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 March 31, 1998
                             OR
/_/ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
      For the transition period from ________ to ________
                           Commission File No. -  0-22524 

                 REAL GOODS TRADING CORPORATION
(Exact name of small business issuer as specified in its charter)

        California                        68-0227324
(State or other jurisdiction (IRS Employer Identification Number)
incorporation or organization)

  555 Leslie Street, Ukiah, California                  95482
(Address of principal executive offices)              (Zip Code)

Issuer's telephone number, including area code: (707) 468-9292

Securities registered under Section 12(b) of the Exchange Act:
Title of each class     Name of each exchange on which registered

Securities registered under Section 12(g) of the Exchange Act:
  Common Stock                        (Title of Class)
     Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 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 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[ ].

State issuer's revenues for its most recent fiscal year.
$17,034,000 

     State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the
stock was sold, or the average bid and asked prices of such
stock, as of a specified date within the past 60-days.
$10,045,000 as of June 15, 1998. The number of shares of the
issuer's Common Stock outstanding as of June 15, 1998 was
3,939,580.

             Documents Incorporated by Reference

     A portion of the Real Goods Trading Corporation's Proxy
Statement for the 1998 Annual Meeting of Shareowners  to be filed
with the Commission on or before June 25, 1998 is incorporated by
reference into Part III, Items 9, 10, 11 and 12 of this Annual
Report on Form 10-KSB.  With the exception of those portions
which are specifically incorporated by reference in this Annual
Report on Form 10-KSB, the Real Goods Trading Corporation Proxy
Statement for the 1998 Annual Meeting of Shareowners is not to be
deemed filed as part of this report.
</PAGE>
                              PART I

Item 1.   DESCRIPTION OF BUSINESS

Mission Statement:  Through our products, publications and
educational demonstrations, Real Goods promotes and inspires an
environmentally healthy and sustainable future.

Introduction.   Real Goods Trading Corporation ("Real Goods" or
the "Company") sells primarily environmentally related products
and renewable energy products through mail order catalogs, direct
sales, retail stores and its Internet web site
(www.realgoods.com). 

The Company mailed catalogs under the names of Real Goods*, Earth
Care*, Real Goods News, Post Consumer, and the renewable energy
products catalog, Real Goods Renewables in fiscal 1998.  The
Company sells renewable energy products directly to its customers
through its renewable energy department, Real Goods Renewables.
The Company's retail stores are located in Hopland and Berkeley,
California and Eugene, Oregon.  The Company also moved a small
outlet store from Ukiah to a site adjacent to its Berkeley store
in January, 1998.

*Real Goods and Earth Care are registered trademarks owned or
licensed by the Company.
</PAGE>
The Company conducts consumer education activities through its
"Institute for Solar Living", a seminar series, and creates
educational products to support its renewable energy products.
Each year the Company conducts an internal "eco-audit" as well as
an annual "social audit" and publishes the results in its annual
report to shareowners.

A.  THE COMPANY'S MARKETS

The Company serves several related market segments within the
single line of business of specialty retailing.  The
"Environmentally Related Products Market," consists of consumers
who wish to pursue simpler, more energy conserving, wholesome
lifestyles with a belief in preserving the earth's resources in a
sustainable manner. Consumers in this market tend to live in
urban and suburban residences served by the conventional electric
utility power grid.   In fiscal 1998, the Company maintained two
differing color catalogs, the Real Goods Catalog containing
products for energy conservation for the suburban household, and
the Earth Care Catalog containing "soft goods" for gifts,
clothing and household cleaning products.  In the coming year the
Company plans to eliminate the Earth Care catalog and offer two
different Real Goods catalogs aimed at different consumer
interests.  The Company believes this plan will strengthen the
Real Goods brand identity, clarify the Real Goods merchandising
mission and create operating internal efficiencies.

The "Regional Retail Market" is served by the Company's retail
stores, located in Hopland and Berkeley, California and Eugene,
Oregon.  Each of the three stores carries a majority of the
products in the color catalogs but also carries environmental and
clothing products as well as unique regional products.  Each of
the stores has a resident technician who is knowledgeable about
renewable energy products, and displays that demonstrate
renewable energy products.  The Company's new outlet store in
Berkeley, California, is used as a vehicle for reducing
overstocks, returns and discontinued products.

The Company's original focus, the "Renewable Energy Market,"
consists of homeowners and others living and working without the
benefit of the traditional electric company power grid and
generating their own electricity.  The Company has also
identified eco-tourism as a promising sub market for its
renewable energy sales. As the price of renewable energy
products, particularly photovoltaic (solar electric) modules
declines, this market has become more mainstream.

In conjunction with its product marketing efforts, the Company
has always emphasized the "Consumer Education Market".  The
Company produces and sells a wide variety of educational
materials through its catalogs and retail stores. The Company has
a successful co-publishing relationship with Chelsea Green
Publishers of Vermont. In 1992, the Company established the
Institute for Solar Living, which offers educational seminars on
a variety of topics.  With the opening of the Solar Living Center
in May 1996 the Company has a demonstration site for the
Institute, as the retail store there has been built with
sustainable building materials, including strawbale construction,
and has many functioning renewable energy systems.

     1. ENVIRONMENTALLY RELATED PRODUCTS MARKET.  The Company's
mail order catalogs market energy saving conservation devices,
environmentally related products durable tools, products for
alternative health and educational and well-made gifts to urban
and suburban dwellers.  Approximately 71% of the Company's total
sales in fiscal 1998 were derived from catalogs.  The Company
mailed approximately 6,417,000 catalogs in the current year,
compared to 6,394,000 in the previous year.

The environmentally related products offered by the Company
comprise a full spectrum of energy-efficient lighting equipment;
high efficiency appliances; water saving devices such as low-flow
showerheads, low-flush toilets and faucet aerators; recycled
paper products including toilet paper, paper towels and facial
tissue; household products; gift and cards and wraps.  The
Company also sell non-toxic household cleaning products, water
and air purification devices, health-related products and durable
tools to this same customer base.

In January 1997 the Company began a trial program offering a
number of its catalog products on its Internet website.  The
Company believes that the Internet is consistent with the
Company's mission to reduce the use of paper and fossil fuels. In
March 1998 the Company began a beta test of "Tree Free", a
program by which Internet users will foreswear catalogs and
purchase the Company's offerings exclusively over the Internet.
There can be no assurance that the Company will continue to use
the Internet as a means of reaching potential customers in the
future.

In the fall of fiscal 1998, the Company mailed catalogs to the
Japanese market that had a Japanese order form.  Although initial
response was positive, the Company has postponed additional
catalog mailings into the Japanese market due to economic
uncertainties.

In April 1997, the Company participated in launching a commercial
Internet site in Japanese that offered Real Goods products for
sale.  This project is continuing currently, and response
supports the Company's belief in the broad based appeal of the
Company's products in the Japanese market.  There can be no
assurance that the Company will successfully exploit foreign
sales opportunities.

In January 1997 the Company began printing a wholesale catalog
that offers a limited number of catalog products at attractive
wholesale prices.  The catalog is being distributed to inquirers
and certain selected businesses, and many of the products that
the Company imports directly are included in the offering. 
Although initial response to this limited offering has been
encouraging, there can be no assurance that the Company will be
successful at wholesale sales.
 
    2. REGIONAL RETAIL MARKET.  The Company's retail stores serve
as demonstration centers for the mail order catalog and renewable
energy products.  The Company markets energy saving devices,
environmentally related products, educational and well-made gifts
and unique regional products in each of its retail stores.  In
fiscal 1998, the Company's four retail stores accounted for 17%
of total sales.  The Company closed its Amherst, Wisconsin store
in August 1997, and opened a store in Berkeley, California in
November 1997.  The Company opened an outlet store in Berkeley to
a site adjacent to its Berkeley store in January 1998.

The Company ended fiscal 1998 with 14,300 square feet of retail
space, which it had for the last four months of the fiscal year. 
The weighted average retail selling space for fiscal 1998 was
10,767 square feet, compared to a weighted average of 9,233
square feet in fiscal 1997.

The Solar Living Center, which opened in 1996 in Hopland,
California, is a twelve acre demonstration site that is the home
of the Company's flagship store.   The 4,200 square foot store is
constructed of adobe-like covered rice straw bales and has a
utility intertie system with the local utility, Pacific Gas &
Electric Company.  The Company's 10 kilowatt photovoltaic array
and 3 kilowatt wind generator can seasonally produce more power
than is necessary for the site; the Company sells the excess
power back to PG &E.  The Solar Living Center embodies the
Company's core principles and provides an opportunity to
demonstrate the practicality of living and working on a low
consumption, environmentally sensitive and renewable energy
basis.  The site is immediately adjacent to Highway 101 in
Hopland, California, and has to date been of interest both to
residents of Northern California and to tourists who have made it
a destination.  Nearly 140,000 visitors came to the SLC in fiscal
1998, up from 100,000 visitors in the previous year.  The Company
believes that the Solar Living Center has the potential to be of
strategic importance to the Company's future. 

In addition to serving as a demonstration center for renewable
energy products and catalog products, the Hopland store also
offers retail products, some of which are unique to the Northern
California bio-region.  Many of these unique products are
handmade or made in small quantities that are not suitable for
mail order.  About two thirds of the Hopland store's products are
catalog and renewable energy items; one third are retail unique
items.

In 1996 the Eugene, Oregon store moved from smaller quarters to a
3,800 square foot downtown location.  The store carries a
majority of the items in the catalogs as well as renewable energy
products and provides full technical support for these products. 
The store is set in a low population area, where the Company
believes there are potential renewable energy customers.

In November 1997, the Company began implementing its retail
expansion strategy and opened a retail store in Berkeley,
California.  The 4,800 square foot Berkeley store serves as an
urban demonstration center for the Company's catalog and
renewable energy products and features hands on displays of
solar, wind power and energy efficiency.  The Company believes
that the store will further the Company's mission of spreading
renewable energy and sustainable living to a wider audience.  In
January 1998, the Company opened a 1,500 square foot outlet store
adjacent to the Berkeley store.  The Company intends to focus its
clearance program through this store.

In August 1997 the Company sold its store in Amherst, Wisconsin
which failed to achieve the long term strategic objectives which
the Company had for the store.  The Company is seeking to sell
the land and building in which the store was located.

     3.  RENEWABLE ENERGY PRODUCTS MARKET. Real Goods Renewables
offers power systems for the eco-tourism market and for domestic
remote homes using renewable sources of energy including
photovoltaic (solar electric), hydroelectric and wind electric,
as well as emerging renewable energy technologies such as
hydrogen fuel cells and a new generation of photovoltaic cells. 
Real Goods Renewables  endeavors to provide a broad array of
appliances and other system components for most aspects of the
independent power systems lifestyle.  These products include
battery storage systems, power conversion devices, charge
controllers, meters, low voltage water pumping systems, solar and
propane gas water heaters, high efficiency refrigerators, solar
cooling devices, composting toilets and a wide variety of
low-voltage household appliances.

The traditional customers for these power systems have been
owners of remote homes in excess of one-quarter mile from the
power companies' lines in the United States and remote villages
in third world countries.  The Company believes over 25,000 homes
have used its products to migrate to renewable energy primarily
through solar systems.  However, the Company believes that the
market for small scale solar electric systems in the developing
third world market is increasing significantly.  The Company is
seeking to serve the domestic remote home market directly and to
develop strategic alliances to address the developing third world
market through product sales and education.  The Company believes
that its renewable energy market will grow significantly in the
near future.

The Company has continued to emphasize the eco-tourism sub
market, a  well as foreign markets, and attributes a portion of
the gain in sales in fiscal 1998 to sales from these markets,
particularly in Brazil and Latin America.

President Clinton's new "million solar roofs" initiative has
brought much interest in renewable energy to mainstream America. 
Currently the federal government is proposing tax credits for
homeowners installing renewable energy systems.  The Department
of Energy continues to provide funds via Team UP funds for
photovoltaic installations.  The California Energy Commission is
offering a renewable energy rebate program for homeowners who
install utility intertie systems.  The Company has offered
assistance in fulfillment of the program requirements for its
customers and is well positioned to take advantage of these
offers.

Real Goods Renewables markets its products through the Real Goods
Renewables Catalog, a technical catalog mailed to the more
sophisticated renewable energy buyer, as well as through the
Company's own Solar Living Sourcebook and other educational
materials, and by direct sales.  The Company's technical staff is
fully trained in energy system sizing and specializes in
designing solar systems of all sizes.

     4. CONSUMER EDUCATION ACTIVITIES. The Company has
traditionally emphasized consumer education as part of its
mission and continues to produce and sell a wide variety of
educational materials.  The Company's primary product for this
market is the ninth edition of its Solar Living Sourcebook, a 700
page textbook that the Company periodically revises and which
features all of the Company's renewable energy products.  The
Solar Living Sourcebook is currently distributed by an
independent publisher (Chelsea Green) as well as by the Company
itself. Over 100,000 copies of this book have been sold in over
44 English speaking countries.  The Company also markets many
publications on specific aspects of renewable energy conservation
and sustainable living within its catalogs and in its retail
stores.  In fiscal 1998 the Company developed a series of
educational booklets, the Solar Living Series, as well as several
new portable power products through Real Goods Renewables.
Currently the Company does not spend material amounts for
research and development.

The Company has established a successful co-publishing
relationship with Chelsea Green Publishers of Vermont.  Through
this relationship, fourteen books have been co-published bearing
"Real Goods Solar Living Series" on the books' covers, including
the Company's own Solar Living Sourcebook.  The Company believes
that these co-publishing efforts have significantly boosted its
position as an education leader in the sustainability  movement.

The Company has established a website (www.realgoods.com) which
it believes to be both user-friendly and informative.  The 
website provides the Company with an alternative avenue for
offering its products and explaining its mission, history,
programs and products.  On the website the Company also maintains
an innovative bulletin board for interested shareowners and
prospective stock purchasers to agree upon the purchase and sale
of the Company's common stock without the intermediation of stock
brokers.  Transactions are without cost to purchasers, and
sellers pay only transfer fees.  The Company received the
approval of the Staff of the Securities and Exchange Commission
for this program in June 1996, and this approval was the first of
its kind.  There can be no assurance that the Company will
continue to offer this service to its shareowners in the future.

Currently in its seventh season, the Institute for Solar Living
offers seminars each year for individuals on a variety of topics
such as "Planning and Building Your Renewable Energy Home" and
"Strawbale Construction."  The seminars are taught by the
Company's employees and by third-party industry specialists.  The
Company believes the Institute for Solar Living creates increased
consumer awareness with regard to the Company's renewable energy
products and integrates well with the Solar Living Center as a
demonstration site. Although the Institute for Solar Living
accounts for a modest portion of the Company's sales, it is a
significant aspect of the Company's mission.

B.  VENDORS 

The Company currently purchases its products from a vendor base
of more than 750 suppliers, none of which accounts for more than
5% of the Company's purchases.  The Company's ten largest vendors
account for 33% of purchases.  The four largest annual purchases
are from vendors who sell renewable energy products, including
photovoltaics, appliances, and inverters.  While there are many
suppliers of these products, the Company has chosen to limit the
majority of its renewable energy purchases to four vendors:
Astropower, a distributor of solar modules;  Solar Electric
Specialties Company, a distributor of solar modules manufactured
by Siemens Solar Industries; Photocomm, Inc., a distributor of
solar modules and high efficiency refrigerators; and Trace
Engineering, a manufacturer of inverters and other solar electric
controls.  The Company has developed long-term relationships with
all four of these vendors.  Because many of the renewable energy
products are relatively new, the number of suppliers for these
products can be limited, and the Company, from time to time, may
face short-term dependencies upon certain manufacturers for these
products.  However, the Company believes it would not face
long-term difficulties in securing alternate sources of supply
for such products if it experiences an interruption in its
current supply.  The Company believes such an interruption would
be brief and is not likely to have a long term material adverse
effect on the Company's orders and sales revenues for the period
affected.

The Company generally does not enter into long-term contracts
with its suppliers because the Company believes that adequate
alternative sources for most products exist and that it has
greater flexibility to take advantage of competitive price
fluctuations or improvements in technology or quality by not
being obligated pursuant to long-term arrangements.  As a result,
there can be no assurance that the Company will not be subject to
unanticipated cost increases or shortages of supply.

C.  SEASONALITY

Forty per cent of the Company's revenues are realized in the
third quarter, which ends on December 31. Renewable energy
products are also subject to seasonality, but the cycle for these
products is the inverse of the environmental, conservation and
gift products, which lessens the effect of the holiday season on
the Company's sales.  The Company's fiscal year ends on March 31. 
The Company's sales have generally increased sequentially over
the term of the first, second and third fiscal quarters, and
generally declined in the fourth fiscal quarter.  It is possible
that such seasonal effects will be increased if the Company's
customer base continues to include a greater percentage of urban
and suburban dwellers. The Company believes that current trends
reflect (i) increased demands for its renewable energy products
during the mild-weather months when its customers are more likely
to undertake construction and major home improvement projects and
(ii) increased demand for environmentally related and gift
products, similar to that generally experienced by conventional
retailers, during the holiday season.  (See: "Description of
Business - A.  The Company's Markets".)


D. BACKORDERS; RETURNS

Backorders are considered healthy in certain other industries;
however, in the mail order industry, backorders can be symptoms
of inefficiency, lack of inventory or bad strategic planning or
implementation, since they create both additional costs and risks
of lost sales.  The majority of the Company's backorders arise
when(i) vendors fail to deliver as promised, or (ii) sales are
higher than anticipated.  The Company's  backorders are generally
less than $100,000 at any one time.  At March 31, 1998, backorders
were $44,000, which was 4.6% of that month's catalog sales.  At
March 31, 1997 backorders were $54,000, which was 4.7% of that
month's catalog sales.  The Company attempts to keep its backorders
at any given time to less than 10% of its total orders, which the
Company believes is the industry standard.  However, the Company
may experience fluctuations in backorder levels due to seasonal
changes in demand, inventory levels and delivery from suppliers.

Although the Company does have a 90-day return policy for
products returned by customers in their original condition, the
Company has not historically experienced substantial product
returns for its catalog segment.  For fiscal 1998, returns of
catalog sales were 5.1% of gross catalog sales, the same
percentage that they were in the previous year.  The Company
believes that the hard goods catalog industry in general
experiences returns of 5-6%.

E.  COMPETITION

Within the catalog market, the Company is very small compared to
industry leaders.  The market for environmentally related
products has grown, and the number of both large and small
catalog retailers carrying these products has increased. The
Company is in the process of merging its Earth Care catalog into
its Real Goods catalog to consolidate the focus of its catalog
efforts.  The Company believes that this will present an
opportunity to leverage the already strong Real Goods brand
identity.  Real Goods has also developed a small number of
proprietary products.  There can be no assurance that the Company
will ever sell material quantities of branded goods or
proprietary products. 

In the renewable energy market, the Company operates in a niche
presently too technical and application specific to interest the
larger catalogs, and the Company's knowledge of its customer and
vendor offerings enables it to be a better intermediary between
suppliers and customers for its segment of the market than larger
catalogs. The Company believes that Internet vendors without
technical support staff are underselling the Company's prices for
common goods.  There can be no assurance that the resources or
market positions of the Company's competitors in this area will
not change.

In the retail market, the Company is experimenting with retail
store formats. In all three markets, the Company competes on the
basis of price, selection and service.  The Company has continued
to work to improve its pricing through increased buying and
improved vendor discounts.  In fiscal 1998 the Company increased
its presence at trade shows and plans to improve its product
selection.  To improve catalog customer service, the Company
hired more in house staff and extended in house hours for a
reduced reliance on outside operators for its telephone lines.
The Company has also increased staff and telephone support for 
Real Goods Renewables.

The Company believes that its image is enhanced by the various
accomplishments that it has made in achieving its mission,
including the opening of the Solar Living Center demonstration
site, the completion of the sale of the largest solar array in
Latin America, the ninth edition of the Solar Living Sourcebook,
the Company's increased presence on the Internet, the mission
message in the national mail order catalogs and public relations
efforts.

The Company has a membership program in which members pay a $50
fee to receive a designated newsletter with special pricing,
closeout bargains and substantial additional information, as well
as a 5% discount on all purchases.  The Company's members order
much more frequently and have a higher average order than the
Company's other customers.  In fiscal 1998 the membership 
program increased by approximately 20% to approximately 49,000
members.  The Company is continuing to explore opportunities to
enhance the membership program, including co-ventures with other
like-minded mission- oriented companies.

F.  REGULATION

Although the Company believes that certain federal, state and
local laws to promote energy conservation may encourage the
purchase of its products, the Company also believes that most of
its customers purchase its products for other reasons.  The
Company does not believe that it is subject to regulation other
than regulations applicable to catalog vendors of comparable
products.   The Company does not believe that the costs and
effects of its own compliance with federal, state and local
environmental laws are likely to be material.  The Company does
not generally seek or obtain governmental approval for the
products it sells; rather, it believes that obtaining such
approval is the responsibility of its vendors or the products'
manufacturers.  The Company has not, to its knowledge, been named
in any environmental cause of action relating to its products or
the sales thereof.

G.   EMPLOYEES

The Company currently has the full time equivalent of 113
employees.  Of those employees, approximately 28 are employed at
the Company's retail stores, 9 are employed at Real Goods
Renewables and approximately 76 are employed in Ukiah providing
support to the catalog and corporate functions.  As with many
retailers, the Company increases its use of temporary employees
during its third fiscal quarter to meet the increased demands of
the holiday season.  The Company believes its use of temporary
employees contributes to its ability to control overhead costs.
The Company is not subject to any collective bargaining
agreements, and the Company believes its relationships with its
employees are good.

H.  TRADEMARKS

The Company has registered the trademark "Real Goods."  In
addition, the Company has a license to use the name "Earth Care"
for recycled paper products.  That license may be terminated
under certain circumstances.  The Company has submitted an
application to register the name  "Real Goods" in Japan.  The
Company does not believe that any other patents, trademarks,
licenses, franchises, concessions, royalty agreements or labor
contracts are material to the business of the Company.
</PAGE>
Item 2.   DESCRIPTION OF PROPERTIES.

As of May 15, 1998, the following was the description of the
Company's properties:

The Company owns the 12-acre parcel in Hopland, California that
is the site of the Solar Living Center and retail store. Hopland
is located approximately 12 miles south of Ukiah, on US Highway
101, a major interstate highway.
 
The Company owns the Amherst, Wisconsin facility.  This property
consists of a 5,000 square foot cold warehouse, a 3,000 square
foot cold storage building and a 1,600 square foot office and
retail store.  This property is listed for sale.

The Company currently leases its Ukiah, California operations
facilities, which consist of a 15,300 square foot
warehouse/distribution center facility on a month-to-month lease. 
The Company's 13,790 square foot office/customer
service/warehouse facility is leased through 1998.  

The Company has a lease agreement expiring in 1999 for the 3,800
square foot retail store in Eugene, Oregon. The Company has a
lease agreement expiring in 1998 for the 4,800 square foot retail
store in Berkeley, California.  The Company has a month to month
lease for the 1,500 square foot Outlet store in Berkeley,
California.

The Company believes that it maintains adequate insurance for its
real and personal property.

Item 3.   LEGAL PROCEEDINGS.

On June 1, 1998, the Company was served with a Summons and
Complaint in the matter of Intervention, Inc. v. Real Goods
Trading Corporation in the Superior Court of the State of
California in and for the County of Contra Costa, an action "on
behalf of the general public" seeking an injunction against the
Company under California business and Professions code Section
17200 and also seeking restitution of revenues and attorneys'
fees.  The Complaint alleges that the Company has engaged in
unfair or fraudulent business acts or practices and/or unfair,
deceptive, untrue or misleading advertising and unfair
competition in connection with the marketing of the Transonic
CIX TM, the Transonic 1000 TM and the Solar Mosquito Guard TM. 
The litigation has just commenced, and the Company is not
able to predict the outcome at this time.

Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not applicable.
</PAGE>
                                   PART II

Item 5.  MARKET FOR COMMON EQUITY AND RELATED SHAREOWNER MATTERS

The Company's common stock was listed on the Pacific Stock
Exchange in April 1994 under the symbol RGT.  The Company's
common stock was listed on the Nasdaq SmallCap Market in July
1996 under the symbol RGTC.  Effective July 1996, the Company's
stock has traded on the Internet on a bulletin board at 
http://www.realgoods.com maintained by the Company.  Effective
January, 1998, the Company's stock was listed on the Chicago
Exchange under the symbol RGT.  The following chart sets forth
the high and low actual sale prices of the Company's common stock
for each quarter within the last two fiscal years, to the extent
the Company is aware thereof.

TRADING INFORMATION
<TABLE>
<CAPTION>
                                       Fiscal Year Ended March 31 
                                                    High     Low  
<S>                                               <C>      <C>   
1997:
     First Quarter                                 8        5-1/4
     Second Quarter                                7-7/8    6-1/8
     Third Quarter                                 6-3/8    4-1/4
     Fourth Quarter                                6        5-1/8

1998:
     First Quarter                                 6 1/8    4-3/4
     Second Quarter                                6-3/4    4-5/8
     Third Quarter                                 6        4-1/4
     Fourth Quarter                                5-1/4    4-1/8
</TABLE>
</PAGE>
Item 6.
                   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
SALES

The Company reported an 8% decrease in net sales to $17,034,000
for fiscal 1998, compared to $18,424,000 for fiscal 1997, which
included the $2 million 100 kilowatt photovoltaic renewable
energy sale to a resort in Belize.  While the amounts of this
sale distort some of the amounts and percentages set forth
herein, they are included for completeness and are excluded only
when specifically so stated. 

With the Belize resort sale excluded, net sales for fiscal 1998
increased 3% or $571,000, compared to $16,463,000 from fiscal
997. Excluding the Belize sale, catalog sales decreased to 71% of
net sales, as compared to 73% in the prior year; retail store
sales remained at 17% of net sales, with one store sold and one
store and an outlet store added; renewable energy department
sales grew to 12% of net sales, as compared to 10% in the prior
year.

Catalog sales increased by $61,000 to $12,029,000, compared to
prior year sales of $11,968,000.  The Company mailed
approximately the same number of catalogs in fiscal 1998, or
6,417,000 compared to 6,394,000, in the previous year.  $496,000
of the Company's catalog sales were attributed to participation
in an inflight magazine, Skymall, and not due to catalog
circulation. The Company is merging its Earth Care catalog into
its Real Goods catalog in fiscal 1999 to consolidate the focus of
catalog efforts.

Retail store sales increased 6% to $2,910,000, compared to
$2,754,000 in the previous fiscal year. The Company sold its Snow
Belt store, and opened an urban demonstration center in Berkeley
California, as well as an urban outlet store adjacent to its
Berkeley store.  The Company ended the fiscal year with 14,300
square feet of retail space, and a weighted average of 10,767
square feet of retail space for the fiscal year, compared to a
weighted average of 9,233 square feet for the previous fiscal
year, a 17% increase in retail square feet.  

Renewable energy sales increased 21% to $2,041,000, compared to 
$1,693,000 in the previous fiscal year excluding the Belize sale. 
The Company has continued to pursue leads in the eco-tourism
market, and while it has not realized any sales of the size of
the Belize sale, it attributes a portion of this continued growth
to growth in "eco-tourism" sales.  The Company's renewable energy
department is also well positioned to take advantage of
government programs providing prelease incentives for renewable
energy systems, and has done so in the past year.  The improved
and expanded Real Goods Renewables catalog also contributed to
the sales increase.

GROSS PROFIT

For fiscal 1998, gross profit amounted to $8,198,000, or 48.1% of
sales, compared to $8,799,000, or 47.8% of sales in the previous
fiscal year.  This gross profit is similar to what the Company
has experienced in the past, as fiscal 1997 results were
distorted by the Belize sale. Traditionally, retail and renewable
energy sales have lower margins than catalog sales, and as these
sales increase, the Company's margin will tend to decline.

Catalog sales had a gross profit of $6,287,000 or 52.3% of sales,
compared to $6,373,000 or 53.2% of sales in the previous year. 
The Company increased its clearance offerings and new purchase
incentives to inactive buyers in the current year in attempts to
increase sales, recover lost customers and keep its inventory
fresh.  Retail store sales had a gross profit of $1,171,000 or
40.2% of sales, compared to $1,096,000 or 39.8% of sales in the
previous year.  The Company received more favorable terms with
retail vendors as its buying power increased, which improved
purchase costs.  Renewable energy sales had a gross profit of
$687,000 or 33.7% of sales, compared to $1,282,000 or 35% of
sales, including the Belize sale, in the previous year.

OPERATING EXPENSES

Selling, general, and administrative expenses amounted to
$8,562,000 or 50.3% of sales in fiscal 1998, compared to
$8,133,000 or 44% of sales in the prior year, or 49.4% without
the Belize sale.  Base sales increased 3%, and operating expenses
increased 5% over the previous year.  The Company increased its
advertising expense by $281,000 in the current fiscal year, due
to its presence in the Skymall magazine in an effort to acquire
new customers. Costs for the integration of retail operations
into the Company, including consulting, additional personnel as
well as startup charges for the Berkeley store were expensed in
the fiscal year and contributed to the higher level of expenses
in comparison to sales.

OTHER INCOME AND EXPENSE

In fiscal 1998, interest expense was $95,000 and interest income
was $24,000, resulting in a net interest expense of $71,000.  In
the previous fiscal year, interest expense was $103,000 and
interest income was $23,000, for a net expense of $80,000. Due to
the repayment of one loan secured by the Solar Living Center, as
well as lower usage of the line of credit, interest expense
declined by year end.  The Company also had higher interest
income due to cash generated by its direct public offering that
commenced in August 1997.

In fiscal 1998, the Company recorded a $30,000 write down of the
land and building in Amherst, Wisconsin to reflect the estimated
net realizable value.  In the second quarter, the Company had
recognized a $13,000 loss on the sale of the assets of the Snow
Belt business.

INCOME TAXES

Income taxes as a percentage of pretax income (loss) was a tax
benefit of 33% due to the Company's reported loss, compared to a
tax rate of 38% for the previous year.  The Company believes that
the applied tax rate accurately reflects its actual experience.

EARNINGS

The Company had a before tax loss of $478,000 and a net loss of
$322,000 or $0.09 per share.  In the previous year, with the
Belize sale, the Company had earnings of $586,000 before tax and
$363,000 net earnings, or $0.11 per share.   The current year
loss is only the second loss ever reported by the Company. Lower
catalog revenue per book, an increase in clearance vehicles and
one time offers resulting in a catalog margin decline, the
Company's unsuccessful advertising program, and one time store
opening costs and retail consolidation costs contributed to the
loss.  Management has restructured its catalog strategy,
consolidated clearance at the outlet store, and improved
efficiencies for retail to improve profitability.

LIQUIDITY AND CAPITAL RESOURCES

During the fiscal year ended March 31, 1998, cash of $32,000 was
provided by operations.  Cash was provided by an increase in
accounts payable of $245,000 as well as deposits of $361,000 (see
Note 9). Cash was used by a increase in inventory of $285,000.

The Company used $441,000 of cash for purchase of property,
equipment and improvements, for both the Berkeley store as well
as the Company's base business needs. 

Cash provided by financing activities was increased $1,793,000
from the Company's direct public offering, and decreased by
$596,000 for the repayment of one loan as well as loan payments
(see Note 4). 

The net effect of all of the Company's activities was to increase
the Company's cash to $788,000 at the end of the period from
$513,000 at the beginning of the period.

The Company has secured a $1,500,000 line of credit for fiscal
1999 to use for seasonal fluctuations in inventory levels as well
as operating expenses.  Management believes that cash flow from
operations together with bank debt financing and existing cash
reserves will be sufficient to fund the Company's operations
through fiscal 1999.

The overall effects of inflation on the Company's business during
the periods discussed were not believed to be material.
</PAGE>
                            CERTAIN CONSIDERATIONS

Except for the historical information contained in this Annual
Report on Form 10-KSB, the matters discussed in this document
are forward looking statements.  These forward looking statements
concern matters that involve risks and uncertainties, including,
but not limited to, those set forth below, that could cause
actual results to differ materially from those in the forward
looking statements.  The matters set forth below should be
carefully considered when evaluating the Company's business and
prospects.

A.  CATALOG SALES.  The mail order industry is susceptible to the
ebb and flow of both retail industry trends and the general
economy.  While the Company could be a beneficiary of a trend
which increases the popularity of the Company's products, that
trend could also ebb away.  Of approximately 350 products in each
of the Real Goods color catalogs, 35% are new to those catalogs;
there can be no assurance that the product selection will be
effective.  While the Company must incur catalog production and
mailing costs, purchase inventory and staff up in preparation for
customer responses in advance of need, if customer response is
below management's expectations and the Company's sales decrease,
the Company's expenses cannot be reduced timely and
proportionately.  In addition, the Company will be reliant to
some extent on the state of the general economy.  An adverse
economic environment could impact the mail order catalog industry
as a whole.  Finally, catalog companies seeking to increase
revenues and their "house list" often "prospect" with rented
lists; excessive prospecting can adversely affect operating
results.

B.  RETAIL STORES.  There are substantial risks in store
retailing, including poor location of retail stores, failing to
identify consumer trends correctly, theft by customers and
employees, inadequate merchandise selection, inadequate financial
controls, and losing customers to competitors.  The Company is
experimenting with retail store formats;  there can be no
assurance that any of those formats will be profitable, or, if
profitable, replicatable.  The Company has only limited
experience with its new urban store format.  The Company sold its
Amherst, Wisconsin store in August 1997 due to the store's
failure to achieve the long term strategic objectives which the
Company had for the store. 

C.  SOLAR LIVING CENTER.  The Company's mission is to promote and
inspire an environmentally healthy and sustainable future through
its products, publications and educational demonstrations.  The
Company has spent approximately $3,000,000 to acquire the land
for the Solar Living Center, landscape the land and construct it
as a demonstration of many of the principles underlying the
Company's mission and vision.  Although the initial response has
been extremely encouraging in both sales and number of visitors,
there can be no assurance that the Solar Living Center, which
opened in May 1996, will fulfill the Company's hopes to increase
the public's awareness of the Real Goods mission, that the
Company will ever realize a suitable return on its investment or
that the Company will not incur a substantial loss from the Solar
Living Center. The Solar Living Center is located on a flood
plain; the building at the Solar Living Center is covered by
flood insurance and is above the 100 year flood mark.

D.  SEASONALITY.  As with nearly all retail enterprises, the
Company's business is seasonal, and it customarily generates
approximately 40% of its revenues in its third fiscal quarter
which is the last calendar quarter of the year.  The Company's
execution in its third quarter is material to its financial
success for a fiscal year.  Poor third quarter results in any
given year would adversely impact the Company to a greater
absolute extent than poor results in any other quarter.

E.  COMPETITION.  In the catalog market, the Company is small
compared to industry leaders.  If one or more of the larger
catalog retailers decides either to have an environmental
products section in an existing catalog or to launch a comparable
catalog, the Company's business could be adversely affected.  In
addition, if the Company successfully identifies an unmet
consumer need, the idea can be copied quickly by catalog
retailers with greater buying power and greater numbers of
catalogs in circulation.  As to its renewable energy market, the
Company believes it operates in a niche presently too technical
and application specific to interest the larger catalogs and the
Company's knowledge of its customers and vendors offerings
enables it to be a better intermediary between suppliers and
customers for its segment of the market than larger catalogs.
Finally, the options available on the Internet allow potential
customers to obtain certain of the Company's value added services
without a charge, and then purchase their goods more cheaply from
less service oriented vendors.

F.  NEW INITIATIVES. The Company has undertaken test programs in
selling via the Internet, as well as a  catalog strategy
involving the mailing of discrete catalogs, which may prove to be
productive endeavors; however, there can be no assurance that
they will be successful or, if they appear successful, that they
will continue to be successful.

G.  UNCONTROLLABLE EVENTS.  The Company is subject to larger
trends and events which are beyond the Company's control.  For
instance, a severe recession would decrease consumers' disposable
income and the amounts people spend on non-essential products
such as those the Company offers.  If there is a war, earthquake,
fire or similar event, the Company could be adversely impacted.
While the Company  carries reasonable insurance considering its
size and economics, such insurance may not fully protect the
Company from events which are beyond the Company's control.  Any
long term drop in energy prices could also reduce the
attractiveness of certain of the Company's products;
reciprocally, the Company could benefit from a long term increase
in energy prices.

H.  SALES TAXES.  In 1992, the United States Supreme Court ruled
that states may not impose taxes on out-of-state direct
marketers, but it suggested that Congress could delegate that
power.  To date, there has been no congressional action.  The
Company collects sales tax only on sales made in California.  If
the Congress does delegate the power to levy a sales tax and
states do levy those taxes, the operations of the Company will
likely be affected substantially because the Company's average
order is relatively high and the combination of sales taxes with
shipping charges may affect consumer buying decisions.

I.  DEPENDENCE ON KEY PERSONNEL.  The Company is substantially
dependent on the continued services of John Schaeffer, its CEO
and Chairman of the Board.  The loss of Mr. Schaeffer's services
for any substantial period of time is certain to have a material
adverse impact on the Company.  The Company maintains a 
$1,000,000 life insurance policy on Mr. Schaeffer.  The Company
does not anticipate acquiring disability insurance on Mr.
Schaeffer.

J.  NEW MANAGERS AND PERSONNEL.  Subsequent to year end, the
Company has added a new President and a new Retail Director and
is actively recruiting a new Vice President of Merchandising. 
There can be no assurance that all of these new executives will
be effective over the long term.

K.  DEPENDENCE ON CERTAIN SUPPLIERS, INCLUDING FOREIGN SUPPLIERS.
The Company carries approximately 350 articles in each color
catalog.   No more that 5% of the Company's sales arise from a
single product.  Approximately 3% of the Company's sales are
generated from products purchased directly from foreign
countries. Accordingly, the Company is subject to both exchange
rate fluctuations and possible disruptions in supplies for those
products.  The Company could also be vulnerable because 5% of its
revenues derive from products purchased from a single supplier. 
However, there is at least one alternative supplier for each
product in every case, and management believes that any such
effect would be temporary.

L.  COST INCREASES.   For the portion of its sales derived from
mail order catalogs, the Company is particularly susceptible to
increases in paper prices and postal and shipping charges.  There
is an immediate effect on the Company's catalog marketing costs
as a result of the paper market price fluctuations. Since paper
capacity is relatively fixed, the Company believes that prices in
this market are directly affected by the strength of the economy.
Increased paper prices as well as increased mailing and shipping
charges could substantially adversely impact the Company's
catalog growth and profitability. Decreased paper prices result
in lower costs, but other catalog merchants may be encouraged to
expand their mailings. Postage costs are also affected by price
changes by the United States Postal Service and United Parcel
Service.  The Company  does expect annual increases in United
Parcel Services's charges.

M.  CONTROL.  Because of his stock ownership position, John
Schaeffer is likely to continue to have the ability to control
the operations and strategy of the Company. 
</PAGE>
Item 7.   FINANCIAL STATEMENTS.

REAL GOODS TRADING CORPORATION

TABLE OF CONTENTS
                                                             PAGE


INDEPENDENT AUDITORS' REPORT                                  18

FINANCIAL STATEMENT AS OF AND FOR THE YEARS 
ENDED MARCH 31, 1998 AND 1997:

Balance Sheets                                                19

Statements of Operations                                      20

Statements of Cash Flows                                      21

Statements of Shareowners' Equity                             22

Notes to Financial Statements                               23-29
</PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareowners

Real Goods Trading Corporation:

We have audited the accompanying balance sheets of Real Goods
Trading Corporation  (the "Company") as of March 31, 1998 and
1997, and the related statements of operations,  shareowners '
equity and cash flows for the years 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 audits.

We conducted our audits 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
audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all
material respects, the financial position of Real Goods Trading
Corporation as of March 31, 1998 and 1997, and the results of its
operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.

[S]DELOITTE & TOUCHE, LLP
Oakland, California
May 8, 1998
<\PAGE>
                         REAL GOODS TRADING CORPORATION
                                 BALANCE SHEETS
                           MARCH 31, 1998 AND 1997
                     (In thousands except share data) 

<TABLE>
<CAPTION>
                                                  1998       1997
<S>                                           <C>        <C>
ASSETS
Current assets:
    Cash                                       $1,301      $  513
    Accounts receivable, net of
      allowance of $6, respectively               210         169
    Inventories                                 2,336       2,112
    Deferred catalog costs, net                   439         383
    Prepaid expenses                              214         112
          Total current assets                  4,500       3,289

Property, equipment and improvements, net       3,509       3,347
Intangible assets and other assets, net           153         166
Income taxes receivable                           167
          Total assets                         $8,329      $6,802

LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
    Accounts payable                           $  726      $  481
    Accrued expenses                              345         304
    Deposits                                      434          85
    Current maturities of long-term debt           17          37
    Deferred income taxes                          23          13
    Other taxes payable                            34          48
          Total current liabilities             1,579         968


Long-term debt                                    568       1,143
          Total liabilities                    $2,147      $2,111


Shareowners' equity:
   Common stock, no par value: Authorized
        10,000,000 shares; issued and 
        outstanding, 3,857,215 and 3,403,804 
        shares, respectively                    6,065       4,252
   Retained earnings                              117         439
          Total shareowners' equity             6,182       4,691
          Total liabilities and 
               shareowners' equity             $8,329      $6,802
</TABLE>

                      See notes to financial statements
</PAGE>
                       REAL GOODS TRADING CORPORATION
                          STATEMENTS OF OPERATIONS
                    YEARS ENDED MARCH 31, 1998 AND 1997
                      (In thousands except share data)
<TABLE>
<CAPTION>
                                              1998        1997
<S>                                          <C>         <C>
Net sales                                     $17,034    $18,424
Cost of sales                                   8,836      9,625 

    Gross profit                                8,198      8,799
Selling, general and administrative expenses    8,562      8,133

    Earnings (loss) from operations              (364)       666

Interest income (expense), net                    (71)       (80)
Loss on store disposition                         (43)           

    Earnings (loss) before income taxes          (478)       586 

Income tax benefit (expense)                       156      (223)
    Net earnings (loss)                        $  (322)    $ 363

Net earnings (loss) per share, basic            ($0.09)    $0.11
Net earnings (loss) per shares, diluted         ($0.09)    $0.10

Weighted average shares outstanding,
    basic                                    3,472,257 3,418,089

Weighted average shares outstanding,
    diluted                                  3,472,257 3,554,089
</TABLE>

                      See notes to financial statements
</PAGE>
                        REAL GOODS TRADING CORPORATION
                            STATEMENTS OF CASH FLOWS
                     YEARS ENDED MARCH 31, 1998 AND 1997
                               (In thousands)

<TABLE>
<CAPTION>
                                                  1998      1997
<S>                                             <C>      <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)                              $(322)    $363
Adjustments to reconcile net earnings (loss) 
    to net cash provided by operating activities:
    Depreciation and amortization                  314      283
    Loss on disposition of assets                   13
    Writedown of land and building to net 
       realizable value                             30
    Other                                           30      (27)
  
Changes in assets and liabilities:
    Accounts receivable                            (56)       9
    Inventory                                     (285)      27
    Deferred catalog costs                         (56)      20
    Prepaid expenses                              (102)     285
    Income taxes receivable                       (167)
    Accounts payable                               245      (94)
    Accrued expenses                                41      (41)
    Other taxes payable                            (14)      13
    Deposits                                       361     (586)
       Net cash provided by operating activities    32      252

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of land, equipment, and
       construction in progress                   (494)    (673)
    Purchase of other assets                       (35)     (23)
    Proceeds from sale of equipment and
       other assets                                 88       11
       Net cash used in investing activities      (441)    (685)

CASH FLOWS FROM FINANCING ACTIVITIES:
    Borrowings                                             2,559
    Proceeds from issuance of common stock, net  1,793        13
    Repayment of debt                             (596)   (1,780)
    Purchase of common stock                                (115)
       Net cash provided by financing activities 1,197       677

Net increase in cash                               788       243
Cash at beginning of period                        513       270
Cash at end of period                           $1,301     $ 513

Other cash flow information:
    Interest paid                                   88        99  
    
    Income taxes paid                                1       233
</TABLE>

                      See notes to financial statements
</PAGE>

                        REAL GOODS TRADING CORPORATION
                                STATEMENTS OF 
                                SHAREOWNERS
                                   ' EQUITY
                     YEARS ENDED MARCH 31, 1998 AND 1997
                               (In thousands)
<TABLE>
<CAPTION>
                          Common Stock
                                                       Total
                     Number of           Retained    Shareowners'
                       Shares    Amount   Earnings      Equity    

<S>                     <C>     <C>       <C>          <C> 
BALANCE, MARCH 31, 1996

                         3,435    $4,354    $  76        $4,430

Issuance of common stock for:

Bonuses                      1        10                     10

Stock options exercised      1         3                      3

Repurchase of stock        (33)     (115)                  (115) 
 
Net earnings                                  363           363
                       _______    _______  _______       _______
BALANCE, MARCH 31, 1997  3,404    $4,252    $ 439        $4,691

Issuance of common
 stock for bonuses           4        20                     20

Issuance of common stock
 for direct public
 offering, net of
 offering costs of $598    449     1,793                  1,793

Net loss                                     (322)         (322)
                        ______    ______    _______      _______
BALANCE, MARCH 31, 1998  3,857    $6,065    $ 117        $6,182   
</TABLE>
                     See notes to financial statements
</PAGE>
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION - Real Goods Trading Corporation (the "Company")
sells primarily environmentally related products and renewable
energy products through mail order catalogs, four retail stores,
and direct sales of its renewable energy department.  The Company
was organized on July 1, 1990.

USE OF ESTIMATES - The preparation of the financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses
during the reporting period.  Actual results could differ from
those estimates. 

INVENTORIES are stated at the lower of cost (first-in/first-out
method) or market.  Inventories include expenses associated with
acquiring the inventory.

DEFERRED CATALOG COSTS - The Company capitalizes the direct cost
of producing and distributing its mail order catalogs.  Deferred
catalog costs are amortized based on the estimated sales lives of
the catalogs, generally eighteen weeks.

PROPERTY, EQUIPMENT AND IMPROVEMENTS are stated at cost. 
Depreciation is computed using the straight-line method over the
estimated useful lives of the assets, which range from 5 to 40
years.

PRE-OPENING costs for retail stores are expensed  as incurred.

INCOME TAXES - The Company accounts for its income taxes using an
asset and liability approach that requires the recognition of
deferred tax assets and liabilities for the expected future tax
consequences of events that have been recognized in the Company's
financial statements or tax returns.  In estimating future tax
consequences, the Company generally considers all expected future
events other than changes in tax laws.

EARNINGS PER SHARE - In the third quarter of fiscal 1997, the
Company adopted SFAS 128, "Earnings per Share" (" SFAS 128").
SFAS 128 replaces current reporting requirements for earnings
per share "EPS") and requires a dual presentation of basic and
diluted PS. Basic EPS is computed by dividing net income by the
weighted average shares outstanding for the period.  Diluted EPS
reflects the potential dilution that could occur if contracts to
issue common stock were exercised or converted to common stock.
Prior periods have been restated to conform to SFAS 128.
<TABLE>
<CAPTION>
The following is a reconciliation of the Company's basic and
diluted net earnings (loss) per share computations (in thousands
except share data);
                                        Fiscal Year
                               1998                   1997
<S>                 <C>         <C>         <C>          <C>
Basic earnings (loss)
     per share       3,472,257   $(0.09)     3,418,089    $ 0.11

Effect of dilutive 
     stock options                             136,000    $(0.01)

Diluted earnings (loss)
     per share       3,472,257   $(0.09)     3,554,089     $0.10
 
Dilutive stock options were not included for the fiscal year
ending March 31, 1998, as the Company incurred a net loss and the
effect would be antidilutive.

RECLASSIFICATION - Certain reclassifications have been made to
the prior period amounts in order to conform to the March 31,1998
presentation.

ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS - Statement of
Financial Accounting Standard (" SFAS ") No. 107, "Disclosures
About Fair Value of Financial Instruments" requires disclosure of
the estimated fair value of financial instruments.  The carrying
values of cash, accounts receivable, accounts payable, and
long-term debt approximates their estimated fair values.

STOCK-BASED COMPENSATION - The Company accounts for stock-based
awards to employees using the intrinsic value method in
accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees."

NEW ACCOUNTING PRONOUNCEMENTS - In June 1997 the Financial
Accounting Standards Board issued two new prouncements,
SFAS No. 130 "Reporting Comprehensive Income" and  SFAS
No. 131 "Disclosures about Segments of an Enterprise and Related
Information." SFAS No. 130 requires companies to report, by major
components and as a single total, the change in its net assets
during the period from non-owner sources. SFAS  No. 131
establishes annual and interim reporting standards for a
company's operating segments and related disclosures about
its products, services, geographic areas and major customers. 
Adoption of these new prouncements  will not impact the financial
position, results of operations or cash flows of the Company and
any effect will be limited to the form and content of its
disclosures.  Both statements are effective for fiscal years
beginning after December 15, 1997.

2.  PROPERTY, EQUIPMENT AND IMPROVEMENTS

</TABLE>
<TABLE>
<CAPTION>
Property, equipment and improvements consist of the following at
March 31 (in thousands):
                                                  1998      1997
  <S>                                          <C>       <C>
   Land                                         $  490    $  490
   Land Improvements                               782       770
   Buildings and leasehold improvements          1,705     1,717
   Equipment, furniture and fixtures             1,309       902
   Construction in progress                         10        10

         Total                                   4,296     3,889 

   Less accumulated depreciation                  (787)     (542)
   Property, equipment and improvements, net    $3,509    $3,347 
</TABLE>
3.  LINE OF CREDIT

In April 1997, the Company entered into a line of credit
agreement for $1,500,000 with National Bank of the Redwoods (the"
Bank"). Borrowings bear interest at 1% over the prime rate, and
interest is payable monthly; additionally the Company pays a loan
fee of .5%.  The line is personally guaranteed by the Company's
CEO and majority shareowner. In April 1998 the line of credit
agreement was extended until April 1999.  Borrowings bear
interest at 1.5% over the prime rate, and there are no loan fees.
At March 31, 1998 and 1997, no amounts were outstanding on the
Company's line of credit.

The line of credit agreement contains restrictive covenants
including debt to net worth and current ratios, restrictions on
capital expenditures, positive cash flow at a certain point in
the fiscal year and prohibitions on payment of cash dividends
without the Bank's approval.  The line is collateralized by
substantially all of the Company's assets including inventory,
accounts receivable and mailing lists as well as a key person
life insurance policy on the life of the Company's majority
shareowner.  At March 31, 1998 and 1997, the Company was in
compliance with all covenants of the line of credit agreement.

4.  DEBT
<TABLE>
<CAPTION>
Long term debt consists of the following at March 31 (in
thousands):
                                                1998         1997
<S>                                            <C>         <C>
National Bank of the Redwoods term loan,
     interest at prime plus 2%, paid in                     $ 568
     November 1997

Small Business Administration term loan,
     interest at 7.77%, payable through 
     September 2016                             583           596

Other                                             2            16

     Total                                   $  585       $ 1,180
</TABLE>

<TABLE>
<CAPTION>
Principal payments on long-term debt are as follows (in
thousands):

        Fiscal Year ending March 31: 
         <C>                                                <C>

          1999                                               17
          2000                                               16
          2001                                               17
          2002                                               19
          2003                                               20
          Thereafter                                        496

                 Total                                   $  585 
</TABLE>
5.  DISPOSITION OF ASSETS

In August 1997 the Company completed the sale of the non-real
property assets of its Amherst, Wisconsin store to two former
employees for net proceeds of $88,000, and recorded a loss of
$13,000 in exchange for inventory, accounts receivable and fixed
assets of the business.  A loss of $13,000 has been recognized in
the September quarter.  The Company is seeking to sell the land
and building in which the store was located.  At March 31, 1998,
the Company recorded an additional loss of $30,000 on the land
and building to reflect the estimated net realizable value.

6.  LEASES

The Company has operating leases for office, warehouse
facilities, the Eugene and Berkeley stores and certain equipment,
which expire from 1998 through 2001.  Rental expense for the
years ended March 31, 1998 and 1997 were $188,000 and $158,000,
respectively.
<TABLE>
<CAPTION>
Future minimum annual lease payments under operating leases are
as follows (in thousands):

     Fiscal Year ending March 31:
         <C>                                                <C>
          1999                                               81
          2000                                               12
          2001                                                5

                 Total                                    $  98 
</TABLE>
7.  INCOME TAXES 
<TABLE>
<CAPTION>
Income taxes consist of the following for the years ended March
31(in thousands):

                                                  1998      1997 

         <S>                                    <C>      <C>
          Current:
          Federal                                $(167)   $  196
          State                                      1        52

                  Total                           (166)      248
          Deferred                                  10       (25)

                  Total provision (benefit)     $ (156)    $ 223 
</TABLE>

<TABLE>
<CAPTION>
The provisions for income taxes for financial reporting purposes
are different from the tax provision computed by applying the
statutory federal income tax rate.  The differences for each year
are reconciled as follows (in thousands):

                                                 1998       1997
<S>                                            <C>       <C>
Federal income taxes at statutory
     income tax rate(34%)                       $ (163)   $  199
State taxes net of federal tax benefit             (29)       33
Effect of permanent differences                    (33)       13
Valuation allowance                                 76 
Other                                               (7)      (22)

Provision (benefit)                             $ (156)    $ 223
</TABLE>

<TABLE>
<CAPTION>
The components of the net deferred tax liability at year-end are
as follows (in thousands):
                                                 1998        1997
<S>                                            <C>          <C>
Deferred tax assets:
Benefit of net operating loss carryforwards     $  76             
                               
Stock option compensation                          14         14
Reduction in cost of property                      11          5
Accrued reserves                                              23
Other                                               9         24
                                                  110         66
Less valuation allowance                          (76)

Non-current deferred tax asset                  $  34      $  66

Deferred tax liabilities:
Catalog costs                                     (78)       (73)
Accruals                                           27
Other                                              (6)        (6)

Current deferred tax liabilities                  (57)       (79)

Net deferred tax liability                     $  (23)    $  (13)
</TABLE>

Because of the uncertain nature of their ultimate utilization, a
valuation allowance is recorded against the deferred tax assets
associated with the net operating losses.  At March 31, 1998, the
Company has available for carryforward approximately $147,000 and
$302,000 of federal and state net operating losses for tax
purposes.  The federal and $40,000 of the state net operating
losses will expire in 2013.  The remaining state net operating
losses expire in 2003.

8.  MAJORITY SHAREOWNER AGREEMENTS

The CEO and majority shareowner has a renewable one-year
employment agreement with the Company which provides for an
annual salary of $72,000.

The CEO and majority shareowner has personally guaranteed the
Company's line of credit agreement.(See Note 3.)

The Company has a split dollar life insurance agreement with its
CEO, whereby the Company pays the premiums.  The Company has been
granted a security interest in the cash value and death benefit
of the policy, and stock has been pledged as additional
collateral during the period the premiums exceed the cash
surrender value.  The net cash value at March 31, 1998 was
$151,000, and is included in other assets.

9.SHAREOWNERS ' EQUITY 

On August 11, 1997 the Company commenced a direct public offering
of 1,000,000 shares of newly issued stock and 300,000 shares
offered by a selling shareholder. 

Through March 31, 1998, the Company had issued 449,214 new shares
of common stock, generating gross proceeds of $2,391,000, and had
incurred costs of $598,000 related to the direct public offering.
The Company also has $276,000 in deposits for shares that were
unissued on March 31, 1998.

The Company is authorized to repurchase up to $250,000 of common
stock.  No stock was repurchased in fiscal 1998.  Through March
31, 1998, 9,184 shares had been repurchased and retired at an
average price of $5.34 per share.  In fiscal 1997, the Company
also repurchased and retired 30,000 shares of unregistered stock
from its CEO and majority shareowner at a below market price of
$3.33 per share

10. BENEFIT PLANS AND STOCK OPTIONS

In August 1992, the Company adopted the Real Goods Trading
Corporation 401(k) Retirement Plan effective for the plan year
commencing on January 1, 1992.  The Plan does not require
matching funds from the Company, and the Company has made no
contributions.

Under the Company's Second Amended and Restated Fiscal 1993 Stock
Incentive Plan (the "Plan") the Company can grant incentive and
non-qualified options to purchase 600,000 shares of common stock.
Incentive Stock Options can be granted at  prices not less than
100% of the fair market value of the common shares (85% for
non-qualified options) on the date the option is granted, and
normally vest over a period not exceeding four years from the
date of grant.  As of March 31, 1998, options to purchase
309,200 shares were outstanding, and 26,100 had been exercised.

The Company has reserved 100,000 shares of common stock for its
Non-Employee Directors' Stock Option Plan (Director's Plan).  As
of March 31, 1998, options to purchase 35,000 shares were
outstanding and none had been exercised.
<TABLE>
<CAPTION>
                                                         Weighted
                                                          Average
                                          Number of      Exercise
                                            Shares          Price 
                                       (in thousands)
<S>                                          <C>          <C>
Outstanding at March 31, 1996                 231          $ 5.48 

Granted (fair value of $1.90)                 249            5.71
Exercised                                      (1)           5.05
Forfeited                                    (211)           5.43 

Outstanding at March 31, 1997                 268          $ 5.40
        
Granted (fair value of $1.47)                 129            5.23
Forfeited                                     (53)           5.21

Outstanding at March 31, 1998                 344          $ 5.37

Shares exercisable at March 31, 1998          180          $ 5.21
Shares available for grant at March 31, 1998  330   
Range of exercise prices                     $5.05 to $7.12
Weighted average remaining contractual life 
     at March 31, 1998                                 7.4 years
</TABLE>
ADDITIONAL STOCK PLAN INFORMATION

As discussed in Note 1, the Company continues to account for its
stock-based awards using the intrinsic value method in accordance
with Accounting Principles Board No.25, "Accounting for Stock
Issued to Employees" and its related interpretations. 
Accordingly, no compensation expense has been recognized in
the financial statements for employee stock arrangements in
fiscal 1998.

Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation", (SFAS  123) requires the
disclosure of pro forma net income and earnings per share had the
Company adopted the fair value method as of the beginning of
fiscal 1996. Under SFAS 123, the fair value of stock-based awards
to employees is calculated through the use of the option pricing
models, even though such models were developed to estimate the
fair value of freely tradeable, fully transferable options
without vesting restrictions, which significantly differ from the
Company's stock option awards.  These models also require
subjective assumptions, including future stock price volatility
and expected time to exercise, which greatly affect the
calculated values.  The Company's calculations were made using
the Black-Scholes option pricing model with the following
weighted average assumptions:  Expected life, 120 months
following vesting in fiscal 1998, 60 months following
vesting in fiscal 1997; stock volatility, 31.55% in fiscal 1998
and 26.18% in fiscal 1997; risk free interest rate 6% in fiscal
1998 and fiscal 1997; and no dividends during the expected term. 
The Company's calculations are based on a multiple option
valuation approach and forfeitures are calculated at a 50%
rate, based on the Company's historical experience. If the
computed fair values of the fiscal 1998 and fiscal 1997 awards
had been amortized to expense over the vesting period of the
awards, pro forma net loss would have been $360,000 or $0.10
per share in fiscal 1998, and the pro forma net earnings would
have been $314,000 or $0.09 per share in fiscal 1997.  However,
the impact of outstanding non-vested stock options granted prior
to fiscal 1996 has been excluded from the pro forma calculation;
accordingly, the fiscal 1998 and fiscal 1997 pro forma
adjustments are not indicative of future period pro forma
adjustments, when the calculation will apply to all applicable
stock options.
</PAGE>
Item 8.        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
               ACCOUNTING AND FINANCIAL DISCLOSURE.

Not applicable.

                                   PART III

Item 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

Information with respect to this Item is incorporated by
reference to the information set forth under the headings
"General Information Regarding Directors and Executive Officers,"
"Professional Experience of Executive Officers and Directors" and
"Reports Required by Section 16(a)" under the section entitled
"Board of Directors" in the Company's Proxy Statement for the
1998 Annual Meeting of Shareowners.

Item 10.   EXECUTIVE COMPENSATION.

Information with respect to this Item is incorporated by
reference to the information set forth under the headings
"Remuneration of Directors," "Compensation of Executive Officers"
and "Employee Contracts, Employment Termination and
Change-in-Control Arrangements" under the section entitled "Board
of Directors" in the Company's Proxy Statement for the 1998
Annual Meeting of Shareowners.

Item 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.

Information with respect to this Item is incorporated by
reference to the information set forth in the section entitled
"Security Ownership of Certain Beneficial Owners and Management"
in the Company's Proxy Statement for the 1998 Annual Meeting of
Shareowners.

Item 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Information with respect to this Item is incorporated by
reference to the information set forth under the heading "Certain
Relationships and Related Transactions" under the section
entitled " Board of Directors" in the Company's Proxy Statement
for the 1998 Annual Meeting of Shareowners.

Item 13.   EXHIBITS AND REPORTS ON FORM 8-K.

    (a)  Form 8-K filed dated December 30, 1997
    (b)  Form 8-K filed dated May 7, 1998

    (b)  See Index to Exhibits following Signature Page.
</PAGE>
                       SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on this June 19th day of 1998.

                          REAL GOODS TRADING CORPORATION
                                   (Registrant)

                      By:[S]DONNA MONTAG
                            Donna Montag, Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant in the capacities and on the dates
indicated.

      Signature                   Title                    Date

[S]DONNA MONTAG         Chief Financial Officer           6/19/98
   Donna Montag

[S]JOHN SCHAEFFER       Chief Exectutive Officer          6/19/98
   John Schaeffer

[S]STEPHEN MORRIS               Director                  6/19/98
   Stephen Morris

[S]JAMES T. ROBELLO             Director                  6/19/98
   James T. Robello

[S]LINDA FRANCIS                Director                  6/19/98
   Linda Francis

[S]JOHN LENSER                  Director                  6/19/98
   John Lenser

[S]BARRY REDER                  Director                  6/19/98
   Barry Reder
</PAGE>
Item 13.  INDEX TO EXHIBITS.

Exhibit No.         Description

 3.1*  Articles of Incorporation

 3.2*  Bylaws

10.1*  Form of Indemnification Agreement with Directors

10.10**** Lease on 555 Leslie Street, Ukiah, California


10.12**** Split Dollar Agreement by and among the Company and
          John C. Schaeffer and the Trustee of the Schaeffer 1994
          Irrevocable Trust dated May 15, 1995 and Assignment of
          Life Insurance Policy as Collateral by Trustee of the
          Schaeffer 1994 Irrevocable Trust

10.14**** Amended and Restated Real Goods Trading Corporation
          Fiscal 1993 Stock Incentive Plan

10.15**** The Real Goods Trading Corporation Non-Employee
          Directors' Stock Option Plan

10.18^ Term Loan agreement between the Company and Small Business
       Administration, dated June 17, 1996 and certain ancillary
       documents.

10.20  Loan Agreement between the Company and National Bank of
       the Redwoods dated April 7, 1998 and certain ancillary
       documents.

10.21  Asset Sales and Purchase Agreement for Snow Belt.

10.23  Lease of 1324 Tenth St., Berkeley, California.

10.24  Agreement with Ronald Zell.

23.2   Independent Auditors' Consent.

*      Incorporated by reference to the Company's Registration
       Statement of Form 10-KSB filed with the Securities and
       Exchange Commission on October 1, 1993.

**     Incorporated by reference to Amendment No. 1 to the
       Company's Registration Statement on Form 10-KSB  filed
       with the Securities and Exchange Commission on December
       1,1993.

***    Incorporated by reference to the Company's Form 10-KSB
       filed with the Securities and Exchange Commission on June
       29, 1994.

****   Incorporated by reference to the Company's Form 10-KSB
       filed with the Securities and Exchange Commission on June
       28, 1995.

^      Incorporated by reference to the Company's Form 10-KSB
       filed with the Securities and Exchange Commission on June
       11, 1997.