U.S. Securities and Exchange Commission
                          Washington, D.C.  20549

                               Form 10-KSB

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 
ACT OF 1934 
For the fiscal year ended December 31, 1996

[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 
ACT OF 1934  
For the transition period from . . . to . . . .  

Commission file number: 0-21087

Name of small business issuer in its charter): Tollycraft Yacht Corporation

(State or other jurisdiction of incorporation or organization) Nevada 

(I.R.S. Employer Identification No.): 86-0849925

(Address of principal executive offices)(Zip Code): 
17 Horton Plaza, Suite 251, San Diego, CA 92101

(Registrant's telephone number, including area code): (360) 423-5910

Securities registered pursuant to Section 12(b) of the Act: NONE

Name of each exchange on which registered: NONE

Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, NO PAR VALUE
(Title of class)

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. Yes .X. No ...
 
Check if there is no disclosure of delinquent filers in response to Item 405 
of Regulation S-B is not contained in this form, and no disclosure will be 
contained, to the best of registrant's knowledge, in definitive proxy or 
information statements incorporated by reference in Part III of this Form 10-
KSB or any amendment to this Form 10-KSB. [ ]
 
State issuer's revenues for its most recent fiscal year: $3,993,517
 
The aggregate market value of the voting and non-voting common equity held by 
non-affiliates was $3,698,717 computed by reference to the average bid and 
asked price of such common equity, as of September 30, 1997, which was $4.50.

(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE PAST FIVE YEARS)
 
Check whether the issuer has filed all documents and reports required to be 
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of 
securities under a plan confirmed by a court.  Yes ... No ...
 
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
 
The number of shares outstanding of the issuer's common stock, as of September 
30, 1997 was 2,270,368

DOCUMENTS INCORPORATED BY REFERENCE
 
The following documents are incorporated by reference in Part III of this Form 
10-KSB to the extent stated herein.  Except with respect to information 
specifically incorporated by reference herein, these documents are not deemed 
to be filed as a part hereof: Registrant's Current Report on Form 8-K as filed 
electronically on October 28, 1996, Registrant's Current Report on Form 8-K/A 
as filed electronically on February 20, 1997, Registrant's Registration 
Statement on Form 10-SB as filed electronically on July 23, 1996, Registrant's 
Quarterly Report for the period ended September 30, 1996 on Form 10-QSB as 
filed electronically on November 27, 1996.
 
Transitional Small Business Disclosure Format (check one): Yes ... No .X.

                               PART I

Item 1.  Description of Business.

(a) General 

TOLLYCRAFT YACHT CORPORATION was originally incorporated in December 1992 in 
the State of Minnesota as Child Guard Corporation.  The Company changed its 
name from Child Guard Corporation to Tollycraft Yacht Corporation concurrent 
with the merger on January 1, 1996 of Child Guard Corporation and Tollycraft 
Acquisition Corporation, a company registered in the State of Washington.  In 
1994 Tollycraft Acquisition Corporation had purchased substantially all of the 
operating assets of the original Tollycraft Corporation, a Washington 
corporation which was operating under a confirmed Chapter 11 bankruptcy plan 
of reorganization.  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.

History and Acquisition

Child Guard Corporation was formed in 1992 as a development stage company to 
develop and market a child monitoring device.  The developed product was not 
marketed and in 1995 the Company began merger talks with Tollycraft 
Acquisition Corporation.

Tollycraft as a business entity has existed in various forms since 1936.  The 
original Tollycraft Corporation was first incorporated in the State of 
Washington in 1936 under the name of Central Lumber Company ("CLC").  CLC was 
wholly owned by R.M. Tollefson.  The Company began as a small manufacturing 
operation producing fine furniture and cabinetry.  As an adjunct to his 
regular business, Mr. Tollefson produced several custom boats for friends and 
himself.

As the reputation of his boat building talents spread, Mr. Tollefson began 
selling more boats than cabinets and eventual demand allowed him to direct his 
attentions solely to boat manufacturing.  With a dedicated group of proficient 
cabinet makers and his own expert knowledge of yacht design a complete line of 
wooden cruisers was launched.  Mr. Tollefson subsequently transferred the 
assets of his pleasure boat manufacturing operations, "Tollycraft", to CLC in 
1955.  Concurrently, the name of CLC was changed to Tollycraft Corporation.

For more than fifty years Mr. Tollefson actively designed and built pleasure 
cruisers and yachts to meet the needs of the cruising enthusiasts.  His 
understanding of the demands of extended voyages came from personal 
experiences on the water cruising yachts which bear his name.  Gathering input 
from fellow boater's, Tollefson incorporated their many comments and 
suggestions into new or existing models.

A chronological synopsis of Tollycraft operations during Mr. Tollefson's 
career is as follows:

1932 Mr. Tollefson, while involved in the cabinets business, started building 
boats for himself.

1936 Tollycraft commenced pleasure boat manufacturing as a sole proprietorship 
in Kelso, Washington, after building and selling the first boat which 
exhibited the quality he demanded.

1941 World War II interrupted boat building while Mr. Tollefson served in the 
U.S. Coast Guard.

1946 Central Lumber Company was incorporated in the State of Washington.

1952 A fire destroyed Central Lumber Company's plant and equipment; after that 
the company narrowed the scope of its business activities to boat 
manufacturing.

1955 The assets of the sole proprietorship boat manufacturing operations were 
transferred to Central Lumber Company, Mr. Tollefson's wholly owned company; 
concurrently the name was changed to Tollycraft Corporation.

1958 Tollycraft built a plant in the Kelso Industrial Park on 14 acres of land 
and commenced operations in the new 65,000 square foot building in 1959.

1967 Tollycraft Yachts began manufacturing fiberglass hulls starting with the 
conversion of the 24', 28', 30', and 34' wooden hull designs into fiberglass.

1970 The last wooden hull boat was built.  The very successful 34' Sedan was 
the first "keel up" fiberglass design, which sold 194 units in 11 years, and 
set the Tollycraft design trend for the 1970's.

In 1987, Mr. Tollefson retired from Tollycraft and took a relaxed role in the 
marine industry as Chairman Emeritus of Tollycraft.  Tollycraft Corporation, a 
then public company, was taken private and merged through a leveraged buyout, 
into Olympic Equities, Inc.  Thereafter, Olympic Equities, Inc. changed its 
name to Tollycraft Yachts Corporation.  As with many leveraged buyouts of the 
1980's, the transaction was ill-fated and threatened the long term financial 
stability of the Company.

In 1989, a group of investors purchased Tollycraft and provided capital to 
reduce debt and increase working capital for continued operations.  However, 
the economic downturn and the passage of the 10 percent luxury tax caused 
Tollycraft, as well as every other luxury boat builder in the United States, 
to sustain substantial operating losses.  The Company subsequently filed for 
protection under Chapter 11 of the U.S. Bankruptcy Code on November 5,1993.

In February of 1994, a group of investors formed Tollycraft Acquisition 
Corporation ("TAC") and effective June 6, 1994 purchased substantially all of 
the operating assets of the old company.

In January of 1996, TAC was acquired, in a merger transaction, by Child Guard 
Corporation which concurrently changed its name to Tollycraft Yacht 
Corporation.

(b)

Tollycraft Yacht Corporation is a builder of high quality cruising motor 
yachts.  The yachts are luxuriously equipped and built with the highest 
structural integrity to ensure safe, long range cruising.  The current line of 
yachts consists of the following:

48'  Cockpit Motor Yacht
57'  Pilothouse Walkaround Motor Yacht
57'  Pilothouse Widebody Motor Yacht
65'  Pilothouse Motor Yacht

Current plans for new products include the following:

48' Convertible Motor Yacht
48' Pilothouse Motor Yacht
52' Pilothouse Motor Yacht
54' Convertible Motor Yacht
76' - 82' Pilothouse Motor Yacht

The 48' Pilothouse has completed engineering design drawings and plans.  A 
hull mold has been built and the deck mold is in process.

The 52', 54', and 76' - 82' models have completed design drawings and plans. 
The hull form for each model has also been tank tested.

All Tollycraft yachts have a 15 year transferable hull warranty, the longest 
and most comprehensive warranty in the industry.  To date, there has never 
been a manufacturing related hull failure.  Tollycraft Yachts are designed for 
owner convenience and overall functionality.  The electrical and mechanical 
systems are laid out and installed for ease of use and maintenance.  
Tollycraft incorporates intelligent engineering, manufacturing integrity, 
quality craftsmanship, and the patented "Quadralift Hull" construction into 
all its vessels, thus ensuring to Tollycraft customers a truly seaworthy 
yacht.

Intelligent Engineering

Great strides have been made in controls, steering engines and gears.  While 
Tollycraft exercises due caution in adopting new systems until they are 
thoroughly tested and proven, the most reliable of these are now offered.

State of the art components such as MMC electronic controls, custom AC/ DC 
electrical, central chilled water heating and air conditioning, vacuum bagged 
divinycell cored hull and deck structures, fully integrated electrical panels 
and switches, Hynautic hydraulic steering, fuel distribution manifolds, and 
oil lubricated shaft stuffing boxes are but a few of the advanced systems 
offered.

Modern systems are of little benefit however, if they are improperly 
integrated into the complete yacht.  That is why Tollycraft engineers are 
careful to match technology with function.

Critical components, such as engines and generator sets (gensets) are matched 
to the specific needs of each vessel and each owner.  Engine selections 
include MAN, Caterpillar, Detroit Diesel and MTU products.  Gensets are 
manufactured by either ONAN or Northern Lights.

All fiberglass lay-up schedules are verified by an outside consulting engineer 
and tested by an independent laboratory.  All lamination takes place in a 
controlled environment.  Temperature and humidity conditions are continuously 
monitored and recorded to ensure materials are applied within the 
manufacturer's specifications.  Core materials are vacuum bagged to the 
laminate to ensure proper bonding and structural integrity.

Wiring systems have been redesigned and simplified.  Wire harnesses have been 
developed which meet or exceed all industry standards.  Plug type connectors, 
designed to withstand the marine environment, have been incorporated to ease 
installation and minimize owner maintenance.  All Tollycraft wire harnesses 
are color coded in accordance with NMMA and ABYC specifications.

New products are ergonomically designed.  Line of sight, ease of passage and 
mobility restriction are just a few of the human factors Tollycraft's 
designers consider on every new project.  Primary consideration is given to 
safety and functionality.  Tollycraft's engineering department is committed to 
product excellence.  Every aspect of the final product must function as well 
as it looks.

Every phase of the production process is scrutinized by engineering staff and 
production personnel.  New techniques and processes are developed and 
implemented to achieve cost savings, quality and product integrity.  
Cooperative efforts maximize the efficiency of both departments.

Product standardization and documentation ensure Tollycraft's ability to 
purchase and manufactured accurately and efficiently. Whenever possible, 
common parts and processes are employed throughout the various models to 
minimize training and maximize productivity.

New Tollycraft yachts feature an impressive list of standard equipment.  In 
addition, many options are available for the customer to choose from.  If 
owners wish to further personalize their yacht, Tollycraft's engineering 
department will create custom designs upon request.  Custom options are not 
inexpensive, but they afford the owner an opportunity to create a truly unique 
and personal yacht while maintaining the advantages and savings of a 
standardized production process.

Manufacturing Integrity

New ideas and designs are worth little if they do not stand up to the 
structural mechanical and electrical integrity that is the foundation for 
Tollycraft cruising yachts' reputation.  Tollycraft's manufacturing integrity 
gives the owner justifiable confidence in his vessel.  Over 60 years of 
building cruising yachts has taught us it takes more than words to instill 
confidence in a skipper who invests his money and the safety of his crew in a 
yacht.

Tollycrafts are known as seaworthy yachts.  Everyday cruising takes a 
Tollycraft into waters that test a hull incessantly.  Tollycraft knows that it 
takes more than a tough hull to survive sea conditions.  Accordingly, every 
stringer must be encapsulated into the hull, every bulkhead fiberglassed to 
the hull, every wood component is glued together (reinforced with screws) 
wiring and plumbing fastened every few inches.  Any component, whether 
purchased or manufactured by Tollycraft, must be proven to withstand the 
rigors of the marine environment.

Dry rot, once the bane of wooden boats, still attacks modern yachts if 
precautions are not taken.  For this reason, Tollycraft uses premium 
straight-grained mahogany for deck, cabinet and bulkhead framing.  This rot 
resistant wood is then encapsulated with fiberglass wherever it might be 
exposed to bilge water.

Engines, generators and other mechanical equipment are securely installed, 
with special strengthening given to areas of extra stress such as rudder posts 
and shaft logs.  The entire mechanical structure is electronically bonded with 
a heavy copper strap that employs a shaft sweep to make positive electrical 
contact to external metal parts.

For strength and waterproofing, the hull deck and cabin structures are bonded 
and screwed through overlapping fiberglass.  Specially designed window frames 
overlap their cabin side openings which eliminates the possibility of leakage.

Decks are cored with closed cell foam for stiffening and to eliminate any 
feeling of resilience underfoot.  Even shower stalls are laid up of heavy 
fiberglass so they don't creak or bend when used by a normal sized adult.

Integrity is much more than a slogan at Tollycraft.  It is the foundation of 
our customers' confidence in our vessels.

The Quadralift Hull

Editors of boating magazines have been exposed to every claim about hull 
design that the mind can dream up.  Naturally they are skeptical when sea 
trialing any new hull.  However, almost without exception, editors who have 
tested Tollycraft's have reported that the Quadralift hull works as claimed.

Naval Architect Ed Monk Jr., who designed the original "Quadralift" hull for 
the Tollycraft 61' Motor Yacht, won't call his design revolutionary, but 
rather the "latest in hull technology ... the culmination of everything we've 
learned about hulls over the years."

While Quadralift varies from model to model its cupped dual chine separates 
this hull from others.  With the waterline midway between the two chines, the 
Quadralift acts as an effective spray knocker, throwing spray horizontally 
away from the hull.  Deflecting the spray not only delivers a dry ride, but 
increases efficiency by reducing the amount of wetted surface (drag) along the 
hull.

The design of the Quadralift provides extra buoyancy at the bow, permitting a 
finer entry and reducing the tendency to broach in a following sea.  In a 
chop, or at anchor, the Quadralift has a roll dampening effect, and with this 
extra stability comes extra comfort.  But the most dramatic demonstration of 
this remarkable hull comes when you ease the throttles forward and feel your 
Tollycraft rise effortlessly onto plane and handle smoothly at any speed.  A 
nearly full length keel aids the tracking through turns and gives you 
excellent control during slow speed maneuvering.

Product Line Enhancements

Tollycraft management believes that improvement is a process, not a project 
and should be accomplished on an incremental basis.  Accordingly, key tactics 
supporting this strategy focus on developing and maintaining a process which 
empowers Tollycraft employees, contractors, vendors, dealers and customers to 
provide input for product improvement on a continuous basis.

The Company is planning to expand its existing product line with new 
complementary products and redesign existing products to update exterior and 
interior styling.  An additional benefit will be lower manufacturing costs.

The Pilothouse Motor Yacht has become noticeably popular.  The East Coast 
area, particularly Florida, is showing strong demand for this design.  The 
Pilothouse may be used to fish as well as cruise and it offers an escape from 
the weather with a full lower interior station.  Design is nearing completion 
on new a 52' planing hull, pilothouse motor yacht and sports sedan which will 
include three staterooms and two heads.  The yacht will be convenient to dock 
and ease of handling will enhance port to port cruising.  This model is 
expected to retail at $795,000.  Tollycraft's new fiberglass/wood liner system 
will be used in its construction.  The boats will be lighter, have a 
significantly improved ride, and higher performance levels.  The new design is 
expected to simultaneously lower material and labor costs in the manufacturing 
process.  Tollycraft's new 52' Pilothouse will fill a gap in the Tollycraft 
line as well as meet customer demand.  There are hundreds of 44' and 45' 
Tollycraft owners currently without the upgrade option that this yacht will 
make available to them.

Due to numerous customer requests, the Company also plans to introduce yachts 
between 76' and 82' called the "Champagne Series."  These boats will retail 
between $2.7 million and $3.1 million each.

Tollycraft's 40' Sports Sedan has been discontinued and a new 48' Convertible 
Sedan is being developed.  This boat will incorporate many of the popular 
features of the previous 40' model but the additional 8' in length will allow 
the yacht to have an enlarged galley and a spacious master stateroom. 

Command bridges and radar arches of all the existing models are being restyled 
with more contemporary lines.  The redesign will include preformed wire chases 
and mechanical runs which will also significantly reduce installation costs.

A professional yacht design firm has updated Tollycraft's standard interiors 
to meet customer demand for upscale, modem interior styles, layouts and 
materials.

Industry Analysis and Competition

The U.S. market for pleasure boats has undergone many changes over the last 
decade.  In 1986, 1987 and 1988 sales of pleasure boats skyrocketed by 18.7%, 
28.5%, and 14.9%, respectively.  Consumer confidence was high and U.S. exports 
of pleasure boats were booming.  In total, manufacturers' sales of pleasure 
boats expanded by over 75% in those three years.

Manufacturers' sales of inboard/outdrive boats finished out a six year growth 
surge with total growth of approximately 160% between 1984 and 1988.  Outboard 
and inboard motorboats also increased, with total manufacturers' sales growth 
of 87.9% and 96.3%, respectively, during the same period.  The only pleasure 
boats that did not benefit from this prosperity were sailboats, a market which 
continued to suffer from declining demand.

The last cyclical downturn in the economy (the recession of 1989-1991) hit the 
industry hard, as a number of factors combined to set the stage for a severe 
slump in manufacturers' sales.  Among the factors significantly impacting the 
market for pleasure boats in the U.S. were the collapse of the financing 
structure of the industry, savings and loan crisis, changing consumer 
confidence in the economy, and fluctuating U.S. pleasure boat exports.

Making matters worse for pleasure boat manufacturers, in 1991 Congress passed 
a 10% luxury tax on all pleasure boats costing more than $100,000.  Although 
this tax was repealed in 1993, the damage was already done.

In 1992 the positive effects of the recovering U. S. economy reached the 
pleasure boat industry.  Consumer confidence in the economy was starting on 
its upward climb towards a significant height in 1993, and banks began to 
loosen the credit restraints on boat loans as interest rates continued to 
decline.  Consumers began to buy new boats again.  Disposable income was up, 
the luxury tax was repealed, and consumers had a rosier outlook on the 
economy.

The market for pleasure boats embarked on its recovery as manufacturers' sales 
increased by 9.8% to $3.1 billion during 1992.  Two more good years followed 
in 1993 and 1994, when sales rose by 11.8% and 9.4%, respectively.  Business 
Trend Analysts estimated the total pleasure boat market at $3.8 billion in 
1994 and $4.1 billion in 1995. (Source: The U.S. Market for Pleasure Boats, @ 
Business Trend Analysts Inc., 1995)

Overall growth in manufacturers' sales of pleasure boats over the next ten 
years is projected at 6.9% annually.  Business Trend Analysts expects the 
total manufacturers' market for pleasure boats to climb just above $7.4 
billion by 2004.  The following table shows the annual sales of such boats:

U.S. MANUFACTURERS' SALES OF PLEASURE BOATS ($ Millions)

Year          Value
1986         $3,406
1987         $4,378
1988         $5,029
1989         $4,775
1990         $3,894
1991         $2,840
1992         $3,118
1993         $3,487
1994         $3,813
1995 E       $4,124
2004 P       $7,450

E - Estimate
P - Projection

Source:  The U.S. Market for Pleasure Boats, @ Business Trend Analysts Inc., 
1995

Primary Competitors

Tollycraft's primary competition can be divided into two categories, the West 
Coast and East Coast of the United States.

West Coast:  Tollycraft's main competition is from the Taiwanese "knock-offs": 
Ocean Alexander and, to a lesser extent, American Marine (Grand Banks).  These 
competitors have built a reputation for emulating Tollycraft's products using 
extremely cheap labor and trying to underprice and undercut Tollycraft's 
market on the West Coast.  The offshore competitors basically sell a lower 
quality product for a lower price.  In addition, Canadian competition has 
begun to appear because of the weakness of the Canadian dollar.  These include 
Sunship by Westbay, and Queenship.  Tollycraft competes well against these 
manufacturers.

East Coast:  Tollycraft has a great deal more competition from Viking,  
Hatteras and, to a lesser extent, Bertram, Sea Ray, Ocean and Carver.  
Hatteras is the perceived market leader, on the East Coast (including the 
Great Lakes and Gulf of Mexico) and its dealer network is very strong.  They 
have a full line of yachts both in the cruiser and yacht fisher segments.  
Hatteras' product is priced anywhere from 10 to 20 percent higher than 
Tollycraft on the East Coast.

Tollycraft's Market Position

Competitive Advantage

Tollycraft's primary competitive advantage results from the high quality of 
its product.  The Company has never had a manufacturing related hull failure 
and customers have shown themselves willing to pay a premium for this quality. 
 Tollycraft's products have historically had a high resale value and have 
proven to be a good investment for customers.  

Tollycraft Yacht Resale Values

1989 Model Year  
                         December 1994     Resale Value
Model             Sales Price   Dealer Cost*      Percentage
30' Sport Cruiser            $77,275       60,700        79%
34' Sport Sedan              126,420      112,750        89%
34' Sundeck Cruiser          124,327      117,300        94%
40' Sundeck Motor Yacht      174,649      137,500        79%
40' Sport Sedan              186,347      144,100        77%
44' Cockpit Motor Yacht      201,753      224,500       111%
48' Cockpit Motor Yacht      320,000      275,000        86%
53' Motor Yacht              464,312      370,550        80%
57' Cockpit Motor Yacht      535,475      451,850        84%
61' Pilothouse Motor Yacht   687,454      551,300        80%

Average resale value as a percent of original sales price after 5 years 86%.

* (NADA Average)
  Source: NADA Appraisal Guide

Tollycraft's Prospects Within the Industry

Sales of large luxury motor yachts have rebounded significantly since the 
repeal of the luxury tax.  Tollycraft's plan is to position itself for this 
continued growth.  Changing U.S. demographics will also help expand the 
customer base for Tollycraft yachts (see the Tollycraft Customer profile 
section which follows).  The Company expects to do more than maintain its 
share of the growing market.

The May 1993 issue of Powerboat Reports, "The Consumer Resource for the 
Powercraft Owner reported in its feature article that Tollycraft is tops in 
owner satisfaction:  Tollycraft scored an A+ in overall satisfaction and a 90 
percent would buy again index...  The highest marks so far in Powerboat 
Reports Ownership Survey...  Not one Tollycraft owner was dissatisfied enough 
to say he wouldn't consider buying another...This is unmatched in other 
surveys.  Tollycraft managed to show itself a winner in both quality and value 
categories.  Overall satisfaction scored an impressive A+, easily outranking 
all other boats in Powerboat Reports' survey."

Customer Profile

Tollycraft's customers typically have an annual income of $150,000 or higher, 
with a net worth of $500,000 or more.  Based on these figures, the average 
potential Tollycraft customer, nationwide, has the following profile 
(Mendelsohn Media Research, Inc., New York, 1991 annual survey of affluent 
households.):

Age: 48.4 years old Number of homes owned: 1.8
Value of principal residence: $363,200
Value of other real estate owned: $223,000

In addition, 45 percent have assets in their business or profession, with the 
mean value of their equity being $312,303.  Only 12 percent of the homeowners 
have a home mortgage.  
(U.S. Department of Commerce Survey of Income and Program Participation, 1988, 
households with net worth over $500,000)

Changing U.S. demographics mean that the large "baby boom" generation is 
entering the average age of Tollycraft's customers resulting in a greater 
number of qualified, potential customers in the coming decade.

Distribution Network

Tollycraft is currently represented by 5 dealers in 10 locations:  Seattle, 
Portland, California, Michigan, and Florida (6).  Representation is being 
targeted in Toronto, San Francisco, Cape Cod, Chicago, New York, and 
Annapolis.  Once the domestic dealer network is established the Company will 
also seek international representation for its products.

Market Promotion

Company tactics designed to help achieve a strategy of promoting Tollycraft 
include the following:

Dealer Manual:  These have been designed to include policies and procedures, 
as well as a selling reference for brokers.  Dealer bulletins are issued as 
needed to keep manuals current.
Plant Tours:  A periodic open house with all staff on hand for customers and 
dealers.
Retail Sales Display:  A portable display for all major boat shows has been 
developed.
Trade Shows and Conventions:  The Company is an attendee at major nonsponsored 
yacht and boat shows including Superyachts Northwest, and Ft. Lauderdale, St. 
Petersburg, Seattle, and Miami.
Videos:  Promotional videos are complete for the 57 and 82' series along with 
a complete plant tour.  The Company is currently working on a video for the 
new 57' and 65' lines.
Communication with Dealers:  Sales staff are providing at east weekly updates 
to each dealer, building relationships and helping to sell our products.
Dealer Meeting:  This initiative is focused on creating enthusiasm for our 
organization and building relationships.
Tolly University:  Each year in August, a two day training seminar educates 
our dealers and brokers on Tollycraft products.  The meetings cover comparison 
to other products, broker motivation and promoting new products.
Advertising:  The advertising strategy is targeted at new buyers.  Key tactics 
include:
Specification Sheets:  These have been recently reconfigured and now contain 
new designs with current 1996 options and new standard equipment pricing.
Brochures:  New brochures have been developed for all lines and are easily 
updated.
Line Drawings:  New computer generated line drawings for brokers and 
advertising have been completed.
Newsletter:  A Tollycraft sponsored quarterly newsletter promoting Tollycraft 
and informing readers of current events has been introduced.  Production cost 
is fully paid for by trade advertising.
Public Relations Media Kits:  Released quarterly to help promote the 
Tollycraft image, inform the press, and generate editorial commentary.
Advertising Campaign:  Designed to involve dealers in co-op advertising and 
increase advertising exposure. 
Internet:  Internet address at "http://usa.nia.com/tollycraft."
Customer Support:  Tollycraft believes it is imperative to support existing 
and past Tollycraft owners.  They tend to upgrade their boats periodically and 
a personal recommendation is one of the Company's most effective sales tools.
Rendezvous':  The factory participates in regional "Tolly Rendezvous" 
gatherings including Northern California, Portland, Seattle and the Great 
Lakes
Factory Visits:  Prospective customers are encouraged to tour our facilities 
and meet our staff. 
Mailing List:  The Company is currently updating the last five years of 
Tollycraft owners by hull number and plans to market directly to them.
Show Leads:  Computer listings of prospective clients are sent to dealers 
across the country during and after each boat show with active follow up by 
the Company's marketing staff.

Intellectual Property and Royalties

The Company has the following trademarks: 
"TOLLYCRAFT" (Stylized), U. S. Trademark Registration # 855,456
"QUADRALIFT" and Design, U. S. Trademark Registration # 1,514,520
"T and Design", U. S. Trademark Registration # 855,455

The Company has the following patent: 
Yacht, Serial No. 444,604, Filing Date: April 2, 1991, Patent No. D315,892; 
Expires: April 2, 2005.  The loss of said patent, at the time of its 
expiration, would not have a significant impact on the business of the 
Company.

The Company has granted to Pinacle Clothiers in Seattle a license to produce 
the Tollycraft Clothing Line in return for a five percent royalty.

Tollycraft meets environmental and safety regulations through a regular 
program of inspections.  All hazardous material is removed from the facility 
on a regular basis with the appropriate documentation.  Continuing efforts are 
being made to reduce the use of potentially hazardous or unsafe materials.  
The Company is not aware of any material capital expenditures required to be 
in compliance with the laws for the protection of the environment.  The 
manufacturing facility is also regularly inspected by the Washington State 
Department of Ecology at their discretion.

Plant capacity usage and the number of employees varies during the year.  
During 1996, the highest number of employees working at one time was 
approximately 180.  Employment varies with a limitation currently caused by a 
lack of working capital.

Item 2.  Description of Property.

In 1996 the Company leased manufacturing and office space in an industrial 
park in Kelso, Washington.  The plant facilities consists of two buildings 
totaling 180,000 square feet.  The smaller 40,000 square foot building houses 
the fiberglass fabrication operations and is equipped with overhead cranes to 
facilitate movement of completed fiberglass components.  The larger building 
of 140,000 square feet houses several subassembly areas, the final assembly 
lines, raw material and parts inventory storage, and administrative offices.  
Each subassembly area is equipped with overhead cranes, compressed air and 
electrical systems.  Plant layout includes deck level work areas and 
production line capability which supports efficient production methods.  The 
larger building was recently renovated and modernized.  At the end of 1996, 
the Company was behind in rental payments to the landlord.

Item 3.  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 May 25, 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.

Estate of Nora Folkenflik v. Tollycraft Yacht Corporation
King County, Washington Superior Court,
Original File Date: January 13, 1997
Alleged wrongful death suit relating to liquor liability as a result of an 
individual's auto accident after attending an open house co-sponsored by 
Tollycraft.  Relief sought to be determined by the court.

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

A special meeting of the shareholders was held on December 9, 1996.  The 
information about the matters submitted to voting security holders at that 
meeting are incorporated by reference to the Company's Schedule 14C Definitive 
Information Statement filed on November 18, 1997, Form 8-K filed on February 
7, 1997, and Form 8-K/A filed on February 20, 1997.

                              PART II

Item 5.  Market for Common Equity and Related Stockholder Matters.

The Company's common stock has been traded in the over-the-counter market 
since 1993. It is currently listed on the NASDAQ Bulletin Board under the 
symbol TLLR.

The following table sets forth the high and low bid prices for the Company's 
common stock as reported by NASDAQ during the past two years and current year. 
The prices reflect interdealer quotations, without retail markup, mark-down or 
commissions and may not represent actual transactions.

On December 9, 1996, the Company's security holders approved a 25 for 1 
reverse stock split.  The amounts in the table set forth below have been 
restated for comparative purposes to reflect the associated change in value 
caused by the reverse split.

                    Low      High
                    Bid      Bid
1994		
March 31            3 1/8    6 1/4
June 30             6 1/4    6 1/4
September 30        3 1/8    6 1/4
December 31         1 9/16   6 1/4
		
1995		
March 31            1 9/16   1 9/16
June 30             1 9/16   9 3/8
September 30        6 1/4    9 3/8
December 31         6 1/4    9 3/8
		
1996		
March 31            9 3/8    11
June 30             6        11
September 30        6        11
December 31         6        11

As of December 31, 1996, the closing bid price of the Company's common shares 
was $ 11.00.  As of December 31, 1996, there were 290 holders of record of the 
Company's shares.

No dividends have been declared with respect to the Company's common shares 
since inception.  The Company is not likely to pay any dividends in the 
foreseeable future.  The Company intends to reinvest any earnings in its 
operations.

During the quarter ended December 31, 1996, the Company sold 7,950 Units in a 
private offering to accredited investors in accordance with Rule 505 
promulgated under the Securities Act.  Each Unit was priced at $5.00 with 
selling agent/finders fees of $.50 deducted therefrom.  Each Unit consists of 
one common share, one "C" warrant exercisable until March 5, 1998 for one 
common share at $6.00 and one "D" warrant exercisable until March 5, 1999 for 
one common share at $8.00.  The proceeds were used for general working 
capital.

Item 6. Management's Discussion and Analysis or Plan of Operation.

At the end of 1996, Tollycraft Yacht Corporation was operating at limited 
capacity as a result of insufficient working capital and ongoing financial 
difficulties.  The management group has identified specific goals for the next 
12 to 24 month period including:

     Obtain additional debt or equity financing to continue operations
     Maintain customer and dealer relationships
     Shape maximum customer confidence
     Invest in updating and redesigning the current product line
     Complete development of a new series of yachts
     Expand the dealer network

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 achieve profitable operations and/or obtain additional debt 
or equity financing.

Tollycraft Yacht Corporation management is continuing efforts to raise funds 
in order to proceed with its business plan.  The Company is considering 
various alternatives to improve its financial position, meet ongoing trade 
obligations, pay delinquent tax balances, and fund capital expenditure 
requirements.  Alternatives being considered include converting current debt 
to equity through the issuance of common shares, the sale of common shares to 
raise working capital, and additional debt financing.  The Company has engaged 
the services of professional advisors to perform these investment activities.

Chairman and Chief Executive Officer Peter Hobbs announced the organization of 
the Capital Formation Committee with the priority goal of generating new 
capital funding for the Company.  Mr. Hobbs will be assisted by President and 
Chief Operating Officer D.R. Cooley and additional individuals from business 
and international investment banking communities.

Results of Operations:

The Company has reduced manufacturing operations during the first six months 
of the year.  The reduction can be attributed to unprofitable operations and 
the resulting lack of working capital to finance ongoing manufacturing 
operations at a reasonable capacity throughout the year. In July, 
manufacturing employees and non-essential support staff were laid off and 
manufacturing was discontinued until December.  At year-end a limited number 
of employees were constructing one 48' Classic Motor Yacht scheduled for 
delivery in January 1997.

During the year ended December 31, 1996, the Company incurred a net loss of 
$(11,633,426) which included excess plant capacity charges of $1,755,861 and a 
one time charge of $6,727,893 for the purchase of Tollycraft Acquisition 
Corporation.  Exclusive of the purchase costs the net loss would be 
$(4,905,533).  For the year ended December 31, 1995, the net loss was 
$(3,660,332).  The Company also incurred a negative cash flow from operations 
of $(1,312,053) for 1996.  This compares to a negative cash flow from 
operations of $(2,275,500) for the year ended December 31, 1995.

Deeper operating losses are a reflection of the Company's inadequate gross 
margin and the suspension of manufacturing operations at the beginning of the 
third quarter.  Gross Margins were -$577,691 or -14.5% of net sales for 1996 
and -$1,428,320 or -11.7% of net sales for 1995.  The Company's efforts to 
modernize the yacht interiors with more luxurious appointments while honoring 
previous price commitments contributed to the negative gross margin.  There 
was a small amount of manufacturing activity prior to the end of the year.  
The majority of the manufacturing expenses incurred during the third and 
fourth quarters were fixed costs relating to plant overhead expenses and some 
wages for essential personnel.  These costs have been identified as "Excess 
plant capacity" on the Statement of Operations.

Management has emphasized the following areas to improve the operations of the 
Company:
Increase basic pricing on each yacht to improve gross margins and 
reflect the improved product being manufactured.
Redefine manufacturing processes to produce yachts more efficiently and 
with greater profit margins.
Select new materials to continue upgrading the quality of each yacht 
while emphasizing production efficiency.
Implement a labor tracking information system to monitor and reduce 
direct labor costs.
Design a new line of yachts to augment the current models offered.  The 
new yachts will utilize updated manufacturing techniques and have greater 
profit margins.
Develop relationships with dealers that are able to provide their own 
inventory financing.
Increase the dealer network to increase sales volume and reach economies 
of scale.

Financial Condition:

The Company's internally generated cash flow has not been sufficient to 
finance its operations.  The cumulative losses of the Company continue to be 
financed through current liabilities.  Current liabilities of $13,970,428 
exceed current assets of $2,196,738 resulting in a current ratio of .157 at 
December 31, 1996.  The current ratio at December 31, 1995 was .232.  Current 
liabilities include a revolving credit amount of $3,000,000 from a marine 
engine supplier to assist financing of work-in-process inventories and other 
working capital loans from finance companies.  The remaining current 
liabilities are trade payables, advance deposits from customers, accrued 
payroll and related expenses, and undeposited payroll taxes and penalties.

The Company has not been able to make timely payments to its landlord, trade 
suppliers, material vendors, and various taxing authorities.  Deferred payment 
terms are being negotiated with the taxing authorities.  During the short 
periods of production trade vendors and material suppliers have provided the 
Company with its raw material needs on a COD basis.  The Company does not 
expect any difficulties in obtaining raw materials once financing is obtained 
and production returns to a regular level.

Long-term debt of $1,474,890 (including current maturities) are mainly 
obligations assumed in exchange for plant machinery and equipment as well as 
molds and tooling necessary to manufacture the current line of yachts.  
Management believes the book value of these assets is understated when 
considering replacement cost values and the potential earnings capability of 
the tooling.

There were no capital expenditures during the third and fourth quarters of 
1996.  In prior quarters approximately $310,000 was invested in the 
construction of molds and tooling for a new 48' pilothouse motor yacht.  This 
new yacht design is planned to improve manufacturing processes and contribute 
a larger gross margin to the product mix.  

Funds for the capital expenditures and financing of the negative cash flows 
were provided by a corresponding increase in current liabilities.  In order to 
establish the Company as a viable competitor in the industry, management has 
established an aggressive time schedule to upgrade existing molds and tooling 
and manufacture additional molds and tooling for the newly designed line of 
yachts.  Total capital expenditures necessary for completion of the product 
line upgrade and expansion is approximately $2,650,000.  The Company is 
dependent on external sources of funding to complete the plan.

In order to begin production at regular capacity the Company is in need of 
additional capital to build production tooling, finance inventory and provide 
working capital.  The Company is dependent on external sources of liquidity 
until projected levels of production and improvements in direct costs and 
production efficiencies are achieved which will return the Company to 
profitability and a positive cash flow.  A material commitment for capital 
expenditures and working capital is necessary to meet the projected sales and 
production goals.  The expected source for a majority of the funds is from 
private placement investment offerings and a future public stock offering.  
There can be no assurance that the anticipated aforementioned improvements in 
operations can be achieved or additional financing or equity capital may be 
obtained by the Company on acceptable terms.

During the third quarter of 1996 union employees accepted a contract effective 
through June of 1998.  After several weeks of negotiations, the members passed 
a contract calling for:
     Average wage reductions of 20%
     Elimination of certain holiday
     Reduction of vacation benefits
     Employee contributions to medical plans
     A reduction of union work categories
The concessions are expected to result in direct labor savings of 
approximately 23%.

Item 7.  Financial Statements.


Independent Auditor's Report

October 2, 1997

To the Stockholders
Tollycraft Yacht Corporation
Kelso, Washington

We have audited the accompanying balance sheet of Tollycraft Yacht 
Corporation, as of December 31, 1996 and the related statement of operations, 
stockholders' equity (deficit), and cash flows for the period then ended.  
These financial statements are the responsibility of the Company's management. 
 Our responsibility is to express an opinion on these financial statements 
based on our audit.

Except as discussed in the following paragraph, we conducted our audit 
in accordance with generally accepted auditing standards.  Those standards 
require that we plan and perform the audit to obtain reasonable assurance 
about whether the financial statements are free of material misstatement.  An 
audit includes examining, on a test basis, evidence supporting the amounts and 
disclosures in the financial statements.  An audit also includes assessing the 
accounting principles used and significant estimates made by management, as 
well as evaluating the overall financial statement presentation.  We believe 
that our audit provides a reasonable basis for our opinion.

The Company's work-in-process inventory is priced on the basis of direct 
material costs estimated by management rather than invoices or other 
documentation of actual costs incurred.  The Company's accounting records did 
not permit us to extend our auditing procedures sufficiently to satisfy 
ourselves about inventory costs, stated at $1,867,999 in the accompanying 
balance sheet.

In our opinion, except for the effects of such adjustments, if any, as 
might have been determined to be necessary had the accounting records been 
adequate for us to satisfy ourselves about the inventory recorded in the 
financial statements, the financial statements referred to in the first 
paragraph present fairly, in all material respects, the financial position of 
Tollycraft Yacht Corporation as of December 31, 1996, and the results of its 
operations and its cash flows for the year then ended in conformity with 
generally accepted accounting principles.

As described in Note 1 to the financial statements, the Company changed 
its method of accounting for contracts from the percentage-of-completion 
method to recognizing revenues when completed yachts are shipped.

The accompanying financial statements have been prepared assuming that 
the Company will continue as a going concern.  As described in Note 2 to the 
financial statements, the Company has a net loss for the year, a working 
capital deficit, and a net capital deficiency that raise substantial doubt 
about the Company's ability to continue as a going concern.  Management's 
plans in regard to these matters are also described in Note 2.  The 
accompanying financial statements do not include any adjustments that might 
result from the outcome of this uncertainty.



Isler & Co., L.L.C.
Portland, Oregon


TOLLYCRAFT YACHT CORPORATION

Balance Sheet

December 31, 1996

ASSETS
Current assets:

  Cash                                            $          677
  Accounts receivable                                     32,000
  Raw material inventories                               288,313
  Work-in-process inventory                            1,867,999
  Prepaid expenses                                         7,749
    Total current assets                               2,196,738

Equipment, net                                         2,731,394

Other assets                                             274,594


    Total assets                                  $    5,202,726


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:

  Checks issued in excess of bank deposits        $       22,569
  Notes payable                                        7,195,747
  Accounts payable                                     1,404,075
  Accrued payroll and payroll related liabilities      2,077,250
  Other accrued liabilities                            1,652,186
  Customer deposits                                      678,000
Long-term debt, due within one year                      940,601
     Total current liabilities                        13,970,428

Net deferred tax liabilities                             124,184

Long-term debt                                           534,289

Stockholders' equity (deficit):

  Common stock, par value, 50,000,000 shares
    authorized, 1999,957 shares issued and 
    outstanding                                        2,829,703
  Retained deficit                                   (12,255,878)

    Total stockholders' equity (deficit)              (9,426,175)

    Total liabilities and stockholders 
        equity (deficit)	                         $    5,202,726

See accompanying notes to financial statements.


TOLLYCRAFT YACHT CORPORATION

Statement of Operations

Year Ended December 31, 1996


Net sales                                        $     3,993,517

Cost of sales                                          4,571,208

Gross margin                                            (577,691)

Excess plant capacity                                  1,755,861

Selling expenses                                         559,317

General and administrative expenses                    1,001,232

Nonrecurring excess costs over net
  assets acquired  (Note 3)                            6,727,893

                                                     (10,621,994)

Other income (expenses)

  Interest, net                                         (950,081)
  Gain on sale of assets                                  11,290
  Other                                                    5,080
                                                        (933,711)

Loss before provision for income taxes               (11,555,705)

Provision for income taxes - deferred                     77,721
Net loss							                                  $   (11,633,426)

Net loss per share                               $         (5.72)

See accompanying notes to financial statements.


TOLLYCRAFT YACHT CORPORATION

Statement of Stockholder's Equity (Deficit)

Year Ended December 31, 1996

                                                        Total
                     Common Stock        Retained    stockholders
                   Shares    Amount     (deficit)      equity

Balance,
December 31, 1995  6,107,061 $  635,110 $   (630,445) $     4,665

Stock issued      43,891,864 $2,194,593           -     2,194,593

Effect of
1 for 25
stock split      (47,998,968)         -           -             -

Effect of
accounting change          -          -        7,993         7,993

Net loss                                 (11,633,426)  (11,633,426)

Balance,
December 31, 96   1,999,957 $ 2,829,703 $(12,255,878) $ (9,426,175)

See accompanying notes to financial statements.


TOLLYCRAFT YACHT CORPORATION

Statement of Cash Flows

Year Ended December 31, 1996

Cash flows from operating activities:

	Net loss                                               $   (11,633,426)
	Adjustments to reconcile net loss to net
		cash used in operating activities:
			Depreciation and amortization                                374,515
			Gain on sale of assets                                       (11,290)
			Nonrecurring excess costs over net 
	  		assets acquired                                          6,727,893
			Change in assets and liabilities, net of effects
      from purchase of Tollycraft Acquisition Corporation:
					Accounts receivable                                         (3,224)
					Inventories                                                161,687
					Prepaid expenses                                           231,774
					Work-in-process inventory                                 (416,337)
					Checks issued in excess of deposits                         22,569
					Accounts payable and accrued liabilities                 2,478,065
					Deposits                                                   678,000
			Deferred income tax                                           77,721
                                                             (1,312,053)
Cash flows from investing activities:
	Proceeds from sale of assets                                    14,305
	Purchase of equipment                                         (309,533)
	Payment for purchase of Tollycraft
   Acquisition Corporation, net of cash
      acquired                                                   19,879
                                                               (275,349)
Cash flow from financing activities:
	Proceeds from notes payable                                  3,360,044
	Repayment of notes payable                                  (1,815,569)
	Repayment of long-term debt                                     43,460
                                                              1,587,935

Net increase in cash                                                533
Cash, December 31, 1995                                             144
Cash, December 31, 1996                                 $           677


Supplemental disclosure of cash flow information:
	Cash paid during the year for interest                 $       342,674

Supplemental disclosure of noncash financing 
activities:
	Issuance of notes payable for professional
    services received                                   $       228,000
	Common stock issued for Tollycraft 
    Acquisition Corporation                             $     2,194,593

See accompanying notes to financial statements.

TOLLYCRAFT YACHT CORPORATION

Notes to Financial Statements

December 31, 1996

Note 1 - Summary of significant accounting policies

Nature of business

Tollycraft Yacht Corporation, "the Company", is engaged in the 
manufacture and distribution of luxury motor yachts.

Concentrations of cash

The Company maintains cash deposits in bank accounts which, at 
times, exceed federally insured limits.  The Company has not experienced 
any losses in such accounts.

Inventories

Inventories are valued at the lower of average cost or market.

Equipment

Equipment is carried at cost.  Depreciation of equipment is 
provided using the straight-line method over the estimated useful lives 
of the assets.  Additions and improvements, including jigs, patterns and 
molds, are capitalized.  The estimated useful lives of the assets are as 
follows:

                                                    Years
Manufacturing equipment                              5-7
Office furniture and equipment                       5-7
Molds and patterns                                   10

Revenue recognition

With effect from the beginning of 1996, the Company discontinued 
its method of accounting for contracts using the percentage-of-
completion method.  The Company now recognizes revenue upon the 
completion, shipment, and title transfer of each yacht.  The Company 
believes, in view of the uncertainty involved in long-term contracts, 
that this is a more prudent method.  The Company also believes this 
method is more in conformity with industry practices.  The effect of 
this change for 1996 is $7,993.

Accordingly, revenue and costs of individual yachts are included 
in operations in the year during which they are completed.  Losses 
expected to be incurred on contracts in progress are charges to 
operations in the period such losses are determined.  The aggregate of 
costs of uncompleted yachts in process is shown as a current asset, and 
the aggregate of billings on uncompleted yachts in process is shown as a 
current liability.

Estimated warranties

The Company records a warranty accrual at the time of sale for 
estimated claims, based on actual claims experience.  There is a general 
one year parts and labor warranty to the original owner for defects in 
material and workmanship.  In addition, there is a 15 year transferable 
limited warranty for structural defects in all Tollycraft built hulls, 
deck bridges, stringers and bulkheads.

Pension and profit sharing plans

Union employees of the Company participate in a pension plan which 
qualifies under Section 401(k) if the Internal Revenue Code.  The 
Company is required by the union contract to make annual contributions 
of $.05 per labor hour.  There was no contribution made to the plan for 
the year ended December 31, 1996.
Non-union employees of the Company also participate in a pension 
plan which qualifies under Section 401(k) of the Internal Revenue Code. 
 The Company is not required and has not made any contributions to the 
non-union plan.

Net loss per share

Net loss per share is computed by dividing net loss by the 
weighted average number of common shares outstanding during the period. 
 The weighted average number of common shares outstanding was 2,033,290 
for the year ended December 31, 1996.

Income Taxes

Income taxes are accounted for and reported using an asset and 
liability approach.  Deferred income tax assets and liabilities are 
computed annually for differences between the financial statement and 
tax basis of assets and liabilities that will result in taxable or 
deductible amounts in the future based on enacted tax laws and rates 
applicable to the periods in which the differences are expected to 
effect taxable income.  Valuation allowances are established when 
necessary to reduce deferred tax assets to the amounts expected to be 
realized.  Income tax expense is the tax payable or refundable for the 
period plus or minus the change during the year in deferred tax 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 result principally from the Company's 
differences for recording warranty reserves for financial statement 
purposes.  Deferred tax liabilities result principally from the use of 
accelerated depreciation for tax purposes.

Significant risks and uncertainties

The process of preparing financial statements in conformity with 
generally accepted accounting principles requires the use of estimates 
and assumptions regarding certain types of assets, liabilities, 
revenues, and expenses.  Management of the Company has estimated the 
reserves for warranty expenses, costs of work-in-process inventory and 
federal tax penalties on unpaid payroll taxes.  Such estimates primarily 
relate to unsettled transactions and events as of the date of the 
financial statements.  Accordingly, upon settlement, actual results may 
differ from the estimated amounts.

Collective bargaining arrangements

Substantially all of the Company's non-management employees are 
covered by a collective bargaining agreement.  If the Company and the 
production workers are unable to agree on a new contract prior to 
expiration of the current contract, a work stoppage may occur that could 
adversely affect results of operations.

Advertising costs

The Company expenses the cost of advertising as it is incurred.  
The amount charges to selling expense for 1996 is $103,222.

Note 2 - Continued operations

During the year ended December 31, 1996, the Company incurred a net loss 
of $11,633,426, which included a one time charge of $6,727,893 for the cost of 
the acquisition of Tollycraft Acquisition Corporation (discussed further in 
Note 3).  As of that date, the Company's current liabilities exceeded its 
current assets by $11,773,690 and its total liabilities exceeded its total 
assets by $9,426,175.  The Company incurred layoffs and shut downs throughout 
most of the year.  These factors, among others, indicate that the Company may 
be unable to continue its operations without the procurement of alternative 
financing and ultimately the successful marketing of the Company's products.
As discussed further in Note 12, the Company is in the process of 
raising additional equity capital.  A portion of the equity capital will be 
used to enhance working capital, gain operating efficiencies, and expand the 
Company's product lines.
The accompanying financial statements have been prepared on a basis of a 
going concern, which contemplates the realization of assets through continuing 
operations.  No adjustments have been made to reflect potentially lower 
realizable values of assets should the Company be unable to continue its 
operations as the outcome of the above matters is not currently determinable.

Note 3 - Business combination

On January 1, 1996, the Company acquired the assets of Tollycraft 
Acquisition Corporation in a business combination accounted for as a purchase. 
 100% of the voting shares in Tollycraft Acquisition Corporation were 
acquired.  The Company changed its name from Child Guard Corporation as of 
that date to Tollycraft Yacht Corporation.  The Company assumed liabilities in 
connection with the purchase aggregating $9,338,932.  The results of 
operations of Tollycraft Acquisition Corporation is included in the 
accompanying financial statements since the date of acquisition.  The total 
cost of the acquisition was $2,194,593 which exceeded the fair value of the 
net assets of Tollycraft Acquisition Corporation by $6,727,893.  The excess 
was written off during the year.

Cash required, net of cash acquired, for the purchase of Tollycraft 
Acquisition Corporation was as follows:

Fair value of net assets acquired:
    Accounts receivable                                 $     28,776
    Raw material inventories                                 450,000
    Equipment                                              2,796,377
    Prepaid expenses                                          52,367
    Deferred tax assets                                       14,564
    Work-in-process inventory                              1,443,669
    Liabilities assumed                                   (9,338,932)
    Excess cost over net assets acquired                   6,727,893
                                                           2,174,714
    Value of common stock issued                           2,194,593
    Net of cash acquired                                $     19,879


The following summarized proforma information represents Tollycraft 
Acquisition Corporation's financial position, earnings and cash flows for the 
year ended December 31, 1995:

ASSETS
Current assets:

  Cash                                                 $        19,879
  Accounts receivable                                           28,775
  Raw material inventories                                     450,000
  Work-in-process inventory                                  1,500,426
  Prepaid expenses                                              52,367
    Total current assets                                     2,051,447
Equipment, net                                               2,796,377
    Total assets                                       $     4,847,824


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:

  Notes payable                                              5,651,273
  Accounts payable                                             768,167
  Accrued payroll and payroll related liabilities            1,016,802
  Other accrued liabilities                                    866,982
  Customer deposits                                            155,000
Long-term debt, due within one year                            400,597
Total current liabilities                                    8,858,821
Net deferred tax liabilities                                    46,463
Long-term debt                                                 574,083

Stockholders' equity (deficit):
  Common stock, par value, 50,000,000 shares
  authorized, 1999,957 shares issued and 
  outstanding                                                  786,157
  Additional paid-in-capital                                   160,000
  Retained deficit                                          (5,577,700)
    Total stockholders' equity (deficit)                    (4,631,543)
      Total liabilities and 
      stockholders equity (deficit)	                   $     4,847,824

OPERATIONS

Net sales                                              $    12,176,166
Cost of sales                                               13,604,486
Gross margin                                                (1,428,320)
Selling expenses                                               697,902
General and administrative expenses                          1,287,961
                                                            (3,414,183)
Other income (expenses)
  Interest, net                                               (674,246)
  Gain on sale of assets                                         7,700
  Other                                                        466,860
                                                              (199,866)

Loss before provision for income taxes                      (3,613,869)
Provision for income taxes - deferred                           46,463
Net loss                                               $    (3,660,332)

Net loss per share                                            $  (3.66)


CASH FLOWS

Cash flows from operating activities:
	Net loss                                              $    (3,660,332)
	Adjustments to reconcile net loss to net
	cash used in operating activities:
		Depreciation and amortization                                426,145
		Change in assets and liabilities
			Accounts receivable                                         (24,776)
			Raw material inventories                                    (22,358)
			Prepaid expenses                                            (52,367)
			Work-in-process inventory                                  (383,060)
			Deposits                                                    155,000
			Accounts payable and accrued liabilities                  1,239,785
	Deferred income tax                                            44,463
                                                            (2,275,500)
Cash flows from investing activities:
	Purchase of equipment                                        (311,958)

Cash flow from financing activities:
	Proceeds from notes payable                                 6,937,377
	Repayment of notes payable                                 (3,926,218)
	Proceeds from long-term debt                                   48,631
	Repayment of long-term debt                                  (711,501)
                                                             2,348,289

Net increase in cash                                          (239,169)
Cash, December 31, 1994                                        259,048
Cash, December 31, 1995                                $        19,879

Supplemental disclosure of cash flow information:
	Cash paid during the year for interest                $       571,881


Note 4 - Equipment and leasehold improvements

		Equipment consisted of the following:
	Manufacturing equipment				                           $     413,072
	Office furniture and equipment		                             35,344
	Molds and patterns				                                    3,161,326
                                               								    3,609,742
	Less accumulated depreciation                      			     (878,348)
                                                							$   2,731,394

         		Depreciation expense was $374,515 for the year.

Note 5 - Other accrued liabilities

		Other accrued liabilities consisted of the following:

	Property taxes		                                   			$     34,212
	Estimated liabilities for warranties	                      116,844
	Interest	                                        					     339,032
	Excise taxes					                                           48,671
	Vacation payable					                                      160,679
	Workers compensation			                                    538,811
	Other						                                          	$    413,937
						                                               		$  1,652,186

Note 6 - Notes payable

The Company has available a $3,000,000 line-of-credit with Caterpillar 
Financial Services Corporation for the manufacture of yachts.  Under the terms 
of the agreement, borrowings are limited to 75% of the dealer net price of 
each particular yacht, and are advanced 1/3 upon commencement of hull 
lamination, 1/3 upon commencement of assembly and 1/3 upon completion of 
engine installation.  Interest on borrowings are payable monthly at a variable 
rate (which was 10.25% per annum at December 31, 1996).  Borrowings are 
collateralized by substantially all assets.  Outstanding borrowings as of 
December 31, 1996 were $3,000,000.
The Company is also required to maintain a minimum level of 
stockholders' equity and a ratio of total liabilities to stockholders' equity. 
 At December 31, 1996, the Company was in violation of these minimum 
requirements.
The Company also has a line-of credit with Vera Corporation for working 
capital purposes.  Interest on borrowings are payable at a rate of 12% per 
annum.  Borrowings are collateralized by substantially all assets.  
Outstanding borrowings at December 31, 1996 were $3,055,317.
The Company also has a line-of-credit with Commercial Factors of 
Portland, Inc. for working capital purposes.  Interest on borrowings are 
payable monthly at a variable rate (which was 13.6% per annum at December 31, 
1996).  Borrowings are collateralized by substantially all assets.  
Outstanding  borrowings at December 31, 1996 were $133,969.
The Company also has a line-of-credit with California Factors & Finance 
for working capital purposes.  Interest on borrowings are payable monthly at a 
rate of 12% per annum.  Borrowings are collateralized by substantially all 
assets.  Outstanding borrowings at December 31, 1996 were $278,461.
The Company issued notes payable in exchange for services received 
during the year totaling $228,000.  The Company intends to convert these notes 
payable into common stock during 1997.
The Company issued notes payable of $500,000 to Voyager Select IPO Fund 
during the year.  The notes are collateralized by certain assets of the 
Company and bear interest at 24% per annum. The principal and accrues interest 
are due on April 6, 1997.  These notes may be converted into common stock of 
the Company at a conversion price equal to 50% of the closing bid price of the 
common stock on the conversion date.

Note 7 - Long-term debt
Long-term debt at December 31, 1996, consisted of the following:

Non-interest bearing note payable to supplier, due 
June 1996, secured by inventories                        $      19,090

8% note payable to the Internal Revenue Service, 
payable in semi-annual installments of $70,646, 
including interest, due July 1996                              314,503

10% Debentures payable, interest payable in semi-
annual payments for 4 years.  The debentures are 
convertible to common stock of the Company at a rate 
of $.75 per share                                               17,000

8% note payable to the Washington State Labor and 
Industries Division, payable in semi-annual payments 
of $2,219 including interest, due July 1996                      9,878

8% note payable to Transamerica, payable in monthly 
installments of $3,500 including interest, due July 
1996, secured by personal property, inventories and 
accounts receivable                                             50,000

Notes payable to individuals, due at various times 
during 1997, bearing variable interest rate (Wall 
Street prime plus 1%). The notes are convertible to 
one restricted common share of the Company, one "A" 
warrant to purchase one common share exercisable until 
January. 15, 1997 at $4 per share and one "B" warrant 
to purchase one common share exercisable until January 
15, 1998 at $6 per share.  The rate of conversion 
equals 50% of the average public bid price of the 
Company's common stock for the 10 days preceding the 
call conversion.                                               439,750

Non-interest bearing note payable to supplier, payable 
in monthly installments of $1,032, due June 1999, 
secured by inventories                                          50,884

8% note payable to Cowlitz County, payable in monthly 
installments of $160 including interest, due June 1999 
secured by personal property                                     7,874

Non-interest bearing notes payable to suppliers, due 
July 1999, 	discounted at an interest rate of 8%               426,236

Non-interest bearing unsecured notes payable to 
vendor, due July 1999, discounted at an interest rate 
of 8%                                                           88,469

Non-interest bearing unsecured note payable at an 
interest rate of 8%                                             51,206

                                                             1,474,890
Less amount due within one year                               (940,601)
				
                                                         $     534,289


Following are maturities of long-term debt for each of the years ending 
subsequent to December 31, 1997.

		Years ending May 31:
		1998                        $     59,091
		1999                             445,836
		2000                              29,362
                              $    534,289

Note 8 - Major customers

The Company distributes its yachts through a select group of dealers 
nationwide.  Sales to the three largest dealers represented 57%, 24% and 11% 
of sales for the year ended December 31, 1996.


Note 9 - Provision for income taxes

Net deferred tax liabilities as of December 31, 1996 consisted of the 
following:

	Deferred tax asset:
		Net operating loss carryover	                     $  5,635,699
		Other	                                        				       7,928
                                             							   5,643,627
	Deferred tax liability:
		Depreciation			                                       (127,121)
		Other					                                              (4,991)
							                                                 (132,112)
	Valuation allowance for
	  deferred tax asset			                              (5,635,699)

	Net deferred tax liability		                       $   (124,184)

As of December 31, 1996, the Company had net operating loss carryovers 
of approximately $16,575,586 available to offset future federal taxable 
income, if any.  In the event of ownership changes aggregating fifty percent 
or more in any three-year period, the amount of loss carryovers that become 
available for utilization in any year may be limited.  Tax loss carryovers of 
$3,083,000, if not utilized against taxable income, will expire in the year 
2010, $1,989,819 will expire in 2011 and $11,502,767 will expire in 2012.

Note 10 - Common stock

	Shares outstanding
During November 1996, the Company issued 5,000,000 (pre-split) 
share of its common stock to Gemini Financial Services, Ltd. In exchange 
for participation in the Gemini Capital Fund.  The transaction was 
rescinded in December 1996 by both parties.  Gemini Financial Services, 
Ltd.  Still has possession of the stock certificates.  The Company did 
not record this transaction on its books and is not reflected in these 
financial statements.

Stock options
On January 11, 1996, the Company granted to an officer of the 
Company an option to purchase 120,000 shares of common stock at $9.25 
per share, exercisable over a period of two years beginning on that date 
that the line-of-credit from Vera Corporation is fully paid and no 
longer outstanding.
Also on January 11, 1996, the Company granted to an officer of the 
Company an option to purchase 40,000 shares of common stock as follows: 
up to 10,000 shares at $9.25 per share on or before December 31, 1996; 
any unexercised shares from above and up to 10,000 additional; shares at 
$12.50 per share on or before December 31, 1997; any unexercised shares 
from above and up to 10,000 additional shares at 50% of bid price on 
date exercised on or before December 31, 1998; any unexercised shares 
from above and up to 10,000 additional shares at 50% of bid price on 
date exercised on or before December 31, 1999.
On June 26, 1996, the Company granted to key persons options to 
purchase a combined total of 3,800 shares of common stock at 50% of 
market value on the date exercised, exercisable over a period of two 
years.
On December 9, 1996, the Company approved an employee stock option 
plan.  The plan provides for the granting of 600,000 shares of common 
stock to key employees.

Stock split
On December 9, 1996, the Board of Directors authorized a 1-for-25 
stock split, thereby decreasing the number of issued and outstanding 
shares to 1,999,957.  The outstanding stock options listed above have 
been adjusted to account for this stock split.

Note 11 - Subsequent events

Tollycraft Yacht Corporation has issued and is currently offering in a 
private placement $3,000,000 of promissory notes convertible into common 
stock.  Additionally, the Company has signed a Letter of Intent with a 
financing consultant to provide investment banking and advisory services in 
connection with a Secondary Offering of $9,000,000 of common stock.
On January 28, 1997, the Company reserved for issuance up to 500,000 
shares of common stock for up to $2,000,000 cash in a Regulation S 
transaction.  The purchase price would be $4 per share.  During August 1997, 
$250,000 was received relating to this reservation.
On February 13, 1997, the Company authorized the call of its Convertible 
Promissory Notes for conversion as their terms so allow.  Each note is 
convertible into one common share of the Company, one "A" warrant to purchase 
one common share until January 15, 1997 at $4 per share and one "B" warrant to 
purchase one common share until January 15, 1998 at $6 per share.
On February 28, 1997, the Company extended the exercise period for the 
warrants issuable pursuant to the conversion of certain promissory notes.  The 
"A" warrant is extended to January 15, 1998 and the "B" warrant is extended to 
January 15, 1999.
Also on February 28, 1997, the Company authorized the issuance of up to 
$3,000,000 of securities designated as 600,000 units at $5 per unit.  Each 
unit shall consist of one common share, one "C" warrant exercisable until 
March 5, 1998 to purchase one common share at $6 per share, and one "D" 
warrant exercisable until March 15, 1999 to purchase one common share at $8 
per share.
Also on February 28, 1997, the Company entered into a retainer agreement 
relating to legal services for securities matters with compensation at a rate 
of $6,000 per month, payable as follows: (a) in S-8 registered common shares, 
if available, valued at the lowest bid price during the month payable, or, (b) 
if S-8 is unavailable, in restricted stock at 50% of the lowest bid price 
during the month payable.
Also on February 28, 1997, the Company issued 10,000 common shares 
registerable under S-8 in cancellation of an existing debt of 40,000 pre-split 
common shares owed for services rendered.
Also on February 28, 1997, the Company granted stock options to purchase 
315,000 shares of common stock to key persons pursuant to the 1996 Employee 
Stock Option Plan.  The options are exercisable at $6 per share over the next 
five years.
On March 20, 1997, the Company granted stock options pursuant to the 
1996 Employee Stock Option Plan to key persons for the purchase of 45,000 
common shares at $6 per share, exercisable over six months.
Subsequent to year end, the Company borrowed approximately $28,000 from 
key persons and is payable on demand.
Also subsequent to year end, the Company received $97,000 from the 
issuance of convertible promissory notes.


Item 8.  Changes In and Disagreements With Accountants on Accounting and 
Financial Disclosure.

None
                              PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons; 
Compliance with 16(a) of the Exchange Act.

Peter D. Hobbs         52          Chairman, Chief Executive Officer,         
                                   Secretary, Director

D.R. Cooley            42          President, Chief Operating Officer
                                   Chief Financial Officer, Director

Peter Hobbs: Involved in investment banking and capital raising since 1972.  
Worked for several overseas companies actively involved in raising capital for 
both domestic and overseas entities.  One of these companies presently 
controls the majority of voting stock of Tollycraft.

D.R. Cooley: Held positions in business and finance with responsibility in 
investment banking, financing, and management of closely held businesses since 
1977.  Experienced in manufacturing entities, management buyouts, and turn 
around activities.  

Compliance with 16(a) of the Exchange Act.  Federal securities laws require 
the Company's directors, certain of its officers, and persons owning 
beneficially more than ten percent (10%) of a registered class of the 
Company's equity securities, to file initial reports of ownership and reports 
of changes in ownership with the Commission.  The Company is required to 
disclose any failure of persons, who at any time during the fiscal year, were 
directors, officers required to report, or more than ten percent (10%) 
beneficial owners, to file timely those reports during the fiscal year.  The 
Company undertakes the responsibility to file all required reports on behalf 
of its directors and officers.  To the Company's knowledge, based solely upon 
information furnished to the Company by its directors and certain of its 
officers, during the fiscal year ended December 31, 19196, all of the 
Company's directors, officers required to report, and greater than ten percent 
(10%) beneficial owners made all such filings on a timely basis, except for 
the following: Peter Hobbs, D.R. Cooley, Kramfors Limited.

Item 10.  Executive Compensation.
<TABLE>
<CAPTION>
                        SUMMARY COMPENSATION TABLE
 
                                                               Long Term Compensation
                                                        -------------------------------------------------
 
                           Annual Compensation                    Awards            Payouts
                   --------------------------------------------------------------------------------------
(a)                (b)     (c)          (d)         (e)         (f)          (g)           (h)        (i)

Other                         Securities
Name                                                 Annual     Restricted   Under-                   All Other
and                                                  Compen-       Stock     lying           LTIP      Compen-
Principal                                            sation      Award(s)    Options/      Payouts     sation
Position           Year     Salary ($)   Bonus ($)     ($)          ($)      SARs (#)        ($)         ($)
<S>                <C>    <C>            <C>         <C>        <C>          <C>           <C>       <C>         

Peter D. Hobbs     1996   ...
Chairman, Chief    1995   ...
Executive Officer
Secretary

D.R. Cooley        1996   $96,000      $0                                    $120,000      $40,000
President,         1995   $96,000      $0
Chief Executive
Officer, Chief 
Financial Officer 

</TABLE>

1996 Option Grants.  The following table shows information regarding grants of 
stock options in 1996 to the executive officers named in the Summary 
Compensation Table. 

                          Individual Grants

(a)	            (b)	           (c)	           (d)	           (e)
                Number of        % of Total
                Securities       Options/SARs
                Underlying       Granted to      Exercise
                Options/SARs     Employees       or Base      Expiration
Name            Granted (#)	   In Fiscal Year	 Price ($/Sh)   Date

Peter D. Hobbs  ...             
				
D.R. Cooley	    120,000	       50%	            $9.25/Share	   variable (1)
               	 40,000	       50%	            $9.25/Share	   12/31/99 (2)

Footnotes
(1) Stock Option Agreement, adjusted for reverse split, expires 24 
months after the debt owed by the Company to Vera Corporation is fully paid 
and no longer outstanding or is bargained, sold, assigned, transferred or 
conveyed to a third party, and written notice from the Company of such payoff 
or transfer is given to the Optionee.
(2) Incentive Stock Option Agreement, adjusted for reverse split, 
exercisable as follows: (1.1) Up to 10,000 shares at $9.25 per share, which is 
the fair value at the time this option is granted, on or before 12/31/96; 
(1.2) Any unexercised shares issuable pursuant to Section 1.1 herein and up to 
10,000 additional shares, all at $12.50 per share on or before 12/31/97; (1.3) 
Any unexercised shares issuable pursuant to Sections 1.1 and 1.2 herein and up 
to 10,000 additional shares, all at 50% of the bid price of the stock as 
quoted at the time notice of exercise is given, on or before 12/31/98; (1.4) 
Any unexercised shares issuable pursuant to Sections 1.1, 1.2, and 1.3 herein 
and up to 10,000 additional shares, all at 50% of the bid price of the stock 
as quoted at the time notice of exercise is given, on or before 12/31/99.

The following table illustrates stock option and SARs exercised by the named 
executive officers during 1996 and the aggregate amounts realized by e4ach 
such officer.  In addition, the table shows the aggregate number of 
unexercised options and SARs that were exercisable and unexercisable as of 
December 31, 1996, and the values of "in-the-money" stock options and SARs on 
December 31, 1996, which represent the positive difference between the market 
price of the Company's Common Stock and the exercise price of such 
options/SARs.

There were no option/SAR exercises in last fiscal year and FY-End Option/SAR 
Values are $0 since the options are not "in-the-money".

There was no compensation paid in 1996 for services as a director of the 
Company.

Item 11.  Security Ownership of Certain Beneficial Owners and Management.

The table below sets forth the only entities known to the Company to be the 
beneficial owner of more than five percent of the outstanding Common Stock of 
the Company.
  
Name and                Amount and
Address of              Nature of
Beneficial              Beneficial              Percent
Owner                   Ownership               of Class

Kramfors Limited,       1,448,431               72.42%
2 Ice House Street,     Option to
Suite 202,              acquire,
Central Hong Kong       voting power*

*subject to a Voting Trust Agreement wherein Peter D. Hobbs is voting trustee 
on behalf of Kramfors Limited.

The following table sets forth the number of shares of Common Stock of the 
Company beneficially owned at December 31, 1996, by each director, by each of 
the executive officers included in the Summary Compensation Table, and by all 
directors and executive officers of the Company as a group, and the percentage 
of the outstanding shares of Common Stock so owned by each such person and 
such group.

Name and                Amount and
Address of              Nature of
Beneficial              Beneficial              Percent
Owner                   Ownership               of Class

Peter D. Hobbs          1,448,431               72.42%
                        Voting Trustee
D.R. Cooley                     0                0%

Total                   1,448,431               72.42%


Item 12.  Certain Relationships and Related Transactions.

Peter D. Hobbs, Chairman, Secretary, Director:  
Mr. Hobbs is an employee of Kramfors Limited.  Kramfors Limited has identified 
Mr. Hobbs as the voting trustee of 72.42% of the common shares of the Company.

During 1996, Corporate Developers of America provided consulting and 
management services to Tollycraft Yacht Corporation.  Mr. Hobbs is the 
Executive Director of Corporate Developers of America.

Item 13.  Exhibits and Reports on Form 8-K.

   (a) Exhibit Table.

2 Plan of Acquisition, reorg. (3)

3.1 Articles of Incorporation (3)

3.2 By-Laws (3)

5 Instruments defining the rights of security holders (4)

9.1 Voting Trust Agreement (2)

9.2 Assignment of Voting Trust Agreement (5)

10.1 *1996 Employee Stock Option Plan (3)

10.2 *Consulting Agreement between Tollycraft and Kramfors Limited (5)

10.3 *Incentive Stock Option Agreement between Tollycraft and D.R. Cooley (1)

10.4 *Stock Option Agreement between Tollycraft and D.R. Cooley (1)

21 Subsidiaries of the registrant (1)

23 Consent of experts and counsel (1)

24 Power of attorney (1) 

27 Financial Data Schedule (1)
____________________

(1) Filed herewith.

(2) Incorporated by reference to the Registrant's Current Report on Form 8-K 
as filed electronically on October 28, 1996.

(3) Incorporated by reference to the Registrant's Current Report on Form 8-K/A 
as filed electronically on February 20, 1997.

(4) Incorporated by reference to the Registrant's Registration Statement on 
Form 10-SB as filed electronically on July 23, 1996. 

(5) Incorporated by reference to the Registrant's Quarterly Report for the 
period ended September 30, 1996 on Form 10-QSB as filed electronically on 
November 27, 1996.

*Compensatory plan or arrangement

   (b) The following reports on Form 8-K were filed during the quarter ended 
December 31, 1996:

October 28, 1996     Item 1,5

                              POWER OF ATTORNEY

The Registrant and each person whose signature appears below hereby authorizes 
D.R. Cooley, the agent for service named in this Report, with full power to 
act alone, to file one or more amendments to this Report, which amendments may 
make such changes in this Report as such agent for service deems appropriate, 
and the Registrant and each such person hereby appoints such agent for service 
as attorney-in-fact, with full power to act alone, to execute in the name and 
in behalf of the Registrant and any such person, individually and in each 
capacity stated below, any such amendments to this Report.

                                [SIGNATURES]

In accordance with Section 13 or 15(d) 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)


By: /s/_______________________________
    Peter D. Hobbs, Chairman, Chief
    Executive Officer, Secretary


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

Date: 11-18-97

 
In accordance with the Exchange Act, this report has been signed below by the 
following persons on behalf of the registrant and in the capacities and on the 
dates indicated.
 
Signature                             Title               Date 

/s/_______________________________                           11-18-97
D.R. Cooley                           President, Chief
                                      Operating Officer,
                                      Chief Financial
                                      Officer, Director

/s/_______________________________                           11-18-97
Peter D. Hobbs                           Chairman, Chief
                                      Executive Officer,
                                      Secretary, Director