U.S. SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, DC 20549

                              FORM 10-QSB

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES 
    EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED JUNE 30, 1998

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES   
    EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________
    TO ____________

Commission File Number 1-12614


                        SEVENTH GENERATION, INC.
    -----------------------------------------------------------------
    (Exact name of small business issuer as specified in its charter)


    		   Vermont                                   03-0300509
-------------------------------         ------------------------------------    
(State or other jurisdiction of         (IRS Employer Identification Number)
 incorporation or organization)


                   1 Mill Street, Burlington, VT 05401
                 ----------------------------------------
                 (Address of principal executive offices)

                            (802) 658-3773
                      ---------------------------
                      (Issuer's telephone number)

______________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last 
report)

Check whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter 
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [ X ]  No [   ]

The number of shares of Common Stock, $0.000333 par value, outstanding as of 
July 31, 1998 was 2,428,791.  The number of Redeemable Common Stock Purchase 
Warrants outstanding as of July 31, 1998 was 1,540,869.

Transitional Small Business Disclosure Format (check one)  Yes [ ]  No [X]


TOTAL NUMBER OF PAGES:  24                EXHIBIT INDEX APPEARS ON PAGE: 20

<PAGE>

PART I.  FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SEVENTH GENERATION, INC.
CONSOLIDATED BALANCE SHEETS
June 30, 1998 and December 31, 1997

ASSETS
                                                June 30,          December 31,
                                                  1998                 1997
                                               (Unaudited)
Current assets:	
Cash and cash equivalents                   $    347,412          $    311,226
Short-term marketable securities                 161,975               257,698
Accounts receivable-trade, net of 
 allowance for doubtful accounts of 
 $27,467 at June 30, 1998 and $25,000 at
 December 31, 1997                               616,603               911,320
Accounts receivable-other                          5,094                39,856
Inventories                                      511,112               344,440
Other assets                                      74,111                54,278
                                             -----------           -----------
Total current assets                           1,716,307             1,918,818
                                             -----------           -----------
Equipment:
Computer equipment                                81,338                68,129
Equipment and furniture                           56,754                33,863
                                             -----------           -----------
                                                 138,092               101,992
Less accumulated depreciation 
 and amortization                                 83,022                70,142
                                             -----------           -----------
Equipment and furniture, net                      55,070                31,850
                                             -----------           -----------

Deposits and other assets                         21,350                25,054
                                             -----------           -----------
Total assets                                $  1,792,727          $  1,975,722
                                             ===========           ===========
See accompanying notes to financial statements

<PAGE>

SEVENTH GENERATION, INC.
CONSOLIDATED BALANCE SHEETS
June 30, 1998 and December 31, 1997

LIABILITIES AND STOCKHOLDERS' EQUITY
                                               June 30,           December 31,
                                                 1998                1997
                                             (Unaudited)	
Current liabilities:			
Current installments of subordinated 
 convertible debentures                     $    100,000         $     100,000
Current portion of capital leases                  2,336                 2,151
Accounts payable-trade                           224,625               251,368	
Other accrued expenses                           191,995               160,095
                                             -----------          ------------
Total current liabilities                        518,956               513,614

Long-term debt:	
Obligations due under capital leases               5,149                 6,365
Subordinated debentures,
 excluding current installments                  847,500               847,500
                                             -----------          ------------
Total liabilities                              1,371,605             1,367,479
                                             -----------          ------------
Commitments and contingencies

Stockholders' equity:

Preferred stock - $.001 par value;
 2,500,000 shares authorized; none issued

Common stock-$.000333 par value; 15,000,000
 shares authorized;	2,428,791 shares issued
 and outstanding in 1998 and 1997                    809                   809
Additional paid-in capital                    12,264,623            12,264,623 
Accumulated deficit                          (11,844,310)          (11,657,189)
                                            ------------          ------------
Total stockholders' equity                       421,122               608,243
                                            ------------          ------------
Total liabilities and stockholders' equity $   1,792,727          $  1,975,722
                                            ============           ===========

See accompanying notes to financial statement

<PAGE>

SEVENTH GENERATION, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997

                                                  For the Three Months Ended
                                                   June 30,        June 30,
                                                     1998            1997
                                                 (Unaudited)     (Unaudited)

Sales                                           $ 1,892,282       $ 1,693,035
Cost of sales                                     1,263,363         1,182,286
                                                 ----------        ----------
Gross profit                                        628,919           510,749
Other operating income                              100,000           100,000
                                                 ----------        ----------
                                                    728,919           610,749
                                                 ----------        ----------
Operating expenses:			
Selling and marketing expenses                      437,788           312,894
Operations and distribution expenses                172,897           116,194
General and administrative expenses                 236,285           198,363
                                                 ----------        ----------
Total operating expenses                            846,970           627,451
                                                 ----------        ----------
Other income (expense):
Interest income                                       5,835            11,557
Interest expense                                    (24,893)          (20,942)
Other                                                (1,851)             (238)
                                                 ----------        ----------
Total other expense, net                            (20,909)           (9,623)
                                                 ----------        ----------
Net loss                                        $  (138,960)      $   (26,325)
                                                 ==========        ==========
Loss per common share:                          $     (0.06)      $     (0.01)
			
Weighted average shares outstanding during
 the period                                       2,428,791         2,428,791
	
See accompanying notes to financial statements

<PAGE>

SEVENTH GENERATION, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
                                                    For the Six Months Ended
                                                     June 30,      June 30,
                                                       1998          1997
                                                    (Unaudited)  (Unaudited)

Sales                                              $ 4,179,984    $ 3,263,200
Cost of sales                                        2,876,724      2,271,613
                                                    ----------     ----------
Gross profit                                         1,303,260        991,587
Other operating income                                 100,000        100,000
                                                    ----------     ----------
                                                     1,403,260      1,091,587
                                                    ----------     ----------
Operating expenses:			
Selling and marketing expenses                         764,698        584,253
Operations and distribution expenses                   330,842        221,033
General and administrative expenses                    458,165        361,602
                                                    ----------     ----------
Total operating expenses                             1,553,705      1,166,888
                                                    ----------     ----------
Other income (expense):
Interest income                                         17,964         18,093
Interest expense                                       (50,936)       (41,655)
Other                                                   (3,704)          (476)
                                                    ----------     ----------
Total other expense, net                               (36,676)       (24,038)
                                                    ----------     ----------

Net loss                                           $  (187,121)   $   (99,339)
                                                    ==========     ==========

Loss per common share:                             $     (0.08)   $     (0.04)
			
Weighted average shares outstanding during
 the period                                          2,428,791      2,428,791

See accompanying notes to financial statement

<PAGE>

SEVENTH GENERATION, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997

                                                   For the Six Months Ended
                                                    June 30,      June 30,
                                                      1998          1997
                                                   (Unaudited)   (Unaudited)
Cash flows from operating activities:			
Net loss                                          $   (187,121)  $    (99,339)
Adjustments to reconcile net loss to net cash
 used in operating activities:			
Depreciation and amortization                           12,880          5,562
Provision for doubtful accounts                          2,467            500
Loss (gain) on short-term securities                       723         (4,965)

Changes in assets and liabilities:
Decrease (increase) in accounts receivable-trade       292,250       (399,833)
Decrease in accounts receivable-other                   34,762          1,583
Increase in inventories                               (166,672)       (42,445)
(Increase) decrease in other assets                    (19,833)        72,890
Decrease (increase) in deposits and other assets         3,704           (662)
(Decrease) increase in accounts payable-trade          (26,743)        33,826
Increase in accrued expenses                            31,900         17,224
                                                   -----------     ----------
Net cash used in operating activities                  (21,683)      (415,659)
                                                   -----------     ----------
Cash flows from investing activities:
Maturities of short-term securities                     95,000	
Purchases of short-term securities                                   (500,000)
Purchases of equipment                                 (36,100)       (12,514)
                                                   -----------     ----------
Net cash provided by (used in)
 investing activities                                   58,900       (512,514)
                                                   -----------     ----------
Cash flows from financing activities:
Principal payments on capital leases                    (1,031)
                                                   -----------     ----------
Net cash used in financing activities                   (1,031)
                                                   -----------     ----------
Net increase (decrease) in cash 
 and cash equivalents                                   36,186       (928,173)
Cash and cash equivalents, beginning of period         311,226      1,233,006
                                                   -----------     ----------
Cash and cash equivalents, end of period          $    347,412    $   304,833
                                                   ===========     ==========
See accompanying notes to financial statements

<PAGE>

SEVENTH GENERATION, INC.
Notes to Consolidated Financial Statements
June 30, 1998 and 1997

1.  BASIS OF PRESENTATION

 The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim 
financial information and with the instructions to Form 10-QSB and Item 
310(b) of Regulation S-B.  Accordingly, they do not include all of the 
information and footnotes required by generally accepted accounting principles
for complete consolidated financial statements.

 In the opinion of management, all adjustments (consisting solely of normal 
recurring adjustments) considered necessary for a fair statement of the interim
financial data have been included.  Results from operations for the six month 
period ended June 30, 1998 are not necessarily indicative of the results that 
may be expected for the fiscal year ending December 31, 1998.

 For further information, please refer to the financial statements and footnotes
filed as Item 7 in the Form 10-KSB for Seventh Generation, Inc. for the fiscal 
year ended December 31, 1997, under Commission File # 1-12614.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Business.    
 Seventh Generation, Inc. (the "Company") began operations in 1988 for the 
purpose of marketing a variety of environmentally friendly consumer products 
primarily through its mail-order catalog.  In 1992, the Company began selling
its Seventh Generation(r) brand products to retailers on a wholesale basis.  
Since the sale of its catalog in May 1995, the Company has focused exclusively
on the wholesale business.

Principles of Consolidation.    
 Effective January 1, 1994, the Company formed a wholly owned subsidiary, 
Seventh Generation Wholesale, Inc., to carry on the operations of its wholesale
business.  The accompanying Consolidated Financial Statements include all of 
the accounts of Seventh Generation, Inc. and its wholly owned subsidiary, 
Seventh Generation Wholesale, Inc.  All significant intercompany balances 
and transactions have been eliminated in consolidation.

Use of Estimates.    
 The preparation of 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
reported amounts of revenues and expenses during the reporting period.  Actual
results could differ from those estimates.

Revenue Recognition, Sales Discounts and Sales Returns.    
 Sales are recorded upon shipment of products to customers.  The Company 
maintains an allowance for estimated future sales returns and doubtful 
accounts.  Revenue is recorded net of cash discounts.

Cash and Cash Equivalents.   
 Cash and cash equivalents include highly liquid investments with original 
maturities of three months or less.

Short-Term Investments.  
 Short-term investments consist of marketable corporate debt securities, 
which are recorded at market value.

Inventories.    
 Inventories include purchased goods that are stated at the lower of cost or 
market using the first-in, first-out (FIFO) method.

Furniture and Equipment.   
 Furniture and equipment are recorded at cost net of depreciation using the 
straight-line method over the estimated useful lives of the assets.  When 
assets are sold, retired or otherwise disposed of, the applicable costs and 
accumulated depreciation are removed from the accounts and the resulting 
gain or loss is recognized.

Stock Based Compensation.  
 The Company has elected to continue accounting for the issuance of stock 
based compensation under APB Opinion No. 25, "Accounting for Stock Issued to 
Employees."  

Advertising.  
 Advertising, selling, and marketing expenses are expensed as they are 
incurred.  The amounts spent on advertising, selling and marketing expenses 
for the three months ended June 30, 1998 and 1997 were approximately $279,000
and $135,000, respectively.  Included in advertising expense for the three 
months ended June 30, 1998 and 1997 was approximately $33,000 and $20,000, 
respectively, for co-op advertising with distributors and retailers, and 
approximately $60,000 and $74,000, respectively, for charge-backs related to 
marketing promotions. Also included in advertising expense for the three 
months ended June 30, 1998 is approximately $190,000 for radio advertising 
and related expenses.  The amounts spent on advertising, selling and marketing
expenses for the six months ended June 30, 1998 and 1997 were approximately 
$430,000 and $245,000, respectively.  Included in advertising expense for the
six months ended June 30, 1998 and 1997 were approximately $58,000 and  
$51,000, respectively, for co-op advertising with distributors and retailers,
and approximately $117,000 and $122,000, respectively, for charge-backs 
related to marketing promotions. Included in advertising expense for the six 
months ended June 30, 1998 is approximately $190,000 for radio advertising.

3.  EARNINGS PER SHARE

 Basic and diluted net loss per common share are computed by dividing net loss 
by the weighted average number of common shares outstanding during the 
respective periods.  The impact of the stock options and warrants outstanding 
as common stock equivalents was not dilutive for 1998 and 1997 and thus 
did not affect basic or diluted net loss per common share.

4.  TRANSACTIONS WITH GAIAM

 Pursuant to a supply Agreement with Gaiam, Inc., the purchaser of the Company's
former catalog (Gaiam), the Company sells its brand name products to Gaiam, 
which Gaiam resells through its mail order catalog.  Gross margins from these
sales are lower than on sales to other customers.  Pursuant to the Supply 
Agreement, Gaiam was obligated to purchase from the Company a minimum of 
$2,500,000 of brand name products over a three-year period, beginning 
May 24, 1995, at cost plus 20%.  During the year ended December 31, 1997, 
Gaiam fulfilled its $2,500,000 obligation under this Agreement.  Pursuant to 
the Supply Agreement, the Company now sells its brand name products to Gaiam 
at cost plus 5%.  During the three months ended June 30, 1998, Gaiam purchased
approximately $198,900 of product at cost plus 5%, yielding sales of 
approximately $208,800.  Gross margin from these sales was approximately 4.8%.
During the three months ended June 30, 1997, Gaiam purchased approximately 
$283,000 of product at cost plus 20%, yielding sales of approximately $340,000.
Gross margin from these sales was approximately 16.7%.  The decrease in gross
profit for the three months ended June 30, 1998 due to the change in markup 
percentage was approximately $30,000. During the six months ended June 30, 
1998, Gaiam purchased approximately $510,600 of product at cost plus 5%, 
yielding sales of approximately $536,100.  Gross margin from these sales was 
approximately 4.8%.  During the six months ended June 30, 1997, Gaiam 
purchased approximately $540,000 of product at cost plus 20%, yielding sales 
of approximately $649,000.  Gross margin from these sales was approximately 
16.7%.  The decrease in gross profit for the six months ended June 30, 1998 
due to the change in markup percentage was approximately $76,000.

 The following table summarizes sales to Gaiam and other customers and the 
corresponding gross profit percentages for the periods indicated.  All sales 
are approximate.

                                     Gaiam           Others              Total

Three months ended June 30, 1998    $208,800      $1,683,500        $1,892,300
Gross profit percentage                 4.8%           36.8%             33.2%

Three months ended June 30, 1997    $340,000      $1,353,000        $1,693,000
Gross profit percentage                16.7%           33.6%             30.2%

Percentage (decrease) 
 increase in sales from 1997          (38.6%)          24.4%             11.8%

Six months ended June 30, 1998      $536,100      $3,643,900        $4,180,000
Gross profit percentage                 4.8%           35.1%             31.2%

Six months ended June 30, 1997      $649,000      $2,614,200        $3,263,200
Gross profit percentage                16.7%           33.8%             30.4%

Percentage (decrease) 
 increase in sales from 1997          (17.4%)          39.4%             28.1%

 The Company also entered into a Licensing Agreement with Gaiam, pursuant to 
which the Company has granted Gaiam the limited right to use the Seventh 
Generation(r) trademark in connection with a consumer mail order catalog.  In
June of 1997, Gaiam paid the Company a non-refundable license fee of $100,000
for continued use of the rights through May 23, 1998. The license fee required
no further performance by the Company and was recognized as revenue. In June 
of 1998, Gaiam paid the Company a non-refundable license fee of $100,000 for 
continued use of the rights through May 23, 1999. The license fee requires no
further performance by the Company and was recognized as revenue.  Gaiam has 
changed the name on its mail order catalog to "Harmony" and may choose at any
time to completely discontinue use of the Seventh Generation(r) name.  
Accordingly, the Company does not anticipate receiving any further licensing 
revenue pursuant to this Agreement.

 The Company also entered into a limited Non-Compete Agreement with Gaiam, 
pursuant to which the Company agreed not to sell environmental products 
directly to end users through a mail order catalog operated by the Company. 

5.  SUBORDINATED DEBENTURES

                                             June 30,1998    December 31, 1997
Variable rate subordinated debentures,
 unsecured, due June 30, 2002                $    847,500         $    847,500

10% subordinated convertible debentures,
 unsecured, due November 30, 1998, 
 convertible at a price per common share
 of $6.67                                         100,000              100,000
                                              -----------          -----------
Total subordinated debentures                     947,500              947,500
Less current installments                        (100,000)            (100,000)

Subordinated debentures, 
 less current installments                   $    847,500          $   847,500
                                              ===========           ==========

 The variable rate debentures are due June 30, 2002, and bear interest at an 
initial annual rate of 10.85%.  The Company has the option to pay interest 
semiannually at the lesser of 4% over the June 30 five-year United States 
Treasury Note yield (currently 9.454%) or 12.5% annually through December 31, 
1998.  At January 1, 1999, the Company has the option of paying interest as 
previously calculated or paying an annual rate of 22%.  If the Company chooses 
to continue paying interest as previously calculated, the debentures become 
convertible at the option of the debenture holder at any time after 
January 1, 1999.  The debenture will be convertible at a discounted price 
ranging from 25% to 50% of the fair market value of the Company's common stock,
based on certain stock price benchmarks.  In no event will the conversion price
be less than $0.50 per share, which approximates the fair market value of the 
stock at the time the debt was issued.   Accordingly, a minimum of 1,695,000 
shares of common stock are reserved for the potential conversion of these 
debentures.  The number of shares of common stock reserved for the potential 
conversion of convertible debentures was 14,993 at June 30, 1998 and December
31, 1997.

6.  COMMITMENTS AND CONTINGENCIES

Uncertainties:

 The Company has historically incurred losses from operations, which resulted 
in part from its catalog operations.  In 1995, the Company sold the catalog 
business and focused on expanding sales through the wholesale distribution 
channels.  The Company relies on a limited number of customers, including 
Gaiam, the purchaser of the catalog segment.  The Company's contractual 
relationship with Gaiam is uncertain.  Gaiam's obligation to purchase product 
at a 20% markup terminated in 1997 and the Company is currently obligated to 
sell its products to Gaiam at cost plus 5%, which has reduced the Company's 
sales and its profit margins on sales to Gaiam.  If the number of distributors
were reduced, principal customers do not meet their commitments, or sales and 
gross profit margins do not reach sufficient levels to provide positive cash 
flow, the Company may not have adequate liquidity to sustain long term 
operations and meet long term obligations.

7.  FAIR VALUE OF FINANCIAL INSTRUMENTS

 The carrying values of the Company's financial instruments at June 30, 1998 
approximate their estimated fair values.  The following methods and assumptions
were used to estimate the fair value of each class of financial instruments:

Cash and Cash Equivalents.    
 The carrying amount approximates fair value due to the short-term maturity of
these instruments.

Short-Term Investments.    
 Short-term investments consist of marketable corporate debt securities, which
are recorded at market value.

Subordinated Debentures.    
 The carrying amount approximates fair value as the interest rates on the 
debentures approximate the Company's current borrowing rate.

8.  RELATED PARTY TRANSACTIONS
	
 During 1997, the Company engaged KSV Communicators, the firm of one of its 
directors, Yoram Samets, to perform marketing services at a cost of 
approximately $37,000 for the year ended December 31, 1997.  These services 
have cost approximately $260,000 during the first six months of 1998, of which
approximately $130,000 was for reimbursements for radio advertising.

9.  CONCENTRATIONS OF CREDIT RISK

 Concentration of credit risk consists primarily of cash and cash equivalents. 
From time to time the Company has on deposit with certain banks and financial 
institutions cash and cash equivalents which exceed the amount subject to 
federal insurance. The Company attempts to mitigate this risk by depositing 
its cash and cash equivalents with high credit quality financial institutions.

10.  MAJOR SUPPLIERS AND CUSTOMERS

 The Company purchased approximately 82% of its product from four suppliers 
during the six months ended June 30, 1998.

 The Company had sales of approximately 52% to two customers during the six 
months ended June 30, 1998 and approximately 61% of accounts receivable were 
due from two customers as of June 30, 1998.

 During 1998 and 1997, Jeffrey A. Hollender, the Chief Executive Officer of the
Company, guaranteed up to $300,000 of the obligations of the Company to one of 
its principal suppliers.

11.  NEW ACCOUNTING PRONOUNCEMENTS

 The Financial Accounting Standards Board issued SFAS No.131, "Disclosures 
About Segments of an Enterprise and Related Information," which is required 
to be adopted by the Company no later than fiscal year 1999.  This statement 
introduces a new model for segment reporting, called the management approach.
The management approach is based on the way that the chief operating 
decision-maker organizes segments within a company for making operating 
decisions and assessing performance. The Company plans to adopt this statement 
in fiscal year 1999.

 The Financial Accounting Standards Board issued SFAS No.133, "Accounting for 
Derivative Instruments and Hedging Activities," which is required to be adopted
by the Company for all fiscal quarters of all fiscal years beginning after June
15, 1999.  It requires that an entity recognize all derivatives as either 
assets or liabilities in the statement of financial position and measure 
those instruments at fair value.  Management has not yet determined the impact 
of adoption of this pronouncement on the financial position or results of 
operation of the company.

12. SUBSEQUENT EVENTS

 Subsequent to June 30, 1998, the Company issued $225,000 of subordinated 
debentures.  The 1998 variable rate debentures are due May 31, 2003, and bear 
interest at an initial annual rate of 10.85% through May 31, 1999.  Effective 
as of June 1, 1999 and through the remainder of the term of the debentures, 
the Company has the option to pay interest at the annual rate of (a) 22% or 
(b) the lesser of (i) 4% over the May 31 five-year United States Treasury Note
and (ii) 12.5%, in which event the debentures become convertible into shares 
of the Company's common stock at the option of the holder at any time after 
May 31, 1999.  If the Company elects to pay interest at 22% per annum, the 
Company is required to pay a premium of 25% over the amount of the debenture 
on May 31, 2003.  If the Company elects the second interest option, the holders
of the debentures will have the option to convert the debentures into shares of
the Company's common stock (i) effective as of May 31, 1999 at a discount to 
the fair market value of the common stock on such date based on certain stock
price benchmarks, subject to a $1.00 minimum conversion price or (ii) at any 
time prior to maturity based on the fair market value of the common stock on 
May 31, 1999 at no discount, but subject to a $1.50 minimum conversion price.


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

Overview

 The following discussion and analysis provides information that the Company's 
management believes is relevant to an assessment and understanding of the 
Company's results of operations and financial condition.  The discussion 
should be read in conjunction with the financial statements and footnotes, 
which appear elsewhere in this report, as well as the Company's 10-KSB filing 
for the fiscal year ending December 31, 1997.  With the exception of historical
information, the matters discussed in the following analysis are forward-looking
statements, as that term is defined in the Private Securities Litigation 
Reform Act of 1995, Section 27A of the Securities Act of 1993 and Section
21E of the Securities Exchange Act of 1934.  The words "believe," "expect,"  
"anticipate," "intend," "estimate," and other expressions which are predictions
of or indicate future events and trends and which do not relate to historical 
matters identify forward-looking statements. The Company cautions investors 
that there can be no assurance that actual results or business conditions will 
not differ materially from those projected or suggested in such forward-
looking statements as a result of various risk factors, including, but not 
limited to, continuing relationships with the Company's key customers, the 
stability of the Company's suppliers, their manufacturing capacity 
and the availability of raw materials, economic conditions, the regulatory and 
trade environment, competitive products and pricing, the risk of entering into 
new market segments, product demand, ability to enforce trademarks, the effects
of the year 2000 on customers' and suppliers' computer systems, and other 
unforeseen risks and uncertainties. The Company undertakes no obligation to 
publicly update or revise any forward-looking statement, whether as a result 
of new information, future events or otherwise.

 The Company's primary strategic objective is to establish Seventh Generation(r)
as the leading brand name for household products that are "safer for you and the
environment."  The Company believes that it is today one of the leading 
marketers of environmentally friendly household products in the United States 
and in Central and Western Canada.  The Company sells Seventh Generation(r) 
brand name products through distributors to natural products stores throughout 
the United States and in Central and Western Canada, is expanding sales of its 
brand name products into upscale supermarkets primarily in the Northeast 
and West Coast.  The Company has tested a new sales distribution channel 
through its "Learning to Make a Difference" program and is evaluating the 
results. The Company's products are also marketed through the Harmony, formerly
Seventh Generation(r) mail order catalog (the "Catalog"), which was sold to 
Gaiam on May 24, 1995, and is operated by Gaiam using the Seventh Generation(r)
trademarked name pursuant to a Licensing Agreement further described below.

 Seventh Generation(r) brand name products include: paper towels, bathroom and 
facial tissues, napkins and paper plates that are all made from 100% recycled 
fiber and are manufactured without the use of chlorine bleach; cleaning and 
laundry products that are non-toxic, renewable-resource based, phosphate-
free and biodegradable; plastic trash bags made from 100% recycled plastic; 
full spectrum light bulbs; baby wipes and feminine hygiene products.  The 
Company markets and distributes, but does not manufacture, its products.

 The Company's sales strategy is to focus primarily on the Natural Products 
Industry and, secondarily, on sales to select supermarkets, mail order 
catalogs, and a limited number of privately labeled products to a limited 
number of select customers.  This approach is designed to reduce the Company's
risks by focusing sales efforts on primarily those accounts that serve 
customers similar to the Company's current account base.  This has helped to 
reduce operating expenses and losses as a percentage of sales.

 The Company's marketing strategy utilizes in-store promotion as its primary 
means to stimulate consumer trial and repeat purchases in natural products 
stores and supermarkets, rather than more costly marketing strategies such 
as television advertising and mass-delivered consumer promotions.  The Company 
has begun to expand its marketing activities to include direct mail and radio 
advertising.

 During the second quarter of 1998, the Company used radio advertising for the 
first time. The Company developed a series of informational radio ads designed 
to heighten consumers' awareness of the toxins in our homes and the environment
caused by traditional household products.  The ads encouraged consumers to 
"Break the Toxic Cycle" by using Seventh Generation(r) brand non-toxic 
products.  The ads were broadcast in the Boston metropolitan area in 
conjunction with the Company's expanded grocery distribution in the Boston 
marketplace.  If successful, this marketing program is designed to serve as a
model for initiating or expanding grocery distribution in other select 
metropolitan markets around the country.  These ads were designed not only to
generate interest and trial purchase of Seventh Generation(r) brand products 
but also to educate and inform the consumer.  As an extension of this 
advertising effort the Company created the opportunity for consumers to receive
a free copy of the "Seventh Generation Guide to a Toxic-Free Home."  This 
guide contains information regarding the toxic chemicals used in common 
household products and their effects on our health and the environment.  The 
guide is designed to raise consumers' awareness of the prevalence of toxins 
in our environment and how to avoid them. The Company has spent approximately
$190,000 on these activities in the second quarter of 1998 and is currently 
analyzing the results of this new marketing program.

 The Company's other marketing activities have included public relations 
programs that have led to news coverage on television, in magazines and 
newspapers, in-store point of purchase displays and educational literature, 
participation in environmental events and activities, trade promotions directed
to the natural products and supermarket industries, the distribution of product
samples to encourage new customers to try the Company's products, the 
development of a web site to provide information and education 
(www.seventhgen.com) and the licensing of its name for use on the Gaiam mail 
order catalog which is distributed directly to consumers. 

 Seventh Generation(r) brand name products are available in natural products 
grocery stores and mainstream supermarkets.  During the three and six months 
ended June 30, 1998, the Company's sales to the Natural Products Industry and
supermarkets grew significantly over sales in the three and six months 
ended June 30, 1997 as a result of continued market penetration, increased 
consumer marketing and trade promotions, and new product introductions.  The 
Company plans to continue its efforts to introduce new products and expand 
distribution.

 In January 1995, the Company made its first sales to supermarkets in the 
Northeastern United States.  The Company plans to continue with its primary 
focus of expanding its sales and marketing efforts in the Natural Products 
Industry as well as continuing to expand sales to upscale supermarket chains 
in the Northeast and West Coast.  Although the Company has started to realize
sales to supermarkets, there can be no assurance that the Company will be 
successful with its marketing strategy. 

RESULTS OF OPERATIONS
 Three Months Ended June 30, 1998 Compared to Three Months Ended June 30, 1997

Operations

 Net sales increased $199,247, or 11.8%, during the three months ended 
June 30, 1998 to $1,892,282, compared to $1,693,035 during the three months 
ended June 30, 1997.  This favorable performance was due primarily to the 
continued growth of sales to natural products and supermarket accounts and the
growth of sales to other customers.  In 1998 and 1997, the Company received 
$100,000 in non-refundable licensing revenue from Gaiam for use of the 
Seventh Generation(r) name in connection with the operation of its mail 
order catalog.

 Gross profit was $628,919 in the three months ended June 30, 1998, compared to
$510,749 during 1997, an increase of $118,170 over the same period in 1997, or 
23.1%.  Gross profit increased to 33.2% as a percentage of sales in the 1998 
period, compared to 30.2% in 1997, due primarily to an increase in purchase 
discounts earned on the higher purchase and inventory levels, despite the 
change in the markup percentage on sales to Gaiam.  The decrease in gross 
profit on sales to Gaiam due to the change in markup percentage was 
approximately $30,000.

 Operating expenses were $846,970 in the three months ended June 30, 1998 
compared to $627,451 during 1997, an increase of 7.7% as a percentage of sales
from 37.1% of sales in the 1997 period to 44.8% of sales for the 1998 period. 

 Sales and marketing expenses were $437,788 in the period, compared to $312,894
in the 1997 period.  Sales and marketing expenses increased 4.7% as a 
percentage of sales from 18.5% in the three months ended June 30, 1997 to 
23.2% in the first three months ended June 30, 1998. Included in the 1998 
expenses is approximately $190,000 (approximately 10% of sales) for radio 
advertising introduced in the second quarter of 1998.   See "Overview" for a 
more complete description of these marketing activities.

 Operations and distribution expenses were $172,897 in the 1998 period, 
compared to $116,194 in the 1997 period.  The additional expenses incurred 
were primarily due to increased warehousing and freight costs due to the 
introduction of new products, higher inventory levels, the changing mix of 
sales, and the higher sales volume. Operations and distribution expenses 
increased as a percentage of sales from 6.9% in the 1997 period to 9.1% in 
the 1998 period.

 General and administrative expenses were $236,285 in the 1998 period, compared
to $198,363 in the 1997 period.  The increase in expenses incurred was 
primarily due to increased personnel costs. General and administrative 
expenses increased from 11.7% of sales in the 1997 period to 12.5% of sales 
in the 1998 period.

 Net other expenses increased in 1998 as earnings on funds invested decreased 
due to a lower level of funds invested in 1998 and by an increase in interest 
paid due to the issuance of new debentures in the fourth quarter of 1997 at a 
higher interest rate than was paid on the debentures in 1997.  See Footnote 5 
of the financial statements for a more complete description of debenture 
activity.  

 The net loss in the 1998 period was $138,960, compared to $26,325 in 1997, an
increase of $112,635.

Transactions with Gaiam

 Pursuant to a Supply Agreement with Gaiam, the purchaser of the Company's 
former catalog, the Company sells its brand name products to Gaiam, which 
Gaiam resells through its mail order catalog.  Gross margins from these sales
are lower than on sales to other customers.  Pursuant to the Supply Agreement,
Gaiam was obligated to purchase from the Company a minimum of $2,500,000 of 
brand name products over a three-year period, beginning May 24, 1995, at cost 
plus 20%.  During the year ended December 31, 1997, Gaiam fulfilled its 
$2,500,000 obligation under this Agreement.  Pursuant to the Supply Agreement, 
the Company now sells its brand name products to Gaiam at cost plus 5%.  During
the three months ended June 30, 1998, Gaiam purchased approximately $198,900 of
product at cost plus 5%, yielding sales of approximately $208,800.  Gross 
margin from these sales was approximately 4.8%.  During the three months ended 
June 30, 1997, Gaiam purchased approximately $283,000 of product at cost plus
20%, yielding sales of approximately $340,000.  Gross margin from these sales
was approximately 16.7%.  The decrease in gross profit for the three months 
ended June 30, 1998 due to the change in markup percentage was approximately
$30,000.  Sales to Gaiam are expected continue to reduce overall gross 
margin percentage through at least the third quarter of 1998.

 The table in Footnote 4 of the financial statements summarizes sales to Gaiam 
and other customers and the corresponding gross profit percentages for the 
three and six months ended June 30, 1998 and 1997.

 Gaiam has elected to renew its Licensing Agreement with the Company through 
May 23, 1999.  Although Gaiam has changed the name on its mail order catalog 
to "Harmony" and may choose at any time to completely discontinue use of the 
Seventh Generation(r) name, this will not affect the $100,000 in non-refundable
licensing revenue received in 1998 from Gaiam.  In the event that Gaiam 
terminates the Licensing Agreement, the Company would not receive any further
licensing fees, which may adversely affect the Company's future results in 
comparison to 1997 and 1998. 

Summary

 Sales during the three months ended June 30, 1998 were $1,892,282, an increase
of $199,247, or 11.8%, from the sales of $1,693,035 during the 1997 period.  
Gross profit was $628,919 for the three months ended June 30, 1998, an increase
of $118,170, or 23.1%, from $510,749 in the 1997 period. Gross profit was 33.2%
of sales for the three months ended June 30, 1998, compared to 30.2% of sales 
in the 1997 period.  Operating expenses for the three months ended June 30, 
1998 were $846,970, or 44.8% of sales, compared to $627,451, or 37.1% of sales 
in the 1997 period. Included in the 1998 expenses is approximately $190,000 
(approximately 10% of sales) for radio advertising.  In 1998 and 1997, the 
Company received $100,000 in non-refundable licensing revenue from Gaiam for 
use of the Seventh Generation(r) name in connection with the operation of its
mail order catalog.  The net loss for the three months ended June 30, 1998 
was $138,960, or 7.3% of sales compared to $26,325, or 1.6% of sales in the 
1997 period.

Six Months Ended June 30, 1998 Compared to Six Months Ended June 30, 1997

Operations

 Net sales increased $916,784, or 28.1%, during the six months ended 
June 30, 1998 to $4,179,984, compared to $3,263,200 during the 1997 period.  
This favorable performance was due primarily to the continued growth of sales
to natural products and supermarket accounts and the growth of sales to other
customers.

 Gross profit was $1,303,260 in the six months ended June 30, 1998, compared to
$991,587 during 1997, an increase of $311,673 over the same period in 1997, or 
31.4%.  Gross profit increased to 31.2% as a percentage of sales in the 1998 
period, compared to 30.4% in 1997, due primarily to an increase in purchase 
discounts earned on the higher purchase and inventory levels, despite the 
change in the markup percentage on sales to Gaiam.  The decrease in gross 
profit on sales to Gaiam due to the change in markup percentage was 
approximately $76,000.

 Operating expenses were $1,553,705 in the six months ended June 30, 1998 
compared to $1,166,888 during 1997, a increase of 1.3% as a percentage of 
sales from 35.8% of sales in the 1997 period to 37.1% of sales for the 1998 
period.  

 Sales and marketing expenses were $764,698 in the period, compared to $584,253
in the 1997 period. Sales and marketing expenses increased .3% as a percentage 
of sales from 17.9% in the six months ended June 30, 1997 to 18.2% in the six 
months ended June 30, 1998.  Included in the 1998 expenses is approximately 
$190,000 (approximately 4.5% of sales) for radio advertising.

 Operations and distribution expenses were $330,842 in the 1998 period, 
compared to $221,033 in the 1997 period. The additional expenses incurred 
were primarily due to increased warehousing and freight costs due to the 
introduction of new products, higher inventory levels, the changing mix of 
sales, and the higher sales volume. Operations and distribution expenses 
increased as a percentage of sales from 6.8% in the 1997 period to 7.9% in 
the 1998 period.

 General and administrative expenses were $458,165 in the 1998 period, compared
to $361,602 in the 1997 period.  The additional expenses incurred were 
primarily due to increased personnel costs. General and administrative 
expenses decreased from 11.1% of sales in the 1997 period to 11.0% of sales 
in the 1998 period.

 Net other expenses increased in 1998 due to the issuance of new debentures in
the fourth quarter of 1997 at a higher interest rate than was paid on the 
debentures in 1997.  See Footnote 5 of the financial statements for a more 
complete description of debenture activity.  

 The net loss in the 1998 period was $187,121, compared to $99,339 in 1997, an
increase of $87,782.

Transactions with Gaiam

 During the six months ended June 30, 1998, Gaiam purchased approximately 
$510,600 of product at cost plus 5%, yielding sales of approximately $536,100.
Gross margin from these sales was approximately 4.8%.  During the six months 
ended June 30, 1997, Gaiam purchased approximately $540,000 of product at cost 
plus 20%, yielding sales of approximately $649,000.  Gross margin from these 
sales was approximately 16.7%.  The decrease in gross profit for the six months
ended June 30, 1998 due to the change in markup percentage was approximately 
$76,000.  Sales to Gaiam are expected continue to reduce overall gross margin
percentage through at least the third quarter of 1998.

 The table in Footnote 4 of the financial statements summarizes sales to Gaiam 
and other customers and the corresponding gross profit percentages for the 
three and six months ended June 30, 1998 and 1997.

Summary

 Sales during the six months ended June 30, 1998 were $4,179,984, an increase 
of $916,784, or 28.1%, from the sales of $3,263,200 during the 1997 period.  
Gross profit was $1,303,260 for the six months ended June 30, 1998, an increase
of $311,673, or 31.4%, from $991,587 in the 1997 period. Gross profit was 31.2%
of sales for the six months ended June 30, 1998, compared to 30.4% of sales in 
the 1997 period.  Operating expenses, including approximately $190,000 for 
radio advertising, for the six months ended June 30, 1998 were $1,553,705, or
37.1% of sales, compared to $1,166,888, or 35.8% of sales in the 1997 period.  
The net loss for the six months ended June 30, 1998 was $187,121, or 4.5% of 
sales compared to $99,339, or 3.0% of sales in the 1997 period.

LIQUIDITY AND CAPITAL RESOURCES

 During the six months ended June 30, 1998, the Company used approximately 
$22,000 of its available cash balances through operations. The Company realized
approximately $292,000 as accounts receivable decreased. The Company used 
approximately $167,000 of cash as its inventories increased.  The Company used
approximately $20,000 by increasing prepaid expenses.  Additionally, the 
Company has decreased its accounts payable by approximately $27,000, while 
increasing its accrued liabilities by approximately $32,000.  As of 
June 30, 1998, the Company's primary sources of liquidity were approximately 
$347,000 in cash, approximately $162,000 in marketable securities, and 
approximately $616,000 in accounts receivable.

 The Company has two customers whose purchases of the Company's products 
accounted for more than 10% each of the Company's total sales in the first 
six months of 1998 and together accounted for 52% of the Company's sales.  
The loss of either of these customers, a decision by one of them to 
significantly reduce its purchases or any disruption to their relationship 
with the Company could adversely affect the Company's liquidity.

 As the Company continues its expansion into natural products stores and 
targeted supermarkets in the Northeast, West Coast, and other targeted 
markets, it plans to carefully monitor its expenses, and will focus on 
reducing them where possible.  During the first six months of 1998, the 
Company's net loss was $187,120, compared to $99,339 in 1997, an increase 
of $87,781. The Company has, for the first time, used radio advertising, at 
a cost of approximately $190,000, which has significantly increased its 
marketing expenses.

 During 1997, the Company completed a debt offering of privately placed 
subordinated debentures.  As of December 31, 1997, $572,500 of debentures had
been sold, and holders of $275,000 of existing debentures had signed 
agreements to participate in the new offering by converting their existing 
debentures into the new debentures, extending the maturity dates to 
June 30, 2002.  The new debentures are due June 30, 2002, and bear interest 
at an initial annual rate of 10.85%.  The Company has the option to pay 
interest at the lesser of 4% over the June 30 five-year United States 
Treasury Note yield (currently 10.85%) or 12.5% annually through December 
31, 1998.  At January 1, 1999, the Company has the option of paying interest 
as previously calculated or paying an annual rate of 22%.  If the Company 
chooses to continue paying interest as previously calculated, the debentures 
become convertible at the option of the debenture holder at any time after 
January 1, 1999.  The debentures will be convertible at a discounted price 
ranging from 25% to 50% of the fair market value of the Company's common 
stock, based on certain stock price benchmarks.  In no event will the 
conversion price be less than $0.50 per share.   Accordingly, a minimum of 
1,695,000 shares of common stock have been reserved for the potential 
conversion of these debentures.  In November 1998, $100,000 of debentures 
are scheduled to come due. 

 Subsequent to June 30, 1998, the Company issued $225,000 of new variable rate 
debentures.  The 1998 variable rate debentures are due May 31, 2003, and bear 
interest at an initial annual rate of 10.85% through May 31, 1999.  Effective 
as of June 1, 1999 and through the remainder of the term of the debentures, 
the Company has the option to pay interest at the annual rate of (a) 22% or 
(b) the lesser of (i) 4% over the May 31 five-year United States Treasury 
Note and (ii) 12.5%, in which event the debentures become convertible into 
shares of the Company's common stock at the option of the holder at any time 
after May 31, 1999.  If the Company elects to pay interest at 22% per annum, 
the Company is required to pay a premium of 25% over the amount of the 
debenture on May 31, 2003.  If the Company elects the second interest option,
the holders of the debentures will have the option to convert the debentures 
into shares of the Company's common stock (i) effective as of May 31, 1999 at
a discount to the fair market value of the common stock on such date based on
certain stock price benchmarks, subject to a $1.00 minimum conversion price 
or (ii) at any time prior to maturity based on the fair market value of the 
common stock on May 31, 1999 at no discount, but subject to a $1.50 minimum 
conversion price.

Year 2000

 The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year.  Any of the Company's 
computer programs that have date-sensitive software may recognize a date 
using "00" as the year 1900 rather than the year 2000.  Management believes 
that all software used is Year 2000 compliant.  The Company is currently unable
to predict the extent to which the Year 2000 issue will affect its suppliers or
customers, or the extent to which it would be vulnerable to such suppliers' 
or customers' failure to remediate any Year 2000 issue on a timely basis.  The 
failure of a major supplier or customer subject to the Year 2000 issue to 
convert its computer systems on a timely basis could have a material adverse 
affect on the Company. 


PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

	Not applicable.

ITEM 2. CHANGES IN SECURITIES

	Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
	
	Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS 

 The annual meeting of the Stockholders of SEVENTH GENERATION, INC., a Vermont 
corporation, was held on Monday, May 4, 1998 at the Company's offices located 
at One Mill Street, Burlington, Vermont for the purpose of electing six 
members to the Board of Directors to hold office until the next annual meeting 
of Stockholders and until their successors are duly elected and qualified.

Board of Directors Election Results:          For        Withheld  Abstentions

Arthur Gray Jr.                           1,953,565        26,050            0
Jeffrey A. Hollender                      1,953,565        26,050            0
Sheila Hollender                          1,952,465        27,150            0
Joshua Sapan                              1,952,665        26,950            0
Peter Graham                              1,948,565        31,050            0
Yoram Samets                              1,952,665        26,950            0
	
ITEM 5. OTHER INFORMATION

 To be considered for inclusion in the proxy statement relating to the Annual 
Meeting of stockholders to be held in 1999, stockholder proposals must be 
received no later than December 11, 1998.  To be considered for presentation 
at the Annual Meeting, although not included in the proxy statement, proposals
must be received not later than March 5, 1999.  All stockholder proposals 
should be marked for the attention of Jeffrey A. Hollender, President and 
Chief Executive Officer, Seventh Generation, Inc., One Mill Street, Box A26, 
Burlington, VT  05401-1530.  

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

  (a)	The following documents are filed as a part of this Report:

EXHIBITS:

Exhibit #	Description

   (11)  Statement re: Computation of Loss Per Share

   (27)  Financial Data Schedule

  (b) Reports on Form 8-K:
      No reports on Form 8-K were filed during the quarter ended June 30, 1998.


SIGNATURES


 In accordance with the requirements of Section 13 or 15(d) of the Exchange 
Act, the Registrant caused this Report to be signed on its behalf by the 
undersigned, thereunto duly authorized.


                                     SEVENTH GENERATION,  INC.

Date: August 14, 1998           By:  /s/  Jeffrey A. Hollender
                                     Jeffrey A. Hollender
                                     President and Chief Executive Officer
                                     (Principal Executive & Financial Officer)

<PAGE>

INDEX TO EXHIBITS


                                    Sequentially 
Exhibit Number                      Numbered Page

        11                             21

        27                             23

<PAGE>
Exhibit 11

<PAGE>

EXHIBIT 11



SEVENTH GENERATION, INC.

Calculation of Shares Used in Determining
Basic and Diluted Earnings Per Common Share


                                               Three Months Ended June 30,
                                                    1998           1997

Loss applicable to common stockholders             $(138,960)    $(26,325)	
	
Weighted average shares outstanding                2,428,791    2,428,791

Basic and diluted earnings per share               $  (0.06)    $  (0.01)




                                                 Six Months Ended June 30,
                                                    1998            1997

Loss applicable to common stockholders           $ (187,121)  $   (99,339)	

Weighted average shares outstanding               2,428,791     2,428,791

Basic and diluted earnings per share               $ (0.08)      $ (0.04)


	The calculation above for diluted earnings per common share excludes the 
potentially dilutive effect of both common stock equivalents (stock options 
and warrants) and the impact of conversion of any debentures into the 
Company's common stock since the impact would be anti-dilutive for both 
1998 and 1997.


<PAGE>