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&lt;p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;&lt;b&gt;1. Organization, Nature
of Operations, and Principles of Consolidation&lt;/b&gt;&lt;/font&gt;&lt;/p&gt;
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&lt;p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;Real Goods Solar, Inc.
(&amp;#x201C;the Company&amp;#x201D;) is a leading residential and commercial
solar energy integrator. The Company incorporated in Colorado on
January&amp;#xA0;29, 2008. The Company&amp;#x2019;s initial public offering
of common stock occurred on May&amp;#xA0;7, 2008.&lt;/font&gt;&lt;/p&gt;
&lt;p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;The Company has prepared
the accompanying unaudited interim condensed consolidated financial
statements in accordance with accounting principles generally
accepted in the United States, or GAAP, including its accounts and
those of its subsidiaries. Intercompany transactions and balances
have been eliminated.&lt;/font&gt;&lt;/p&gt;
&lt;p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;The unaudited condensed
consolidated financial position, results of operations and cash
flows for the interim periods disclosed in this report are not
necessarily indicative of future financial results.&lt;/font&gt;&lt;/p&gt;
&lt;p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;Amounts are reported in
thousands, except share, per share and monthly amounts, or as
otherwise noted. Certain prior period amounts have been
reclassified to conform to the current period
presentation.&lt;/font&gt;&lt;/p&gt;
&lt;p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;&lt;i&gt;Liquidity and Financial
Resources Update&lt;/i&gt;&lt;/font&gt;&lt;/p&gt;
&lt;p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;The Company has experienced
recurring losses in recent years, including $47,206 for the fiscal
year ended December&amp;#xA0;31, 2012 and a loss of $6,701 for the six
months ended June&amp;#xA0;30, 2013. The Company believes the
seasonality of its operations, investments in its selling and
marketing efforts and reductions in operating expenses will
significantly reduce future losses. The Company increased its
financial resources during the six months ended June&amp;#xA0;30, 2013.
On June&amp;#xA0;3, 2013, the Company closed &lt;u&gt;a&lt;/u&gt; private placement
with unaffiliated investors resulting in the Company receiving net
proceeds of $8,414 (See Note 7. Shareholders&amp;#x2019; Equity). At
June&amp;#xA0;30, 2013 the Company has cash of $6,859 and unused
borrowing capacity of $5,247 with Silicon Valley Bank. As of
June&amp;#xA0;30, 2013, the Company had no outstanding borrowings under
its revolving credit facility. The Company does not believe it will
borrow against the facility prior to September&amp;#xA0;30,
2013.&lt;/font&gt;&lt;/p&gt;
&lt;p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;The Company&amp;#x2019;s
revolving line of credit with Silicon Valley Bank (See Note 4.
Revolving Line of Credit) matures on September&amp;#xA0;30, 2013. The
Company is presently discussing an extension of the revolving line
of credit with Silicon Valley Bank.&lt;/font&gt;&lt;/p&gt;
&lt;p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;The Company believes it has
sufficient resources to operate through June&amp;#xA0;30, 2014 and that
a replacement revolving line of credit will be in place prior to
maturity of the Silicon Valley Bank line of credit on
September&amp;#xA0;30, 2013. However, there can be no assurance that
the Company will be able to renew the revolving line of credit,
continue to maintain sufficient receivables and maintain borrowing
availability under the revolving line of credit, continue to reduce
its losses, have sufficient resources to continue to invest in its
selling and marketing efforts or to otherwise expand its business,
or be able to repay related party debt with Gaiam of $2,600
maturing in April 2014.&lt;/font&gt;&lt;/p&gt;


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