UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549

                                  FORM 10-Q


(Mark One)
[X]  Quarterly report pursuant to Section 13 or 15(d) of the 
Securities Exchange Act of 1934

For the quarterly period ended June 30, 1997 or

[  ]  Transition report pursuant to Section 13 or 15(d) of the 
Securities Exchange Act of 1934

For the transition period from 		 to 		

Commission file number 0-10120

                               FAFCO, Inc.

          (Exact name of Registrant as specified in its charter)

                           California              	94-2159547
(State or other jurisdiction of incorporation or organization)   
(I.R.S. Employer Identification No.)

          2690 Middlefield Road, Redwood City, California 94063
(Address, including zip code, of Registrant's principal executive 
offices)

                             (415) 363-2690
          (Registrant's telephone number, including area code)


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	


At July 31, 1997, 3,298,311 shares of the Registrant's Common 
Stock, $.125 par value were issued and outstanding.









Part I - FINANCIAL INFORMATION
Item 1 - Financial Statements
                                 FAFCO, Inc.            
                         CONSOLIDATED BALANCE SHEET

<TABLE>
                           
                                    
                                    
                                   June 30, 1997            December 31, 1996
                                    (unaudited)

Assets
Current assets:


<S>                                   <C>                       <C>
Cash and cash equivalents             $219,700                  $88,200
Accounts receivable, less 
allowance for doubtful accounts 
of $532,400 in 1997 and $512,600 
in 1996                              2,338,500                1,890,700
Current portion of long-term notes 
receivable (net)                       199,600                  229,100
Inventories                            728,900                  835,400
Prepaid expenses and other current 
assets                                 157,200                  150,800
Other accounts receivable, net of 
allowance                               10,400                    4,500
Deferred tax asset, net of 
allowance                              221,500                  221,500
Total current assets                 3,875,800                3,420,200
Plant and equipment, at cost         2,542,100                2,465,800
Less accumulated depreciation and 
amortization                        (2,165,400)              (2,116,200)

                                       376,700                  349,600
Notes receivable and other assets 
(net)                                  185,100                   65,500
Deferred tax asset, net of 
allowance                              427,900                  427,900
Total assets                        $4,865,500               $4,263,200
Liabilities and shareholders'equity
Current Liabilities:
Bank line of credit                                            $758,600
Accounts payable and other 
accrued expenses                    $1,257,700                1,037,800
Accrued compensation and benefits      453,000                  187,000
Accrued warranty expanse               252,300                  234,100
Total current liabilities            1,963,000                2,217,500
Convertible subordinated notes 
($600,000 was owed to related 
parties in 1997 and 1996)              925,000                  925,000
Other non-current liabilities           66,500                   26,400
Total liabilities                   $2,954,500               $3,168,900
Shareholders' equity:
Preferred stock-authorized 
1,000,000 shares of $1.00 par 
value, none of which has been 
issued
Common stock-authorized 
10,000,000 shares of $0.125 par 
value; 3,298,311 issued and 
outstanding in 1997 and 1996.           412,200                 412,200
Capital in excess of par value        5,105,200               5,105,200
Notes receivable secured by 
common stock                            (75,100)                (75,100)
Accumulated deficit                  (3,531,300)             (4,348,000)
Total shareholders' equity           $1,911,000              $1,094,300
Commitments and contingent 
liabilities
Total liabilities and 
shareholders' equity                 $4,865,500              $4,263,200
</TABLE>
The accompanying notes are an 
integral part of this statement.



Part I - FINANCIAL INFORMATION - Item 1 (continued)

                                   FAFCO, Inc.
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                  (unaudited)
<TABLE>


                              Quarter Ended             Six Months Ended
                                 June 30                     June 30

                            1997         1996          1997          1996

<S>                   <C>            <C>           <C>           <C>
Net sales             $3,291,400     $2,775,500    $6,187,300    $5,059,900
Other income (net)       100,500         20,300       115,200        36,400

Total revenues         3,391,900      2,795,800     6,302,500     5,096,300

Cost of goods sold     1,771,600      1,583,900     3,416,200     2,907,400
Marketing & selling 
expense                  492,400        459,000       962,200       928,100
General & 
administrative expense   522,400        370,700       863,200       682,700
Research & development 
expense                   55,200          5,400       110,200        58,000
Net interest expense      37,100         40,700        80,000        81,100

Total costs and 
expenses               2,878,700      2,459,700     5,431,800     4,657,300

Income before income 
taxes                    513,200        336,100       870,700       439,000
Provision for income 
taxes                     40,000         30,500        54,000        32,800

Net income              $473,200       $305,600      $816,700      $406,200

Primary net income per 
share                      $0.13          $0.09         $0.24         $0.13
Fully diluted net 
income per share           $0.12          $0.09         $0.20         $0.13
</TABLE>
The accompanying notes are an integral part of this statement

Part I - FINANCIAL INFORMATION - Item 1 (continued)

                                   FAFCO, Inc.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (unaudited)
<TABLE>

                                                     Six Months Ended
                                                          June 30

                                                1997                 1996*
Cash flow from operating activities:

<S>                                           <C>                  <C>
Net income                                    $816,700             $406,200
Adjustments to reconcile net income to 
net cash provided by (used in) 
operating activities:

Depreciation                                    59,900               59,500
Allowance for doubtful accounts                 19,800               26,000
Gain on sale of fixed assets                                         (6,000)
Change in assets and liabilities:
Change in accounts receivable                 (473,500)            (818,500)
Change in inventories                          106,500             (314,500)
Change in prepaid expenses                      (6,400)              (6,900)
Change in other assets                         (90,100)              39,200
Change in payables and accrued expenses        504,100              692,800
Change in other non-current liabilities         40,100              (61,800)
Net cash provided by operating 
activities                                     977,100               16,000

Cash flow from investing activities:
Purchase of fixed assets                       (87,000)            (156,500)
Proceeds from sale of property & 
equipment                                                             6,000
Net cash used in investing activities          (87,000)            (150,500)

Cash flow from financing activities:
Borrowings under subordinated debt 
agreements                                                          325,000
Proceeds from sale of common stock                                   92,800
Payments on line of credit                   (1,493,900)           (695,000)
Borrowings on line of credit                    735,300             355,000
Net cash (used in) provided by 
financing activities                           (758,600)             77,800

Net increase (decrease) in cash and 
cash equivalents                                131,500             (56,700)
Cash and cash equivalents, beginning of 
period                                           88,200             126,200
Cash and cash equivalents, end of 
period                                         $219,700             $69,500

Supplemental disclosures of cash flow 
information:
Cash paid during the period for 
interest                                        $86,700             $73,200
Cash paid during the period for 
income taxes                                                         $7,500

*Reclassified for comparative purposes.
</TABLE>
The accompanying notes are an integral part of this statement

Part I - FINANCIAL INFORMATION - Item 1 (continued)

                                 FAFCO, Inc.
              NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                (unaudited)

1.  This information is unaudited; however, in the opinion of the 
Registrant's management, all adjustments necessary for a fair 
statement of results for the periods presented have been 
included.  The results for the period ended June 30, 1997 are not 
necessarily indicative of results to be expected for the entire 
year.  These financial statements, notes and analyses should be 
read in conjunction with the Registrant's audited annual 
financial statements for the year ended December 31, 1996, 
included in its 1996 Annual Report to Shareholders.

2.  Net income (loss) per share is calculated using the weighted 
average number of common and common equivalent shares outstanding 
during the periods presented.  (See Note 6)

3.  Inventories are valued at the lower of cost or market, 
determined on a last in, first out (LIFO) basis, and consist of 
the following.
<TABLE>

                                     June 30, 1997         December 31, 1996
<S>                                     <C>                      <C>
Raw materials                           $408,100                 $370,500
Work in process                          169,100                  100,800
Finished goods                           151,700                  364,100
                                        $728,900                 $835,400
</TABLE>

4.  The Registrant has a line of credit agreement with Silicon 
Valley Bank, which line of credit allows the Registrant to borrow 
the lesser of $1,000,000 or an amount determined by a formula 
applied to accounts receivable.  Unused borrowing capacity was 
$1,000,000 at June 30, 1997.  Amounts borrowed bear interest at 
prime rate plus 2% per annum and are secured by the Registrant's 
assets along with The Gregory Company's assets.  This line of 
credit expires on March 31, 1998.

5.	Effective as of the beginning of 1993, the Company changed 
its method of accounting for income taxes by adopting SFAS 109.  
The cumulative effect of this change on years prior to 1993 
increased net income for 1993 by $1,434,800 offset by a valuation 
allowance of $717,400.  The cumulative effect resulted primarily 
from the recognition of the tax effects of state and federal net 
operating loss carryforwards and net deductible temporary 
differences.  Financial statements presented for fiscal years 
prior to 1993 reflect accounting for income taxes under the prior 
deferred method.

Part I - FINANCIAL INFORMATION - Item 1 (continued)

Deferred tax assets are comprised of the following at:


<TABLE>
                                       January 1, 1997       January 1, 1996
<S>                                       <C>                    <C>
Allowance for doubtful accounts           $215,600               $197,000
Accrued expenses                           184,300                142,300
Loss carryforwards                       1,157,800              1,360,500
Tax credits                                175,700                178,600
Other                                      107,800                116,400

                                         1,841,200              1,994,800
Deferred tax asset 
valuation allowance                     (1,191,800)            (1,383,800)
Total deferred taxes, net                 $649,400               $611,000

</TABLE>
6.  Net Income Per Share

Primary earnings per share were calculated as follows:

<TABLE>


                               Quarter Ended              Six Months Ended
                                  June 30                      June 30

                             1997         1996            1997         1996
<S>                       <C>          <C>             <C>          <C>
Net income                $473,200     $305,600        $816,700     $406,200
Average common shares 
outstanding              3,298,311    3,298,311       3,298,311    3,209,579
Add:  Exercise of options 
reduced by the number of 
shares purchased with 
proceeds                   208,734          N/A          79,833          N/A
Add:  Exercise of warrants 
reduced by the number of 
shares purchased with 
proceeds                    68,571          N/A          63,173          N/A
Adjusted weighted average 
shares outstanding       3,575,616    3,298,311       3,441,317    3,209,579
Earnings per share           $0.13        $0.09           $0.24        $0.13


</TABLE>
Primary earnings (loss) per share are calculated by dividing net 
income (loss) by the weighted average number of shares issued and 
outstanding and shares issuable upon exercise of dilutive stock 
options and warrants during each year

Part I - FINANCIAL INFORMATION - Item 1 (continued)

Fully diluted earnings per share were calculated as follows:

<TABLE>
                                Quarter Ended            Six Months Ended 
                                   June 30                    June 30

                             1997          1996           1997         1996
<S>                       <C>           <C>            <C>          <C>
Net income                $473,200      $305,600       $816,700     $406,200
Average common shares 
outstanding              3,298,311     3,298,311      3,298,311    3,209,579
Add:  Exercise of options 
reduced by the number of 
shares purchased with 
proceeds                   208,734           N/A         79,833          N/A
Add:  Exercise of warrants 
reduced by the number of 
shares purchased with 
proceeds                    68,571           N/A         63,173          N/A
Add:  Conversion of 
convertible debt into
shares                     555,000           N/A        555,000          N/A
Adjusted weighted average 
shares outstanding       4,130,616     3,298,311      3,996,317    3,209,579
Earnings per common share 
assuming full dilution       $0.12         $0.09          $0.20        $0.13

</TABLE>
Fully diluted earnings (loss) per share are calculated by 
dividing net income (loss), adjusted for the dilutive after-tax 
effect of the interest expense associated with the convertible 
debt, by the sum of the weighted average number of shares issued 
and outstanding and shares issuable upon exercise of dilutive 
stock options and warrants, and upon conversion of convertible 
debt during each year.


Part I - FINANCIAL INFORMATION (continued)
Item 2

                                  FAFCO, Inc.
                   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                 (Unaudited)

Results of Operations
Net sales for the quarter ended June 30, 1997 increased by 18.6% 
from $2,775,500 in 1996 to $3,291,400 in 1997. Net sales 
increased by 22.3% from $5,059,900 in the first half of 1996 to 
$6,187,300 in the corresponding period in 1997.  These increases 
were due mainly to increased unit sales of the Company's pool 
panel products, along with increased unit sales of the Company's 
IceStor products partially offset by the effect of discontinuance 
of the Company's automated swimming pool controls.
Cost of goods sold increased from $1,583,900 in the quarter ended 
June 30, 1996 to $1,771,600 in the corresponding period in 1997, 
while decreasing as a percentage of net sales from 57.1% in 1996 
to 53.8% in 1997.  For the six months ended June 30 cost of sales 
increased from $2,907,400 in 1996 to $3,416,200 in 1997 while 
decreasing as a percentage of sales from 57.5% in 1996 to 55.2% 
in 1997.  These decreases as a percent of net sales were due 
mainly to the spreading of decreased overhead costs over higher 
net sales.
Marketing and selling expenses increased slightly in absolute 
terms from $459,000 and $928,100 for the quarter and six month 
period ended June 30, 1996 respectively to $492,400 and $962,200 
in the same periods in 1997.  Marketing and selling expenses 
declined as a percentage of net sales from 16.5% for the quarter 
ended June 30, 1996 and 18.3% for the six months ended June 30, 
1996 to 15.0% and 15.6% of net sales for the corresponding 
periods in 1997 due entirely to the increased level of sales 
experienced in 1997 compared with 1996. 
General and administrative expenses for the quarter ended June 30 
increased from $370,700 (13.4% of net sales) in 1996  to $522,400 
(15.9% of net sales) in 1997 and for the six month period ended 
June 30 increased from $682,700 (13.5% of net sales) in 1996 to 
$863,200 (14.0% of net sales) in 1997.  These increases were due 
mainly to increased personnel costs.
Research and development expenses for the quarter ended June 30 
increased from $5,400 (0.2% of net sales) in 1996 to $55,200 
(1.7% of net sales) in 1997 and for the six month period ended 
June 30 increased from $58,000 (1.2% of net sales) in 1996 to 
$110,200 (1.8% of net sales) in 1997.  These increases were due 
mainly to increased personnel and consulting costs.
Net interest expense was relatively stable in absolute dollars at 
$40,700 and $37,100 in the quarter ended June 30, 1996 and 1997 
respectively while decreasing as a percentage of net sales from 
1.5% in 1996 to 1.1% in 1997. Net interest expense was also 
relatively stable in absolute dollars at $81,100 and $80,000 in 
the six month period ended June 30, 1996 and 1997 respectively 
while decreasing as a percentage of net sales from 1.6% in 1996 
to 1.3% in 1997.
Other income (net) included $15,800 in refunds of prior year's 
insurance premiums in the first half of 1997 compared with 
$14,000 in the second quarter and $30,000 during the first half 
of 1996.  Other income (net) also included $100,000 in license 
fees.

Liquidity and Capital Resources
At June 30, 1997, the Registrant's inventories had decreased to 
$728,900 from $835,400 at December 31,1996.  This decrease was 
due mainly to aggressive management of inventories resulting from 
increased planning accuracy and purchasing strategy.
At June 30, 1997, the Registrant's accounts payable and other 
accrued expenses had increased to $1,257,700 from $1,037,800 at 
December 31, 1996.  This increase is primarily due to the 
increased volume of business during the first half of 1997 and 
especially during the quarter ended June 30, 1997.
Part I - FINANCIAL INFORMATION - Item 2 (continued)
At June 30, 1997, the Registrant's accounts receivable had 
increased to $2,338,500 from $1,890,700 at December 31, 1996 due 
mainly to the effect of increased sales levels of all of the 
Company's  products.
At June 30, 1997, the Registrant's accrued compensation and 
benefits had increased to $453,000 from $187,000 at December 31, 
1996, due mainly to accruals for employee profit sharing bonuses 
along with the fact that the December 1996 level was abnormally 
low due to heavy use of vacation while the Company was closed in 
the latter half of December. Another factor was increased accrual 
for employee vacation during the first half of 1997 as a result 
of the volume of business combined with lean staffing making it 
difficult for employees to take time off during this period.
At June 30, 1997, the Registrant's current ratio was 1.97 to 1 
compared with 1.54 to 1 at December 31, 1996.  The Registrant had 
working capital of $1,912,800 at June 30, 1997 compared with 
$1,202,700 at December 31, 1996.  Total assets exceeded total 
liabilities by $1,911,000 at June 30, 1997 compared with 
$1,094,300 at December 31, 1996
The Registrant believes that its cash flow from operations along 
with its available line of credit will be sufficient to support 
operations during the next twelve months.
Significant Accounting Policies - Income Taxes
Effective as of the beginning of 1993, the Company adopted 
Statement of Financial Accounting Standards No. 109, "Accounting 
for Income Taxes" (SFAS 109), on a prospective basis.  The new 
standard requires an asset and liability approach for financial 
accounting and reporting for income taxes.  Under this approach, 
deferred tax assets and liabilities are recognized for the tax 
consequences of temporary differences between the financial 
reporting and tax basis of assets and liabilities.  See Note 5 of 
Notes to Interim Consolidated Financial Statements.
For periods prior to 1993, the Company followed the deferred 
method prescribed by Accounting Principles Board Opinion No. 11.

Part II - OTHER INFORMATION

Item 4 - Submission of Matters to a Vote of Security Holders
a. The Annual Meeting of Shareholders was held on April 24, 
1997.  Certain business was conducted at that time, 
including the voting on items (1) and (2) set forth under 
subsection (c.) below.

b. The following directors were elected at the meeting:
                     Freeman A. Ford
                     William A. Berry
                     Robert W. Selig, Jr.
c. The matters voted upon at the meeting and results of the 
vote with respect to those matters were as follows:

<TABLE>
(1) Election of Directors		         	For		       Withheld           	Result
  <S>      <C>                 <C>                 <C>              <S>
  Freeman A. Ford			           2,457,782           82,125		         Elected
  William A. Berry		          	2,458,782	          81,125	          Elected
  Robert W. Selig, Jr.			      2,458,782	          81,125         		Elected

 (2) Election of Burr, Pilger  	    	For        		Against        	Abstained
     & Mayer LLP as the
     Company's	independent    	2,461,932	           2,075	          	75,900
     auditors for the fiscal
     year 1997

</TABLE>

Part II - OTHER INFORMATION (continued)
Item 5 - Other Information

The following table summarizes the outstanding securities during 
the quarter ended March 31, 1997.
<TABLE>

                                                             Shares   
<S>                                                          <C>
Common Stock: authorized 10,000,000 
shares of $.125 par value; issued and 
outstanding at December 31, 1996, as 
reported in the Registrant's Annual 
report on Form 10-K filed for the                
fiscal year ended December 31, 1996.                         3,298,311


Issued during the quarter                                            0


Outstanding at June 30, 1997                                 3,298,311
</TABLE>

Item 6 - Exhibits and Reports on Form 8-K

b.	Reports on Form 8-K

No reports on Form 8-K were filed during the quarter ended 
June 30, 1997.

                                 SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 
1934, the Registrant has duly caused this report to be signed on 
its behalf by the undersigned thereunto duly authorized.


                                        	FAFCO, Inc. (Registrant)



DATE:    July 25, 1997  	                BY:/s/Alex N. Watt	
                                            	Alex N. Watt,
                                            	Vice President - Finance and 
                                             Administration
                                            	and Chief Financial Officer
                                            	(Principal Financial and 
                                             Accounting Officer)