<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20429

                                   FORM 10-QSB

(Mark One)

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

                  For the quarterly period ended March 31, 2008

[ ]   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: 14,671,200 shares of Issuer's voting
common stock were outstanding on May 12, 2008.

<PAGE>

                          ALLERGY RESEARCH GROUP, INC.
                            INDEX TO QUARTERLY REPORT
                                 ON FORM 10-QSB
                                 MARCH 31, 2008
================================================================================


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.............................   11

  ITEM 3. Controls and Procedures..........................................   19

PART II. OTHER INFORMATION

  ITEM 1. Legal Proceedings................................................   20
  ITEM 2. Changes in Securities and Use of Proceeds........................   20
  ITEM 3. Defaults Upon Senior Securities..................................   20
  ITEM 4. Submission of Matters to a Vote of Security Holders..............   20
  ITEM 5. Other Information................................................   20
  ITEM 6. Exhibits.........................................................   20

SIGNATURE..................................................................   21


                                       2
<PAGE>

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.

<TABLE>
                               ALLERGY RESEARCH GROUP, INC.
                               CONSOLIDATED BALANCE SHEETS


                                                               March 31,     December 31,
                                                                 2008            2007
                                                              (Unaudited)     (Audited)
                                                              -----------    -----------
<S>                                                           <C>            <C>
ASSETS
------
Current assets
 Cash and cash equivalents                                    $ 4,520,442    $ 4,859,156
 Accounts receivable, net                                       1,035,232        972,354
 Inventories, net  (Note 4)                                     3,323,000      2,620,337
 Prepaid state income taxes                                         1,621          1,621
 Prepaid expenses and other current assets                        344,271        218,447
                                                              -----------    -----------
Total current assets                                            9,224,566      8,671,915
                                                              -----------    -----------

Property and equipment, net                                       473,691        477,967
                                                              -----------    -----------

 Intangible assets, net                                            13,180         13,180
                                                              -----------    -----------

Total assets                                                  $ 9,711,437    $ 9,163,062
                                                              ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities
 Accounts payable                                             $   444,065    $   234,531
 Accrued expenses (Note 5)                                        385,956        262,822
 Income taxes payable                                             145,800        130,767
 Deferred tax liability                                            41,516         45,516
                                                              -----------    -----------
Total current liabilities                                       1,017,337        673,636
                                                              -----------    -----------

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: 14,416,950
   (3/31/08) and 14,463,805 (12/31/07)                             15,105         15,105
 Additional paid in capital                                     1,158,127      1,158,127
 Retained earnings                                              7,910,914      7,666,413
 Less: treasury stock, at cost 688,405 shares (3/31/08)
   and 641,550 (12/31/07)                                        (390,046)      (350,219)
                                                              -----------    -----------
Total stockholders' equity                                      8,694,100      8,489,426
                                                              -----------    -----------
Total liabilities and stockholders' equity                    $ 9,711,437    $ 9,163,062
                                                              ===========    ===========


See Notes to Condensed Consolidated Financial Statements.


                                       3
<PAGE>

                                ALLERGY RESEARCH GROUP, INC.
                               CONSOLIDATED INCOME STATEMENTS


                                                                   Three Months Ended
                                                                       March 31,
                                                                  2008            2007
                                                              ------------    ------------

Net sales                                                     $  4,433,248    $  4,086,717
Cost of sales                                                    2,820,127       2,505,786
                                                              ------------    ------------
Gross margin                                                     1,613,121       1,580,931
                                                              ------------    ------------

Operating expenses
  Selling, general and administrative                            1,197,661       1,084,309
  Research and development                                          62,156          65,980
                                                              ------------    ------------
Total operating expenses                                         1,259,817       1,150,289
                                                              ------------    ------------

Earnings from operations                                           353,304         430,642

Other income
  Interest expense                                                    (327)              -
  Interest income                                                   33,323          40,357
                                                              ------------    ------------
Total other income                                                  32,996          40,357
                                                              ------------    ------------

Earnings before income taxes                                       386,300         470,999

Provision for income taxes                                         141,800         189,091
                                                              ------------    ------------

Net earnings                                                  $    244,500    $    281,908
                                                              ============    ============

Basic and diluted earnings per share (Note 3)                 $       0.02    $       0.02
                                                              ============    ============


See Notes to Condensed Consolidated Financial Statements.


                                             4
<PAGE>

                                     ALLERGY RESEARCH GROUP, INC.
                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                                              (UNAUDITED)


                                                                              Three Months Ended
                                                                                  March 31,
                                                                             2008            2007
                                                                         ------------    ------------

Cash flows from operating activities
  Net earnings                                                           $    244,500    $    281,908
  Adjustments to reconcile net earnings to net cash
    provided by operating activities:
    Depreciation                                                               15,835          16,979
    Change in deferred taxes                                                   (4,000)         (2,009)
  Changes in assets and liabilities
    (Increase) decrease in accounts receivable                                (62,878)       (189,698)
    (Increase) decrease in inventory                                         (702,663)        312,004
    (Increase) decrease in prepaid expenses and other current assets         (125,824)        (33,548)
    Increase (decrease) in accounts payable and accrued expenses              332,669         222,183
    Increase (decrease) in income taxes payable                                15,033         100,177
                                                                         ------------    ------------
Net cash flows (used in)  provided by operating activities                   (287,328)        707,996
                                                                         ------------    ------------

Cash flows from investing activities
  Acquisition of property and equipment                                       (11,559)        (34,702)
                                                                         ------------    ------------
Net cash flows used in investing activities                                   (11,559)        (34,702)
                                                                         ------------    ------------

Cash flows from financing activities
  Cash paid for the acquisition of treasury shares                            (39,827)              -
                                                                         ------------    ------------
Net cash flows used in financing activities                                   (39,827)              -
                                                                         ------------    ------------

(Decrease) increase in cash and cash equivalents                             (338,714)        673,294
Cash and cash equivalents, beginning of period                              4,859,156       3,159,403
                                                                         ------------    ------------
Cash and cash equivalents, end of period                                 $  4,520,442    $  3,832,697
                                                                         ============    ============


See Notes to Condensed Consolidated Financial Statements.


                                                  5
</TABLE>
<PAGE>

                          ALLERGY RESEARCH GROUP, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2008
                                   (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 March 31, 2008 are not necessarily
         indicative of the operating results that may be expected for the entire
         year ending December 31, 2008. 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, 2007, filed with the Securities and Exchange Commission
         ("SEC") on March 31, 2008.

         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 December 2007, the FASB issued SFAS No. 141(R), "Business
         Combinations," ("SFAS 141(R)"). This Statement replaces the original
         FASB Statement No. 141. This Statement retains the fundamental
         requirements in Statement 141 that the acquisition method of accounting
         (which Statement 141 called the purchase method) be used for all
         business combinations and for an acquirer to be identified for each
         business combination. The objective of this SFAS 141(R) is to improve
         the relevance and comparability of the information that a reporting
         entity provides in its financial reports about a business combination
         and its effects. To accomplish that, SFAS 141(R) establishes principles
         and requirements for how the acquirer: (1) recognizes and measures in
         its financial statements the identifiable assets acquired, the
         liabilities assumed, and any noncontrolling interest in the acquiree;
         (2) recognizes and measures the goodwill acquired in the business
         combination or a gain from a bargain purchase; and (3) determines what
         information to disclose to enable users of the financial statements to
         evaluate the nature and financial effects of the business combination.
         This Statement applies prospectively to business combinations for which
         the acquisition date is on or after the beginning of the first annual
         reporting period beginning on or after December 15, 2008 and may not be
         applied before that date. The Company does not currently expect the new
         standard to have any material impact on its financial statements.

         In December 2007, the FASB issued SFAS No. 160, "Noncontrolling
         Interests in Consolidated Financial Statements - an amendment of ARB
         No. 51" ("SFAS 160"). This Statement amends the original Accounting
         Review Board (ARB) No. 51 "Consolidated Financial Statements" to
         establish accounting and reporting standards for the noncontrolling
         interest in a subsidiary and for the deconsolidation of a subsidiary.
         It clarifies that a noncontrolling interest in a subsidiary is an
         ownership interest in the consolidated entity that should be reported
         as equity in the consolidated financial statements. This Statement is
         effective for fiscal years and interim periods within those fiscal
         years, beginning on or after December 15, 2008 and may not be applied
         before that date. The Company does not currently expect the new
         standard to have any material impact on its financial statements.

                                       6
<PAGE>

         In March 2008, the FASB issued SFAS No. 161, "DISCLOSURES ABOUT
         DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES-AN AMENDMENT OF FASB
         STATEMENT NO. 133" ("SFAS 161"). SFAS 161 requires enhanced disclosure
         related to derivatives and hedging activities and thereby seeks to
         improve the transparency of financial reporting. Under SFAS 161,
         entities are required to provide enhanced disclosures relating to: (a)
         how and why an entity uses derivative instruments; (b) how derivative
         instruments and related hedge items are accounted for under SFAS No.
         133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES"
         ("SFAS 133"), and its related interpretations; and (c) how derivative
         instruments and related hedged items affect an entity's financial
         position, financial performance, and cash flows. FAS No. 161 must be
         applied prospectively to all derivative instruments and non-derivative
         instruments that are designated and qualify as hedging instruments and
         related hedged items accounted for under SFAS 133 for all financial
         statements issued for fiscal years and interim periods beginning after
         November 15, 2008. The Company does not currently expect the new
         standard to have any material impact on its financial statements.

         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.

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

<TABLE>
                                                                       Three Months    Three Months
                                                                           Ended           Ended
                                                                          3/31/08         3/31/07
                                                                       ------------    ------------
<S>                                                                    <C>             <C>
         Numerator-Net Earnings                                        $    244,500    $    281,908
                                                                       ============    ============

         Denominator:

         Weighted average shares used in computing basic EPS             14,440,887      14,521,605
         Net effect of dilutive common shares                               147,343         172,922
                                                                       ------------    ------------
         Weighted average shares used in computing diluted EPS           14,588,230      14,694,527

         Basic Earnings Per Share                                      $       0.02    $       0.02
                                                                       ============    ============
         Diluted Earnings Per Share                                    $       0.02    $       0.02
                                                                       ============    ============

Note 4 - Inventories

         Inventories consist of the following:
                                                                         March 31,     December 31,
                                                                           2008            2007
                                                                       ------------    ------------
         Raw materials                                                 $  2,396,944    $  1,719,426
         Finished goods                                                     857,841         842,700
         Supplies                                                           118,215         108,211
         Reserve for obsolescence                                           (50,000)        (50,000)
                                                                       ------------    ------------
                                                                       $  3,323,000    $  2,620,337
                                                                       ============    ============
</TABLE>

                                       7
<PAGE>

Note 5 - Accrued Expenses

<TABLE>
         Accrued expenses consist of the following:
                                                                         March 31,     December 31,
                                                                           2008            2007
                                                                       ------------    ------------
<S>                                                                    <C>             <C>
         Operating expenses                                                 141,804         167,719
         Vacation and bonus                                                 152,000          48,000
         Payroll                                                             85,667          40,614
         Sales tax                                                            6,485           6,489
                                                                       ------------    ------------
                                                                       $    385,956    $    262,822
                                                                       ============    ============
</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 March 31, 2008 was 5.45%. 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
         March 31, 2008 was 3.29%. The entire line was available for use as of
         March 31, 2008.

     Purchase Obligations

         As of March 31, 2008, the Company had inventory purchase obligations
         incurred in the normal course of business of $2,062,488 representing
         outstanding purchase orders for inventory ($1,954,055) and a two-year
         distribution agreement that began in July 2006 with a vendor for the
         exclusive distribution of their product ($108,433).

     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 first quarter of 2008 was
         $72,000 (2007: $72,000). 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.

         On or about November 1, 2007, Steven and Kimberly Bronson filed a
         Complaint for Court-Ordered Inspection of Corporate Records with the
         Circuit Court of the 15th Judicial District in and for Palm Beach,
         Florida. The complaint alleges that the Bronsons are entitled to
         inspect and make copies of corporate and accounting records of the
         Company which are not publicly available. The request for inspection
         submitted by the Bronsons was denied by the Company based on the
         inability of the Company to disclose these records without violating
         Regulation FD of the Securities Exchange Act of 1934, as amended, and
         because of the prior publication of correspondence and documents
         exchanged between the Company and the Bronsons by Mr. Bronson. It is
         also our position that Mr. Bronson is not entitled to obtain these
         records because the purposes stated can be satisfied through
         information which has already been made publicly available by the
         Company. We intend to vigorously defend against this action. No
         adjustments were made to our consolidated financial statements for the
         outcome of this uncertainty.

                                       8
<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. We intend to vigorously defend
         against the allegations and have countersued for breach of contract.
         Because we believe 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 March 31,
         2008. Trade receivables from these three customers totaled
         approximately $474,000. All of the Company's trade receivables are
         unsecured. Approximately 11% of the Company's total sales in 2008 and
         13% in 2007 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
         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 three
         months ended March 31, 2008, the Company had a concentration of
         approximately 42% of manufacturing with three separate vendors, who
         individually account for more than ten percent of our purchases. For
         the three months ended March 31, 2007, the Company had a concentration
         of approximately 66% of manufacturing with four 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 2008 or 2007
         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.

                                       9
<PAGE>

         Options outstanding and exercisable at March 31, 2008 were 283,750
         exercisable at $0.40 per share with an aggregate intrinsic value of
         $127,688. The weighted-average exercise price of options outstanding
         and exercisable at March 31, 2008 was $0.40 per share and the
         weighted-average remaining contractual life was .12 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 688,405
         on hand.

         Subsequent Event - All options were due to expire on May 12, 2008. Of
         the 283,750 options outstanding, 254,250 were exercised and 29,500 were
         forfeited. Anyone with material financial information agreed to sign an
         agreement which prohibits trading of the shares issued for six months.
         Under the terms of the option agreements, 13-month loans were offered
         to non-officer employees with interest set at the Company's borrowing
         rate as defined in Note 6 above. As part of the loan agreement, the
         shares are held as collateral until the loan is paid in full.

Note 9 - Stockholders' Equity Transactions

         TREASURY STOCK. The Company acquired 46,855 shares of outstanding
         common stock at $0.85 per share for an aggregate purchase price of
         $39,827 from an unrelated party on February 15, 2008.

                                       10
<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-month period ended March 31,
            2008 compared to the same period in 2007. 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 three
            months ended March 31, 2008, 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.

                                       11
<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 condition.

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 and 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     Customer demands and changes in industry trends.
      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.

                                       12
<PAGE>

      o     Our ability to efficiently manufacture our products.
      o     Unexpected customer bankruptcy.
      o     The effect of SFAS 123R on future stock-based compensation.
      o     The majority of the members on our board of directors are also
            members of management. We have no plans to add additional
            independent directors at this time.
      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 Financial Industry Regulatory Authority's
("FINRA") 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.

                                       13
<PAGE>

             PERIOD ENDED MARCH 31, 2008 COMPARED TO MARCH 31, 2007
             ------------------------------------------------------

RESULTS OF OPERATIONS

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

                                        Three months ended March 31,
                               ------------------------------------------------
                                                             $           %
                                                           Change      Change
                                                            from        from
                                   2008         2007        2007*       2007*
                               -----------  -----------  ----------  ----------
Revenues                       $ 4,433,248  $ 4,086,717   +346,531       +8%
Cost of Sales                    2,820,127    2,505,786   -314,431      -13%
                               -----------  -----------
Gross Profit                     1,613,121   1,580,931
                               -----------  -----------
Gross Profit as a % of Sales         36.4%       38.7%
Operating Expenses:
   Selling, General and
     Administrative              1,197,661    1,084,309   -113,352      -10%
                               -----------  -----------
   Research and Development         62,156       65,980      3,824        6%
                               -----------  -----------
Operating Expenses               1,259,817    1,150,289   -109,528      -10%

Earnings from Operations           353,304      430,642

Interest Expense                      (327)                   -327         -
Interest Income                     33,323       40,357     -7,034      -18%
                               -----------  -----------

Net Earnings Before Tax            386,300     470,999

Provision for Income Tax           141,800      189,091    +47,291      +25%
                               -----------  -----------

Net Earnings                   $   244,500  $   281,908    -37,408      -13%
                               -----------  -----------
----------------
* + = Favorable change to NET EARNINGS; - = Unfavorable change to NET EARNINGS.

REVENUES. Our revenues grew at a modest rate during the first quarter of 2008
and were driven by increased sales to our wholesale customers and to
distributors. We attribute the first quarter increase in sales to a combination
of the results of our promotional efforts and the upward trend in ordering
patterns of the distributors.

COSTS OF SALES. Cost of sales in the first quarter increased as a direct result
of the 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 decreased for the period over period comparison primarily as a result of
increased sales to distributors at lower margins than retail customers or
wholesale accounts.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses consist primarily of costs associated with our
executive, financial, human resources, and customer account management functions
such as compensation costs, including benefits, facilities-related expenses,
advertising and promotions of our products, including our attendance at
tradeshows, and outside professional services such as legal and accounting.
Selling, general and administrative expenses increased primarily due to
increased legal fees associated with pending lawsuits, increased payroll
expenses associated with the addition of a graphic artist and technical support
position, and increased medical insurance costs. We anticipate that selling,
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).

                                       14
<PAGE>

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses decreased
slightly during the first quarter of 2008 versus the comparative prior period
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 decreased cash balance and because we placed excess
cash in lower yielding Merrill Lynch institutional tax-exempt funds, interest
income decreased for the first quarter 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 decreased in the first quarter due to the increase in
general and administrative expenses.

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 March 31, 2008, 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 three-month period ended March 31, 2008, our working capital
increased by approximately $208,950 to $8,207,229, compared to a working capital
at December 31, 2007 of $7,998,279. Current assets mainly consist of
approximately $4.52 million in cash, $1.04 million in accounts receivable, and
$3.32 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 March 31, 2008, 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. Net cash provided by operating activities for both periods
primarily reflects net earnings and net changes in operating assets and
liabilities such as accounts receivable, inventory and accounts payable. Cash
used by operating activities in 2008 was used to increase inventory levels to
take advantage of favorable pricing and to buy ahead to ensure availability on
certain imported items offset by an increase in accounts payable and accrued
liabilities. Cash generated by operating activities for 2007 was primarily a
result of an increase in accounts receivable due to the timing of customer
payments, a decrease in inventory due to the utilization of inventory purchased
ahead to take advantage of favorably priced purchases and the result of
management efforts employed to increase inventory turns offset by an increase in
accounts payable, accrued expenses, and income taxes payable. The net cash
generated by the change in these accounts was offset by an increase in accounts
receivable.

INVESTING ACTIVITIES. Net cash flows used in investing activities for the three
months ended March 31, 2008 resulted from cash paid to replace a damaged air
compressor. Net cash flows used in investing activities for the three months
ended March 31, 2007 resulted from payments for a new label printer and a new
server.

                                       15
<PAGE>

FINANCING ACTIVITIES. Net cash flows used by financing activities for the three
months ended March 31, 2008 represents cash paid for the purchase of 46,855
shares of our common stock. There were no cash flows from financing activities
during 2007.

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 11% of our total sales in 2008 and 13% in 2007 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 three months ended March 31, 2008, we had a
concentration of approximately 42% of our manufacturing with three separate
vendors who individually account for more than ten percent of our purchases. For
the three months ended March 31, 2007, the Company had a concentration of
approximately 66% of manufacturing with four 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 2008 or 2007 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
                                    ---------------------------------------------------------------------
         Contractual                    Less         Than 1          1-3           4-5         After 5
         Obligations                    Total         Year          Years         Years         Years
----------------------------------- ------------- ------------- ------------- ------------- -------------
Line of Credit (1)                              -             -             -             -             -
----------------------------------- ------------- ------------- ------------- ------------- -------------
Operating Leases (2)                   $2,052,000      $288,000      $864,000      $576,000      $324,000
----------------------------------- ------------- ------------- ------------- ------------- -------------
Purchase Obligations (3)               $2,062,488     2,062,488             -             -             -
----------------------------------- ------------- ------------- ------------- ------------- -------------
Total Cash Contractual Obligations     $4,114,488    $2,350,488      $864,000      $576,000      $324,000
----------------------------------- ------------- ------------- ------------- ------------- -------------
</TABLE>

      (1)   This represents the Company's borrowings under its line of credit
            with Merrill Lynch, which had a zero balance as of March 31, 2008.
            The line was used briefly in April 2008 due to timing for the
            liquidation of investments. 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 March 31, 2008, the interest rate on the line
            of credit was 5.45% per annum. 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.

                                       16
<PAGE>

      (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 ($1,954,055)
            and a two-year distribution agreement that began in July 2006 with a
            vendor for the exclusive distribution of their product ($108,433).

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 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 was required under the lease.

LIQUIDITY RESOURCES. We have approximately $4.52 million in cash and cash
equivalents as of March 31, 2008, 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 other 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.

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.

                                       17
<PAGE>

INCOME TAXES

SFAS 109, ACCOUNTING FOR INCOME TAXES, establishes financial accounting and
reporting standards for the effect of income taxes. Accruals for uncertain tax
positions are provided for in accordance with the requirements of FIN 48. 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

From time to time, we are involved in disputes, litigation and other legal
proceedings and 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. However, the actual
liability in any such litigation may be materially different from our estimates,
which could result in the need to record additional costs. 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. See Part II, Item 1 of this report entitled "LEGAL
PROCEEDINGS" for a description of ongoing litigation and related accounting
adjustments.

                                       18
<PAGE>

ITEM 3. CONTROLS AND PROCEDURES.

(a) Evaluation of Disclosure Controls and Procedures

Based on the management's evaluation (with the participation our President and
Chief Financial Officer), our President and Chief Financial Officer has
concluded that as of March 31, 2008, our disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange of 1934
(the "Exchange Act") are effective to provide reasonable assurance that the
information required to be disclosed in this quarterly report on Form 10-QSB is
recorded, processed, summarized and reported within the time period specified in
Securities and Exchange Commission rules and forms, and that such information is
accumulated and communicated to the Company's management, including the Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow for
timely decisions regarding required disclosure.

(b) Internal control over financial reporting

MANAGEMENT'S QUARTERLY REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act. Our internal control over financial reporting is
intended to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with U.S. GAAP. Our internal control over financial reporting should
include those policies and procedures that:

o     pertain to the maintenance of records that, in reasonable detail,
      accurately and fairly reflect the transactions and dispositions of our
      assets;

o     provide reasonable assurance that transactions are recorded as necessary
      to permit preparation of financial statements in accordance with
      applicable GAAP, and that receipts and expenditures are being made only in
      accordance with authorizations of management and the Board of Directors;
      and

o     provide reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of our assets that could have
      a material effect on the financial statements.

Under the supervision and with the participation of our management, including
Stephen Levine, our Chief Executive Officer and Chief Financial Officer; Fred
Salomon, our President and Laura Johnson, our Controller, we have evaluated the
effectiveness of our internal control over financial reporting and preparation
of our quarterly financial statements as of March 31, 2008 and believe they are
effective. While we believe the present control design and procedures are
effective, future events affecting our business may cause the Company to modify
its controls and procedures.

ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM

This quarterly report does not include an attestation report of the company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the company's
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the company to provide only management's
report in this quarterly report.

CHANGES IN INTERNAL CONTROLS

Based on the evaluation as of March 31, 2008, Stephen Levine our Chief Executive
Officer and Chief Financial Officer has concluded that there were no significant
changes in our internal controls over financial reporting or in any other areas
that could significantly affect our internal controls subsequent to the date of
his most recent evaluation and there were no corrective actions during the
quarter with regard to significant deficiencies or material weaknesses.

Item 3(T) - Controls and Procedures

See Item 3 - Controls and Procedures above.


                                       19
<PAGE>

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On or about November 1, 2007, Steven and Kimberly Bronson filed a Complaint for
Court-Ordered Inspection of Corporate Records with the Circuit Court of the 15th
Judicial District in and for Palm Beach, Florida. The complaint alleges that the
Bronsons are entitled to inspect and make copies of corporate and accounting
records of the Company which are not publicly available. The request for
inspection submitted by the Bronsons was denied by the Company based on the
inability of the Company to disclose these records without violating Regulation
FD of the Securities Exchange Act of 1934, as amended, and because of the prior
publication of correspondence and documents exchanged between the Company and
the Bronsons by Mr. Bronson. It is also our position that Mr. Bronson is not
entitled to obtain these records because the purposes stated can be satisfied
through information which has already been made publicly available by the
Company. We intend to vigorously defend against this action. No adjustments were
made to our consolidated financial statements for the outcome of this
uncertainty.

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 and is countersuing for breach of contract.
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


                                       20
<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: May 13, 2008
                                                By: /s/ Stephen A. Levine
                                                    ----------------------------
                                                    Chief Executive Officer and
                                                    Chief Financial Officer


                                       21