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, 1997
                    OR
/_/ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________

Commission File 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 
(incorporation or organization)            Identification Number)

 555 Leslie Street, Ukiah, California                 95482
(Address of principal executive office)            (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.
$18,424,000

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.    $6,807,185   as
of May 01, 1997.
The number of shares of the issuer's Common Stock outstanding as
of May 20, 1997 was 3,403,804.

              Documents Incorporated by Reference

     A portion of the Real Goods Trading Corporation's Proxy
Statement for the 1997 Annual Meeting of Shareowners to be filed
with the Commission on or before June 27, 1997 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 1997 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 and retail stores.  Except for fiscal 1996, the Company has
been profitable every year since it was incorporated in 1990. 
The Company currently mails catalogs under the names of Real
Goods*, Earth Care*, REAL GOODS NEWS (currently being transformed
into the REAL GOODS RENEWABLES), REAL STUFF (currently being
transformed into the REAL GOODS NEWS) and the POST CONSUMER.  The
Company sells renewable energy products directly to its customers
through the Renewable Energy Department (RG Renewables).  The
Company's continuing retail stores are located in Hopland,
California and Eugene, Oregon.  The Company is selling or closing
its Snow-Belt Energy store in Amherst, Wisconsin.  The Company
also conducts consumer education activities through the
"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 and
publishes the results in its annual report to shareowners.

In May 1996 the Company opened its Solar Living Center ("SLC"), a
twelve acre demonstration site housing a 5,000 square foot retail
store constructed of adobe-like covered rice straw bales and with
a utility intertie system with its local utility, Pacific Gas &
Electric Company.  The Company's 10 kilowatt photovoltaic array
and 3 kilowatt wind generator produce much of the power for the
site; the Company sells the excess power back to PG&E.  In the
event of power failures or lack of wind and sunshine, a battery
backup system provides electricity.  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.  The Company believes that the Solar Living Center
has the potential to be of great strategic importance to the
Company's future.  In its ten months of operation approximately
100,000 people visited the SLC.  In fiscal 1997, store sales
nearly doubled from the sales in the store's previous Hopland
location in fiscal 1996, although selling space increased by only
20%.

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.   The Company has revamped its color Real
Goods and Earth Care catalogs to be more appealing to these
customers, and these catalogs now carry primarily conservation
and healthy lifestyle products.

The "REGIONAL RETAIL MARKET" is served by the Company's three
retail stores, located in Hopland, California; Eugene, Oregon and
Amherst, Wisconsin.  Each of the three stores carries environ-
mentally related and renewable energy products as well as
regional products with a unique focus.  The Hopland, California
store, relocated to the Company's new Solar Living Center in May
1996, features a number of products that are handmade locally or
made in small quantities that are not suitable for mail order
sale.  Due to the Hopland store's proximity to Highway 101 and
its exposure to summer tourists to Northern California's
attractions, the store carries many items for the traveler and
camper.  The store plans to focus on proprietary and private
labelled products which traditionally command higher gross
margins.  The Amherst, Wisconsin store, Snow-Belt, is the
Company's national hearth center, marketed in fiscal 1997 through
a REAL GOODS NEWS special catalog;  the Company is selling or
closing this store.  The Eugene, Oregon store features technical
sales of hot water systems and is also one of the Company's
outlet stores for inventory no longer available through mail
order.  Since November 1996 the Company has kept open an outlet
store in Ukiah at its corporate headquarters; the outlet store
was previously only open during the holiday season.

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.  Installation and use of
renewable energy products requires a substantial investment of
time and money by the consumer.  These products are often
purchased in connection with constructing or rehabilitating
residences with systems and appliances that supply renewable
sources of energy or otherwise circumvent the consumer's need to
use conventional sources of energy. To increase customer service
as well as more effectively manage these larger sales, the
Company  created a Renewable Energy Department, called Real Goods
Renewables, that relates to customers directly.  The Company has
also identified eco-tourism as a promising market for its
renewable energy sales.  In the first quarter of fiscal 1997, the
Company made the largest sale in its history, a $1.8 million 100
kilowatt photovoltaic renewable energy sale to a resort on the
island of Belize in Central America (the "Belize sale").  The
Company also earned a $200,000 bonus for the on-time completion
of the project.  The Company believes there will be other
opportunities for significant sales in this market in the future,
although there can be no assurance either that the opportunities
will develop or that the Company will convert the opportunities
to sales thereof.

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 primary
product that the Company produces for this market is the SOLAR
LIVING SOURCEBOOK.  In 1992, the Company established the
Institute for Solar Living, which offers educational seminars on
a variety of topics.  With the opening of the SLC in May, 1996
the Company has a demonstration site for the Institute, as the
retail store there has been built with sustainable building
techniques, including strawbale construction, and has many
functioning renewable energy systems.  The Company has also
established a successful co-publishing relationship with Chelsea
Green Publishers of Vermont.

     1.  ENVIRONMENTALLY RELATED PRODUCTS MARKET.  The Company's
mail order catalogs market energy saving conservation devices,
environmentally related products and educational and well-made
gifts to urban and suburban dwellers.  Approximately 65% of the
Company's total sales in fiscal 1997, including the Belize sale,
were derived from catalogs.  The Company mailed approximately
6,300,000 catalogs in the current year, compared to 5,400,000 in
the previous year.  This 15% increase in mailings was implemented
to take advantage of paper price decreases and to increase the
revenues from the Earth Care catalog.

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
magnetic radiation meters 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. 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 fiscal 1997 the Company conducted its first large scale
catalog mailing utilizing a native language order form in Japan.
This fall test mailing had a favorable initial response, and the
Company has increased the Japanese fall mailing scheduled in
fiscal 1998.  Subsequent to year end, in April 1997, the Company
also participated in launching a commercial Internet site in
Japanese that offered Real Goods products for sale.  Initial
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.  Included in the offering are
many of the products that the Company imports directly.  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
sell environmentally related products, renewable energy products
and unique regional products.  In fiscal 1997, the Company's
three retail stores accounted for 15% of total sales, including
the Belize sale. In May 1996 the Hopland store moved from
temporary quarters to the new Solar Living Center, and the Eugene
store relocated as well, increasing the square footage of the
retail stores to a total of 9,600 square feet from a total of
7,400 square feet for the first two months of fiscal 1997 and all
of fiscal 1996.

In addition to stocking a majority of the products from the
Company catalogs as well as Renewable Energy Products, the
Hopland store also offers items that 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.  The Hopland store's products are currently comprised
of 65% mail order catalog and renewable items and 35% retail
unique items.

In April 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 color catalogs, as well
renewable energy products and provides full technical support. 
In addition to being nationally advertised as the Company's
outlet center, the store specializes in solar hot water systems.

During the November through January months, the Company has
previously operated a seasonal outlet store in Ukiah as a
clearance center for returned and discontinued merchandise.  The
Company currently plans to expand this facility and leave it open
year round.  There can be no assurance the Company will continue
to operate an outlet store in Ukiah.

The Company's 1,600 square foot Snow-Belt store in Amherst
Wisconsin emphasized hearth stoves and related products, as well
as many items sold by the Company through its catalogs. The
Company expects to sell or close the Snow-Belt store in fiscal
1998 for failing to achieve the long term strategic objectives
which the Company had for the store.

     3.  RENEWABLE ENERGY PRODUCTS MARKET.  In fiscal 1997 the
Company completed a sale of the largest solar power generating
system in Latin America.  The system, located at a resort in
Belize, generated $2,000,000 of revenue.  The Company believes
that the size and non-recurring nature of the Belize sale, which
accounted for 10% of the Company's fiscal 1997 sales, make it
appropriate to state portions of the Company's operating results
without reference to the Belize sale.  For instance, excluding
the Belize sale, approximately 10% of the Company's sales were
from renewable energy sales in fiscal 1997, compared to 8% of
sales in fiscal 1996; including the Belize sale, approximately
20% of the Company's sales were from renewable energy sales.

Real Goods Renewables markets its products through the REAL GOODS
NEWS, currently being transformed into the REAL GOODS RENEWABLES
CATALOG, a specific 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 are fully trained in
energy system sizing and specializes in designing solar systems
of all sizes.

Real Goods Renewables offers power systems for the eco-tourism
market and for 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 markets for these power systems have been 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 it has assisted over 25,000
homes in making the transition to renewable energy primarily
through solar systems.  Market research in the solar energy field
suggests that the domestic market for solar systems is growing at
a rate of 10%-15% annually.  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.

     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 its SOLAR LIVING SOURCEBOOK, a 700 page textbook that
the Company periodically (now in its ninth edition) 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. The Company also markets many publications on specific
aspects of renewable energy, conservation and sustainable living
within its catalogs and in its retail stores.  Additionally, the
Company is continuing to develop educational materials and
products through its Renewables Department.  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, thirteen books have been co-published bearing
" Real Goods Independent 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.

In 1992, the Company established the Institute for Solar Living,
which 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.

The Company has established a website (www.realgoods.com) which
the Company 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.  Transaction 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.

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 purchases.  The Company's three largest 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 three vendors:
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 three 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
material adverse effect on the Company's back 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 assurances that the Company will not be subject
to unanticipated cost increases or shortages of supply.

C.  SEASONALITY 

The Company's revenues are not subject to the extreme seasonality
experienced by certain other retailers, however, excluding the
Belize sale, 40% of the Company's revenues are realized in the
third quarter. 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 has
lessened the effect of the holiday season on the Company's sales. 
The Company's fiscal year ends on March 31.  Excluding the Belize
sale, 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

The Company's backorders are generally less than $100,000 at any
one time.  At March 31, 1997, backorders were $54,000, which was
4.7% of that month's catalog sales.  At March 31, 1996 backorders
were $27,000, which was 3% of that month's catalog sales.
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 attempts to keep its
Backorders at any given time to less than 10% of its total
orders; the Company believes this 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 1997, returns of
catalog sales were 5.1% of gross catalog sales, compared to 4.8%
in the previous year.  The Company believes that the hard goods
catalog industry in general experiences returns of 5-6%.

E.  COMPETITION

In the sale of environmentally related products, the Company
believes that it has many indirect competitors but few direct
competitors;  indirect competitors range from other catalog
retailers selling similar products to specialty retailers and
local hardware stores.  The Company is currently testing a
program to sell branded goods and is in the process of developing
new and innovative proprietary products.  There can be no
assurance that the Company will ever sell material quantities of
branded goods or proprietary products.

The Company has a number of competitors in the sale of renewable
energy products, none of whom is known to the Company to be
substantially larger than the Company.  However, there can be no
assurance that the resources or market positions of the Company's
competitors in this area will not change.

In both product areas, 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 1997 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 for RG 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 1997 the membership 
program increased by approximately 24% to over 38,000 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 100
employees.  Of those employees, approximately 20 are employed at
the Company's retail stores, 8 are employed at RG Renewables and
approximately 72 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.


Item 2.   DESCRIPTION OF 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 housing the
Snow-Belt retail store.  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.

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's lease on its IBM RISC 6000, which is the computer
system and portions of its telephone system, expires in fiscal
1998.

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

Item 3.   LEGAL PROCEEDINGS.

The Company is not party to any material legal proceedings.

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

Not applicable.

                                  PART II

Item 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's common stock has been eligible for over-the-counter
trading since February 25, 1993.  The Company's common stock was
listed on the Pacific Stock Exchange on April 11, 1994 under the
symbol RGT.  Effective July 23, 1996, the Company's stock was
listed on the NASDAQ SmallCap Market 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.  Between the Company's initial public
offering in 1991 and the date listed on the Pacific Stock
Exchange, trading in the Company's securities was extremely
isolated because the Company's shares were traded only through a
single broker offering a passive "bulletin board" matching
service.  The following chart sets forth the high and low actual
sale prices of the Company's common stock for each quarter within
the last three fiscal years, to the extent the Company is aware
thereof.
<TABLE>
<CAPTION>               Fiscal Year Ended March 31 
                               High (Purchase)         Low (Sale)
                                  by Share              by Share


<S>                                   <C>                 <C>
1996:              
    First Quarter                      9                   8
    Second Quarter                     8-7/8               5-3/4
    Third Quarter                      7-1/4               5-1/8
    Fourth Quarter                     6                   5-1/2
  
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  
</TABLE>

To the extent the Company is aware thereof, the prices on the
foregoing table reflect the actual prices paid or received by the
investors before commissions and taxes.  There were 3,403,804
shares of the Company's common stock outstanding as of May 20,
1997.  The Company had 5,333 shareowners of record as of May 1,
1997.
<PAGE>
Item 6.
              MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Sales

The Company reported the highest net sales in its history,
$18,424,000 for fiscal 1997, an increase of 19% over fiscal 1996.
Net sales include a $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.

For the fiscal year ended March 31, 1997, without the Belize
resort sale, net sales for the year were $16,463,000, up 7% from
$15,432,000 from the previous year.  Excluding the Belize sale,
retail and renewable energy sales continued to grow as a
percentage of total Company sales, and catalog sales decreased as
a percentage of sales: catalog sales were 73% of sales, as
compared to 78% in the prior year; retail store sales were 17% of
sales, as compared to 14% in the prior year, and renewable energy
department sales were 10% of sales, as compared to 8% in the
prior year.

Catalog sales remained level at $11,968,000, compared to prior
year sales of $11,972,000.  The Company mailed approximately 17%
more catalogs in fiscal 1997, or 6,300,000 compared to 5,400,000,
primarily taking advantage of paper price declines in the third
and fourth quarter.  The Real Goods catalog showed a 12% increase
in circulation, and an increase in dollars per book to $2.12 per
book in fiscal 1997 from $2.04 per book in fiscal 1996.  The
remerchandised, re-positioned and expanded Earth Care catalog had
a 35% increase in circulation, with dollars per book falling to
$1.42 per book compared to $1.80 per book in fiscal 1996.  The
Company took advantage of the paper price decrease to mail the
Earth Care catalog to additional prospect lists and implement
long term growth plans for the title.

As the Company moved both the Hopland, California and Eugene,
Oregon stores to larger quarters, retail store sales increased
26% to $2,754,000, compared to $2,181,000 in the previous fiscal
year. The Company had 7,400 square feet of retail selling space
during fiscal 1996.  For 10 months of the current fiscal year
there was 9,600 square feet of retail selling space. The Hopland
store has been relocated to the Company's Solar Living Center,
and the Eugene store has been relocated to a larger, more central
location at a mall in downtown Eugene.  Since November 1996, the
Company has kept a small outlet store open in Ukiah all year; in
fiscal 1996 the Ukiah store was open only from November through
January. 

Renewable energy sales, excluding the Belize sale, increased 37%
to $1,693,000 compared to  $1,237,000 in the previous fiscal
year.  The Company believes that Real Goods Renewables has shown
a significant sales increase due to the department's increased
staff levels, emphasis on customer service (including separate
800 lines), and utilization of a separate and more technical
catalog, the Real Goods News, for the renewable energy customers.
Due to increased staffing, Renewables has been able to pursue
many new leads in both national and international markets, as
well as in the expanding "eco-tourism" business.

Gross Profit

For fiscal 1997, gross profit amounted to $8,799,000, or 47.8% of
sales, compared to gross profits of $7,426,000 or 48.1% of sales
in the previous fiscal year.  Overall gross profits as a
percentage of sales was slightly lower due to the percentage
of retail and renewable energy sales, including the Belize sale,
increasing in comparison to catalog sales; renewable and retail
sales traditionally have lower margins than catalog sales.

Catalog, retail and renewable energy sales all showed an
improvement in gross margins over the previous fiscal year. 
Catalog sales had a gross profit of $6,373,000 or 53.2% of sales,
compared to $6,151,000 or 51.4% of sales in the previous year,
which was a $220,000 increase in margin on flat sales.  Retail
store sales had a gross profit of $1,096,000 or 39.8% of sales,
compared to $839,000 or 38.4% of sales in the previous year. 
Renewable energy sales had a gross profit of $1,282,000 or 35% of
sales, including the Belize sale, compared to $394,000 or 31.8%
of sales in the previous year.

The gains in margins in all areas were attributed to the
successful efforts to improve terms with vendors that allow for
cash discounts, quantity discounts, and generally improved
purchasing efficiencies.

Operating Expenses

Selling, general, and administrative expenses amounted to
$8,133,000 or 44% of sales in fiscal 1997, compared to $7,745,000
or 50.1% of sales in the prior year.  Operating expense increased
only 5% in absolute dollars while sales increased 19% including
the Belize sale, or 7% without the Belize sale.  The Belize sale
did not generate incremental operating expense. Labor and
benefits increased only 2% on the sales increase, reflecting the
Company's efforts to improve and streamline internal management. 
Catalog circulation increased by 15%, yet due to paper price
declines experienced in the third and fourth quarters, overall
catalog expense declined by 6%.  Postage and freight expense
increased 19%, reflecting the increased catalog circulation as
well as increases by United Parcel Service in February 1996 and
February 1997.  The Company has experienced small reductions in
postage costs since July 1996 due to favorable new postal
reclassification regulations.  The Company also continued to
reduce outside consulting expenses, general expenses, and other
variable costs.  Depreciation increased $100,000, due to the
completion of the Solar Living Center.

Earnings from operations were $666,000 for the year, compared to
a loss of $319,000 in the previous year, representing a
turnaround of $985,000.  The Belize sale, improved margins, paper
price reductions and improved operational efficiencies
contributed to this dramatic improvement.

Interest

In fiscal 1997, interest expense was $103,000 and interest income
was $23,000, resulting in a net interest expense of $80,000.  In
the previous fiscal year, interest income was $32,000 and
interest expense was capitalized into the Solar Living Center
construction project.  The increased interest expense is due to
the loans required to finance the Solar Living Center (see Note
5).  Approximately $11,000 of the interest expense in fiscal 1997
was related to the line of credit.  The Company largely uses its
line of credit to increase inventory levels for the holiday
season.

Income Taxes

Income taxes as a percentage of pretax income was 38% compared to
a tax benefit at the rate of 34% for the previous year when the
Company reported a loss.  The Company believes that the applied
tax rate accurately reflects its actual experience.

Earnings

The Company earned $586,000 before tax and had $363,000 net
earnings in the current fiscal year, or $.11 per share.  In
fiscal 1996, the Company had a before tax loss of $287,000 and a
net loss of $175,000 or $.05 per share.  Current year profits are
the highest annual results ever earned by the Company.  These
earnings represent a significant turnaround for the Company, as
they follow the Company's first annual loss in fiscal 1996.

Management believes that the Belize sale, the improved margins
particularly from catalog sales, the decreased paper costs in its
third and fourth quarters, and improved internal operating
efficiencies are to be credited with the earnings gain.  The
Company has remained committed to its mission of reducing waste
and pollution and heightening environmental awareness by
continuing to print catalogs on recycled paper, despite the 4% -
10% premium that it pays for recycled paper.

Liquidity and Capital Resources

During the fiscal year ended March 31, 1997, cash of $252,000 was
provided by operations. Cash was increased by a decrease in
prepaid purchases of $285,000 due to the effect in the prior year
of a purchase for the Belize sale.  Cash was decreased by a
decrease in customer deposits of $585,000 due to the Belize
deposit being recognized in sales in the current year.

The Company used $685,000 of cash largely for purchase of
property, equipment and improvements related to the completion of
its Solar Living Center.

Cash provided by financing activities was $677,000, primarily due
to the Company completing its construction loan and entering into
two long term debt agreements (see note 5) for $585,000 and
$604,000 respectively.  Cash of $115,000 was used in the
repurchase of common stock (see Note 10).

The net effect of all of the Company's activities was to increase
the Company's cash position to $513,000 at the end of the period
from $270,000 at the beginning of the period.

The Company has secured a $1,500,000 line of credit for fiscal
1998 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 1998. 

The overall effects of inflation on the Company's business during
the periods discussed were not believed to be material.

                      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 and Earth Care 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 gross income decreases, 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; unwise or 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, poor 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
is selling or closing its Amherst, Wisconsin store 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.

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.  The Company believes that as to certain of its
products it operates in a niche presently too technical and
application specific to interest the larger catalogs and that 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. 
However, the Company is small compared to industry leaders.  If
one or more of the larger catalog retailers decides either to
have a major renewable energy and conservation section in an
existing catalog or to launch a comparable catalog, the Company's
business could be adversely affected.

F.  NEW INITIATIVES. The Company has undertaken test programs in
Japan, in wholesale sales and in selling via the Internet, which
may prove to be productive endeavors; however, there can be no
assurance that any of them 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 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 and,
for so long as it operates the Snow-Belt store, Wisconsin.  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.  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.  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.

K.  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.  In
late 1994 and early 1995 paper prices increased dramatically,
causing significant cost increases; those prices eased in 1996. 
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 impact the Company's
catalog growth and profitability.  Decreased paper prices result
in a more favorable mail order catalog market.

Postage costs are affected by price changes by the United States
Postal Service and United Parcel Service. In early 1995, United
States Postal Service prices increased and could increase in the
future. In February 1996 and February 1997 United Parcel Service
increased rates.   The Company  does expect annual increases in
United Parcel Services's charges. The Company  has experienced a
small reduction in postage costs since the third quarter due to
recently enacted postal reclassification regulations.

L.  CONTROL.  Because of his stock ownership position, John
Schaeffer will at all times have the ability to control the
operations and strategy of the Company. 

Item 7.  FINANCIAL STATEMENTS.

<PAGE>

REAL GOODS TRADING CORPORATION

TABLE OF CONTENTS
                                                           PAGE


INDEPENDENT AUDITORS' REPORT                                16

CONSOLIDATED FINANCIAL STATEMENTS AS OF AND 
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996:

 Consolidated Balance Sheets                                17

 Consolidated Statements of Operations                      18

 Consolidated Statements of Cash Flows                      19

 Consolidated Statements of Shareowners' Equity             20
 
 Notes to Consolidated Financial Statements              21-27
<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareowners 
Real Goods Trading Corporation:

We have audited the accompanying consolidated balance sheets of
Real Goods Trading Corporation and subsidiary (the "Company") as
of March 31, 1997 and 1996, and the related consolidated
statements of operations, shareowners' equity and of 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 consolidated financial statements present
fairly, in all material respects, the financial position of Real
Goods Trading Corporation and subsidiary as of March 31, 1997 and
1996, and the results of its operations and its cash flows for
the years then ended in conformity with generally accepted
accounting principles.

As discussed in Note 2 to the financial statements in fiscal 1996
the Company changed its method of accounting for certain
inventory acquisition and distribution costs.

[S]DELOITTE & TOUCHE, LLP
   Deloitte & Touche, LLP

Oakland, California
May 9, 1997

<PAGE>
                       REAL GOODS TRADING CORPORATION
                         CONSOLIDATED BALANCE SHEETS
                          MARCH 31, 1997 AND 1996
                    (In thousands except share data) 

<TABLE>
<CAPTION>
                                                 1997       1996 
<S>                                            <C>        <C>
ASSETS
Current assets:
      Cash                                      $  513     $  270
      Accounts Receivable, net of 
          allowance of $6                          169        179
      Inventories                                2,112      2,139
      Deferred catalog costs, net                  383        403
      Prepaid expenses                             112        403
          Total current assets                   3,289      3,394

Property, equipment and improvements, net        3,347      2,936
Intangible assets and other assets, net            166        167
          Total assets                          $6,802     $6,497

LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
      Accounts payable                          $  481      $ 575
      Accrued expenses                             304        345
      Customer deposits                             85        670
      Current maturities of long-term debt          37        387
      Deferred income taxes                         13         40 
      Income taxes and other taxes payable          48         35
          Total current liabilities                968      2,052

Long-term debt                                   1,143         15
          Total liabilities                     $2,111     $2,067

Shareowners' equity:
     Common stock, without par value:
        Authorized 10,000,000 shares;
        Issued and outstanding, 3,403,804
        and  3,434,666 shares respectively       4,252      4,354
     Retained Earnings                             439         76
          Total shareowners' equity              4,691      4,430
          Total liabilities and shareowners'
                                     equity      $6,802    $6,497
</TABLE>
              See notes to consolidated financial statements

<PAGE>
                     REAL GOODS TRADING CORPORATION
                   CONSOLIDATED STATEMENTS OF OPERATIONS
                    YEARS ENDED MARCH 31, 1997 AND 1996
                     (In thousands except share data)
<TABLE>
<CAPTION>
                                             1997          1996
<S>                                        <C>           <C>  
Net sales                                  $18,424       $15,432
Cost of sales                               (9,625)       (8,006)
      Gross profit                           8,799         7,426 
Selling, general and administrative
      expenses                               8,133         7,745 
Earnings (loss) from operations                666          (319)
Interest income (expense), net                 (80)           32 
      Earnings (loss) before income taxes
      and cumulative effect of change
      in accounting principle                  586          (287)
Income tax benefit (expense)                  (223)           85 
  Earnings (loss) before cumulative
  effect of change in accounting principle     363          (202)
Cumulative effect of change in accounting
  principle, net of tax (Note 2)                 -            27 
  Net earnings (loss)                       $  363        $ (175)

Earnings (loss) per share of common stock:
     Before cumulative effect of change 
     in accounting principle                 $0.11        ($0.06)
     Cumulative effect of change in
        accounting principle - accounting
        for certain inventory acquisition
        and distribution costs               $0.00         $0.01 
     Net earnings (loss) per share           $0.11        ($0.05)

Weighted average shares used to compute
       earnings per share                3,418,089     3,435,167  
</TABLE>
              See notes to consolidated financial statements
<PAGE>
                      REAL GOODS TRADING CORPORATION
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                    YEARS ENDED MARCH 31, 1997 AND 1996
                             (In thousands)
<TABLE>
<CAPTION>
                                                   1997      1996
<S>                                               <C>     <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) before cumulative
  effect of change in accounting principle         $363    $(202)
Adjustments to reconcile net earning (loss)
  before cumulative effect of change in
  accounting principle to net cash provided
  by operating activities:
    Depreciation and amortization                   283      176 
    Other                                           (27)      39 
Changes in assets and liabilities:
    Accounts receivable                               9      (92)
    Inventory                                        27      110 
    Deferred catalog costs                           20      189 
    Prepaid expenses                                285     (299)
    Accounts payable                                (94)    (273)
    Accrued expenses                                (41)     172 
    Income taxes and other taxes payable             13       13  
    Customer deposits                              (586)     630 

Net cash provided by operating activities           252      463 

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of land, equipment, and construction
   in progress                                     (673)  (1,411) 
 
Purchase of other assets                            (23) 
Proceeds from sale of equipment                      11        3 
   Net cash used in investing
                 activities                        (685)  (1,408)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings                                        2,559      361 
Proceeds from issuance of common stock               13      109 
Repayment of debt                                (1,780)     (20)
Purchase of common stock                           (115)     (67)

Net cash provided by financing activities           677      383 

Net increase (decrease) in cash                     243     (562)
Cash at beginning of period                         270      832
Cash at end of period                              $513     $270

Other cash flow information:
     Interest paid                                  99
     Income taxes paid                             233         1 
Non cash investing/financing activities:
      Notes receivable cancelled upon
           repurchase of options                             (17)
</TABLE>
              See notes to  consolidated financial statements
<PAGE>
                      REAL GOODS TRADING CORPORATION
               CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY
                    YEARS ENDED MARCH 31, 1997 AND 1996
                             (In thousands)
<TABLE>
<CAPTION>
                          COMMON STOCK
                                                          Total
                                          Notes           Share-
                         Number          Recieve Retained owners' 
                        of Shares Amount   able  Earnings Equity 
<S>                       <C>   <C>      <C>     <C>     <C>
BALANCE, MARCH 31, 1995    3,422  $4,285  $ (17)  $  251  $4,519

Issuance of stock for:
    Bonuses                    1      10                      10
    Stock options exercised   18     109                     109

Repurchase of stock
     and stock options        (6)    (68)    17              (51) 

Stock option compensation             18                      18  

Net earnings                                        (175)   (175)
BALANCE, MARCH 31, 1996    3,435   4,354      -       76   4,430

Issuance of 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  
</TABLE>   
               See notes to consolidated 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, retail stores, and
direct sales of its renewable energy department.  The Company was
organized on July 1, 1990. 

Principles of Consolidation - In December, 1995 the Company's
wholly owned subsidiary, Snow-Belt Energy Center, Inc. was merged
into the Company.  The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiary,
Snow-Belt.  Intercompany transactions and balances have been
eliminated.

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.  See Note 2 to the financial statements.

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.

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.

Intangibles represent the excess of cost over tangible net assets
acquired and are amortized over 5 years.

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 are computed based on the weighted average
number of shares outstanding during the period.

Reclassification - Certain reclassifications have been made to
the March 1996 amounts in order to conform to the March 1997
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 APB No. 25, "Accounting for Stock Issued to
Employees."

New Accounting Standards - In fiscal 1997, Real Goods adopted the
provisions of Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of."  SFAS
No.121 establishes recognition and measurement criteria for
impairment losses when the Company no longer expects to recover
the carrying values of a long-lived asset.  The adoption of SFAS
No. 121 did not have a significant impact on the Company's
financial statements.

Recently Issued Accounting Standard - In February 1997 the
Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share"
(SFAS 128).  The Company is required to adopt SFAS 128 in the
third quarter of fiscal 1997 and will restate at that time
earnings per share (EPS) data for prior periods to conform with
SFAS 128.  Earlier application is not permitted.

SFAS 128 replaces current EPS reporting requirements and requires
a dual presentation of basic and diluted EPS.  Basic EPS excludes
dilution and is computed by dividing net income (available to
common shareowners) by the weighted average of common shares
outstanding for the period.  Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock.
If SFAS 128 had been in effect during the current and prior year
periods, basic EPS would have been $.11 and ($.05) for the years
ended March 31, 1997 and 1996 respectively.  Diluted EPS and SFAS
128 would not have been significantly different than primary EPS
currently reported for the periods.

2.  CHANGE IN ACCOUNTING PRINCIPLE

The Company changed its method of accounting for certain
inventory acquisition and distribution costs to capitalize such
costs into merchandise inventories to better match these costs
with their related sales and to conform to the predominant
industry practice.  Previously, such costs were expensed as
incurred.  The cumulative effect on prior years of adopting this
method was $27,000, which is included in 1996 net income.  The
effect of this accounting change was an increase in earnings for
fiscal 1996 of $4,000.  

3.  PROPERTY, EQUIPMENT AND IMPROVEMENTS
<TABLE>
<CAPTION>
Property, equipment and improvements consist of the following at
 March 31 (in thousands):
                                                  1997      1996 
<S>                                             <C>       <C>
      Land                                       $  490    $  262 
      Land Improvements                             770 
      Buildings and leasehold improvements        1,717       200 
      Equipment, furniture and fixtures             902       798 
      Construction in progress                       10     2,136 
                               Total              3,889     3,396 

     Less accumulated depreciation                 (542)    (460)
     Property, equipment and improvements, net   $3,347   $2,936 
</TABLE>

At the end of fiscal 1996, construction in progress related to
the Solar Living Center (SLC), located in Hopland, California. 
The SLC is a twelve acre demonstration site of sustainable living
practices and renewable energy systems and includes a retail
store.  The Solar Living Center was completed in May, 1996.
$62,000 of interest was capitalized over a two year period in
connection with this project.

4.  LINE OF CREDIT

On April 8, 1997, the Company entered into an extended line of
credit agreement for $1,500,000 from National Bank of the
Redwoods (the" Bank"). Borrowings  bear interest at 1% over the
prime rate, and interest is payable monthly.  The line is
personally guaranteed by the Company's majority shareowner. This
agreement expires April 8, 1998.

In fiscal 1997, the Company had a $1,000,000 line of credit with
the Bank.  Borrowings bore interest at 2% over the prime rate,
and interest was payable monthly.  That line was personally
guaranteed by the Company's majority shareowner. On March 31,
1997, no amounts were outstanding on the Company's line of
credit.

The extended 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.  The Company was in compliance
with all covenants of the extended line of credit agreement as of
March 31, 1997.

5.  DEBT
<TABLE>
<CAPTION>
Long term debt consists of the following on March 31 (in
thousands):
                                                   1997      1996
<S>                                            <C>          <C>
National Bank of the Redwoods term loan,
     interest at prime plus .5%, payable
     through June 30, 2021                         $568 

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

National Bank of the Redwoods construction
     loan, interest at prime plus 2%, paid
     June 1996                                                387

Other                                                16        15

            Total                                $1,180     $ 402


Short-term                                           37       387
Long- term                                        1,143        15

            Total                                $1,180      $402
</TABLE>
Collateral for both term loans is a first deed of trust on the
Hopland, California property.
<TABLE>
<CAPTION>
Principal payments on long-term debt are as follows (in
thousands):
          Fiscal Year ending March 31: 
         <C>                                                 <C>
          1998                                                $37 
          1999                                                 54 
          2000                                                 39 
          2001                                                 41 
          2002                                                 42 
          Thereafter                                          966 

                    Total                                  $1,180 
</TABLE>

6.  DISPOSITION OF ASSETS

The Company plans to sell or close its retail store in Amherst,
Wisconsin during fiscal 1998, due to the failure of the store to
achieve the long term strategic objectives that the Company had
for the store.  The Company does not anticipate that the sale or
closure of this store will result in a loss.

7.  LEASES

The Company has operating leases for office, warehouse
facilities, the Eugene store and certain equipment, which expire
from 1997 through 2000.  Rental expense for the years ended March
31, 1997 and 1996 was $158,000 and $264,000, respectively.
<TABLE>
<CAPTION>
Future minimum annual lease payments under operating leases are
as follows (in thousands):

Fiscal Year ending March 31:
         <C>                                                <C> 
          1998                                               $166 
          1999                                                 43 
          2000                                                 11 
          2001                                                  5 

              Total                                          $225
</TABLE>

8.  INCOME TAXES 

<TABLE>
<CAPTION> 
Income tax expense (benefit) consists of the following for the
years ended March 31 (in thousands):
                                               1997         1996
         <S>                                   <C>         <C>
          Current:
          Federal                                $196      $ (40)
          State                                    52          1 

                   Total                          248        (39)
          Deferred                                (25)       (31)

                   Total                        $ 223      $ (70)
</TABLE>

The provisions for income taxes for financial reporting purposes
are different from the tax provision computed by applying the
statutory federal income tax rate.

<TABLE>
<CAPTION>
The differences for each year are reconciled as follows (in
thousands):
                                                 1997     1996
<S>                                           <C>        <C>
Federal income taxes at statutory income
     tax rate (34%)                            $  199     $  (84)
State taxes net of federal tax benefit             33        (10)
Effect of nondeductible expenses                   13         13 
Other                                             (22)        11 

Provision                                      $  223       $(70)
</TABLE>
<TABLE>
<CAPTION>
The components of the net deferred tax liability at year-end are
as follows (in thousands):
                                                 1997       1996
<S>                                           <C>       <C>
Deferred tax assets:
Accrued reserves                               $   23    $   23 
Stock option compensation                          14         8 
State income taxes                                  5         1 
Other                                              24         -  

    Total deferred tax assets                      66        32 
Deferred tax liabilities:
Catalog costs                                     (73)      (63)
Other                                              (6)       (9)

Total deferred tax liabilities                    (79)      (72)

Net deferred tax liability                     $  (13)   $  (40)
</TABLE>

9.  MAJORITY SHAREOWNER AGREEMENTS

The President and majority stockholder has a renewable one-year
employment agreement with the Company which provides for an
annual salary of $72,000. The President and majority shareowner
has personally guaranteed the Company's line of credit agreement.
(See Note 4.)

The Company has a split dollar life insurance agreement with its
President, 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 amount receivable at March 31, 1997 was
$111,000.

10.  SHAREOWNERS' EQUITY

In September 1995 the Board of Directors approved a stock
repurchase program.  The Company is authorized to repurchase up
to $250,000 of common stock.  As of March 31, 1997, the Company
had repurchased 9,184 shares at an average price of $5.34 per
share.

In July 1996 the Company repurchased 30,000 shares of
unregistered stock from its President and majority shareowner at
a below-market price of $3.33 per share.

11. 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, 1997, options to purchase 233,700
shares were outstanding, and 26,100 had been exercised.

On March 3, 1997, the Board of Directors granted to all optionees
under the Plan who surrendered their held options the same number
of options with the same vesting provisions but at an exercise
price which was both (i) five cents per share below the exercise
price of the old options and (ii) at or above the current fair
market value of the Company's stock on that date.

In June 1995 the Company reserved 50,000 shares of common stock
for its Non-Employee Directors' Stock Option Plan (Director's
Plan).  In May 1996 the Company amended and restated the
Non-Employee Directors' Stock Option Plan and increased the plan
to 100,000 shares.  As of March 31, 1997, options to purchase
35,000 shares were outstanding and none had been exercised.
                                                             
                                                         Weighted
                                            Number of    Average
                                              Shares     Exercise 
                                          (in thousands)   Price  
Outstanding at March 31, 1995                    325       $ 6.10
 
Granted                                          103         5.79
Exercised                                        (18)        5.10
Cancelled                                       (100)        8.38
Forfeited                                        (79)        5.10

Outstanding at March 31, 1996                    231         5.48
        
Granted                                          368         5.71
Exercised                                         (1)        7.00
Forfeited                                       (330)        5.43

Outstanding at March 31, 1997                    268        $5.40

Shares exercisable at March 31, 1997             136        $5.12
Shares available for grant at March 31, 1997     405
Range of exercise prices                        $5.05 to $7.12
Weighted average remaining contractual
               life at March 31, 1997              8 years 

At March 31, 1997, 340,200 and 65,000 shares were available for
future grants under the Second Amended and Restated Stock
Incentive Plan and Directors' Plan respectively.

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
1997. In fiscal 1996, as some options had been previously granted
at an exercise price below market, an expense of $31,000 was
reflected in the financial statements.

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 calculate values.  The
Company's calculations were made using the Black-Scholes option
pricing model with the following weighted average assumptions: 
Expected life, 60 months following investing; stock volatility,
26.18% in fiscal 1997 and fiscal 1996; risk free interest rate 6%
in fiscal 1997 and fiscal 1996; and no dividends during the
expected term.  The Company's calculations are based on a
multiple  option valuation approach and forfeitures are
calculated at 50% expected rate, based on the Company's
historical experience. If the computed fair values of the fiscal
1996 and fiscal 1997 awards had been amortized to expense over
the vesting period of the awards, pro forma net earnings would
have been $345,000 or $.10 per share in fiscal 1997, and net loss
would have been $183,000 or ($.05) per share in fiscal 1996.
However, the impact of outstanding non-vested stock options
granted prior to fiscal 1996 have been excluded from the pro
forma calculation; accordingly, the fiscal 1996 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.

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
1997 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 1997
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 1997 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 1997 Annual Meeting of Shareowners.

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

    (a)  Form 8-K filed dated April 25, 1996
         Form 8-K filed dated May 21, 1996.

    (b)  See Index to Exhibits following Signature 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 10th day of 1997.

      REAL GOODS TRADING CORPORATION
              (Registrant)

By:[S]DONNA MONTAG, CHIEF FINANCIAL OFFICER
      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       May 20,1997
   Donna Montag

[S]JOHN SCHAEFFER            President/CEO           May 20,1997
   John Schaeffer

[S]STEPHEN MORRIS               Director             May 20,1997
   Stephen Morris

[S]JAMES T. ROBELLO             Director             May 20,1997
   James T. Robello

[S]LINDA FRANCIS                Director             May 20,1997
   Linda Francis

[S]JOHN LENSER                  Director             May 20,1997 
   John Lenser

[S]BARRY REDER                  Director             May 20,1997 
   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

10.2**    Contract to Purchase Hopland Property 

10.7**    License Agreement, as amended, between Sierra Club and
          Earth Care Paper Company, Inc.,
          and consent letter from Sierra Club to the Company

10.9***   Lease of 1670 West 7th Avenue, Eugene, Oregon

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

10.11**** Loan Agreement between the Company and National Bank of
          the Redwoods dated April 4, 1995 and certain ancillary
          documents

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

10.13**** Consulting Agreement with Stephen Morris

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

10.16^    Loan Agreement between the Company and National Bank of
          the Redwoods dated April 8, 1997 and certain ancillary
          documents.

10.17^    Term Loan agreement between the Company and National
          Bank of the Redwoods, dated June 24, 1996 and certain
          ancillary documents.

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

23.1^    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 21, 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.