        4,280
       Material inventory                   (3,695)            0
       Work-in-process inventory           285,703             0
       Other current assets               (368,829)          385
       Accounts payable                    (73,140)   (1,346,311)
       Accrued payroll & taxes             104,585    (2,759,710)
       Customer deposits                   (15,200)     (598,000)
       Other current liabilities        (1,290,989)     (768,212)
       Deferred tax liability                7,928      (222,542)
                                        (2,468,277)   (6,502,802)

Cash flows from investing activities:
   Purchase of other assets                (62,960)            0
   Purchases of equipment                 (191,908)            0
                                          (254,868)            0

Cash flows from financing activities:
   Proceeds from notes payable             534,854       299,587
   Repayment of notes payable                    0    (7,197,620)
   Proceeds from long-term debt            683,134        47,150
   Repayment of long-term debt                   0    (1,653,586)
   Issuance of preferred stock                   0    14,833,181
   Issuance of common stock              1,514,468       174,132
                                         2,732,456     6,502,844

Net increase (decrease) in cash              9,311            42

Cash, June 30,                               9,988         2,241


TOLLYCRAFT YACHT CORPORATION
Notes to Financial Statements
For the Six Months Ended June 30, 1998

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.  On December 12, 1996 the Company changed its state of 
registration from Minnesota and is now duly organized and registered in 
the State of Nevada.  The Company also changed its name from Child Guard 
Corporation to Tollycraft Yacht Corporation in connection with the 
acquisition.

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.

Note 3 - Equipment
Equipment consists of the following

Manufacturing equipment			$    391,575
Office furniture and fixtures		     486,126
Yacht molds and patterns 		   2,888,444
Vehicles                                  39,958
                                       3,806,103
Less accumulated depreciation	      (  1,359,273)
                                    $  2,446,830

Note 4 - Notes Payable and Long-term Debt
The Company had working capital loans with Vera Corporation, Commercial 
Factors, California Factors and Finance, and Caterpillar Financial 
Services Corporation.  Interest on borrowings accrued monthly at rates 
of 10% to 12%.  Borrowings are secured by substantially all assets.

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".

Debt Conversion - On 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 will issue 
up to 1,500,000 shares of its authorized 5,000,000 preferred shares of 
its capital stock proportionately to all debt holders of record as of 
June 29, 1998.  The financial statements have been adjusted to show the 
issuance of the preferred shares.

Contingent Liability: Negotiations for the conversion of certain tax 
liabilities payable to various taxing agencies that were included in the 
debt conversion with the issuance of preferred stock have not been 
finalized.  In the event that a total agreement cannot be reached, an 
alternate payment plan that may or may not include stock will be 
arranged which may include restating the obligations as a debt.

Note 5 - 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

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.

During the second quarter, the management of Tollycraft Yacht Corporation was 
concentrating efforts on finalizing joint venture agreements with the Mexican 
partners and the acquisition of additional land parcels from the Mexican 
government.  These are the final steps in Tollycraft's plan of relocating the 
production facilities to Mexico.  Plans for the relocation of corporate 
headquarters to southern Florida were also ongoing.  The management group has 
identified specific goals for the next 12 month period including:

1. Complete the plan of relocation and equity financing to restart 
production operations in Mexico
2. Relocate corporate headquarters to southern Florida
3. Complete updating and redesigning of the current product line
4. Complete development of a new series of yachts
5. Maintain customer and dealer relationships
6. Shape maximum customer confidence
7. Expand the dealer network 
8. Identify and purchase CNC equipment
9. Implement SCRIMP laminating process 
 
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 obtain additional debt or equity financing.

Results of Operations

Current operating results were as expected and budgeted by management.  With 
domestic production discontinued, the majority of expenses incurred were 
primarily due to the budgeted fixed costs of management and other ongoing 
contractual financial obligations.  Further expenses have been incurred in 
connection with the costs of developing the current business plan and 
negotiating joint venture agreements for production in Mexico.

The majority of the manufacturing expenses incurred during 1997 were fixed 
costs relating to overhead expenses.  These costs have been identified as 
"Excess plant capacity" on the Statement of Operations.

Financial Condition

During the second quarter of 1998, Tollycraft Yacht Corporation completed 
negotiations with the Company's largest secured creditors for the conversion 
of debt to equity.  On June 29, 1998 the Company announced that it would 
convert its total debt of approximately $14,850,000 to equity in the form of 
free trading preferred shares of Tollycraft Yacht Corporation stock.  This 
conversion will represent 100% payment to all of the Company's creditors as of 
June 30, 1998.  In addition to the preferred shares being issued each creditor 
will receive warrants to purchase additional common shares of Tollycraft Yacht 
Corporation.  The warrant package will be available to preferred shareholders 
as of specific dates over the next 36 months.

The Company has 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. 

Other Information

The Company has previously announced three signed letters of intent for joint 
ventures in the Yucatan.  As of June 30, 1998 the Company has signed a joint 
venture with Yachts of the Americas for the production of Tollycraft Yachts in 
Progreso, Yucatan.  Yachts of the Americas is building a 100,000 square foot 
facility in a new industrial park that has been a special project of Governor 
C. Victor Manuel Cervera Pacheco.  The park has been specifically made for 
companies specializing in marine industries.  Yachts of the Americas is to be 
the anchor tenant within the complex which will be 6.5 acres of waterfront 
land.  There will be 240 feet of concrete frontage on the water with docking 
to accommodate the use of a travel lift to launch vessels up to 120 feet in 
length 

Tollycraft Yacht Corporation is to receive special production considerations 
for being the magnet used to attract additional well known manufacturers to 
the complex.  The special considerations should be finalized by October 1, 
1998.  Negotiations are under way for Tollycraft Yacht Corporation to take an 
equity interest in Yachts of the Americas.

Negotiations are still underway with Pergasa for large yacht and ship repair.  
It is hoped that this agreement will be finalized by September 30, 1998.

Tollycraft management selected businesses in the State of Yucatan primarily 
because of their close proximity to the USA markets.  In addition, these 
businesses have a 30 year history of steel and fiberglass vessel production 
and repair.

The capabilities of these facilities and the expected 80% reduction in direct 
labor production costs will allow the Company to competitively price its 
products and services and assure it a place as a world leader in the marine 
industry.

Tollycraft's Future

The following narration outlines a program for Tollycraft Yacht Corporation to 
continue as a builder of luxury motor yachts, and also to be an attractive 
investment for the capital markets. It contains certain forward-looking 
statements within the meaning of the Private Litigation Reform Act of 1995 
with respect to the financial condition, results of operations and business of 
the company. these forward-looking statements involve certain risks and 
uncertainties, and as such may involve known and unknown risks, uncertainties 
and other factors which may cause the actual results, performance or 
achievements of the company to be materially different from any future 
results, performance or achievements express or implied by such 
forward-looking statements. Such forward-looking statements speak only as of 
the date of this document.  The company expressly disclaims any obligation or 
undertaking to release publicly any updates or revisions to any 
forward-looking statements contained herein to reflect any change in the 
company's expectations with regard thereto or any change in events, conditions 
or circumstances on which any such statement is based. 
  
Tollycraft has been in business for 63 years and has produced some of the 
finest motor yachts available.  However, the Company has operated as a Union 
Shop and typically had the highest labor rates in the industry.  Even with the 
concessions in the current labor contract recent research has determined that 
other manufacturers labor rates are much less.  Thousands of man-hours go into 
the production of each vessel.  These circumstances have contributed to 
Tollycraft Yachts becoming some of the most expensive yachts in their class.  
While these retail prices have not diminished demand for the finished product 
it is only evident that at some point in the future, Tollycraft would price 
itself out of existence.

In order to move into the 21st century and beyond Tollycraft is making some 
massive changes in its organization, manufacturing, marketing, and sales.  The 
boating industry itself is maturing with many companies being purchased or 
merging with other entities.  This consolidation process is being recognized 
as a healthy improvement in the yacht building industry.  Just as important is 
the perceived favorable climate for the yacht consumer.

As explained in "Other Information", Tollycraft's future plans are to 
outsource the manufacturing of all yachts to facilities in Mexico under joint 
venture agreements with Mexican businesses.

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.

Tollycraft Yacht Corporation has also announced that the Company's corporate 
headquarters will be relocated from southwest Washington to southern Florida.  
At this time a location in Miami is available with sufficient infrastructure 
which will allow the Company to establish its offices including 
administration, sales and marketing, engineering, purchasing and a 
Warranty/Service Center.  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. 

For marketing, the Company will continue utilizing the existing dealer network 
and is also considering a strategic alliance with a major franchised yacht 
broker.  This broker anticipates 50 major yacht dealerships across the United 
States and the rest of the world.  Each franchisee would be required to carry 
an inventory of Tollycraft vessels.  This could create a great deal of demand 
for Tollycraft's products.

Tollycraft's management is very excited about the new alliances established 
and the future production of Tollycraft Yachts.  The capabilities of the new 
joint venture partnerships and their related and production facilities coupled 
with significantly reduced labor costs will place the Company as a world 
leader in the marine industry.

In general Tollycraft management feels that the Company is in its best 
position in recent history.  The months ahead will set the course for the next 
decade of Tollycraft Yachts.  


                         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 August 24, 
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.

Southard v. Tollycraft Yacht Corporation
U.S. District Court
Claim for age discrimination and wrongful discharge.  Settlement discussions 
are in process.

Phil Gentile v. Tollycraft
Cowlitz County District Court
Complaint for breach of contract and negligence in the amount of $15,000.  A 
Notice of Appearance has been entered.  Trial date set for August 13, 1998.  
Settlement negotiations are continuing.

Dennis Pursley v. Tollycraft Yacht Corporation and 35 others
San Diego Superior Court
Claim for intentional misrepresentation, sale of security not qualified for 
sale, and fraudulent transfer.  The company believes the suit has no merit and 
will defend itself vigorously.


Item 2. Changes in Securities

None.

Item 3. Defaults Upon Senior Securities

During the second quarter the Company issued preferred shares of stock in 
Tollycraft Yacht Corporation in settlement of the outstanding debt to senior 
creditors, and as such is no longer in default of the terms of the debt 
instruments.

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

None

Item 5. Other Information

The Company issued 20,000 of common stock to Lloyd Wade Securities, Inc. as 
payment for services rendered.  The shares are part of the S-8 registration 
currently in effect and filed with the Securities and Exchange Commission on 
December 12, 1997.

On 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 will issue up to 1,500,000 shares of its authorized 5,000,000 
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" warrant exercisable at $2.25 after 12 months,
"B" warrant exercisable at $2.00 after 24 months,
"C" warrant exercisable at $1.25 after 36 months,

As previously discussed in "Legal Proceedings" the Company has been named as a 
defendant in a nuisance law suit filed by Plaintiff, Dennis Pursley.  
Tollycraft has been named along with approximately 35 other defendants in a 
suit that alleges intentional misrepresentation, conspiracy to defraud, sale 
of security not qualified for sale, money had and received, and fraudulent 
transfer.  The company believes the suit has absolutely no merit and will 
defend itself vigorously.

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 stock 
broker 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.

Item 6. Exhibits and Reports on Form 8-K

     (a) Exhibit Table:

27 Financial Data Schedule

     (b) Reports on Form 8-K were filed during the quarter as follows:

May 13, 1998 - Item 9
June 9, 1998 - Item 5
June 13, 1998 - Item 5
June 30, 1998 - Item 5
                                  [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: August 26, 1998

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