<PAGE>

                                   FORM 10-QSB

                     U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20429


(Mark One)
[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                  For the quarterly period ended September 30, 2007

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
         THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________________  to _______________________
Commission File Number     0-27227   .
                       -------------


                          ALLERGY RESEARCH GROUP, INC.
             (Exact name of registrant as specified in its charter)


            Florida                                           13-3940486

(State or other jurisdiction of                              (IRS Employer
 incorporation or organization)                           Identification No.)


                 2300 North Loop Road, Alameda, California 94502

                    (Address of principal executive offices)

(Issuer's telephone number) (800) 545-9960.
                            ---------------

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

Checkmark whether the issuer (1) has filed all reports required to be filed by
Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
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 [ ]

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 14,463,805 shares of Issuer's voting
common stock were outstanding on November 7, 2007.

<PAGE>

                          ALLERGY RESEARCH GROUP, INC.
                            INDEX TO QUARTERLY REPORT
                                 ON FORM 10-QSB
                               SEPTEMBER 30, 2007
================================================================================


PART I. FINANCIAL INFORMATION                                               PAGE

     ITEM 1. Condensed Consolidated Financial Statements (Unaudited):

                Consolidated Balance Sheets...................................3

                Consolidated Income Statements................................4

                Consolidated Statements of Cash Flows.........................5

                Notes to Condensed Consolidated Financial Statements..........6

     ITEM 2. Management's Discussion and Analysis.............................10

     ITEM 3. Controls and Procedures..........................................18

PART II. OTHER INFORMATION

     ITEM 1. Legal Proceedings................................................19
     ITEM 2. Changes in Securities and Use of Proceeds........................19
     ITEM 3. Defaults Upon Senior Securities..................................19
     ITEM 4. Submission of Matters to a Vote of Security Holders..............19
     ITEM 5. Other Information................................................19
     ITEM 6. Exhibits.........................................................19


SIGNATURE.....................................................................20

                                       2
<PAGE>
<TABLE>

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

In the opinion of management, the accompanying unaudited financial statements
included in this Form 10-QSB reflect all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation of the results of
operations for the periods presented. The results of operations for the periods
presented are not necessarily indicative of the results to be expected for the
full year.

                                         ALLERGY RESEARCH GROUP, INC.
                                          CONSOLIDATED BALANCE SHEETS

                                                                                   September 30,  December 31,
                                                                                        2007          2006
                                                                                    (Unaudited)    (Audited)
                                                                                   -----------------------------
<S>                                                                                    <C>           <C>
ASSETS
------
Current Assets
 Cash and Cash Equivalents                                                             $4,851,877    $3,159,403
 Accounts Receivable                                                                    1,042,735       818,738
 Inventories (Note 4)                                                                   2,636,105     3,077,124
 Prepaid Income Taxes                                                                           -        90,923
 Prepaid Expenses and Other Current Assets                                                289,113       204,342
                                                                                   -----------------------------
Total Current Assets                                                                    8,819,830     7,350,530
                                                                                   -----------------------------

Property and Equipment, Net                                                               496,856       504,050
                                                                                   -----------------------------

 Intangible Assets, Net                                                                    13,180        13,180
                                                                                   -----------------------------

Total Assets                                                                           $9,329,866    $7,867,760
                                                                                   =============================

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities
 Accounts Payable                                                                        $386,961      $148,805
 Accrued Expenses (Note 5)                                                                529,746       236,907
 Income Taxes Payable                                                                     143,043        11,958
 Deferred Tax Liability                                                                    41,185        40,387
                                                                                   -----------------------------
Total Current Liabilities                                                               1,100,935       438,057
                                                                                   -----------------------------

Commitments and Contingencies (Note  6)

Stockholders' Equity
 Preferred Stock, $.25 Par Value, Authorized 1,000,000
    Shares, Issued and Outstanding: None                                                     None          None
 Common Stock, $.001 Par Value, Authorized 100,000,000 Shares
   Issued: 15,105,355; Outstanding: 14,463,805 (9/30/07) and 14,521,605 (12/31/06)         15,105        15,105
 Additional Paid In Capital                                                             1,158,127     1,150,641
 Retained Earnings                                                                      7,405,918     6,542,494
 Less: Treasury Stock, at cost 641,550 shares (9/30/07) and 583,750 (12/31/06)          (350,219)     (278,537)
                                                                                   -----------------------------
Total Stockholders' Equity                                                              8,228,931     7,429,703
                                                                                   -----------------------------
Total Liabilities and Stockholders' Equity                                             $9,329,866    $7,867,760
                                                                                   =============================

See Notes to Condensed Consolidated Financial Statements.

                                                      3
<PAGE>

                                              ALLERGY RESEARCH GROUP, INC.
                                             CONSOLIDATED INCOME STATEMENTS
                                                       (UNAUDITED)

                                                                Three Months Ended                Nine Months Ended
                                                                   September 30,                    September 30,
                                                              2007             2006             2007            2006
                                                              ----             ----             ----            ----

Revenues                                                  $ 4,319,664      $ 4,091,460      $12,478,851      $12,353,483
Cost of Sales                                               2,633,782        2,529,300        7,621,815        7,626,840
                                                          -----------      -----------      -----------      -----------
Gross Profit                                                1,685,882        1,562,160        4,857,036        4,726,643
                                                          -----------      -----------      -----------      -----------

Operating Expenses
      Selling, General and Administrative                   1,096,315        1,031,184        3,343,867        3,119,881
      Research and Development                                 68,054           73,183          200,367          219,874
                                                          -----------      -----------      -----------      -----------
Total Operating Expenses                                    1,164,369        1,104,367        3,544,234        3,339,755
                                                          -----------      -----------      -----------      -----------

Earnings from Operations                                      521,513          457,793        1,312,802        1,386,888

Other Income
      Interest Income                                          53,111           36,078          141,520           92,962
                                                          -----------      -----------      -----------      -----------

Net Earnings Before Tax                                       574,624          493,871        1,454,322        1,479,850

Provision for Income Taxes                                    235,225          202,437          590,898          604,878
                                                          -----------      -----------      -----------      -----------

Net Earnings                                              $   339,399      $   291,434      $   863,424      $   874,972
                                                          ===========      ===========      ===========      ===========

Basic and Diluted Earnings Per Common Share (Note 3)      $      0.02      $      0.02      $      0.06      $      0.06
                                                          ===========      ===========      ===========      ===========


See Notes to Condensed Consolidated Financial Statements.

                                                           4
<PAGE>

                                                 ALLERGY RESEARCH GROUP, INC.
                                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                          (UNAUDITED)
                                                                                                      Nine Months Ended
                                                                                                        September 30,
                                                                                                   2007               2006
                                                                                                   ----               ----
Cash  Flows From Operating Activities
       Net Earnings                                                                            $   863,424       $   874,972
       Adjustments to Reconcile Net Earnings to Net Cash Provided by Operating Activities
           Depreciation                                                                             50,936            53,656
           Change in Deferred Taxes                                                                    798            15,578
       Changes in Assets and Liabilities
           (Increase) Decrease in Accounts Receivable                                             (223,997)           35,348
           (Increase) Decrease in Inventory                                                        441,019          (677,889)
           (Increase) Decrease in Prepaid Expenses and Other Current Assets                          6,152            63,906
           Increase (Decrease) in Accounts Payable and Accrued Expenses                            530,995           357,354
           Increase (Decrease) in Income Taxes Payable                                             131,085            12,428
                                                                                               -----------       -----------
Net Cash Flows Provided By Operating Activities                                                  1,800,412           735,353
                                                                                               -----------       -----------

Cash Flows From Investing Activities
       Acquisition of Property and Equipment                                                       (43,742)           (6,105)
                                                                                               -----------       -----------
Net Cash Flows Used In Investing Activities                                                        (43,742)           (6,105)
                                                                                               -----------       -----------

Cash Flows From Financing Activities
       Cash Paid for the Acquisition of Treasury Shares                                            (80,196)               --
       Cash Received from the Exercise of Employee Stock Options                                    16,000                --
                                                                                               -----------       -----------
Net Cash Flows Used in Financing Activities                                                        (64,196)               --
                                                                                               -----------       -----------

Increase in Cash and Cash Equivalents                                                            1,692,474           729,248
Cash and Cash Equivalents, Beginning of Period                                                   3,159,403         2,487,824
                                                                                               -----------       -----------
Cash and Cash Equivalents, End of Period                                                       $ 4,851,877       $ 3,217,072
                                                                                               ===========       ===========

See Notes to Condensed Consolidated Financial Statements.
</TABLE>
                                                           5
<PAGE>

                          ALLERGY RESEARCH GROUP, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2007
                                   (UNAUDITED)

Note 1 - Basis of Presentation
------------------------------

         The accompanying unaudited Consolidated Financial Statements of Allergy
         Research Group, Inc. ("the Company") have been prepared in accordance
         with generally accepted accounting principles in the United States for
         interim financial information and the instructions to Form 10-QSB and
         Article 10 of Regulation S-X. Accordingly, they do not include all the
         information and footnotes required by generally accepted accounting
         principles for complete financial statements. In the opinion of
         management, all adjustments (which include only normal recurring
         adjustments) necessary to present fairly the financial position,
         results of operations and cash flows for all periods presented have
         been made. Preparing financial statements requires management to make
         estimates and assumptions that affect the reported amounts of assets,
         liabilities, revenue and expenses. Examples include provisions for
         returns, accounting for income taxes, bad debts, length of product life
         cycles, and property, plant and equipment lives for depreciation
         purposes. Actual results may differ from these estimates. The results
         of operations for the period ended September 30, 2007 are not
         necessarily indicative of the operating results that may be expected
         for the entire year ending December 31, 2007. These financial
         statements should be read in conjunction with the financial statements
         included in the Company's Annual Report on Form 10-KSB as of and for
         the year ended December 31, 2006, filed with the Securities and
         Exchange Commission ("SEC") on March 29, 2007.

         The consolidated financial statements include the accounts of Allergy
         Research Group, Inc. and its subsidiary. All significant intercompany
         transactions and balances have been eliminated.


Note 2 - Recent Accounting Pronouncements
-----------------------------------------

         In February 2007, the FASB issued SFAS No. 159, The Fair Value Option
         for Financial Assets and Financial Liabilities -- Including an
         Amendment of FASB Statement No. 115 ("SFAS No. 159"). SFAS No. 159
         permits entities to choose to measure many financial instruments and
         certain other items at fair value. Unrealized gains and losses on items
         for which the fair value option has been elected will be recognized in
         earnings at each subsequent reporting date. SFAS No. 159 is effective
         for financial statements issued for fiscal years beginning after
         November 15, 2007. The Company does not anticipate that SFAS No. 159
         will have a material impact on its results of operations and financial
         condition.

         Other recent accounting pronouncements issued by the FASB (including
         its Emerging Issues Task Force ("EITF")), the American Institute of
         Certified Public Accountants ("AICPA"), and the SEC did not or are not
         believed by management to have a material impact on the Company's
         present or future financial statements.


Note 3 - Earnings Per Share
---------------------------

         Basic earnings per share ("EPS") is based on the weighted average
         number of common shares outstanding. Diluted EPS is based on the
         weighted average number of common shares outstanding and dilutive
         common stock equivalents.

                                       6
<PAGE>
<TABLE>
<S>     <C>

          The computation of basic and diluted earnings per share is as follows:

                                                                    Three Months     Three Months     Nine Months      Nine Months
                                                                        Ended           Ended            Ended            Ended
                                                                       9/30/07         9/30/06          9/30/07          9/30/06
                                                                    --------------------------------------------------------------
         Numerator-Net Earnings                                     $   339,399      $   291,434      $   863,424      $   874,972
                                                                    ===========      ===========      ===========      ===========
         Denominator:

         Weighted average shares used in computing basic EPS         14,463,805       14,521,605       14,510,364       14,521,605
         Net effect of dilutive common shares                           149,850          180,977          156,801          180,977
                                                                    -----------      -----------      -----------      -----------
         Weighted average shares used in computing diluted EPS       14,613,655       14,702,582       14,667,165       14,702,582

         Basic Earnings Per Share                                   $      0.02      $      0.02      $      0.06      $      0.06
                                                                    ===========      ===========      ===========      ===========

         Diluted Earnings Per Share                                 $      0.02      $      0.02      $      0.06      $      0.06
                                                                    ===========      ===========      ===========      ===========


Note 4 - Inventories
--------------------

         Inventories consist of the following:
                                                                   September 30, 2007         December 31, 2006
                                                                   ------------------         -----------------
         Raw materials                                                    $ 1,742,172               $ 1,993,200
         Finished goods                                                       820,021                 1,002,162
         Supplies                                                             123,912                   131,762
         Reserve for obsolescence                                             (50,000)                  (50,000)
                                                                          -----------               -----------
                                                                          $ 2,636,105               $ 3,077,124
                                                                          ===========               ===========

Note 5 - Accrued Expenses

         Accrued expenses consist of the following:
                                                                   September 30, 2007         December 31, 2006
                                                                   ------------------         -----------------
         Operating expenses                                                   123,138                   157,928
         Vacation and bonus                                                   338,000                    46,000
         Payroll                                                               62,969                    26,849
         Sales tax                                                              5,639                     6,130
                                                                          -----------               -----------
                                                                          $   529,746               $   236,907
                                                                          ===========               ===========
</TABLE>

Note 6 - Commitments and Contingencies
--------------------------------------

     Line of Credit

         The Company has a Merrill Lynch Working Capital Management Account
         (WCMA) which provides for a line of credit up to $1,500,000 bearing
         interest at the London Interbank Offered Rate (LIBOR) plus 2.75%, due
         monthly. The LIBOR plus 2.75% at September 30, 2007 was 7.87%. The note
         is secured by substantially all of the assets of the Company. The WCMA
         immediately pays down the line of credit when deposits are received.
         When checks are issued, the line of credit is utilized if no cash is
         available. If the line of credit has a zero balance, the WCMA pays
         interest on deposits at Merrill Lynch's money market rate, which as of
         September 30, 2007 was 4.70%. The entire line was available for use as
         of September 30, 2007.

                                       7
<PAGE>

     Purchase Obligations

         As of September 30, 2007, the Company had inventory purchase
         obligations of $1,545,018 and a two-year distribution agreement that
         began in July 2006 with a vendor for the exclusive distribution of
         their product with a remaining obligation of $391,827, which were
         incurred as part of the normal course of business.

     Operating Lease (A Related Party Transaction)

         On January 4, 2005, the Company entered into a lease with AriBen
         Corporation, a related party 100% owned by Susan and Stephen Levine,
         the Company's Vice President and CEO/CFO, respectively, and
         collectively, as husband and wife, the majority stockholders of the
         Company, for approximately 29,821 square feet of office and industrial
         space. The lease, which has a term of ten years with options to renew
         for two subsequent periods of ten and five years, respectively, has a
         base monthly rent of $24,000 for the initial period, $30,000 for the
         first option period and $35,000 for the second option period. Rent will
         be adjusted annually during the second five years of each 10-year lease
         period based on the consumer price index, with a minimum increase of
         three percent. No security deposit was required under the lease. Rent
         expense charged to operations during the third quarter of 2007 was
         $72,000 (2006: $72,000), and $216,000 for the nine months ended
         September 30, 2007 (2006:$216,000). Future minimum rental commitments
         under non-cancelable leases for the next five years are $288,000 per
         year.

     Asserted and Unasserted Claims

         From time to time the Company is subject to certain asserted and
         unasserted claims encountered in the normal course of business. It is
         the Company's belief that the resolution of these matters will not have
         a material adverse effect on our financial position or results of
         operations, however; we cannot provide assurance that damages resulting
         in a material adverse effect on our financial position or results of
         operations will not be imposed in these matters. The Company accounts
         for contingent liabilities when it is probable that future expenditures
         will be made and such expenditures can be reasonably estimated.

         In March 2006, the Company received a summons from the United States
         District Court for the District of Colorado in an action filed by Pure
         Research Products, LLC, a division of J.A. Sichel & Associates. The
         Company had agreed with John A. Sichel in February 2004 to launch,
         promote and exclusively distribute a product then known as Del-Immune
         (later changed to Delta Immune with his consent). After the Company
         incurred significant time and expense associated with the launch and
         promotion of the product, and had received significant orders, Mr.
         Sichel terminated the agreement and refused to provide product to meet
         the outstanding orders. Allegations in the complaint filed by Pure
         Research allege that the Company has violated a trademark and certain
         licensing rights held by Pure Research to components of the product
         through the marketing and sale of its own product, Russian Choice
         Immune. Pure Research is seeking various forms of injunctive relief
         against the Company as well as damages to be proven at trial. The
         complaint includes a request for treble damages in the event the
         plaintiff is successful. The Company intends to vigorously defend
         itself against the allegations and, on October 26, 2007, filed a
         countersuit for breach of oral contract, fraud, intentional
         interference with contractual relations, promissory estoppel, and for
         exemplary damages, in an amount to be proven at trial. Because the
         Company believes that the plaintiff's claim has no merit, no
         adjustments were made to our consolidated financial statements for the
         outcome of this uncertainty.


Note 7 - Concentration of Credit Risk
-------------------------------------

         The Company is subject to a wide variety of risks in the ordinary
         course of its business as follows:

                  SALES. There were three customers that each accounted for more
         than 10% of the Company's ending trade receivables balance at September
         30, 2007. Trade receivables from these three customers totaled
         approximately $513,000. All of the Company's trade receivables are
         unsecured. Approximately 12% of the Company's total sales in 2007 and
         11% in 2006 were attributable to the same single distributor. In the
         event the Company were to lose that account, management anticipates
         that it would be able to convert the business to sales directly to the


                                       8
<PAGE>

         customers of that distributor. As converted sales would be at a higher
         margin, management does not believe the loss of the account would have
         a material negative impact on sales. However, no assurance can be given
         that, if the Company were to lose this distributor, all or any of the
         customers would transfer directly to the Company or that current sales
         from this group would be maintained at current levels.

                  PURCHASES. The Company purchases raw materials and uses
         outside vendors for the manufacture of its products. For the nine
         months ended September 30, 2007, the Company had a concentration of
         approximately 62% of manufacturing with four separate vendors, who
         individually account for more than ten percent of our purchases. For
         the nine months ended September 30, 2006, the Company had a
         concentration of approximately 31% of manufacturing with two separate
         vendors, who individually accounted for more than ten percent of our
         purchases. The Company does not currently have written contracts with
         any of its manufacturers, but relies on long-term personal and
         professional relationships. Management believes that, due to the large
         number of businesses performing this type of service in the industry,
         it would have little difficulty in finding viable alternatives in the
         event any one of these vendors became unable or determined not to
         continue manufacturing the Company's products. However, there can be no
         assurance that suitable, alternative manufacturers would be available
         to the Company when needed or that such alternative manufacturers would
         not result in an increase in costs or a change in the quality of the
         Company's products.

                  PRODUCT. None of the Company's products in 2007 or 2006
         individually accounted for more than 10% of its sales dollars.


Note 8 - Stock-Based Compensation
---------------------------------

         The Company has authorized 1,000,000 shares of common stock for
         issuance to key employees under the 1998 Stock Option Plan (the
         "plan"). The objectives of the plan include attracting and retaining
         the best personnel, providing for additional performance incentives,
         and promoting the success of the Company by providing key employees the
         opportunity to acquire common stock.

         Options outstanding and exercisable at September 30, 2007 were 293,750
         exercisable at $0.40 per share with an aggregate intrinsic value of
         $126,313. The weighted-average exercise price of options outstanding
         and exercisable at September 30, 2007 was $0.40 per share and the
         weighted-average remaining contractual life was .62 years. The options
         vested upon issue on May 12, 2003 and expire five years after said
         date. There were no options granted or exercised during any of the
         periods presented or compensation expense recognized. When options are
         exercised the Company issues treasury shares of which there are 641,550
         on hand.


Note 9 - Stockholders' Equity Transactions
------------------------------------------

         TREASURY STOCK. The Company acquired 97,800 shares of outstanding
         common stock at $0.82 per share for an aggregate purchase price of
         $80,196 from Rae Levine, a related party (mother) to the CEO and CFO of
         the Company, Dr. Stephen Levine.

         COMMON STOCK. During the nine months ended September 30, 2007, employee
         stock options were exercised for the purchase of 40,000 shares of
         common stock at $.40 per share for cash proceeds of $16,000.


                                       9
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

INTRODUCTION
------------

Management's discussion and analysis of results of operations and financial
condition ("MD&A") is provided as a supplement to the accompanying consolidated
financial statements and footnotes to help provide an understanding of Allergy
Research Group, Inc.'s (the "Company") financial condition, changes in financial
condition and results of operations. The MD&A is organized as follows:

     o    CAUTION CONCERNING FORWARD-LOOKING STATEMENTS AND RISK FACTORS. This
          section discusses how certain forward-looking statements made by the
          Company throughout the MD&A and in the consolidated financial
          statements are based on our present expectations about future events
          and are inherently susceptible to uncertainty and changes in
          circumstances.

     o    OVERVIEW. This section provides a general description of the Company's
          business, as well as recent developments that we believe are important
          in understanding the results of operations and to anticipate future
          trends in those operations.

     o    RESULTS OF OPERATIONS. This section provides an analysis of our
          results of operations for the three- and nine-month periods ended
          September 30, 2007 compared to the same periods in 2006. A brief
          description is provided of transactions and events that impact the
          comparability of the results being analyzed.

     o    LIQUIDITY AND CAPITAL RESOURCES. This section provides an analysis of
          our financial condition and cash flows as of and for the nine months
          ended September 30, 2007, including related party transactions.

     o    CRITICAL ACCOUNTING POLICIES. This section provides an analysis of the
          significant estimates and judgments that affect the reported amounts
          of assets, liabilities, revenues and expenses, and related disclosure
          of contingent assets and liabilities.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS AND RISK FACTORS
--------------------------------------------------------------

The following discussion should be read in conjunction with the Company's
financial statements and the notes thereto and the other financial information
appearing elsewhere in this document. In addition to historical information, the
following discussion and other parts of this document contain certain
forward-looking information. When used in this discussion, the words "believes,"
"anticipates," "expects," and similar expressions are intended to identify
forward-looking statements. Such statements are subject to certain risks and
uncertainties, which could cause actual results to differ materially from those
projected due to a number of factors beyond our control. The Company does not
undertake to publicly update or revise any of its forward-looking statements
even if experience or future changes show that the indicated results or events
will not be realized. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. You are also
urged to carefully review and consider our discussions regarding the various
factors that affect our business, included in this section and elsewhere in this
report.

In June 2007, the Food and Drug Administration announced a final rule
establishing regulations to require current good manufacturing practices (cGMP)
for dietary supplements. The regulations establish the cGMP needed to ensure
quality throughout the manufacturing, packaging, labeling, and storing of
dietary supplements. The final rule includes requirements for establishing
quality control procedures, designing and constructing manufacturing plants, and
testing ingredients and the finished product. It also includes requirements for
recordkeeping and handling consumer product complaints. The rule has a
three-year phase in period for small business, with companies of our size having
until June 2009 to comply. We are currently evaluating the potential impact of
the packaging, labeling and storing portions of the regulations on our financial
statements and operations. Because we do not currently manufacture our vitamin
and nutritional supplement products, our outside vendors will be required to
comply with all applicable governmental regulations, including cGMP. It is
possible that our manufacturers and vendors will pass on the cost of compliance
with these regulations by raising their prices. In that event, we would need to
evaluate the competitive market to determine whether those costs can be passed
on to our own customers. If not, increased prices from our manufacturers and
vendors may adversely affect our own profit margins.

                                       10
<PAGE>

In July 2005, the Codex Alimentarius Commission adopted Guidelines for Vitamin
and Mineral Food Supplements (the "Guidelines"). The Guidelines only apply to
supplements that contain vitamins and minerals that are regulated as foods. The
Guidelines provide criteria for establishing maximum amounts of vitamins and
minerals per daily portion of the supplement as recommended by the manufacturer.
They also address the packaging and labeling of supplements. The restrictions
are expected to lower the dosage of U.S.-manufactured products to standards set
by foreign jurisdictions. The FDA has stated that the Codex Guidelines will not
affect the availability of supplement products to U.S. consumers.

We cannot predict the nature of any future laws, regulations, interpretations or
applications, nor can we determine what effect additional governmental
regulations or administrative orders, when and if promulgated, would have on the
Company's business in the future. They could require the reformulation of
certain products to meet new standards, the recall or discontinuance of certain
products not capable of reformulation, additional record keeping, expanded
documentation of the properties of certain products, expanded or different
labeling, and/or scientific substantiation. Any or all of such requirements
could have a material adverse effect on our results of operations and financial
condition. Currently, we do not believe that compliance with the provisions of
national, state and local environmental laws and regulations will have a
material adverse effect upon the capital expenditures, earnings, financial
position, liquidity or competitive position of the Company.

We face an inherent risk of exposure to product liability claims in the event
that the use of our products results in injury. Such claims may include, among
others, that our products contain contaminants or include inadequate
instructions as to use or inadequate warnings concerning side effects and
interactions with other substances. We do not anticipate obtaining contractual
indemnification from parties supplying raw materials or marketing our products.
In any event, any such indemnification if obtained would be limited by our terms
and, as a practical matter, to the creditworthiness of the indemnifying party.
In the event that we do not have adequate insurance or contractual
indemnification, product liabilities relating to defective products could have a
material adverse effect on our operations and financial conditions.

Because of our dependence upon consumer perceptions, adverse publicity
associated with illness or other adverse effects resulting from the consumption
of our products or any similar products distributed by other companies could
have a material adverse effect on our operations. Such adverse publicity could
arise even if the adverse effects associated with such products resulted from
consumers' failure to consume such products as directed. In addition, we may not
be able to counter the effects of negative publicity concerning the efficacy of
our products. Any such occurrence could have a negative effect on our
operations.

Other key factors that affect our operating results are as follows:

     o    Overall customer demand for our various products.
     o    Volume of products ordered.
     o    Mix of products purchased by our customers.
     o    Prices at which we sell our products.
     o    Our ability to manage our cost structure for capital expenditures and
          operating expenses such as salaries and benefits, freight and
          royalties.
     o    Our ability to match operating costs to shifting volume levels.
     o    Increases in the cost of raw materials and other supplies, which may
          impact pricing, our ability to compete or result in lower profit
          margins if prices are not raised on related products.
     o    The impact of competitive products.
     o    Adequacy and availability of insurance coverage.
     o    Our inability to gain and/or hold market share.
     o    Exposure to and expense of resolving and defending product liability
          claims and other litigation.
     o    Consumer acceptance of our products.
     o    Managing and maintaining growth.
     o    Market and industry conditions including pricing, demand for products,
          levels of trade inventories and raw materials availability and changes
          in applicable laws and government regulation.
     o    The success of product development and new product introductions into
          the marketplace.
     o    Slow or negative growth in the nutritional supplement industry.
     o    The departure of key members of management.
     o    Our ability to efficiently manufacture our products.

                                       11
<PAGE>

     o    Unexpected customer bankruptcy.
     o    The effect of SFAS 123R on future stock-based compensation.
     o    Limitations on future financing.
     o    Increases in the cost of borrowings and unavailability of debt or
          equity capital.
     o    Costs of implementing internal financial controls required by Section
          404 of the Sarbanes-Oxley Act of 2002.
     o    Costs of compliance with new cGMP regulations.

OVERVIEW
--------

BUSINESS DESCRIPTION. Allergy Research Group, Inc. (SYMBOL: ALRG) (the "Company"
or "ARG"), together with its wholly-owned subsidiary, Nutricology, Inc., strives
to be an innovative leader in nutraceutical research and product formulation.
Our common stock is traded on the Over-The-Counter Bulletin Board. Since 1980,
we have produced quality, hypoallergenic nutritional supplements and supplied
products to physicians and health care practitioners worldwide. We develop,
contract manufacture, market and sell vitamins and nutritional supplements
throughout the world under the NutriCology(R) and Allergy Research Group(R)
labels. Our products are distributed through distributors to medical and
professional accounts, retail stores, and consumers directly. We offer a line of
approximately 280 products, including vitamins in both multivitamin and
single-entity formulas, minerals, and herbals. Our products are manufactured in
various forms, including capsules, tablets, softgels, powders (drink mixes) and
liquids. We also distribute certain third-party manufactured products under our
labels. These products account for approximately 20% of all products offered by
the Company. Our principal executive offices are located at 2300 North Loop
Road, Alameda, California 94502 and our telephone number is (800) 545-9960.

FUTURE OPERATIONS. The success of our future operations will depend to a great
extent on the operations, financial condition, and management of the Company. We
intend to expand our position in the vitamin and nutritional supplements
markets. Specifically, our strategy continues to be to: (i) develop new brands
and product line extensions, as well as new products, through our commitment to
research and development; (ii) continue the growth of our balanced distribution
network; (iii) build our execution skills through new operations processes and
decision support systems; (iv) achieve cost superiority through formal
productivity benchmarking and continuous improvement programs; and (v) continue
to improve upon our comprehensive e-commerce plan, which includes a
user-friendly and marketing-driven website that has the ability to accommodate
wholesale orders. We believe that our history and reputation in the field,
multiple distribution channels, broad portfolio of products and packaging and
distribution capabilities position us to be a long-term competitor in the
vitamin and nutritional supplements industries.

We are still collaborating with several entrepreneurs of cutting-edge
science-based products, who have limited resources to bring their products to
market. We look towards working partnerships and/or acquisition of these
businesses to broaden our product line of innovative nutraceuticals. There is
potential for real growth in sales and profit while providing products that
promote general health. The Company's distribution channel to the medical and
professional-practitioners market is key to the successful introduction of
unique products.

We believe that the Company has good relations with all of its current
manufacturers and suppliers. We do not currently have written contracts with any
of our manufacturers, but rely on long-term personal and professional
relationships with our vendors. We believe that, due to the large number of
businesses performing this type of service in the industry, the Company would
have little difficulty in finding viable alternatives in the event any one of
these vendors became unable or determined not to continue manufacturing our
products. Of course, we can give no assurance that this would be the case.

RESULTS OF OPERATIONS
---------------------

Please refer to the consolidated financial statements, which are a part of this
report, for further information regarding the results of operations of the
Company.

                                       12
<PAGE>
<TABLE>
<S>     <C>
                          PERIOD ENDED SEPTEMBER 30, 2007 COMPARED TO SEPTEMBER 30, 2006
                          --------------------------------------------------------------
RESULTS OF OPERATIONS

The following table and discussion is a summary of our consolidated results of
operations:

                                     Three months ended September 30,                 Nine months ended September 30,
                                -------------------------------------------    ---------------------------------------------
                                                           $         %                                      $         %
                                                         Change    Change                                 Change    Change
                                                          from      from                                   from      from
                                   2007        2006       2006*     2006*          2007         2006       2006*     2006*
                                ----------- ----------- ---------- --------    ------------- ----------- ---------- --------
Revenues                        $4,319,664  $4,091,460   +228,204      +6%      $12,478,851  $12,353,483  +125,368      +1%
Cost of Sales                    2,633,782   2,529,300   -104,482      -4%        7,621,815    7,626,840    +5,025      +0%
                                ----------- -----------                         ------------- -----------
Gross Profit                     1,685,882   1,562,160                            4,857,036    4,726,643
                                ----------- -----------                         ------------- -----------
Gross Profit as a % of Sales         39.0%       38.2%                                38.9%        38.3%

Operating Expenses:
   Selling, General and
        Administrative           1,096,315   1,031,184    -65,131      -6%        3,343,867    3,119,881  -223,986      -7%
   Research and Development         68,054      73,183     +5,129      +7%          200,367      219,874   +19,507      +9%
                                ----------- -----------                         ------------- -----------
Operating Expenses               1,164,369   1,104,367    -60,002      -5%        3,544,234    3,339,755  -204,479      -6%
                                ----------- -----------                         ------------- -----------

Earnings from Operations           521,513     457,793                            1,312,802    1,386,888

Interest Income                     53,111      36,078    +17,033     +47%          141,520       92,962   +48,558     +52%
                                ----------- -----------                         ------------- -----------

Net Earnings Before Tax            574,624     493,871                            1,454,322    1,479,850

Provision for Income Tax           235,225     202,437    -32,788     -16%          590,898      604,878   +13,980      +2%
                                ----------- -----------                         ------------- -----------

Net Earnings                   $   339,399  $  291,434    +47,965     +16%      $   863,424  $   874,972   -11,548      -1%
                               ===========  ==========                          ===========  ============
</TABLE>
_____________
*    + = Favorable change to NET EARNINGS;
     - = Unfavorable change to NET EARNINGS.

REVENUES. Our revenues grew at a modest rate during the third quarter of 2007,
but due to decreased sales to distributors and retail customers in the first
quarter the increase is not matched year to date. The third quarter increase was
driven by increased sales to our wholesale customers and to distributors. We
attribute the third quarter increase in sales to a combination of the results of
our promotional efforts and the upward trend ordering patterns of the
distributors. Sales to distributors had decreased in the first quarter and
bounced back in the second quarter.

COSTS OF SALES. Cost of sales in the third quarter increased as a direct result
of the increase in sales and year to date remained flat due to the small
increase in sales. We continue to make a concerted effort to determine that our
manufacturers are maintaining the high standards we and our customers expect. We
expect our cost of sales as a percentage of net sales to fluctuate somewhat as
our product mix fluctuates. Our average selling price and related material cost
used to manufacture our product has been relatively consistent and we expect
this trend to continue for the foreseeable future. Gross profit margins
increased slightly for the period over period (both quarter and year to date)
comparison primarily as a result of increased prices on 50 items beginning in
February 2007.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased due to an increase in payroll expense associated with the addition of
a National Accounts Manager, increased attendance at trade shows, and sales
promotions utilizing samples. We anticipate that general and administrative
expenses will continue to increase over the long term as our business continues
to grow and the costs associated with being a public company continue to
increase as a result of our required reporting requirements, including but not
limited to expenses incurred to comply with the Sarbanes-Oxley Act of 2002
(including, among other things, compliance with Item 404 financial controls).

                                       13
<PAGE>

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses decreased
during the third quarter of 2007 and year to date, versus the comparative prior
periods due to a reallocation of resources. However, we anticipate that research
and development expense could increase over the long term as a result of the
growth of the products we offer, new product opportunities and our continued
efforts to invest in the future and strengthen our position within the
nutritional and supplement market.

INTEREST INCOME. Due to our increased cash balance and because we placed excess
cash in short-term certificates of deposits, interest income increased for the
third quarter and year to date over the comparative prior period.

PROVISION FOR INCOME TAXES. Provision for income taxes represents federal and
state income taxes based on earnings and changes to deferred taxes.

NET EARNINGS. Net earnings increased in the third quarter due to the increase in
sales and interest income offset by increased general and administrative costs;
however the increase was not enough to offset decreases in net earnings during
the first and second quarters.

SEASONALITY. Historically, we have experienced little seasonal fluctuation in
revenues; however, during the spring and fall we traditionally attend two trade
shows geared toward the retail market. Show discounts are offered and the retail
distributors tend to purchase higher quantities due to the discounts. We attend
trade shows geared toward the professional market throughout the year, but the
shows are smaller and tend to not have an immediate effect on sales. These shows
are useful because they provide personal contact with the professional market
and potentially increase sales in the long run.

As of September 30, 2007, to the best of our knowledge, no known trends or
demands, commitments, events or uncertainties, except as discussed below, have
existed which will have a material effect on our liquidity.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

Current Financial Condition

During the nine-month period ended September 30, 2007, our working capital
increased by approximately $806,422 to $7,718,895, compared to a working capital
at December 31, 2006 of $6,912,473. Current assets mainly consist of
approximately $4.85 million in cash, $1.04 million in accounts receivable, and
$2.64 million in inventory. We continue to finance our inventory and accounts
receivable through cash generated by operating activities. We believe that the
Company's operating cash flow, cash and cash equivalents, and borrowing capacity
under committed bank credit agreements is sufficient to fund our capital and
liquidity needs for the next twelve months.

Off-Balance Sheet Arrangements

At September 30, 2007, we did not have any relationship with unconsolidated
entities or financial partnerships, which other companies have established for
the purpose of facilitating off-balance sheet arrangements or other
contractually narrow or limited purposes as defined in Item 303(c)(2) of SEC
Regulation S-B. Therefore, we are not materially exposed to any financing,
liquidity, market or credit risk that could arise if we had engaged in such
relationships.

Cash Flows

OPERATING ACTIVITIES. Cash generated by operating activities for 2007 was
primarily a result of net earnings offset by changes in assets and liabilities
as follows: (i) decreases in inventory levels due to the utilization of
inventory on hand that had previously been purchased ahead to take advantage of
favorable pricing and as a result of concerted efforts made to increase
inventory turns, (ii) increases in accounts payable due to the overall varied
timing of payments and purchases, (iii) increases in accrued expenses because
accrued bonuses were paid by year-end 2006, and (iv) an increase in accounts
receivable due increased sales compounded by a slow down in payment from several
distributors who paid later than normal in September. Cash generated by
operating activities for 2006 was primarily a result of increases in inventory
levels to obtain favorable pricing to fulfill minimum purchase requirements of
certain vendors and to obtain quantity discounts, offset by an increase in
accounts payable and accrued liabilities incurred to finance our increased
purchases of inventory.

INVESTING ACTIVITIES. Net cash flows used in investing activities for the nine
months ended September 30, 2007 primarily resulted from cash payments for a new
label printer, computer equipment and software. Net cash flows used in investing
activities for the nine months ended September 30, 2006 resulted from cash paid
for an equipment upgrade.

                                       14
<PAGE>

FINANCING ACTIVITIES. Net cash flows used by financing activities for the nine
months ended September 30, 2007 represents $80,196 in cash paid for the purchase
of 97,800 shares of our common stock offset by cash proceeds received of $16,000
for exercise of employee stock options. There were no cash flows from financing
activities during 2006.

CONCENTRATION OF RISK

The Company is subject to a wide variety of risks in the ordinary course of its
business. Some of the more significant of these risks include heavy
concentrations of sales with a few key customers; heavy concentrations of raw
material purchases with a few key suppliers; regulation by various federal,
state and local agencies with regards to the manufacture, handling, storage and
safety of products; and regulation by various agencies with regards to the
labeling and certification of products. The Company is also subject to
competition from other nutritional supplement companies and is dependent on the
continued demand for nutritional supplements by consumers.

          SALES. Approximately 12% of our total sales in 2007 and 11% in 2006
were attributable to the same single distributor. In the event we were to lose
that account, we anticipate that we would be able to convert the business to
sales directly to the customers of that distributor. As converted sales would be
at a higher margin, we do not believe the loss of the account would have a
material negative impact on sales. However, we cannot assure you that, if we
were to lose this distributor, all or any of the customers would transfer
directly to us or that current sales from this group would be maintained at
current levels.

         PURCHASES. We purchase raw materials and use outside vendors for the
manufacture of our products. For the nine months ended September 30, 2007, we
had a concentration of approximately 62% of our manufacturing with four separate
vendors who individually account for more than ten percent of our purchases. For
the nine months ended September 30, 2006, the Company had a concentration of
approximately 31% of manufacturing with two separate vendors, who individually
accounted for more than ten percent of our purchases. We do not currently have
written contracts with any of our manufacturers, but rely on long-term personal
and professional relationships. We believe that, due to the large number of
businesses performing this type of service in the industry, we would have little
difficulty in finding viable alternatives in the event any one of these vendors
became unable or decided not to continue manufacturing our products. However, we
can give no assurance that suitable, alternative manufacturers would be
available to us when needed or that such alternative manufacturers would not
result in an increase in costs.

          PRODUCT. None of our products in 2007 or 2006 individually accounted
for more than ten percent of our sales dollars.

CONTRACTUAL OBLIGATIONS. The Company's Contractual Obligations and Commercial
Commitments are detailed below:
<TABLE>
<S>     <C>
                               ----------------------------------------------------------------------------------
                                                            Payments Due by Period
                               ----------------------------------------------------------------------------------
                                                     Less
         Contractual                                Than 1               1-3             4 - 5        After 5
         Obligations               Total             Year               Years            Years         Years
------------------------------ --------------- ------------------ ------------------ -------------- -------------

Line of Credit (1)                          -                  -                  -              -             -
------------------------------ --------------- ------------------ ------------------ -------------- -------------

Operating Leases (2)               $2,124,000           $288,000           $864,000       $576,000      $396,000
------------------------------ --------------- ------------------ ------------------ -------------- -------------

Purchase Obligations (3)           $1,936,845          1,936,845                                 -             -
------------------------------ --------------- ------------------ ------------------ -------------- -------------
Total Cash Contractual
Obligations                        $4,060,845         $2,224,845           $864,000       $576,000      $396,000
------------------------------ --------------- ------------------ ------------------ -------------- -------------
</TABLE>

     (1)  This represents the Company's borrowings under its line of credit with
          Merrill Lynch, which had a zero balance throughout the nine months
          ended September 30, 2007 and through the date of this filing. The
          Merrill Lynch line of credit provides for maximum financing of
          $1,500,000, bearing interest at the London Interbank Offered Rate
          (LIBOR) plus 2.75%, computed on a monthly basis. As of September 30,
          2007, the interest rate on the line of credit was 7.87% per annum.

                                       15
<PAGE>

          Because the line of credit is secured by substantially all of the
          assets of the Company, if the Company were to fall into default under
          the terms of our agreement with Merrill Lynch it could have material
          adverse impact on our business and financial position.

     (2)  Represents our building lease with AriBen Corporation, a related
          party. See "Related Party Transactions" below. The current monthly
          obligation for the base rent on the lease is $24,000 for approximately
          29,821 square feet.

     (3)  Represents outstanding purchase orders for inventory ($1,545,018) and
          a two-year distribution agreement that began in July 2006 with a
          vendor for the exclusive distribution of their product ($391,827).

RELATED PARTY TRANSACTIONS. Dr. Stephen Levine, the Company's Chief Executive
Officer, Chief Financial Officer and Chairman of the Board of Directors, and
Susan Levine, the Company's Vice President and Secretary, are husband and wife.

On June 13, 2007 we agreed to purchase 97,800 shares of outstanding common stock
for $0.82 per share for an aggregate purchase price of $80,196 from Rae Levine,
Dr. Levine's mother. The purchase price was based on the ten-day average closing
price of our common stock on the Over-the-Counter Bulletin Board immediately
preceding board approval of the transaction. The repurchased shares were added
to our outstanding treasury stock and are available for reissuance under our
1998 Incentive Stock Option Plan. The determination to directly repurchase the
shares was based, in part, on the potential impact of a sale into the market on
our other shareholders due to the thinly traded market for our stock, and on the
availability of cash resources for the purchase.

On January 4, 2005, we entered into a lease with AriBen Corporation, a related
party 100% owned by Susan and Stephen Levine, for approximately 29,821 square
feet of office and industrial space. The lease, which has a term of ten years
with options to renew for two subsequent periods of ten and five years,
respectively, has a base monthly rent of $24,000 for the initial period, $30,000
for the first option period and $35,000 for the second option period. Rent will
be adjusted annually during the second five years of each 10-year lease period
based on the consumer price index, with a minimum increase of three percent. No
security deposit is required under the lease.

LIQUIDITY RESOURCES. We have approximately $4.85 million in cash and cash
equivalents as of September 30, 2007, which we believe is sufficient to satisfy
our cash requirements over the next twelve months without use of our available
line of credit based our current operating levels. Our future funding
requirements will depend on numerous factors, some of which are beyond our
control. These factors include our ability to operate profitably, our ability to
maintain, recruit and train management and personnel, and our ability to compete
with other, better-capitalized and more established competitors who offer
alternative or similar products. We believe that, given our positive working
capital position, we can satisfy our cash requirements over the next twelve
months from operations if we continue to operate at a profit. Cash flow from
operations is expected to provide us with our capital resources and liquidity
needs.

The Company expects to continue to purchase equipment and hire new employees as
is commensurate with the growth of the business. In addition, we will continue
to invest time and effort in research for product development. We know of no
trends that are expected to affect the cost of labor or materials, and sales are
expected to be stable over the next twelve months. See "CAUTION CONCERNING
FORWARD-LOOKING STATEMENTS/RISK FACTORS" above for some of the variables that
may affect our business and financial results.

CRITICAL ACCOUNTING POLICIES
----------------------------

Our discussion and analysis is based upon our consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these financial statements
requires us to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent
assets and liabilities. On an on-going basis, we evaluate our estimates,
including those related to bad debts, inventories, intangible assets, income
taxes and contingencies. We base our estimates on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions.

                                       16
<PAGE>

An accounting policy is deemed to be critical if it requires an accounting
estimate to be made based on assumptions about matters that are highly uncertain
at the time the estimate is made, and if different estimates that reasonably
could have been used or changes in the accounting estimate that are reasonably
likely to occur could materially change the financial statements.

We believe the following critical accounting policies reflect our more
significant estimates and assumptions used in the preparation of our
consolidated financial statements; however, management does not consider any of
the estimates and assumptions to be highly uncertain.

INCOME TAXES

SFAS 109, Accounting for Income Taxes, establishes financial accounting and
reporting standards for the effect of income taxes. The objectives of accounting
for income taxes are to recognize the amount of taxes payable or refundable for
the current year and deferred tax liabilities and assets for the future tax
consequences of events that have been recognized in an entity's financial
statements or tax returns. Judgment is required in assessing the future tax
consequences of events that have been recognized in our financial statements or
tax returns. Variations in the actual outcome of these future tax consequences
could materially impact our financial position or our results of operations.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

We evaluate the collectibility of our trade receivables based on a combination
of factors. We regularly analyze our significant customer accounts, and, when we
become aware of a specific customer's inability to meet its financial
obligations to us, such as in the case of bankruptcy filings or deterioration in
the customer's operating results or financial position, we record a specific
reserve for bad debt to reduce the related receivable to the amount we
reasonably believe is collectible. The allowances are calculated based on
detailed review of certain individual customer accounts, historical rates and an
estimation of the overall economic conditions affecting our customer base. We
review a customer's credit history before extending credit. If the financial
condition of our customers were to deteriorate, resulting in an impairment of
their ability to make payments, additional allowances may be required. In the
event that our trade receivables become uncollectible, we would be forced to
record additional adjustments to receivables to reflect the amounts at net
realizable value. The accounting effect of this entry would be a charge to
earnings, thereby reducing our net earnings. Although we consider the likelihood
of this occurrence to be remote based on past history and the current status of
our accounts, there is a possibility of this occurrence.

INVENTORY

Our inventory purchases and commitments are made in order to build inventory to
meet future shipment schedules based on forecasted demand for our products. We
perform a detailed assessment of inventory for each period, which includes a
review of, among other factors, demand requirements, product life cycle and
development plans, component cost trends, product pricing and quality issues.
Based on this analysis, we record adjustments to inventory for excess,
obsolescence or impairment, when appropriate, to reflect inventory at net
realizable value. Revisions to our inventory adjustments may be required if
actual demand, component costs or product life cycles differ from our estimates.
In the event we were unable to sell our products, the demand for our products
diminished, other competitors offered similar or better products, and/or the
product life cycles deteriorated causing quality issues, we would be forced to
record an adjustment to inventory for impairment or obsolescence to reflect
inventory at net realizable value. The effect of this entry would be a charge to
earnings, thereby reducing our net earnings. Although we consider the likelihood
of this occurrence to be remote based on our forecasted demand for our products,
there is a possibility of this occurrence.

CONTINGENCIES

The outcomes of potential legal proceedings and claims brought against us are
subject to significant uncertainty. SFAS 5, ACCOUNTING FOR CONTINGENCIES,
requires that an estimated loss from a loss contingency such as a legal
proceeding or claim should be accrued by a charge to earnings if it is probable
that an asset has been impaired or a liability has been incurred and the amount
of the loss can be reasonably estimated. Disclosure of a contingency is required
if there is at least a reasonable possibility that a loss has been incurred. In
determining whether a loss should be accrued we evaluate, among other factors,
the degree of probability of an unfavorable outcome and the ability to make a
reasonable estimate of the amount of loss. Changes in these factors could
materially impact our financial position or our results of operations.

                                       17
<PAGE>

In March 2006, the Company received a summons from the United States District
Court for the District of Colorado in an action filed by Pure Research Products,
LLC, a division of J.A. Sichel & Associates. The complaint alleges that the
Company violated certain trademarks and exclusive license rights held by Pure
Research Products, LLC during negotiations between the parties and following the
dissolution of those negotiations. The plaintiff in the action is seeking
various forms of injunctive relief against the Company as well as damages to be
proven at trial. The complaint includes a request for treble damages in the
event the plaintiff is successful. The Company intends to vigorously defend
itself against the allegations. On October 26, 2007, the Company filed a
countersuit for breach of contract, intentional interference with contractual
relations, promissory estoppel, and for exemplary damages, in an amount to be
proven at trial. Because we believe that the claim has no merit, no adjustments
were made to our consolidated financial statements for the outcome of this
uncertainty. See "LEGAL PROCEEDINGS" in Part II, Item 1 of this Report.

ITEM 3. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including
our principal executive officer and principal financial officer, Mr. Stephen
Levine, we conducted an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures, as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 as of the end
of the period covered by this report (the "Evaluation Date"). Based upon the
evaluation, our principal executive officer and principal financial officer
concluded as of the Evaluation Date that our disclosure controls and procedures
were effective. Disclosure controls are controls and procedures designed to
reasonably ensure that information required to be disclosed in our reports filed
under the Exchange Act, such as this report, is recorded, processed, summarized
and reported within the time periods specified in the SEC's rules and forms.
Disclosure controls include controls and procedures designed to reasonably
ensure that such information is accumulated and communicated to our management,
including our chief executive officer and chief financial officer, as
appropriate to allow timely decisions regarding required disclosure.

CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING

There were no changes in the Company's internal controls over financial
reporting that occurred during the quarterly period covered by this report, that
have materially affected, or are reasonably likely to materially affect, our
internal controls over financial reporting.


                                       18
<PAGE>

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In March 2006, the Company received a summons from the United States District
Court for the District of Colorado in an action filed by Pure Research Products,
LLC, a division of J.A. Sichel & Associates. The Company had agreed with John A.
Sichel in February 2004 to launch, promote and exclusively distribute a product
then known as Del-Immune (later changed to Delta Immune with his consent). After
the Company incurred significant time and expense associated with the launch and
promotion of the product, and had received significant orders, Mr. Sichel
terminated the agreement and refused to provide product to meet the outstanding
orders. Allegations in the complaint filed by Pure Research allege that the
Company has violated a trademark and certain licensing rights held by Pure
Research to components of the product through the marketing and sale of its own
product, Russian Choice Immune. Pure Research is seeking various forms of
injunctive relief against the Company as well as damages to be proven at trial.
The complaint includes a request for treble damages in the event the plaintiff
is successful. The Company intends to vigorously defend itself against the
allegations and, on October 26, 2007, filed a countersuit for breach of oral
contract, fraud, intentional interference with contractual relations, promissory
estoppel, and for exemplary damages, in an amount to be proven at trial. Because
the Company believes that the plaintiff's claim has no merit, no adjustments
were made to our consolidated financial statements for the outcome of this
uncertainty.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

         Not Applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

         Not Applicable.

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

         Not Applicable.

Item 5. OTHER INFORMATION

         Not Applicable.

Item 6. EXHIBITS

Exhibits filed herewith

31    Certificate of Stephen A. Levine required by Rule 13a-14(a) or Rule
      15d-14(a) of The Securities Exchange Act of 1934, as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002

32   Certificate of Stephen A. Levine Pursuant to 18 U.S.C. Section 1350, as
     adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

                                       19
<PAGE>


                          ALLERGY RESEARCH GROUP, INC.
                                    SIGNATURE

           Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                                  ALLERGY RESEARCH GROUP, INC.
                                                  Registrant



Dated:  November 14, 2007
                                                  By:/s/ Stephen A. Levine
                                                     ---------------------------
                                                    Chief Executive Officer and
                                                    Chief Financial Officer


                                       20