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, 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 March 31, 1998 is 
5,179,352.

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


                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Tollycraft Yacht Corporation
First Quarter - 1998

Balance Sheet
                                           December 31,     March 31,
                                               1997           1998
Current Assets
   Cash                                           2,199          2,128
   Accounts receivable                            4,280          4,280
   Inventory - Raw materials                    303,508        303,508
   Inventory - Work-in-process                   96,909         96,909
   Other current assets                             385            154
                                                407,281        406,979

Property and Equipment, net                   2,478,855      2,462,565


Other Assets                                    382,000        382,000

Total Assets                                  3,268,136      3,251,544


Current Liabilities
   Accounts payable                           1,346,311      1,394,856
   Accrued payroll & taxes                    2,759,710      2,786,929
   Notes payable                              6,898,033      7,045,383
   Other current liabilities                    768,212        845,936
   Customer deposits                            598,000        598,000
   Long-term debt - due within one year         451,627        452,000
                                             12,821,893     13,123,104

Net Deferred Tax Liabilities                    222,542        222,542

Long-term Debt                                1,154,809      1,176,674


Stockholders Equity (Deficit)
   Common Stock                               4,366,171      4,480,303
   Retained earnings (deficit)              (15,297,279)   (15,751,079)
                                            (10,931,108)   (11,270,776)

Total Liabilities and Stockholders Equity     3,268,136      3,251,544




Statement of Operations

                                                      Three Months
                                                     Ended March 31,
                                                   1997           1998

Net sales                                         514,955              0

Cost of sales                                     466,026              0

Gross Margin                                       48,929              0

Excess plant capacity                             280,557              0

Selling expenses                                   53,283              0

General and administrative expenses               120,844        205,142

Income (loss) from operations                    (405,755)      (205,142)

Other income (expenses):

   Interest, net                                 (246,972)      (248,658)

Total other income (expenses)                    (246,972)      (248,658)

Income (loss) before provision for income tax    (652,727)      (453,800)

Net income (loss)                                (652,727)      (453,800)





Statement of Cash Flows
                                                        Three Months
                                                       Ended March 31,
                                                    1997           1998

Cash, January 1,                                     677           2,199

Cash flows from operating activities:
   Net loss                                     (652,727)       (453,800)
   Adjustments to reconcile net loss
   to net cash used by operations
       Depreciation                               95,843          16,290
Change in assets and liabilities
       Accounts receivable                        (8,000)              0
       Material inventory                         (5,033)              0
       Work-in-process inventory                 168,070               0
       Other current assets                      356,733)            231
       Accounts payable                         (137,939)         48,545
       Accrued payroll & taxes                    44,197          27,219
       Other current liabilities              (1,394,069)         77,724
                                              (2,246,391)       (223,791)

Cash flows from investing activities:
   Purchase of other assets                      (52,960)              0
   Purchases of equipment                       (146,135)              0
                                                (199,095)              0

Cash flows from financing activities:
   Proceeds from notes payable                   316,429         147,350
   Proceeds from long-term debt                  617,354          22,238
   Issuance of common stock                    1,514,468         114,132
                                               2,448,251         283,720

Net increase (decrease) in cash                    2,765             (71)

Cash, March 31                                     3,442           2,128




TOLLYCRAFT YACHT CORPORATION
Notes to Financial Statements
For the Three Months Ended March 31, 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			$    391,020
Office furniture and fixtures		     486,126
Yacht molds and patterns		   2,888,444
Vehicles			              39,958
					   3,805,548
Less accumulated depreciation	        (  1,342,983)
					$  2,462,565

Note 4 - Notes Payable
The Company has working capital loans with Vera Corporation, Commercial 
Factors, California Factors and Finance, and Caterpillar Financial 
Services Corporation.  Interest on borrowings is payable monthly at 
rates of 10% to 12%.  Borrowings are secured by substantially all 
assets.  The Company is currently not in compliance with the payment and 
borrowing terms required by the creditors.

Note 5 - 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 6 - 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 first quarter, the management of Tollycraft Yacht Corporation was 
concentrating efforts on negotiating joint venture agreements with a Mexican 
partner and relocating 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 to 24 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. Invest in updating and redesigning 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.  All 
production has been discontinued and all non-essential personnel have been 
laid off.  A net loss of $(453,800) was incurred primarily due to the budgeted 
fixed costs of management and other ongoing contractual financial obligations.

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


Financial Condition

The cumulative losses of the Company continue to be financed with current 
liabilities.  Current liabilities of $13,123,104 exceed current assets of 
$406,979 resulting in a current ratio of .03.

Other assets include prepaid consulting fees of $360,000 purchased with the 
issuance of common stock pursuant to an employee benefit plan.

The Company has not made timely payments to its debt holders, trade suppliers, 
material vendors, and various taxing authorities.  Deferred payment terms have 
been or are being negotiated with various taxing authorities.  State and local 
taxing authorities have agreed to payment terms while negotiations continue 
with federal authorities.

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 preferred 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.  

Lastly, 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

On February 23, 1998 the Company announced that it had signed three letters of 
intent to joint venture with three marine oriented businesses in the State of 
Yucatan, Mexico.  The joint ventures will produce 39' to 125' Tollycraft 
Yachts, provide repair facilities for pleasure and commercial craft to 150', 
and develop a 125 slip marina and related retail marine facilities.  The 
ventures will also have an additional 15 acres of waterfront property for 
future expansion.

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.

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.  It is the goal of management to have a company 
that is debt free and for the first time have a surplus of cash in the bank.

                         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 and motions to dismiss have been filed and heard.  
No decision has been rendered on the Defendants Motion to Dismiss.

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.

Item 2. Changes in Securities

None.

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 $2,661,209 including accrued interest in 
arrears of $319,449.

Vera Corporation
The Company has not made timely payments as required by the debt 
agreement. Total debt is $3,548,226 including accrued interest in 
arrears of $1,006,654.

Commercial Factors of Portland
The Company has not made timely payments as required by the debt 
agreement Total debt is $155,528 including accrued interest in arrears 
of $35,528.

California Factors & Finance
The Company has not made timely payments as required by the debt 
agreement. Total debt is $323,339 including accrued interest in arrears 
of $70,248.

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

None

Item 5. Other Information

On February 25, 1998 the Board of Directors reserved for issuance up to 
2,000,000 common shares for sale to Manuel Gomez Ramos, Attorney at Law, Trust 
Account for up to $6,000,000 cash or other compensation in a regulation S. 
transaction.  The purchase price would be $3.00 per share.  The Corporation 
reserves the right to reject all or any part of such other compensation at its 
sole discretion.  The stock is being acquired specifically to be used in the 
joint venture agreements that the Company is entering into; specifically, Zena 
Atilleros Pergasa Marina Tortuga located in Progresso, Yucatan.

The Company issued 8,044 shares of common stock pursuant to the 1996 Employee 
Stock Option Plan for contribution to the Tollycraft Union 401(k) Plan and 
Trust.  The contribution is for plan years 1993, 1995, and 1996 totaling 
$24,132.  The price is to be $3.oo per share.

The Company issued 20,000 of common stock to J.A. Overton Company 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.

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: August 26, 1998


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