U.S. SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C. 20549
________________________________________________________________________________

                                 FORM 10-QSB
                  QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997

                         Commission file number 0-5460
                  _____________________________________________              

                             Stocker & Yale, Inc.
                 (Name of small business issuer in its charter)

               Massachusetts                        04-2114473
(State or other jurisdiction of incorporation    (I.R.S. employer 
                           or organization)         identification no.)
  
                              32 Hampshire Road
                          Salem, New Hampshire 03079
        (Address of principal executive offices   (Zip Code)

                               (603) 893-8778
                         (Issuer's telephone number)
                         ___________________________
       
Check whether the issuer (1) filed all reports required to be filed by Section 
13 or 15(d) of the Exchange Act during the past 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.  ___X__Yes _____No

As of August 1, 1997 there were 2,567,894.60 shares of the issuer's common stock
outstanding.

Transitional Small Business Disclosure Format:  _______Yes   ____X__No


<PAGE>





                          PART 1 FINANCIAL STATEMENTS
                     Item 1.1 CONSOLIDATED BALANCE SHEETS
                             STOCKER & YALE, INC.
                                   ASSETS
<TABLE>
<CAPTION>
                                             JUNE 30, 1997    DECEMBER 31, 1996
<S>                                           (unaudited)         (unaudited)   
Current Assets:                              <C>               <C>
Cash                                         $   186,363       $ 1,244,418
Accounts Receivable                            1,873,673         1,410,774
Prepaid Taxes                                    233,588           353,668
Inventory                                      4,608,390         3,701,019
Prepaid Expenses                                 385,017           131,478
                                               _________         _________
     Total current assets                      7,287,031         6,841,357

Property, Plant and Equipment, Net             3,335,007         3,134,717
                                               ---------         ---------  
Note Receivable                                1,000,000         1,000,000
                                               ---------         ---------
Goodwill, Net of Accumulated Amortization      8,587,400         8,721,800
                                               ---------         ---------
Other Assets                                      52,166                 0
                                               ---------         ---------
Debt Issuance Costs, Net of Accumulated 
                            Amortization         118,054           138,490
                                               ---------         ---------
                                            $ 20,379,658      $ 19,836,364

                    LIABILITIES AND STOCKHOLDER'S INVESTMENT
<S>
Current Liabilities:                        <C>               <C>
Current Portion of long-term debt           $    273,869      $    357,569
Accounts Payable                               1,413,796         1,373,121
Accrued Expenses                                 481,594           547,654
                                               _________         _________
     Total current liabilities                 2,169,259         2,278,344
                                               ---------         ---------
Long Term Debt                                 4,772,319         4,021,570
                                               ---------         ---------
Other Long Term Liabilities                      564,688           564,688
                                               ---------         ---------
Deferred Income Taxes                            912,685         1,012,685

Stockholder's Investment:  Common stock, par value $0.001
Authorized -- 10,000,000
Issued and outstanding -- 2,567,894                2,568             2,568
Paid-in capital                               10,822,705        10,822,705
Retained earnings                              1,135,434         1,133,804
                                              ----------        ----------
     Total stockholder's investment           11,960,707        11,959,077
                                              ----------        ----------
                                            $ 20,379,658      $ 19,836,364
</TABLE>

<PAGE>







                            PART I FINANCIAL STATEMENTS
                Item 1.2  CONSOLIDATED STATEMENT OF OPERATIONS
                             STOCKER & YALE, INC.
<TABLE>
<CAPTION>


                       Three Months Ended          Six  Months Ended
                            June 30,                    June 30, 
                      1997         1996         1997              1996
                   (unaudited)  (unaudited)  (unaudited)       (unaudited)

<S>                <C>          <C>          <C>               <C>
Net Sales        $ 2,804,280  $ 2,566,098   $ 5,537,942       $ 5,576,224

Cost of Sales      1,614,438    1,634,293     3,256,883         3,579,452
                   __________   _________     _________         _________   
  Gross Profit     1,189,842      931,805     2,281,059         1,996,772

Selling Expenses     410,447      409,756       839,357           831,127

General and          467,458      444,557       852,243           955,567
Administrative Expenses

Research and         157,241       73,357       331,525           144,762
Development         _________     ________     _________         _________
  Operating Income   154,696        4,135       257,934            65,316

Interest Expense     (86,871)    (147,976)     (164,304)         (300,140)
                     ________    _________     _________         _________
Income/(Loss) before  67,825     (143,841)       93,630          (234,824)
      income taxes

Income Tax Expense/   54,500      (36,100)       92,000           (36,100)
   (Benefit)

  Net Income/(Loss) $ 13,325     (107,741)    $   1,630          (198,724)
                     ________   __________      ________          ________
                     ________   __________      --------          --------
Income/(Loss)      $   0.01        (0.07)      $   0.00            (0.11)
Per Share            --------   ----------      --------          --------
Weighted-Average 
Common Shares and   2,567,894    1,712,914     2,567,894         1,712,914
Equivalents

</TABLE>

<PAGE>







                           PART I FINANCIAL STATEMENTS
                 Item 1.3  CONSOLIDATED STATEMENTS OF CASH FLOWS
                              STOCKER & YALE, INC. 

<TABLE>
<CAPTION>

                                                     Six Months Ended
                                                         June 30
                                                  1997              1996
                                               (unaudited)      (unaudited)
<S>
Cash Flows from Operating Activities:        <C>              <C>
     Net Income/(Loss)                       $      1,630     $   (198,724)
     Adjustments to reconcile net loss to 
       net cash used in/provided by operating
       activities                            
     Depreciation and Amortization                278,151          486,784
     Deferred income taxes                       (100,000)         (80,000)
     Other changes in assets and liabilities 
       Accounts receivable, net                  (462,899)         204,729
       Inventories                               (907,371)        (162,458)
       Prepaid expenses                          (133,459)          44,127
       Accounts payable                            40,675          225,340
       Accrued expenses                           (66,060)         (48,810)
       Other assets                               (52,166)               0
       Accrued and refundable taxes                      0        (184,188)
                                                 ---------        ---------
   Net cash used in/provided by operating       (1,401,499)         286,800
     activities                                  ---------        ---------

Cash Flows from Investing Activities:
  Purchases of property, plant and equipment     (323,602)        (110,073)
                                                 ---------         --------
     Net cash used in investing activities       (323,602)        (110,073)
                                                 

Cash Flows from Financing Activities:            
  Proceeds of equipment line of credit            153,985                0
  Payments/Advances of bank debt                  513,061       (1,445,715)
  Payments on capital lease                             0          (37,974)
  Proceeds from Subordinated Notes Payable              0        1,350,000
  Deferred Financing Costs                              0          (39,000)
                                                  --------         --------
     Net cash used in financing activities        667,046         (172,689)
                                                  --------         --------

Net Decrease in Cash and Cash Equivalents      (1,058,055)           4,038

Cash and Cash Equivalents, Beginning of Period  1,244,418           22,033
                                                ---------          --------     
Cash and Cash Equivalents, End of Period       $  186,363        $  26,071
                                               ----------        ---------
                                               ----------        ---------
</TABLE>

<PAGE>





                            PART 1. FINANCIAL STATEMENTS

Notes to Financial Statements

The interim consolidated financial statements presented have been prepared by 
Stocker & Yale, Inc. (the "Company") without audit and, in the opinion of the
management, reflect all adjustments of a normal recurring nature necessary for
a fair statement of (a) the results of operations for the three month and six
month periods ended June 30, 1997 and June 30, 1996 (b) the financial position
at June 30, 1997 and (c) the cash flows for the six month periods ended
June 30, 1997 and June 30, 1996.  Interim results are not necessarily
indicative of results for a full year.  

The consolidated balance sheet presented as of December 31, 1996 has been 
derived from the consolidated financial statements that have been audited by  
the Company's independent public accountants.  The consolidated financial 
statements and notes are condensed as permitted by Form 10-QSB and do not 
contain certain information included in the annual financial statements and 
notes of the Company.  The consolidated financial statements and notes 
included herein should be read in conjunction with the financial statements 
and notes included in the Company's Annual Report on Form 10-KSB.  

In March 1997, the Financial Accounting Standards Board issued SFAS No. 128 
Earnings Per Share.  SFAS No. 128 establishes standards for computing and 
presenting earnings per share and applies to entities with publicly held common
stock.  This statement is effective for fiscal years ending December 15, 1997
and early adoption is not permitted.  When adopted, the statement will require
restatement of prior years' earnings per share.  The Company will adopt this
statement for its fiscal year ending December 31, 1997 and does not believe that
the effect of this adoption of this standard would be materially different from
the amounts presented in the accompanying statements of income.  


<PAGE>

              ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS
               OF FINANCIAL CONDITION AND OPERATING RESULTS

This Quarterly Report on Form 10-QSB contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the 
Securities Exchange Act of 1934.  The Company's actual results could differ 
materially from those set forth in the forward-looking statements.


Results of Operations

 
The following discussion should be read in conjunction with the attached 
consolidated financial statements and notes thereto and with the Company's 
audited financial statements and notes thereto for the fiscal year ended 
December 31, 1996. 


Three-month periods ending June 30, 1997 and 1996


Revenues increased 9% from $2,566,098 for the three months ended June 30,1996,
to $2,804,280 for the three months ended June 30, 1997, as the Company
experienced significant revenue increases in sales of lighting products and 
sales of military products (military-style watches and compasses) to civilian
markets.  Sales of lighting products increased approximately 56% from $642,321
in the second quarter of 1996 to $1,001,871 in the second quarter of 1997.
This growth resulted in part from the introduction in May 1997 of the 
Steadylite Plus, a new fluorescent lighting product which generated $48,765 
in net revenues in the quarter, as well as sales of the Company's new fiber
opitc lighting products which totaled $81,762 for the second quarter of 1997
as compared to $0 in the second quarter of 1996. Sales of military products 
to civilians increased approximately 41%, from $232,366 for the quarter ended
June 30, 1996 to $326,986 for the quarter ended June 30, 1997.  These 
reported military sales include the sales by the Company's Hong Kong subsidiary,
which primarily sells these products to civilians in southeast Asia.

Sales to the U.S.  Government increased 67% from $80,250 in the three months
ending June 30, 1996 to $133,936 in the equivalent period in 1997, as a result
of a new contract for galvanometers and increased contract shipments of watches
in the 1997 period.  Electronic ballast, which were discontinued as a product
offering in 1996, decreased from $122,331 for the quarter ended June 30, 1996
to $1,976 for the quarter ended June 30, 1997.  Sales of the Company's MFE
products decreased 30% from $487,845 for the second quarter of 1996 to $339,318
for the second quarter of 1997, in large part because of a decrease in OEM
contracts.  Second quarter comparative sales of machine tool components through
the Company's Stilson division remained relatively flat at $1,001,196 for the 
quarter ended June 30, 1997 and $1,000,885 for the quarter ended June 30, 1996.

Management attributes the increase in lighting and military product sales to 
management's efforts to implement its strategic shift away from sales of the 
Company's commodity price driven products in favor of developing and 
marketing the Company's higher margin products.  Lighting and military products,
as well as machine tool components, generate higher gross margins than the 
Company's other product lines. 

Gross profit margin increased, to 42% for the quarter ended June 30, 1997 as 
compared to 36% for the quarter ended June 30, 1996, primarily as a result 
of the more favorable product mix.  Selling expenses and General and 
Administrative expenses remained unchanged between the two periods.  Research
and development expenditures increased by $83,884 as a result of the Company's
increased development efforts relating to its new fiber optic product line.

The Company recorded pretax income of $67,825 for the quarter ended 
June 30, 1997 as compared with the reported pretax loss of $(146,841) for the
quarter ended June 30, 1996.  The increase is primarily attributable to the
above improved gross margin and to reduced interest expense, which decreased
by $61,105 as a result of reductions in the Company's outstanding debt.

Six month periods ending June 30, 1997 and 1996

Revenues decreased modestly from $5,576,224 for the six months ended 
June 30, 1996, to $5,537,942 for the six months ended June 30, 1997. Although
the second quarter of 1997, reflected various positive elements, circumstances
in the first quarter of 1997 served to burden cumulative totals as of June 30,
1997.  In particular, sales to the U.S. Government for the first six months 
of 1997 were $156,497 as compared to $354,842 for the first six months of 1996,
in spite of favorable comparisons between the second quarter of 1997 and the
second quarter of 1996.  Similarly, although Stilson division sales were flat
in the June 30 three month period comparisons above, the division's six months
sales lagged 7% behind the prior year at $1,996,717 for the six months ended 
June 30, 1997 versus $2,148,113 for the comparable 1996 period.   

Sales of lighting and military products increased significantly.  Lighting 
sales increased 43% from $1,362,257 in the six month period ended
June 30, 1996 to $1,949,862 in the equivalent period of 1997.  Included in 
these lighting segment revenues are sales of the Company's fiber optic 
lighting products which were $129,995 as of June 30, 1997 compared to $0 in 
the comparable period of 1996.  For the six months ended June 30, 1997, sales 
of military products to civilian markets increased 52% to $667,066 from
$445,653 for the first six months of 1996.  Electronic ballast decreased from
$260,073 for the six months ended June 30, 1997 to $16,209 for the comparable
1997 period.  MFE product sales declined from $1,005,286 for the six month
period ended June 30, 1996 to $742,591 for the six month period ended 
June 30, 1997. 

In the six month period ended June 30, 1997, the Company recorded pretax 
income of $93,630 which was an increase from the reported pretax loss of 
$(234,824) for the comparable period ended June 30, 1996.  An increase in 
gross profit margin from 36% for the six months ended June 30, 1996 to 41% 
for the six months ended June 30, 1997 contributed toward this positive 
pretax income.  Interest expense also decreased by $135,836 as a result of 
reductions in the Company's outstanding debt.  Selling expenses remained 
generally unchanged between the two periods.  General and Administrative 
expenses decreased by $103,324 primarily due to a reduction in professional
fees such as legal.  Lastly, research and development costs increased by 
$186,763 as a result of the Company's research efforts efforts relating to 
its new fiber optic product line. 

   

<PAGE>

Liquidity and Capital Resources

The Company finances its operations primarily through third party credit
facilities and cash from operations.  Net cash provided by operations was 
$(1,401,499) for the six months ended June 30, 1997 and $286,800 for the six
months ended June 30, 1996.

The Company's primary third party financing relationship is with Fleet National 
Bank of Massachusetts, N.A. (the "Bank").  The initial Credit Agreement between
the Company and the Bank, dated March 6, 1995 (the "Credit Agreement"), 
provided for a Revolving Line of Credit Loan (the "Revolving Loan") due
March 31, 1998 and a a Long Term Loan due March 1, 2001.  The 
Revolving Loan and the Long Term Loan bear interest at the Bank's base rate 
plus 1/2%.  At June 30, 1997 there was a total of $1,844,591 borrowed under
the Credit Agreement and availability to borrow of $2,440,936 under the 
Revolving Loan.
 
Under the terms of the Credit Agreement, the Company is required to comply with 
a number of financial covenants including minimum equity, debt service coverage
ratios, debt to equity ratios and minimum net income tests.  For the period 
ending 6/30/97, the Company is in compliance with all of the covenants.

The Company has issued and outstanding Subordinated Notes 
in an original principal amount of $1,350,000.  These notes mature  
on May 1, 2001.  They bear interest at 7.25% and are convertible into 
shares of the Company's common stock at a price of $7.375 per share.  

Company expenditures for capital equipment were $323,602 in the first six
months of 1997 as compared to $110,073 in the same period of 1996.  The
majority of the 1997 expenditures related to the Company's new fiber optic 
product line. 

On May 20, 1997 the Company entered into a line of credit agreement with 
Primary Bank to finance capital equipment related to new product development. 
The facility provides that equipment purchases will be converted quarterly 
into a series of five year notes, not to exceed $500,000 in the aggregate, 
bearing interest at the prime rate plus .75%.  As of June 30, 1997, the 
Company had borrowed $153,985 against the line of credit. 

The Company believes that its available financial resources are adequate to 
meet its foreseeable working capital, debt service and capital expenditure 
requirements.  
   
<PAGE>

                                  PART II
                       ITEM. 3  OTHER INFORMATION

The Annual Meeting of Shareholders of Stocker & Yale, Inc. was held on Tuesday
May 6, 1997, for the purpose of (i) electing the directors of the Company to 
serve until the next Annual Meeting of Shareholders, and (ii) appointing Arthur
Andersen, LLP as the Company's independent public accountants.  The following
table describes the results of the shareholder votes.  

Election of the following 
directors to serve until                 Votes in Favor     Votes Withheld
the next Annual                          ______________     ______________
Meeting:

          Mark W. Blodgett                1,703,503.20          5,000
          James Bickman                   1,703,503.20          5,000
          Alex W. Blodgett                1,703,503.20          5,000
          Clifford L. Abbey               1,703,503.20          5,000
          Robert G. Atkinson              1,703,503.20          5,000
          Hubert R. Marleau               1,703,503.20          5,000
          John M. Nelson                  1,703,503.20          5,000


Appointment of Arthur Andersen, LLP
 
                        Votes in Favor     Votes Against   Votes Abstaining
                        ______________     _____________   ________________

                         1,703,503.20            0             5,000













             ITEM. 6 EXHIBITS, LISTS AND REPORTS ON FORM 8-K  
            
(a)  The following is a complete list of Exhibits filed as part of this Form
     10-QSB:

     Exhibit                   
     Number                         Description
     -------                        -----------
     27.1                           Financial Data Schedule

(b)  There were no reports filed on Form 8-K during the quarter ended June
30,1997.


<PAGE>












                                SIGNATURES

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

Stocker & Yale, Inc.
--------------------

August 1, 1997                       /s/ Mark W. Blodgett
--------------                      ----------------------
                       Mark W. Blodgett, Chairman and Chief Executive Officer

August 1, 1997                       /s/ Susan A. H. Sundell
--------------                      -------------------------
                Susan A.H. Sundell, Senior Vice-President-Finance and Treasurer