<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 June 30, 2002

[ ]      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.)


                 30806 Santana Street, Hayward, California 94544

                    (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: 14,822,855 shares of Issuer's voting
common stock were outstanding on August 13, 2002.

<PAGE>

                          ALLERGY RESEARCH GROUP, INC.
                            INDEX TO QUARTERLY REPORT
                                 ON FORM 10-QSB

PART I. FINANCIAL INFORMATION                                               PAGE

     ITEM 1. Condensed Consolidated Financial Statements (Unaudited):

                Consolidated Balance Sheets                                  2

                Consolidated Income Statements                               3

                Consolidated Statements of Cash Flows                        4

                Notes to Condensed Consolidated Financial Statements         5

     ITEM 2. Management's Discussion and Analysis                            7

PART II. OTHER INFORMATION

     ITEM 1. Legal Proceedings                                              13
     ITEM 2. Changes in Securities and Use of Proceeds                      13
     ITEM 3. Defaults Upon Senior Securities                                13
     ITEM 4. Submission of Matters to a Vote of Security Holders            13
     ITEM 5. Other Information                                              13
     ITEM 6. Exhibits and Reports on Form 8-K                               13

     SIGNATURE                                                              14

                                       1
<PAGE>
<TABLE>

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
<CAPTION>

                                                                          June 30,        December 31,
                                                                            2002              2001
ASSETS                                                                  ------------      ------------
                                                                         (unaudited)
<S>                                                                      <C>               <C>
Current Assets
   Cash and Cash Equivalents                                             $   227,062       $   199,499
   Accounts Receivable, Net of Allowances for Doubtful Accounts and
      Returns, $90,210 and $90,213                                           761,134           534,884
   Inventories                                                             1,455,429         1,559,133
   Prepaid Income Taxes                                                        1,600            10,800
   Prepaid Expenses and Other Current Assets                                 151,945           156,367
   Deferred Tax Assets                                                       256,460           220,460
                                                                         ------------      ------------
Total Current Assets                                                       2,853,630         2,681,143

Property and Equipment, Net                                                  410,084           505,573

Other Assets
   Deposits                                                                   21,410            21,410
   Due From Officers                                                         132,372           138,801
   Intangible Assets, Net of Amortization of $15,892 and $13,192              24,561            27,261
                                                                         ------------      ------------
Total Other Assets                                                           178,343           187,472
                                                                         ------------      ------------
Total Assets                                                             $ 3,442,057       $ 3,374,188
                                                                         ============      ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
   Accounts Payable                                                      $   958,974       $ 1,016,027
   Accrued Liabilities                                                       168,806           213,611
   Line of Credit  (Note 3)                                                  267,102           570,064
   Capital Lease Obligation, Current Portion                                  55,214            55,214
   Income Taxes Payable                                                           --               862
                                                                         ------------      ------------
Total Current Liabilities                                                  1,450,096         1,855,778

Long-Term Liabilities
   Capital Lease Obligation, Noncurrent Portion                               21,850            48,647
                                                                         ------------      ------------
Total Liabilities                                                          1,471,946         1,904,425

Stockholders' Equity
   Preferred Stock, $0.25 Par Value, Authorized 1,000,000 Shares,
      Issued and Outstanding                                                    None              None
   Common Stock, $0.001 Par Value, Authorized 100,000,000 Shares,
      December 31, 2001: 15,105,355 issued and outstanding
      June 30, 2002: 15,105,355 issued and 15,015,355 outstanding             15,105            15,105
   Additional Paid In Capital                                              1,141,377         1,141,377
   Retained Earnings                                                         827,929           313,281
   Treasury Stock, 90,000 Shares, at cost (Note 4)                           (14,300)             None
                                                                         ------------      ------------
Total Stockholders' Equity                                                 1,970,111         1,469,763
                                                                         ------------      ------------
Total Liabilities and Stockholders' Equity                               $ 3,442,057       $ 3,374,188
                                                                         ============      ============
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

                                                 2
<PAGE>
<TABLE>

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

                                                                    Three Months Ended                   Six Months Ended
                                                                         June 30,                             June 30,
                                                                        ----------                           ----------
                                                                 2002               2001               2002               2001
                                                             -------------      -------------      -------------      -------------
<S>                                                          <C>                <C>                <C>                <C>
Revenues                                                     $  3,234,125       $  3,028,728       $  6,240,312       $  5,887,677
Cost of Sales                                                   2,034,133          1,822,024          3,833,343          3,509,711
                                                             -------------      -------------      -------------      -------------
Gross Profit                                                    1,199,992          1,206,704          2,406,969          2,377,966

Operating Expenses
   Selling, General & Administrative                              920,085          1,003,409          1,817,033          1,949,437
   Research & Development                                          48,299             43,893             92,169             89,573
                                                             -------------      -------------      -------------      -------------
Total Operating Expenses                                          968,384          1,047,302          1,909,202          2,039,010
                                                             -------------      -------------      -------------      -------------

 Operating Income                                                 231,608            159,402            497,767            338,956

 Other Income (Expense)
   Interest Income                                                    821              2,890              3,598              5,685
   Interest Expense                                                (9,936)           (61,770)           (21,917)          (119,662)
                                                             -------------      -------------      -------------      -------------
 Net Income Before Provision (Benefit) for Income Taxes           222,493            100,522            479,448            224,979

 Provision (Benefit) For Income Taxes                                 800            (43,593)           (35,200)           (96,910)
                                                             -------------      -------------      -------------      -------------
 Net Income Available to Common Stockholders                 $    221,693       $    144,115       $    514,648       $    321,889

 Weighted Average Common Shares Outstanding:                   15,096,784         15,067,992         15,101,021         15,061,709

 Basic and Diluted Income Per Common Share (Note 2)          $        .01       $        .01       $        .03       $        .02
</TABLE>


See Notes to Condensed Consolidated Financial Statements.

                                                      3
<PAGE>
<TABLE>

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

                                                                               Six Months Ended
                                                                                    June 30,
                                                                               2002            2001
                                                                            ----------      ----------
<S>                                                                         <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income                                                                  $ 514,648       $ 321,889
                                                                            ----------      ----------
   Adjustments to Reconcile Net Income to Net Cash Provided By
    Operating Activities
      Depreciation and Amortization                                           110,311         111,480
      Stock Issued to Former Employee                                               0           7,500
      Other Adjustments                                                        10,000               0
   Changes in Assets and Liabilities
      (Increase) Decrease in Accounts Receivable                             (226,250)         (8,753)
      (Increase) Decrease in Inventories                                      103,704         271,051
      (Increase) Decrease in Prepaid Expenses and Other Current Assets         13,622         (68,623)
      (Increase) Decrease in Deferred Tax Assets                              (36,000)        (96,910)
      (Increase) Decrease in Cash Surrender Value of Life Insurance                 0          45,290
      Increase (Decrease) in Accounts Payable and Accrued Liabilities        (101,858)        (35,980)
      Increase (Decrease) in Income Taxes Payable                                (862)              0
                                                                            ----------      ----------
   Total Adjustments                                                         (127,333)        225,055
                                                                            ----------      ----------
Net Cash Flows Provided By Operating Activities                               387,315         546,944

Cash Flows From Investing Activities
   Acquisition of Property and Equipment                                      (12,121)        (11,422)
   Repayments From (Advances To) Officers                                      (3,572)            674
                                                                            ----------      ----------
Net Cash Flows Used In Investing Activities                                   (15,693)        (10,748)

Cash Flows From Financing Activities
   Purchase of Treasury Shares                                                (14,300)              0
   Proceeds From Line of Credit                                                     0          74,604
   Repayments on Line of Credit                                              (302,962)       (383,017)
   Repayments on Capital Lease Obligations                                    (26,797)        (25,712)
                                                                            ----------      ----------
Net Cash Flows Used In Financing Activities                                  (344,059)       (334,125)
                                                                            ----------      ----------

Increase in Cash and Cash Equivalents                                          27,563         202,071

Cash and Cash Equivalents, Beginning of Period                                199,499         188,648
                                                                            ----------      ----------

Cash and Cash Equivalents, End of Period                                    $ 227,062       $ 390,719
                                                                            ==========      ==========
</TABLE>


See Notes to Condensed Consolidated Financial Statements.

                                                 4
<PAGE>

                          ALLERGY RESEARCH GROUP, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2002
                                   (UNAUDITED)


Note 1 - Statement of Information Furnished
-------------------------------------------

         The accompanying unaudited Consolidated Financial Statements of Allergy
         Research Group, Inc. ("the Company") have been prepared in accordance
         with generally accepted accounting principles for interim financial
         information and the instructions to Form 10-QSB. 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, and
         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 six-month period ended
         June 30, 2002 are not necessarily indicative of the operating results
         that may be expected for the entire year ending December 31, 2002.
         These financial statements should be read in conjunction with the
         Management's Discussion and Analysis and financial statements and notes
         thereto included in the Company's financial statements and accompanying
         notes thereto as of and for the year ended December 31, 2001, filed
         with the Company's Annual Report on Form 10-KSB on April 1, 2002.

         Certain accounts from prior years have been reclassified to conform to
         the current year's presentation. These changes had no effect on
         previously reported results of operations or total stockholders'
         equity.

Note 2 - Earnings Per Share
---------------------------

         Basic earnings per share is based on the weighted average number of
         common shares outstanding. Diluted earnings or loss per share is based
         on the weighted average number of common shares outstanding and
         dilutive common stock equivalents. All earnings per share amounts in
         these financial statements are basic earnings per share as defined by
         SFAS No. 128, "Earnings Per Share." Diluted weighted average shares
         outstanding exclude the potential common shares from options because to
         do so would be antidilutive.

          The computation of basic earnings per share is as follows:

<TABLE>
<CAPTION>
                                                   Three Months   Three Months    Six Months     Six Months
                                                       Ended          Ended          Ended          Ended
                                                      6/30/02        6/30/01        6/30/02        6/30/01
                                                      -------        -------        -------        -------
         <S>                                        <C>            <C>             <C>            <C>
         Numerator-Net Income Available
         to Common Stockholders                     $  221,693     $  144,115      $  514,648     $  321,889
                                                    ===========    ===========     ===========    ===========

         Denominator-Weighted Average Number
         of Common Shares Outstanding               15,096,784     15,067,992      15,101,021     15,061,709
                                                    ===========    ===========     ===========    ===========

         Basic and Diluted Earnings Per Common
         Share                                      $     0.01     $     0.01      $     0.03     $     0.02
                                                    ===========    ===========     ===========    ===========
</TABLE>

                                       5
<PAGE>

Note 3 - Line of Credit
-----------------------

         On May 17, 2001, the Company entered into an agreement with City
         National Bank to replace the former line of credit with Aerofund
         Financial, Inc. and to provide additional funding if needed. The
         replacement line of credit of up to $1,200,000 was for twelve months,
         bearing interest at prime plus two percent computed on a monthly basis.
         The City National Bank prime rate at June 30, 2002 was 4.75%. Interest
         is due monthly. The agreement matured on June 5, 2002, and was renewed
         for an additional year. The new line of credit is for up to $500,000
         for twelve months, bearing interest at prime plus one percent computed
         on a monthly basis. The note is secured by substantially all of the
         assets of the Company and is personally guaranteed by the officers of
         the Company.


Note 4 - Stockholders' Equity
-----------------------------

         On May 3, 2002, the Company announced a stock repurchase plan, whereby
         the Company may repurchase between 1,000,000 and 2,500,000 shares of
         the Company's common stock in open market transactions, from time to
         time during the next two years in compliance with Rule 10b-18 of the
         Securities Exchange Act of 1934 and all other applicable securities
         regulations. Repurchases of common shares in the open market will
         provide shares for issuance to employees under stock option and stock
         purchase plans. During the second quarter, the Company repurchased
         90,000 shares of common stock for $14,300. The Company purchased an
         additional 192,500 shares during July 2002 for $37,500.

                                       6
<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. (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. 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 management's 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 the
                  Company believes are important in understanding the results of
                  operations, as well as to anticipate future trends in those
                  operations.

         o        RESULTS OF OPERATIONS. This section provides an analysis of
                  the Company's results of operations for the second quarter of
                  2002 relative to that of 2001. 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 the Company's financial condition and cash flows
                  as of and for the six months ended June 30, 2002.

         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
---------------------------------------------

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 the Company's 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. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
hereof. Readers are also urged to carefully review and consider the Company's
discussions regarding the various factors, which affect its business, included
in this section and elsewhere in this report.

OVERVIEW
--------

BUSINESS DESCRIPTION. Allergy Research Group, Inc. (SYMBOL: ALRG) (the "Company"
or "ARG"), through its wholly owned subsidiary, Nutricology, Inc., strives to be
an innovative leader in nutraceutical research and product formulation. Since
1980, the Company has produced quality, hypoallergenic nutritional supplements
and supplies products to physicians and health care practitioners worldwide. Our
shares are traded on the Over The Counter Bulletin Board.

                                       7
<PAGE>

Healthcare professionals worldwide recognize the Company for the quality, purity
and efficacy of its targeted nutritional supplement line. Currently, we supply
products to approximately 4,000 physicians and health care practitioners
world-wide, including accounts in the United States, Japan, Taiwan, the United
Kingdom, South Korea, Jamaica, New Zealand, Mexico, Turkey, Norway, Sweden,
Switzerland, Italy, Ireland, Philipines, Russia, South Africa and Singapore. We
develop, contract manufacture, market and sell branded and private label
products, including vitamins and nutritional supplements, throughout the world
under the NutriCology and Allergy Research Group(R) labels. Our products are
distributed through distributors to medical and professional accounts and to
retailers. We offer a line of approximately 200 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. The Company's principal executive
offices are located at 30806 Santana Street, Hayward, California 94544 and its
telephone number is (800) 545-9960.

FUTURE OPERATIONS. The success of the Company's future operations will depend to
a great extent on the operations, financial condition, and management of the
Company. We intend to expand the Company's position in the vitamin and
nutritional supplements markets. Specifically, our strategy continues to be: (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) implement a comprehensive e-commerce plan. The Company believes that its
history and reputation in the field, multiple distribution channels, broad
portfolio of products and packaging and distribution capabilities position it to
be a long-term competitor in the vitamin and nutritional supplements industries.

The Company will continue to work with Dr. Hoang on his proprietary herbal
formulas with a view to developing additional research that can be marketed to
the pharmaceutical and nutraceutical industries. This process is limited to
literature work, including patent submissions for potential products. The
research can be marketed to pharmaceutical companies either through direct sell
of the research to the pharmaceutical company, or through a joint venture
arrangement between the pharmaceutical company and the Company whereby the
parties will jointly own the patent and continue development of the products. It
is our hope that, during the process of research into possible pharmaceutical
and nutraceutical products, we will test new herbal products, or additional uses
for existing herbal products, that can be added to our current line of products
as health food or dietary supplements.

PRODUCT DEVELOPMENT. In addition to our work in the pharmaceutical and
nutraceutical fields of research, we continue to add new products to our
existing product line. So far during 2002, the Company has added seven new
products to its existing product line: Coag Cal Oxygenation Formula (an herbal
formula to support general circulation), L-Citrulline (an amino acid for
optimizing blood flow), Nattokinase (supports the body in dissolving the
unhealthy coagulation of blood), NeoDerma/Skin Glow (provides hydration of the
skin and other organs at the cellular level), Metabolic Co-Factor (support for
utilization and metabolism of essential fatty acids.), Super D3 ("natural source
of vitamin D," to support the body in maintaining healthy blood levels of
calcium and phosphorus), and Guggul Lipids (an ancient Ayervedic botanical shown
to support healthy cholesterol and lipid metabolism.)

Management believes that the Company has good relations with all of its current
manufacturers and suppliers. During 2001, we experienced a concentration of
approximately 56% of our manufacturing with four separate vendors. The Company
does not currently have written contracts with any of its manufacturers, but
relies on long-term personal and professional relationships with its four
largest vendors - Horizon Laboratories at 30%, M&L Pharmaceuticals at 11%, and
Softgel Technologies at 10% and ABCO Laboratories, Inc. at 6%. However, 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 the Company's products.

                                       8
<PAGE>

RECENT DEVELOPMENTS. On July 15, 2002, the company hired Fred Salomon, age 64,
to fill the role of Director of Operations. Mr. Salomon brings 40 years of
executive management experience. He comes from the Home-sewing & Craft industry
where he managed and grew several businesses. He also founded his own company,
which he sold to the McCall Pattern Company, where he served as Chief Operating
Officer of their national distribution company, NMI, Inc. For the last 20 years,
Mr. Salomon was general manger of Lion Notions, Inc. and Fantasy Importers,
Inc., both privately held corporations.

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.

              PERIOD ENDED JUNE 30, 2002 COMPARED TO JUNE 30, 2001
              ----------------------------------------------------

REVENUES. The Company's net sales were $3,234,125 for the second quarter and
$6,240,312 for the six months ended June 30, 2002, compared with $3,028,728 and
$5,887,677, respectively, for the same periods in 2001. The increase of
$205,397, or 7%, in the second quarter is due to increased marketing efforts and
due to the introduction of new products. The increase of $352,635, or 6%, for
the six-month period also reflects the introduction of new products and
marketing efforts, and a decrease in sales in December 2001 as compared to the
prior twelve months, which was offset by an increase in sales during January
2002 due to some of our larger accounts not ordering until after year-end.
Generally speaking, the Company's sales typically average approximately
$1,000,000 a month.

COSTS OF SALES. Cost of sales increased $212,109 to $2,034,133 for the three
months ended June 30, 2002, compared to $1,822,024 for the three months ended
June 30, 2001. For the six months ended June 30, 2002 cost of sales increased
$323,632 from $3,509,711 in 2001 to $3,833,343 in 2002. Gross profit margins
decreased approximately 2.7% for the second quarter and 1.8% year to date,
approximating 39% for 2002. Profit margins are decreasing due to (1) increased
discounts offered this year over last, (2) sales of selected products at smaller
than normal margins to be competitively priced in the marketplace and (3)
increases in the cost of freight. It is anticipated that margins will remain
lower throughout 2002.

OPERATING EXPENSES. Total operating expenses were $968,384 for the second
quarter and $1,909,202 for the six months ended June 30, 2002, compared with
$1,047,302 and $2,039,010, respectively, for the same periods in 2001. The
decrease of $78,918 and $129,808 for the three and six months ended June 30,
2002 was primarily due to a decrease in selling, general and administrative
expenses such as administrative payroll, legal fees and settlements.

INTEREST EXPENSE. Interest expense was $9,936 for the second quarter and $21,917
for six months ended June 30, 2002, a decrease of $51,834 and $97,745,
respectively, for the same periods in 2001. The significant decrease was
primarily due to the Company's renegotiated line of credit, which significantly
reduced interest expense beginning in June 2001. Additionally, interest expense
decreased because the Company has reduced the outstanding line of credit balance
from $672,064 at June 30, 2001 to $267,102 at June 30, 2002, and as a result of
the above market interest rate the Company was paying for that line of credit
prior to renegotiating the loan. The line of credit is used to finance accounts
receivable and inventory.

                                       9
<PAGE>

PROVISION FOR INCOME TAXES. As of June 30, 2002, the Company recorded a deferred
tax asset of $256,460 to be realized as a result of future taxable income offset
by net operating loss carryforwards. As of fiscal year ended December 31, 2001,
the Company had approximately $3,000,000 and $1,350,000, respectively, available
in federal and state net operating loss carryforwards to offset future taxable
income, which expire principally in the year 2020.

NET INCOME. During the quarter and six-month period ended June 30, 2002, the
Company recorded net income of $221,693 and $514,648, respectively, compared to
net income of $144,115 and $321,889 for the same period in 2001. The increase of
$77,578 for the quarter and $192,759 for year-to-date is due primarily to a
decrease in selling, general and administrative expenses such as administrative
payroll, conventions, and legal fees, and interest expense for 2002 compared to
the same period last year.

EARNINGS PER SHARE. Earnings per share remains fairly stable at $0.01 and $0.03
per share for the three and six months ended June 30, 2002, versus $0.01 and
$0.02 per share for the same periods in 2001.

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

Current Financial Condition

At June 30, 2002, the Company had positive working capital of $1,403,534,
compared to a working capital at December 31, 2001 of $825,365. The Company has
been successful in paying down its outstanding debt as a result of overall
decreased operating expenses. The Company continues to finance its inventory and
accounts receivable under a line of credit and through its income from
operations. The line of credit outstanding at June 30, 2002 was $267,102
compared to $570,064 at December 31, 2001. Management believes that the
Company's operating cash flow, cash and equivalents, and borrowing capacity
under committed bank credit agreements are sufficient to fund its capital and
liquidity needs for the next twelve months.

Cash Flows

OPERATING ACTIVITIES. Net cash flow provided by operating activities was
$387,315 for the six months ended June 30, 2002. This was primarily the result
of net income of $514,648, increased by depreciation expense of $110,311 and a
decrease in inventory of $103,704. These figures were offset by an increase in
accounts receivable of $226,250 and a decrease of accounts payable and accrued
liabilities of $101,858. Net cash flow provided by operating activities for the
six months ended June 30, 2001 was $546,944, due to net income of $321,889
increased by depreciation of $55,740, a decrease in inventory of $271,051, and
life insurance surrendered for cash value of $45,290. These were offset by an
increase in prepaid expenses and other assets of $68,623, an increase in
deferred tax assets of $96,910 and a decrease in accounts payable and accrued
liabilities of $35,980.

INVESTING ACTIVITIES. Net cash flow used in investing activities was $15,693 and
$10,748 for the six months ended June 30, 2002 and June 30, 2001, respectively,
which was used primarily for the acquisition of property and equipment,
increased in 2002 by advances to officers of $3,572 and offset in 2001 by
repayments from officers of $674.

FINANCING ACTIVITIES. Net cash flow used in financing activities was $334,059
for the six months ended June 30, 2002, representing repayments under the line
of credit and capital lease obligations of $329,759 and $14,300 for the purchase
of treasury shares. For the same period ended June 30, 2001, net cash flow used
in financing activities was $334,125, representing advances drawn on the line of
credit of $74,604 offset by repayments on the line and the capital lease
obligations of $408,729.

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<PAGE>

COMMON STOCK REPURCHASE PROGRAM. On May 3, 2002, the Company announced a stock
repurchase plan, whereby the Company may repurchase between 1,000,000 and
2,500,000 shares of the Company's common stock in open market transactions, from
time to time during the next two years in compliance with Rule 10b-18 of the
Securities Exchange Act of 1934 and all other applicable securities regulations.
Repurchases of common shares in the open market will provide shares for issuance
to employees under stock option and stock purchase plans. During the second
quarter, the Company repurchased 90,000 shares of common stock for $14,300.

CONCENTRATION OF CREDIT RISK. Approximately 12% of our total sales in 2001 were
attributable to a single distributor. In 2002, this distributor continued to
account for over 10% of sales. In the event we were to lose that account, we
anticipate that we would be able to convert the business to dealing directly
with 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.

CONTRACTUAL OBLIGATIONS. The Company's Contractual Obligations and Commercial
Commitments are detailed below:

<TABLE>
<CAPTION>
----------------------- -------------------------------------------------------------------------------------
     Contractual
     Obligations                                       Payments Due by Period
----------------------- -------------------------------------------------------------------------------------
                                                 Less
                                                Than 1               1-3             4 - 5        After 5
                              Total              Year               Years            Years         Years
----------------------- ------------------ ------------------ ------------------ -------------- -------------
<S>                              <C>                <C>                 <C>         <C>           <C>
Line of Credit (1)               $267,102           $267,102
----------------------- ------------------ ------------------ ------------------ -------------- -------------
Capital Lease
Obligations                       $77,064            $55,214            $21,850
----------------------- ------------------ ------------------ ------------------ -------------- -------------

Operating Leases                 $405,411           $353,088            $52,323
----------------------- ------------------ ------------------ ------------------ -------------- -------------
Total Cash
Contractual
Obligations                      $749,577           $675,404            $74,173
----------------------- ------------------ ------------------ ------------------ -------------- -------------
</TABLE>

(1)      This represents the Company's borrowings under its line of credit with
         City National Bank. The City National Bank line of credit renegotiated
         beginning June 5, 2002 provides for maximum financing of $500,000,
         bearing interest at prime plus one percent, computed on a monthly
         basis. As of June 30, 2002, the interest rate on the line of credit was
         5.75% per annum. The Company has been making monthly interest payments
         on the balance. 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 its agreement with City National Bank it
         could have material adverse impact on the Company's business and
         financial position. The Company would be considered to be in default
         based on the following financial conditions:
         o        Failure to maintain a tangible net worth plus subordinated
                  debt of not less than $1,400,000 at all times.
         o        Failure to maintain a ratio of total liabilities to tangible
                  net worth plus subordinated debt of not more than 2 to 1 at
                  all times.
         o        Failure to maintain after-tax profitability of not less than
                  $300,000 for the year ended December 31, 2002.

Under the line of credit, we are required to make a pledge of Key Man Life
Insurance on our Chief Executive Officer of up to $500,000. The officers of the
Company have personally guaranteed the line of credit.

RELATED PARTY TRANSACTIONS. In 1999, Dr. Stephen A. Levine, CEO, and his wife,
Susan Levine, formed Inventive Biomedical, LLC, a California limited liability
company ("IBM"), as a research and development firm. For the years ended
December 31, 2001 and 2000, the Company paid approximately $9,000 and $99,000,
respectively, to IBM for research and development and for market testing of new
products. As of June 30, 2002, IBM owes Allergy Research Group approximately
$29,539. The continued viability of IBM may depend on the ability of the Company
to provide additional funding.

                                       11
<PAGE>

When the Company's stock repurchase plan was announced on May 3, 2002, Dr.
Levine and Susan Levine announced that they would also be repurchasing up to
1,000,000 shares under Rule 10b-18. During the second quarter of 2002, the
Levines purchased 10,000 shares of common stock at $0.16 per share on the open
market. The Levines will continue to purchase shares concurrently with the
Company's purchases under the stock repurchase plan.

LIQUIDITY RESOURCES. The Company's future funding requirements will depend on
numerous factors, some of which are beyond the Company's control. These factors
include the Company's ability to operate profitably, its ability to recruit and
train management and personnel, and its ability to compete with other, better
capitalized and more established competitors who offer alternative or similar
products to those of the Company. Management believes that, given its positive
working capital position, the Company can satisfy its cash requirements over the
next twelve months from operations if it continues to operate at a profit. The
Company's capital resources and liquidity are expected to be provided by the
Company's cash flow from operations. In addition, the Company has available
federal net operating loss carryforwards of approximately $3,000,000 to offset
future taxable income which will allow the Company's net income from operations
to be generated with potentially little or no tax due until the loss
carryforwards are utilized. Continued repayment of notes are expected to act as
contributing factors to the Company's profitability thereby reducing interest
payments required on the outstanding line of credit.

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. The Company knows
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.

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

Our discussion and analysis or plan of operations are 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.

Currently, we consider our accounting policy for income taxes to be affected by
management judgments and/or uncertainties. 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 the Company's financial statements or tax returns. Fluctuations in
the actual outcome of these future tax consequences could materially impact the
Company's financial position or its results of operations. The Company's
deferred tax asset on its balance sheet is recognized primarily as a result of
net operating loss carryforwards. In the event that the Company did not generate
any taxable income within the next year, the asset would be overstated. Reducing
the asset to zero would result in an additional expense in the period in which
it is determined that the asset cannot be realized. This asset represents
approximately 7.5% of our total assets at June 30, 2002.

                                       12
<PAGE>

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         In 1993, a lawsuit was filed in the Circuit Court of the 15th Judicial
Circuit in and for Palm Beach County, Florida by NutriSupplies, Inc., successor
in the interest to rights of Robert H. Harris and the Earth Harvest, Inc.
against NutriCology, Inc. (which has since become a wholly-owned subsidiary of
the Company), Stephen A. Levine (officer, director and beneficial shareholder of
the Company) and Nicholas Gonzales, M.D. This matter is a contract dispute
between Dr. Gonzales and NutriSupplies, Inc., which alleges that Dr. Gonzales
violated their contract agreement and then returned to NutriCology to supply his
patients' needs. NutriCology and Dr. Levine were named in the suit only because
NutriCology had been Dr. Gonzales' supplier. Dr. Gonzales has agreed to fully
indemnify NutriCology and Dr. Levine from any wrongdoing. A motion for summary
judgment was granted in favor of NutriCology, but was appealed. On June 6, 2001,
the appellate court affirmed the grant of that motion, and NutriSupplies filed a
Motion for Rehearing and Request for Oral Argument. That motion was denied and
no further appeals have been filed. NutriCology requested reimbursement of
attorneys' fees, which were denied. NutriCology appealed that decision, and won.
A hearing has been set for August 30, 2002 to determine the amount of the fees
the Company can recover.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

         In May 2002, the company announced a stock repurchase program for
between 1,000,000 and 2,500,000 shares of its common stock. Based on then
current market prices, the aggregate purchase price for the shares would be
approximately $120,000 to $300,000. Stock purchased under the stock repurchase
program, will primarily be used to incentivize the Company's employees through
its 1998 Stock Option Plan, while minimizing the dilutive effect of such awards
on the Company's current shareholders. During the second quarter of 2002, the
Company purchased 90,000 shares of common stock for a total of $14,300. The
Company purchased an additional 192,500 shares during July 2002 for $37,500.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

         Not Applicable.

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

         No matters were submitted to a vote of the Company's shareholders
during the three months ended June 30, 2002.

Item 5. OTHER INFORMATION

         Not Applicable.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

    (a) Exhibits

         (99.1) Certification Pursuant to 18 U.S.C. Section 1350.

    (b) Reports on Form 8-K

         A Current Report on Form 8-K filed May 3, 2002 was filed with the
    Commission under Item 5 (other information), regarding the stock repurchase
    program.

                                       13
<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:  August 13, 2002                             By: /s/ Stephen A. Levine
                                                       -------------------------
                                                       Chief Executive Officer


                                       14