UNITED STATES  
  
               SECURITIES AND EXCHANGE COMMISSION  
  
                     Washington, D.C. 20549  
  
                            FORM 10-QSB  
  
  
Quarterly Report Pursuant to Section 13 or 15(d) of the   
Securities Exchange Act of 1934  
  
For the quarterly period ended        September 30, 1997  
  
Commission file Number     1-3489  
  
                   CLARY CORPORATION                  
(Exact name of registrant as specified in its charter.)  
  
    CALIFORNIA, U.S.A.                    95-0630196     
(State or other jurisdiction of    (I.R.S. Employer  
incorporation or organization)     Identification No.)  
  
1960 S WALKER AVE. MONROVIA CA, U.S.A.        91016       
(Address of principal executive offices      (Zip Code)  
  
Registrant's telephone number, including area code:  
(626) 359-4486  
  
Indicate by check mark whether the registrant(1) has filed 
all reports required to be filed by Section 13 or 15(d) of the 
Securities Exchange Act of 1934 during the preceding 12 months 
(or for such shorter period that the registrant was required to 
file such reports), and (2) has been subject to such filing 
requirements for the past 90 days.  
  
  
                         YES [X]        NO [ ]  
  
       
  
     Common Stock, $1 Par Value - 1,807-319 shares as of  
     October 27, 1997.  
 
<PAGE>  
<TABLE>  
  
                 PART I. - FINANCIAL INFORMATION  
  
                      CLARY CORPORATION  
  
           STATEMENTS OF LOSS AND ACCUMULATED DEFICIT  
  
              FOR THE THREE MONTHS AND NINE MONTHS  
  
                ENDED SEPTEMBER 30, 1997 AND 1996  
                           (Unaudited)  
  
  
(Amounts in thousands, except per share data)  
<CAPTION>  
                            Three months ended  Nine months ended
                               September 30       September 30 
                            __________________  _________________
                              1997      1996     1997     1996   
                             ______    ______   ______   ______
<S>                          <C>       <C>      <C>      <C> 
Net Sales                    $1,397    $1,217    $3,398   $4,416 

Cost of goods sold              909       944     2,257    3,256 
                             ______    ______   ______   ______
 
Gross Profit(Loss)              488       273     1,141    1,160 
Engineering & Prod.Develop.      76        97       250      294
Selling, general and  
 administrative expenses        373       252       785     1172 (1) 
                             ______    ______   ______   ______  
            
Operating Earnings(loss)         39     (  76)     106     (306)
Interest Expense                 36        44       99      133 
Income tax expense                0         0        1        1  
                             ______    ______   ______   ______ 

Net Earning (Loss)                3     ( 120)       6    (440)
                             _______   _______  _______  _______

Average number of shares   1,807,319  1,807,319  1,807,319  1,807,319 
  
Net Earning(Los) per share  $ 0        $ (.07)     $  0     $ (.24)

(1)In 1996 includes $300,000 for downsizing, reorgnanization, and
   future legal expenses.

<FN>    
See Accompanying Notes to Financial Statements  
</TABLE>

<PAGE> 
<TABLE>         
                                CLARY CORPORATION 
  
                                 BALANCE SHEETS  
                                  (Unaudited)

(Amounts in thousands, except per share data)  
<CAPTION>  
                               September 1997      December 1996 
                               ______________      ______________
                                 
<S>                                   <C>                <C> 
ASSETS  
Current Assets   
  Cash                                $  212             $  123 
  Cash rstricted                         300                300
  Accounts receivable trade              883                469 
  Inventories                          1,537              1,908 
  Prepaid expenses                        76                 42 
                                      ______             ______
Total Current Assets                   3,008              2,842 
 Machinery and Equipment, Dies
 jigs and fixtures,Leasehold
 improvement.  
  less: accumulated depreciation of  
  $1,351,000 and $1,312,000             104                 115 

 Other Assets                            59                  59
                                      ______             ______
TOTAL ASSETS                           3,171              3,016 
                                      ======             ======
</TABLE>
<TABLE> 

<CAPTION>  
LIABILITIES AND STOCKHOLDERS' EQUITY   
<S>                                   <C>                <C> 
Current Liabilities  
  Notes Payable                       $  725             $  650
  Accounts Payable and expenses          701                603 
  Accrued Payroll and expenses            68                 90 
  Customer Deposits                       22                 24 
                                      ______             ______
Total Current Liabilities              1,516              1,367 

 9.5% Convertible Subordinated Note
 due October 17,2000                     600                600 

Stockholder's Equity 
  Preferred Stock                         55                 55  
  Common stock and additional stated
  value arising from conversion of
  preferred stock                      2,509              2,509  
  Additional paid-in Capital           5,099              5,099 
  Beginning of year deficit           (6,614)            (6,614)
                                      _______            _______
Total Stockholders' Equity            $1,055             $1,049 
  
TOTAL LIABILITIES AND STOCKHOLDERS'  
EQUITY                                $3,171             $3,016 
                                     ========            ========
<FN> 
See Accompanying Notes to Financial Statements  
</TABLE>

<PAGE> 
<TABLE>  
                        CLARY CORPORATION 
  
                    STATEMENTS OF CASH FLOWS  
  
      FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996  
                           (Unaudited)  
  
(Amounts in thousands)  
<CAPTION>  
                                        1997               1996

<S>                                   <C>                <C>  
Cash Flow From Operating Activities:  
 Operating Earnings(Loss)              $  6             $ (140)
 Reserve for downsizing and legal
 losses                                   0               (300)
                                      _______            _______ 
            Net earning(loss)             6               (440)
 
Adjustments To Reconcile Net  
 Income to Net Cash Provided by   
 Operating Activities  
  Depreciation and amortization           39                 37
  Provision for losses on Accounts
  Receivable                              (6)                 0 
 Changes in assets and liabilities:  
  (Increase)decrease in receivables     (408)               104 
  Decrease in inventories                371                 42
  (Increase)decrease prepaid expenses    (34)                11
  Decrease in other assets                 0                 55
  Increase in Accounts payable and 
  accrued expenses                        76                 26 
  Decrease in customer deposits           (2)                 0 
                                      _______            _______
Net Cash Used In Operating Activities $   42            $ ( 165)
                                      _______            _______ 
   
Cash Flow From Investing Activities:  
  Capital expenditures                $  (28)            $   (6)
                                      -------            -------
Net cash (used for)   
  Investing Activities                $  (28)            $   (6)

Cash Flow From Financing Activities:  
 Net borrowings (repayment) under
 line-of credit                           75               (135)
 Reserve for legal contingencies           0                150 
                                      _______            _______ 
Net Cash Provided From  
  Financing Activities                $   75             $   15  
                                      _______            _______ 
  Net increase(decrease) in Cash
  and cash equivalent                     89                (156)

Cash and cash equivalent at
Beginning of Year                    $   123             $   292 
                                      _______            _______ 
Cash and cash equivalent at
End of Period                        $   212             $   136  
                                      ========           ========
<FN>  
See Accompanying Notes to Financial Statements  
</TABLE>

<PAGE> 
  
  
  
  
  
  
                        CLARY CORPORATION 
  
                   MANAGEMENT'S DISCUSSION AND  
               ANALYSIS OF FINANCIAL CONDITION AND  
                      RESULTS OF OPERATIONS  
  
                       September 30, 1997  
  
Liquidity and Capital Resources  
  
     The registrant believes funds provided form operations and short-term
lines of credits will be sufficient to fund its immediate needs for working
capital. Capital expenditures will be minimal and funded from working or
placed on short-term leases. 

  
  
  
  
Results of Operations  
  
     Sales and other revenues for the third quarter of  1997 increased $180,000
or 14.8% from the third quarter of 1996. This increase was due to the 
Registrant's new digital power products introduction to the marketplace.

     Cost of sales decreased $35,000 or 3.7% over the two periods. This cost
decrease was due to larger margins on the newer products sold. Selling and
Administrative expenses increased $121,000 or 48.0% over the compared quarters.
The majority of this increase was  commission on the increased sales as well
as a general rebuilding of the sales department. With the new product line ready
to sell, sales expenses  will de gradually increasing over the next few quarters
Engineering and development decreased $21,000 or 21.6% over the two quarters.
This decrease was due to outsourcing projects in a strategic partnership.
Interest expenses decreased $8,000 or 18.2%  due to reduced borrowing as cash
flow was enhanced through operating earnings and inventory reductions.

    In the second quarter 1996, the registrant established a $300,000 reserve
for reorganization expenses and additional legal fees associated with a prior
law suit.

<PAGE>

                NOTES TO PART I OF THIS REPORT


NOTE 1

     As of September 30,1997. the Registrant has 12,688 shares of common stock
reserved for convertion of preferred stock and 600,000 shares reserved for the
conversion of the 9.5% convertible subordinated notes. In additio the Regis-
trant has reserve 26,000 shares of common stock for purchases by officers or
employees under its 1984 Incentive Stock Plan and an additional 80,000 shares
reserved for purchases by officers and key employees under 1996 Employee Incen-
tive Stock Option Plan. Also, the Company has 40,000 shares of common stock for
purchases by its Executive Vice-President under a non-qualified stock option
plan.


NOTE 2

     This report reflects all adjustmens which are, in the opinion of the
management, neccesary to present a fair statement of the results for the interim
period. The reports has not been reviewed by our independent public accountants
and is, therefore, unaudited. 
  
<PAGE>  

  
                   PART II - OTHER INFORMATION  
  
Item 1  Legal Proceedings

        Refer to registrant's Annual Report to Shareholders and Form 10-KSB
        file with the Securities and Exchange Commision on March 28,1997
        Since this filing, the Second Court of Appeals rendered a Judgment
        on Remand on July 3,1997 reversing, rremanding, rendering and affirming,
        in part, the judgment of the original trial court. Essentially, the
        Second Court of Appeals reduced the net damages tp approximately 20% of
        original award. The distributor is expected to file for hearing by the
        Supreme Court of Texas on this matter.


Item 2  Changes in Securities - Inapplicable


Item 3  Defaults Upon Senior Securities - Innaplicable

  
Item 4  Submission of Matters to a Vote of Security Holders - Innaplicable


Item 5  Other Information - Innaplicable


Item #6 Exhibits and Reports on Form 8-K  
  
        a. Exhibits  
  
           Exhibit 27. Financial Data Schedule
  
        B. Reports on Form 8-K  
  
           No reports have been filed on Form 8-K during this    
           quarter.   
                                  
  
<PAGE>  
  
  
                        CLARY CORPORATION 
  
                           SIGNATURES  
  
  
     Pursuant to the requirement of the Securities Exchange Act of 
1934, the registrant has duly cause this report to be signed on its 
behalf by the undersigned thereunto duly authorized.  
  
  
  
  
                                   CLARY CORPORATION              
                                   Registrant  
  
  
Date:October 27, 1997                                  
                                   John G. Clary                  
                                   President and Chief Executive Officer  
  

  
Date:October 27, 1997                               
                                   Donald G. Ash                
                                   Treasurer and Chief Financial Officer