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 SEPTEMBER 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 
October 31, 1998 was 2,428,791.  The number of Redeemable Common Stock Purchase
Warrants outstanding as of October 31, 1998 was 1,540,869.

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


TOTAL NUMBER OF PAGES:  26                EXHIBIT INDEX APPEARS ON PAGE: 22




<PAGE>

PART I.  FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

ASSETS
                                            September 30,          December 31,
                                                  1998                 1997
                                               (Unaudited)
Current assets:	
Cash and cash equivalents                   $    562,393          $    311,226
Short-term marketable securities                 162,154               257,698
Accounts receivable-trade, net of 
 allowance for doubtful accounts of 
 $26,407 at September 30, 1998 and $25,000 at
 December 31, 1997                               704,602               911,320
Accounts receivable-other                          3,625                39,856
Inventories                                      551,568               344,440
Other assets                                      67,191                54,278
                                             -----------           -----------
Total current assets                           2,051,533             1,918,818
                                             -----------           -----------
Equipment:
Computer equipment                                83,313                68,129
Equipment and furniture                           59,899                33,863
                                             -----------           -----------
                                                 143,212               101,992
Less accumulated depreciation 
 and amortization                                 89,022                70,142
                                             -----------           -----------
Equipment and furniture, net                      54,190                31,850
                                             -----------           -----------

Deposits and other assets                         19,498                25,054
                                             -----------           -----------
Total assets                                $  2,125,221          $  1,975,722
                                             ===========           ===========















See accompanying notes to financial statements

<PAGE>

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

LIABILITIES AND STOCKHOLDERS' EQUITY
                                            September 30,         December 31,
                                                 1998                1997
                                             (Unaudited)	
Current liabilities:			
Current installments of subordinated 
 convertible debentures                     $    100,000         $     100,000
Current portion of capital leases                  2,435                 2,151
Accounts payable-trade                           465,517               251,368 
Other accrued expenses                           205,557               160,095
                                             -----------          ------------
Total current liabilities                        773,509               513,614

Long-term debt:	
Obligations due under capital leases               4,501                 6,365
Subordinated debentures,
 excluding current installments, net of
 unamortized discount of $59,659 at
 September 30, 1998                            1,012,841               847,500
                                             -----------          ------------
Total liabilities                              1,790,851             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                    12,327,123            12,264,623 
Accumulated deficit                          (11,993,562)          (11,657,189)
                                            ------------          ------------
Total stockholders' equity                       334,370               608,243
                                            ------------          ------------
Total liabilities and stockholders' equity $   2,125,221          $  1,975,722
                                            ============           ===========













See accompanying notes to financial statements
<PAGE>

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

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

Sales                                           $ 2,113,825       $ 1,564,689
Cost of sales                                     1,413,814         1,095,947
                                                 ----------        ----------
Gross profit                                        700,011           468,742
                                                 ----------        ----------
Operating expenses:			
Selling and marketing expenses                      441,782           251,053
Operations and distribution expenses                155,107           116,127
General and administrative expenses                 228,443           187,444
                                                 ----------        ----------
Total operating expenses                            825,332           554,624
                                                 ----------        ----------
Other income (expense):
Interest income                                       9,223            13,144
Interest expense                                    (31,303)          (24,400)
Other                                                (1,852)             (238)
                                                 ----------        ----------
Total other expense, net                            (23,932)          (11,494)
                                                 ----------        ----------
Net loss                                        $  (149,253)      $   (97,376)
                                                 ==========        ==========
Loss per common share:                          $     (0.06)      $     (0.04)
			
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 NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                                    For the Nine Months Ended
                                                   September 30, September 30,
                                                       1998          1997
                                                    (Unaudited)  (Unaudited)

Sales                                              $ 6,293,809    $ 4,827,890
Cost of sales                                        4,290,539      3,367,560
                                                    ----------     ----------
Gross profit                                         2,003,271      1,460,330
Other operating income                                 100,000        100,000
                                                    ----------     ----------
                                                     2,103,271      1,560,330
                                                    ----------     ----------
Operating expenses:			
Selling and marketing expenses                       1,206,480        835,305
Operations and distribution expenses                   485,949        337,160
General and administrative expenses                    686,608        549,047
                                                    ----------     ----------
Total operating expenses                             2,379,037      1,721,512
                                                    ----------     ----------
Other income (expense):
Interest income                                         27,188         31,237
Interest expense                                       (82,239)       (66,055)
Other                                                   (5,556)          (714)
                                                    ----------     ----------
Total other expense, net                               (60,607)       (35,532)
                                                    ----------     ----------

Net loss                                           $  (336,373)   $  (196,714)
                                                    ==========     ==========

Loss per common share:                             $     (0.14)   $     (0.08)
			
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 CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997

                                                   For the Nine Months Ended
                                                   September 30, September 30,
                                                      1998          1997
                                                   (Unaudited)   (Unaudited)
Cash flows from operating activities:			
Net loss                                          $   (336,373)  $    (99,339)
Adjustments to reconcile net loss to net cash
 used in operating activities:			
Depreciation and amortization                           21,721          5,562
Provision for doubtful accounts                          1,407            500
Loss (gain) on short-term securities                       544         (4,965)

Changes in assets and liabilities:
Decrease (increase) in accounts receivable-trade       205,311       (399,833)
Decrease in accounts receivable-other                   36,231          1,583
Increase in inventories                               (207,128)       (42,445)
(Increase) decrease in other assets                    (12,913)        72,890
Decrease (increase) in deposits and other assets         5,556           (662)
(Decrease) increase in accounts payable-trade          214,149          33,826
Increase in accrued expenses                            45,462         17,224
                                                   -----------     ----------
Net cash used in operating activities                  (26,033)      (415,659)
                                                   -----------     ----------
Cash flows from investing activities:
Maturities of short-term securities                     95,000	
Purchases of short-term securities                                   (500,000)
Purchases of equipment                                 (41,220)       (12,514)
                                                   -----------     ----------
Net cash provided by (used in)
 investing activities                                   53,780       (512,514)
                                                   -----------     ----------
Cash flows from financing activities:
 Proceeds from debenture offering                      225,000        235,000
 Increase in restricted cash                                 -       (236,108)
 Principal payments on capital leases                   (1,580)
                                                   -----------     ----------
Net cash provided by (used in)
 financing activities                                  223,420         (1,108)
                                                   -----------     ----------
Net increase (decrease) in cash 
 and cash equivalents                                  251,167     (1,062,400)
Cash and cash equivalents, beginning of period         311,226      1,233,006
                                                   -----------     ----------
Cash and cash equivalents, end of period          $    562,393    $   170,606
                                                   ===========     ==========













See accompanying notes to financial statements

<PAGE>

SEVENTH GENERATION, INC.
Notes to Consolidated Financial Statements
September 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 nine month 
period ended September 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 September 30, 1998 
and 1997 were approximately $286,000 and $88,000, 
respectively.  Included in advertising, selling, and 
marketing expenses for the three months ended 
September 30, 1998 and 1997 was approximately $47,000 
and $25,000, respectively, for co-op advertising with 
distributors and retailers, and approximately $174,000 and 
$53,000, respectively, for charge-backs related to 
marketing promotions. 

     The amounts spent on advertising, selling and 
marketing expenses for the nine months ended 
September 30, 1998 and 1997 were approximately 
$762,000 and $339,000, respectively.  Included in 
advertising, selling, and marketing expense for the nine 
months ended September 30, 1998 and 1997 were 
approximately $105,000 and $76,000, respectively, for co-
op advertising with distributors and retailers, and 
approximately $291,000 and $175,000, respectively, for 
charge-backs related to marketing promotions. Included in 
advertising, selling, and marketing expense for the nine 
months ended September 30, 1998 is approximately 
$195,000 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 September 30, 1998, 
Gaiam purchased approximately $277,140 of product at 
cost plus 5%, yielding sales of approximately $291,000.  
Gross margin from these sales was approximately 4.8%. 
During the three months ended September 30, 1997, 
Gaiam purchased approximately $138,000 of product at 
cost plus 20% under the terms of the Supply Agreement, 
yielding approximately $165,000 in sales, fulfilling its 
$2,500,000 obligation under this Agreement.  During the 
three months ended September 30, 1997, Gaiam also 
purchased approximately $133,000 of product at cost plus 
5%, yielding sales of approximately $140,000.   The 
combined product purchase of approximately $271,000 
yielded sales of approximately $305,000.  The decrease in 
gross profit for the three months ended September 30, 
1998 due to the change in markup percentage was 
approximately $20,000.  During the nine months ended 
September 30, 1998, Gaiam purchased approximately 
$788,100 of product at cost plus 5%, yielding sales of 
approximately $827,500.  Gross margin from these sales 
was approximately 4.8%.  During the nine months ended 
September 30, 1997, Gaiam purchased approximately 
$810,900 of product, yielding sales of approximately 
$954,000.  Gross margin from these sales was 
approximately 15.0%. 

     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 September 30, 1998       $291,000    $1,822,800  $2,113,800
Gross profit percentage                         4.8%         37.6%       33.1%

Three months ended September 30, 1997       $305,000    $1,259,000  $1,564,000
Gross profit percentage                        11.1%         33.7%       30.0%

Percentage (decrease) increase in 
  sales from 1997                              (4.6%)        44.8%       35.1%

Nine months ended September 30, 1998        $827,500    $5,466,300  $6,293,800
Gross profit percentage                         4.8%         35.9%       31.8%

Nine months ended September 30, 1997        $954,000    $3,874,000  $4,828,000
Gross profit percentage                        15.0%         34.0%       30.3%

Percentage (decrease) increase in
  sales from 1997                             (13.3%)        41.1%       30.4%

     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 
Generationr 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 requires 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 Generationr 
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

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

Variable rate subordinated debentures,
  unsecured, due May 31, 2003                      225,000

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                    1,172,500             947,500
Less current installments                         (100,000)           (100,000)
Less unamortized discount                          (59,659)                  - 	
                                                ----------         -----------
Subordinated debentures, less current 
installments and unamortized discount           $1,012,841         $   847,500
                                                ==========         ===========

     The variable rate debentures due May 31, 2003, 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 yield 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. Accordingly, 
a minimum of 225,000 shares of common stock are 
reserved for the potential conversion of these debentures.  
A portion of the proceeds in the amount of $62,500 from 
the offering was allocated to paid in capital as a discount 
on the debentures.  The discount amount represents the 
difference between the potential conversion price and the 
fair market value of the Company's common stock at the 
date of issuance of the debentures.  This discount will be 
amortized and recorded as interest expense over the term 
of the debentures.

     The variable rate debentures due June 30, 2002, 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 September 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 September 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 $330,000 
during the first nine months of 1998, of which 
approximately $130,000 was for reimbursements for radio 
advertising air time purchased for the Company by KSV 
Communicators.

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 86% of its 
product from four suppliers during the nine months ended 
September 30, 1998.

     The Company had sales of approximately 56% to two 
customers during the nine months ended September 30, 
1998 and approximately 58% of accounts receivable were 
due from two customers as of September 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 1998.  
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 1998.

     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

     The Company has entered into an agreement with a 
bank whereby the Company may elect to sell up to 
$500,000 of eligible accounts receivable to the bank at the 
Company's option.  Under the agreement, the bank 
purchases the receivables at face value, withholding 20% 
as a reserve against uncollectable amounts. The reserve 
is adjusted semi-monthly to reflect payments received by 
the bank.  In connection with this agreement, the 
Company must pay the bank a service fee of $1.00 per 
invoice plus a processing fee based upon the timeliness of 
payments received by the bank.  The processing fees 
range from .47% to 2.04% of the face value of the invoice.  
The Company is obligated to repurchase any invoices that 
exceed 60 days in age.  To date, the Company has not 
elected to sell any of its accounts receivable to the bank.

     The Boston Stock Exchange suspended the 
Company's common stock and warrants from trading as of 
the close of business on November 3, 1998 and filed for 
delisting with the Securities and Exchange Commission.  
The Company does not meet current minimum 
maintenance requirements.

13.  LITIGATION

     An action entitled Venus Laboratories, Inc. v. Seventh 
Generation, Inc. was commenced on September 10, 1998 
in the United States District Court for the Northern District 
of Illinois Eastern Division.  The complaint alleges that the 
Company unfairly competed with the plaintiff in violation of 
the Lanham Act by distributing promotional materials 
which falsely claimed that the plaintiff's product contained 
petroleum-based surfactants according to independent 
test results.  The complaint seeks injunctive relief, 
unspecified damages, trebled, and attorneys' fees. The 
Company intends to defend this claim vigorously.  
However, the Company does not believe that the final 
disposition of this matter will have a material adverse 
effect on the Company's financial condition or results of 
operation.   

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 
previously tested an additional sales distribution channel 
through its "Learning to Make a Difference" program and 
has decided to discontinue this program after evaluating 
the results. The Company's products are also marketed 
through the Harmony mail order catalog, formerly the 
Seventh Generationr 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, a 
food freshness system for refrigerators, 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 and mail order catalogs.  In addition, 
the Company sells a limited number of privately labeled 
products to a limited number of select major customers.  
This approach is designed to reduce the Company's risks 
by focusing sales efforts primarily on those accounts that 
serve customers consistent with the Company's current 
account base.  

     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 by testing direct 
mail and local 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 considered successful, this marketing 
program may serve as a model for initiating or expanding 
grocery distribution in other select metropolitan markets 
around the country. The Company has spent 
approximately $195,000 on these activities in the second 
and third quarters of 1998 and is currently analyzing the 
results of this new marketing program.

     During the third quarter of 1998, the Company 
introduced a new performance-based cooperative 
advertising and promotion strategy designed to increase 
the number of the Company's products carried by retail 
outlets. Retailers were given the opportunity to enter into 
an agreement whereby the Company would financially 
support their merchandising activities of the Company's 
products. The key objective of the program is to expand 
distribution and shelf presence for the Company's 37-item 
product line. The agreement states that the retailer must 
stock a minimum of 25 core products.  The retailer also 
must agree to give the Company's products an equal or 
greater number of shelf facings as compared to the 
Company's principal competitors.  This additional shelf 
space provides the Company with increased product 
exposure that could, if successful, increase sales.  
Through this new program, the Company will also receive 
detailed information of product sales by these retailers. 

     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 nine 
months ended September 30, 1998, the Company's sales 
to the Natural Products Industry and supermarkets grew 
significantly over sales in the three and nine months ended 
September 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 September 30, 1998 Compared to 
Three Months Ended September 30, 1997

Operations

     Net sales increased $549,136, or 35.1%, during the 
three months ended September 30, 1998 to $2,113,825, 
compared to $1,564,689 during the three months ended 
September 30, 1997.  This favorable performance was 
due primarily to the continued growth of sales of the 
Company's products and the introduction of new products.

     Gross profit was $700,011 in the three months ended 
September 30, 1998, compared to $468,742 during 1997, 
an increase of $231,269 over the same period in 1997, or 
49.3%.  Gross profit increased to 33.1% as a percentage 
of sales in the 1998 period, compared to 30.0% in 1997, 
due primarily to the changing mix of sales, 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 $20,000.

     Operating expenses were $825,332 in the three 
months ended September 30, 1998 compared to $554,624 
during 1997, an increase of 3.6% as a percentage of sales 
from 35.4% of sales in the 1997 period to 39.0% of sales 
for the 1998 period. 

     Sales and marketing expenses were $441,782 in the 
three months ended September 30, 1998, compared to 
$251,053 in the 1997 period.  Sales and marketing 
expenses increased 4.9% as a percentage of sales from 
16.0% in the three months ended September 30, 1997 to 
20.9% in the three months ended September 30, 1998.  
The increase in expenditures was primarily due to the new 
performance based cooperative marketing program 
described in the "Overview".

     Operations and distribution expenses were $155,107 
in the three months ended September 30, 1998, compared 
to $116,127 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 
decreased as a percentage of sales from 7.4% in the 1997 
period to 7.3% in the 1998 period.

     General and administrative expenses were $228,443 
in the three months ended September 30, 1998, compared 
to $187,444 in the 1997 period.  The increase in expenses 
incurred was primarily due to increased personnel costs. 
General and administrative expenses decreased from 
12.0% of sales in the 1997 period to 10.8% of sales in the 
1998 period.

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

     The net loss in the 1998 period was $149,253, 
compared to $97,376 in 1997, an increase of $51,877.  
The increase in the loss was primarily due to the increased 
sales and marketing expenditures for the new cooperative 
marketing program described in the "Overview", the 
decreased margin on sales to Gaiam, and other marketing 
activities.

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 September 30, 1998, Gaiam 
purchased approximately $277,140 of product at cost plus 
5%, yielding sales of approximately $291,000.  Gross 
margin from these sales was approximately 4.8%. During 
the three months ended September 30, 1997, Gaiam 
purchased approximately $138,000 of product at cost plus 
20% under the terms of the Supply Agreement, yielding 
approximately $165,000 in sales, fulfilling its $2,500,000 
obligation under this Agreement .  During the three months 
ended September 30, 1997, Gaiam also purchased 
approximately $133,000 of product at cost plus 5%, 
yielding sales of approximately $140,000.   The combined 
product purchase of approximately $271,000 yielded sales 
of approximately $305,000.  The decrease in gross profit 
for the three months ended September 30, 1998 due to 
the change in markup percentage was approximately 
$20,000. During the nine months ended September 30, 
1998, Gaiam purchased approximately $788,100 of 
product at cost plus 5%, yielding sales of approximately 
$827,500.  Gross margin from these sales was 
approximately 4.8%. 

     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 
nine months ended September 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 September 30, 
1998 were $2,113,825, an increase of $549,136, or 
35.1%, from sales of $1,564,689 during the 1997 period.  
Gross profits were $700,011 for the three months ended 
September 30, 1998, an increase of $231,269, or 49.3%, 
from $468,742 in the 1997 period. Gross profits were 
33.1% of sales for the three months ended September 30, 
1998, compared to 30.0% of sales in the 1997 period.  
Operating expenses for the three months ended 
September 30, 1998 were $825,332, or 39.0% of sales, 
compared to $554,624, or 35.4% of sales in the 1997 
period.  The net loss for the three months ended 
September 30, 1998 was $149,253, or 7.1% of sales 
compared to $97,376, or 6.2% of sales in the 1997 period.

Nine months Ended September 30, 1998 Compared to 
Nine months Ended September 30, 1997

Operations

     Net sales increased $1,465,919, or 30.4%, during the 
nine months ended September 30, 1998 to $6,293,809, 
compared to $4,827,890 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.   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 $2,003,271 in the nine months ended 
September 30, 1998, compared to $1,460,330 during the 
same period in 1997, an increase of $542,941, or 37.2%.  
Gross profits increased to 31.8% as a percentage of sales 
in the nine months ended September 30, 1998, compared 
to 30.3% during the same period in 1997, due primarily to 
the changing mix of sales and an increase in purchase 
discounts earned on the higher purchase and inventory 
levels, despite the change in the markup percentage on 
sales to Gaiam.  

     Operating expenses were $2,379,037 in the nine 
months ended September 30, 1998 compared to 
$1,721,512 during 1997, a increase of 2.1% as a 
percentage of sales from 35.7% of sales in the 1997 
period to 37.8% of sales for the 1998 period.  

     Sales and marketing expenses were $1,206,480 in 
the nine months ended September 30, 1998, compared to 
$835,305 in the 1997 period. Sales and marketing 
expenses increased 1.9% as a percentage of sales from 
17.3% in the nine months ended September 30, 1997 to 
19.2% in the nine months ended September 30, 1998. 
Included in the 1998 expenses is approximately $195,000 
(approximately 3.1% of sales) for radio advertising in 
Boston.

     Operations and distribution expenses were $485,949 
in the nine months ended September 30, 1998, compared 
to $337,160 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 7.0% in the 1997 
period to 7.7% in the 1998 period.

     General and administrative expenses were $686,608 
in the nine months ended September 30, 1998, compared 
to $549,047 in the 1997 period.  The additional expenses 
incurred were primarily due to increased personnel costs. 
General and administrative expenses decreased from 
11.4% of sales in the 1997 period to 10.9% of sales in the 
1998 period.

     Net other expenses increased in 1998 due to the 
issuance of debentures in the third quarter of 1998 and the 
issuance of debentures in the fourth quarter of 1997.  See 
Footnote 5 of the financial statements for a more complete 
description of debenture activity.

     The net loss in the 1998 period was $336,373, 
compared to $196,714 in 1997, an increase of $139,659.  
The increased loss was primarily due to increased 
marketing activities, primarily the radio advertising and the 
new cooperative marketing program, as well as the 
decrease in markup percentage applicable to sales to 
Gaiam.

Transactions with Gaiam

     During the nine months ended September 30, 1998, 
Gaiam purchased approximately $788,100 of product at 
cost plus 5%, yielding sales of approximately $827,500.  
Gross margin from these sales was approximately 4.8%.  
During the nine months ended September 30, 1997, 
Gaiam purchased approximately $810,900 of product, 
yielding sales of approximately $954,000.  Gross margin 
from these sales was approximately 15.0%. 

     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 
nine months ended September 30, 1998 and 1997.

Summary

     Sales during the nine months ended September 30, 
1998 were $6,293,809, an increase of $1,465,919, or 
30.4%, from the sales of $4,827,890 during the 1997 
period.  Gross profits were $2,003,271 for the nine months 
ended September 30, 1998, an increase of $542,941, or 
37.2%, from $1,460,330 in the 1997 period. Gross profits 
were 31.8% of sales for the nine months ended 
September 30, 1998, compared to 30.3% of sales in the 
1997 period.  Operating expenses, including 
approximately $195,000 for radio advertising, for the nine 
months ended September 30, 1998 were $2,379,037, or 
37.8% of sales, compared to $1,721,512, or 35.7% of 
sales in the 1997 period.  The net loss for the nine months 
ended September 30, 1998 was $336,373, or 5.3% of 
sales compared to $196,714, or 4.1% of sales in the 1997 
period.

     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.

LIQUIDITY AND CAPITAL RESOURCES

     During the nine months ended September 30, 1998, 
the Company used approximately $26,000 of its available 
cash balances through operations. The Company realized 
approximately $205,000 as accounts receivable 
decreased. The Company used approximately $207,000 of 
cash as its inventories increased.  The Company used 
approximately $13,000 by increasing prepaid expenses.  
Additionally, the Company has increased its accounts 
payable by approximately $214,000, while increasing its 
accrued liabilities by approximately $45,000.  As of 
September 30, 1998, the Company's primary sources of 
liquidity were approximately $562,000 in cash, 
approximately $162,000 in marketable securities, and 
approximately $705,000 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 nine months 
of 1998 and together accounted for 56% 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 nine 
months of 1998, the Company's net loss was $336,373, 
compared to $196,714 in 1997, an increase of $139,659. 
The Company has, for the first time, used radio 
advertising.  The Company has also introduced a new 
cooperative marketing program.  These activities have 
significantly increased its marketing expenses.

     During 1997, the Company completed a debt offering 
of privately placed subordinated debentures.  These 
variable rate debentures due June 30, 2002, bore 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 September 30, 1998 and 
December 31, 1997.  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.   See footnote 5 of the financial statements for 
a complete description of these debentures.

     During the third quarter of 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 yield 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.  A portion of 
the proceeds in the amount of $62,500 from the offering 
was allocated to paid in capital as a discount on the 
debentures.  The discount amount represents the 
difference between the fair market value and the potential 
conversion price of the Company's common stock at the 
date of issuance of the debentures.  This discount will be 
amortized and recorded as interest expense over the term 
of the debentures.

     The Company has entered into an agreement with a 
bank whereby the Company may elect to sell up to 
$500,000 of eligible accounts receivable to the bank at the 
Company's option.  Under the agreement, the bank 
purchases the receivables at face value, withholding 20% 
as a reserve against uncollectable amounts. The reserve 
is adjusted semi-monthly to reflect payments received by 
the bank.  In connection with this agreement, the 
Company must pay the bank a service fee of $1.00 per 
invoice plus a processing fee based upon the timeliness of 
payments received by the bank.  The processing fees 
range from .47% to 2.04% of the face value of the invoice.  
The Company is obligated to repurchase any invoices that 
exceed 60 days in age.  To date, the Company has not 
elected to sell any of its accounts receivable to the bank.

     The Boston Stock Exchange suspended the 
Company's common stock and warrants from trading as of 
the close of business on November 3, 1998 and filed for 
delisting with the Securities and Exchange Commission.  
The Company does not meet current minimum 
maintenance requirements.  The Company's Common 
Stock will continue to be available "over the counter" under 
the symbol SVNG.

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 or 
embedded micro-controllers may recognize a date using 
"00" as the year 1900 rather than the year 2000.   This 
could result in a system failure or miscalculations causing 
disruptions of operations, including, among other things, a 
temporary inability to process transactions, send invoices, 
or engage in other normal business activities.

     During fiscal 1998, the Company completed an initial 
review of its information and non-information technology 
systems, including its existing and planned computer 
software and hardware. After the initial review, the 
Company has identified three areas of potential Year 2000 
risk: financial and ancillary software, computers and 
embedded-chip hardware and non-compliance of vendors 
and customers.

     As a result, a more in-depth analysis is currently 
ongoing.  Internally, this second analysis will include the 
testing of internally developed systems.  The internal 
portion of the second analysis just recently commenced 
and is not expected to be completed until the end of 
calendar year 1998.  The Company has, however, 
implemented financial and operational software packages 
that currently utilize six digits to identify the transaction 
year and period.  Additionally, the Company has been 
actively upgrading its computers and embedded-chip 
hardware to ensure Year 2000 compliance.  Currently, the 
Company estimates that 90% of its computers and 
embedded-chip hardware are Year 2000 compliant.  The 
Company intends to reach 100% compliance by the end of 
calendar year 1998.  The Company presently believes that 
with additional modifications to existing software and 
conversions to new software and systems, the Year 2000 
issue will not pose significant operational problems for its 
computer and other information systems.

     If required, the Company will utilize additional internal 
and external resources to reprogram, replace (if 
necessary), and test its software and systems for Year 
2000 modifications.  Externally, the Company's 
preparations for the Year 2000 issue will consist of 
soliciting and obtaining certification of Year 2000 
compliance from third-party software vendors and 
determining the readiness of its significant suppliers and 
customers.  This process is expected to be completed by 
the end of the first quarter of calendar year 1999.

     If such modifications, conversions and/or 
replacements are not made, are not completed timely, or if 
any of the Company's suppliers or customers do not 
successfully deal with the Year 2000 issue, the Year 2000 
issue could have material impact on the operations of the 
Company.  The Company could experience delays in 
receiving or distributing products that would increase its 
costs and that could cause the Company to lose business 
and even customers and could subject the Company to 
claims for damages.  Problems with the Year 2000 issue 
could also result in delays in the Company invoicing its 
customers or in the Company receiving payments from 
them.  The severity of these possible problems would 
depend on the nature of the problem and how quickly it 
could be corrected or an alternative implemented, which is 
unknown at this time.  In the extreme, such problems 
could bring the Company to a standstill.

     While management has not yet specifically 
determined the costs associated with its Year 2000 
readiness efforts, monitoring and managing the Year 2000 
issue will result in additional direct and indirect costs to the 
Company.  Direct costs include potential charges by third-
party software vendors for product enhancements, costs 
involved in testing software products for Year 2000 
compliance and any resulting costs for developing and 
implementing contingency plans for critical software 
products which are not enhanced.  The Company 
estimates the total cost for upgrading its computer system 
and embedded-chip hardware will be approximately 
$15,000.  Indirect costs will principally consist of the time 
devoted by existing employees in monitoring software 
vendor progress, testing enhanced software products and 
implementing any necessary contingency plans.  Such 
costs have not been material to date.  Both direct and 
indirect costs of addressing the Year 2000 issue will be 
charged to earnings as incurred.

     After evaluating its internal compliance efforts as well 
as the compliance of third parties as described above, the 
Company will develop during calendar year 1999 
appropriate contingency plans to address situations in 
which various systems of the Company, or of third parties 
with which the Company does business, are not Year 2000 
complaint.  Some risks of the Year 2000 Issue, however, 
are beyond the control of the Company and its suppliers 
and customers.  For example, no preparations or 
contingency plan will protect the Company from a 
downturn in economic activity caused by the possible 
ripple effect throughout the entire economy caused by the 
Year 2000 issue.

SUBSEQUENT EVENTS

     The Company has entered into an agreement with a 
bank whereby the Company may elect to sell up to 
$500,000 of eligible accounts receivable to the bank at the 
Company's option.  Under the agreement, the bank 
purchases the receivables at face value, withholding 20% 
as a reserve against uncollectable amounts. The reserve 
is adjusted semi-monthly to reflect payments received by 
the bank.  In connection with this agreement, the 
Company must pay the bank a service fee of $1.00 per 
invoice plus a processing fee based upon the timeliness of 
payments received by the bank.  The processing fees 
range from .47% to 2.04% of the face value of the invoice.  
The Company is obligated to repurchase any invoices that 
exceed 60 days in age.  To date, the Company has not 
elected to sell any of its accounts receivable to the bank.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     An action entitled Venus Laboratories, Inc. v. Seventh 
Generation, Inc. was commenced on September 10, 1998 
in the United States District Court for the Northern District 
of Illinois Eastern Division.  The complaint alleges that the 
Company unfairly competed with the plaintiff in violation of 
the Lanham Act by distributing promotional materials 
which falsely claimed that the plaintiff's product contained 
petroleum-based surfactants according to independent 
test results.  The complaint seeks injunctive relief, 
unspecified damages, trebled, and attorneys' fees.  The 
Company intends to defend this claim vigorously.  
However, the Company does not believe that the final 
disposition of this matter will have a material adverse 
effect on the Company's financial condition or results of 
operation.   

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 

	Not applicable.

ITEM 5. OTHER INFORMATION

	Not applicable.


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 September 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: November  13, 1998			
By:   /s/ Jeffrey A. Hollender		
      President and Chief Executive Officer
      (Principal Executive & Financial Officer)

<PAGE>

INDEX TO EXHIBITS


                                    Sequentially 
Exhibit Number                      Numbered Page

        11                             23

        27                             25

<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 September 30,
                                                    1998           1997

Loss applicable to common stockholders             $(149,253)    $(97,376)	
	
Weighted average shares outstanding                2,428,791    2,428,791

Basic and diluted earnings per share               $  (0.06)    $  (0.04)




                                             Nine Months Ended September 30,
                                                    1998            1997

Loss applicable to common stockholders           $ (336,373)  $  (196,714)

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

Basic and diluted earnings per share               $ (0.14)      $ (0.08)

     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>