<PAGE>

                                   FORM 10-QSB

                     U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20429


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

                  For the quarterly period ended September 30, 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: 14,722,105 shares of Issuer's voting
common stock were outstanding on November 5, 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

     ITEM 3. Controls and Procedures                                         13

PART II. OTHER INFORMATION

     ITEM 1. Legal Proceedings                                               14
     ITEM 2. Changes in Securities and Use of Proceeds                       14
     ITEM 3. Defaults Upon Senior Securities                                 14
     ITEM 4. Submission of Matters to a Vote of Security Holders             14
     ITEM 5. Other Information                                               14
     ITEM 6. Exhibits and Reports on Form 8-K                                15

     SIGNATURE                                                               15

                                       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>

                                                                             September 30,     December 31,
                                                                                 2002              2001
ASSETS                                                                       ------------      ------------
                                                                             (unaudited)
<S>                                                                          <C>               <C>
Current Assets
   Cash and Cash Equivalents                                                 $   167,818       $   199,499
   Accounts Receivable, Net of Allowances for Doubtful Accounts and
      Returns, $90,213 and $90,213                                               606,208           534,884
   Inventories                                                                 1,762,132         1,559,133
   Prepaid Income Taxes                                                            1,600            10,800
   Prepaid Expenses and Other Current Assets                                     183,666           156,367
   Deferred Tax Assets                                                           256,460           220,460
                                                                             ------------      ------------
Total Current Assets                                                           2,977,884         2,681,143

Property and Equipment, Net                                                      379,827           505,573

Other Assets
   Deposits                                                                       21,410            21,410
   Due From Officers                                                             135,020           138,801
   Intangible Assets, Net of Amortization of $17,242 and $13,192                  23,211            27,261
                                                                             ------------      ------------
Total Other Assets                                                               179,641           187,472
                                                                             ------------      ------------
Total Assets                                                                 $ 3,537,352       $ 3,374,188
                                                                             ============      ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
   Accounts Payable                                                          $ 1,044,676       $ 1,016,027
   Accrued Liabilities                                                           146,568           213,611
   Line of Credit  (Note 3)                                                      242,497           570,064
   Capital Lease Obligation, Current Portion                                      55,214            55,214
   Income Taxes Payable                                                               --               862
                                                                             ------------      ------------
Total Current Liabilities                                                      1,488,955         1,855,778

Long-Term Liabilities
   Capital Lease Obligation, Noncurrent Portion                                    7,872            48,647
                                                                             ------------      ------------
Total Liabilities                                                              1,496,827         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
      September 30, 2002:  15,105,355 issued and 14,765,605 outstanding           15,105            15,105
   Additional Paid In Capital                                                  1,141,377         1,141,377
   Retained Earnings                                                             949,993           313,281
   Treasury Stock, 339,750 Shares, at cost (Note 4)                              (65,950)             None
                                                                             ------------      ------------
Total Stockholders' Equity                                                     2,040,525         1,469,763
                                                                             ------------      ------------

Total Liabilities and Stockholders' Equity                                   $ 3,537,352       $ 3,374,188
                                                                             ============      ============

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

                                                 2
<PAGE>
<TABLE>

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

                                                                   Three Months Ended                     Nine Months Ended
                                                                      September 30,                         September 30,
                                                             --------------------------------      --------------------------------
                                                                 2002              2001                2002               2001
                                                             -------------      -------------      -------------      -------------
<S>                                                          <C>                <C>                   <C>             <C>
Revenues                                                     $  3,000,925       $  2,974,478          9,241,237       $  8,862,155
Cost of Sales                                                   1,816,288          1,824,648          5,649,631          5,334,358
                                                             -------------      -------------      -------------      -------------
Gross Profit                                                    1,184,637          1,149,830          3,591,606          3,527,797

Operating Expenses
   Selling, General & Administrative                            1,012,048            995,749          2,829,081          2,945,187
   Research & Development                                          44,696             45,994            136,866            135,567
                                                             -------------      -------------      -------------      -------------
Total Operating Expenses                                        1,056,744          1,041,743          2,965,947          3,080,754
                                                             -------------      -------------      -------------      -------------

 Operating Income                                                 127,893            108,087            625,659            447,043

 Other Income (Expense)
   Interest Income                                                  2,753              2,700              6,351              8,385
   Interest Expense                                                (7,675)           (17,334)           (29,591)          (136,996)
                                                             -------------      -------------      -------------      -------------
 Net Income Before Provision (Benefit) for Income Taxes           122,971             93,453            602,419            318,432

 Provision (Benefit) For Income Taxes                                 907                              (34,293)           (96,910)
                                                             -------------      -------------      -------------      -------------
 Net Income Available to Common Stockholders                 $    122,064       $     93,453       $    636,712       $    415,342
                                                             =============      =============      =============      =============
 Weighted Average Common Shares Outstanding:                   14,849,977         15,105,355         15,016,436         15,076,417

 Basic and Diluted Income Per Common Share (Note 2)          $        .01       $        .01       $        .04       $        .03

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

                                                      3
<PAGE>
<TABLE>

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

                                                                                             Nine Months Ended
                                                                                                September 30,
                                                                                           2002             2001
                                                                                         ----------      ----------
<S>                                                                                      <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income                                                                               $ 636,712       $ 415,342
                                                                                         ----------      ----------
   Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities
      Depreciation and Amortization                                                        166,292         167,221
      Stock Issued to Former Employee                                                            0           7,500
      Other Adjustments                                                                     10,000               0
   Changes in Assets and Liabilities
      (Increase) Decrease in Accounts Receivable                                           (71,324)        (46,340)
      (Increase) Decrease in Inventories                                                  (202,999)        (96,110)
      (Increase) Decrease in Prepaid Expenses and Other Current Assets                     (18,099)        (89,799)
      (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                      (38,394)         36,551
      Increase (Decrease) in Income Taxes Payable                                             (862)              0
                                                                                         ----------      ----------
   Total Adjustments                                                                      (191,386)        (72,597)
                                                                                         ----------      ----------
Net Cash Flows Provided By Operating Activities                                            445,326         342,745

Cash Flows From Investing Activities
   Acquisition of Property and Equipment                                                   (36,496)        (17,988)
   Repayments From (Advances To) Officers                                                   (6,219)         10,364
                                                                                         ----------      ----------
Net Cash Flows Used In Investing Activities                                                (42,715)         (7,624)

Cash Flows From Financing Activities
   Purchase of Treasury Shares                                                             (65,950)              0
   Proceeds From Line of Credit                                                                  0          74,604
   Repayments on Line of Credit                                                           (327,567)       (483,017)
   Repayments on Capital Lease Obligations                                                 (40,775)        (38,865)
                                                                                         ----------      ----------
Net Cash Flows Used In Financing Activities                                               (434,292)       (447,278)
                                                                                         ----------      ----------

Decrease in Cash and Cash Equivalents                                                      (31,681)       (112,157)

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

Cash and Cash Equivalents, End of Period                                                 $ 167,818       $  76,491
                                                                                         ==========      ==========
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

                                                 4
<PAGE>

                          ALLERGY RESEARCH GROUP, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 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 nine-month period ended
         September 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 and
         amended on October 7, 2002 for a correction of the number of stock
         options outstanding.

         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      Nine Months     Nine Months
                                               Ended           Ended            Ended           Ended
                                              9/30/02         9/30/01          9/30/02         9/30/01
                                              -------         -------          -------         -------
<S>                                        <C>              <C>              <C>              <C>
Numerator-Net Income Available
to Common Stockholders                     $   122,064      $    93,453      $   636,712      $   415,342
                                           ============     ============     ============     ============
Denominator-Weighted Average Number
of Common Shares Outstanding                14,849,977       15,105,355       15,016,436       15,076,417
                                           ============     ============     ============     ============
Basic and Diluted Earnings Per Common
Share                                      $      0.01      $      0.01      $      0.04      $      0.03
                                           ============     ============     ============     ============
</TABLE>

                                       5
<PAGE>

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

         On August 19, 2002, a Merrill Lynch Working Capital Management Account
         (WCMA) was activated. The WCMA replaces the line of credit with City
         National Bank and provides for a line of credit up to $500,000 for
         twelve months bearing interest at the London Interbank Offered Rate
         (LIBOR) plus 3.15%. The LIBOR plus 3.15% at September 30, 2002 was
         4.97%. Interest is due monthly. The note is secured by substantially
         all of the assets of the Company and is personally guaranteed by the
         officers of the Company. The WCMA account immediately pays down the
         line of credit when deposits are received. When checks are issued, the
         line of credit is utilized. If the line of credit has a zero balance,
         the WCMA account pays interest on deposits at Merrill Lynch's money
         market rate.


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. Since inception of the plan through September 30, 2002,
         the Company repurchased 339,750 shares of common stock for $65,950. The
         Company purchased an additional 43,500 shares during October 2002 for
         $11,843.

                                       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 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 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 third quarter 2002
                  compared to 2001. A brief description is provided of
                  transactions and events, including related party transactions,
                  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 nine months ended September 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/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 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.

Factors that might cause actual results, performance or achievements to differ
materially from those projected or implied in such forward-looking statements
include, among other things: (i) the impact of competitive products; (ii)
changes in law and regulations; (iii) adequacy and availability of insurance
coverage; (iv) limitations on future financing; (v) increases in the cost of


                                       7
<PAGE>

borrowings and unavailability of debt or equity capital; (vi) the effect of
adverse publicity regarding nutritional supplements; (vii) the inability of the
Company to gain and/or hold market share; (viii) exposure to and expense of
resolving and defending product liability claims and other litigation; (ix)
consumer acceptance of the Company's products; (x) managing and maintaining
growth; (xi) customer demands; (xii) market and industry conditions including
pricing, demand for products, levels of trade inventories and raw materials
availability, (xiii) the success of product development and new product
introductions into the marketplace; (xiv) slow or negative growth in the
nutritional supplement industry; (xv) the departure of key members of
management; (xvi) the ability of the Company to efficiently manufacture its
products; as well as other risks and uncertainties that are described from time
to time in the Company's filings with the Securities and Exchange Commission.

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. 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 the
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.

                                       8
<PAGE>

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 nine new
products to its existing product line: Coag Cal Oxygenation Formula, Fibrenase
II, (a Chinese herbal formula providing nutritional support for blood and tissue
oxygenation), L-Citrulline (a potent amino acid), Nattokinase (an enzyme derived
from boiled soybeans and BACILLUS NATTO used as a blood purifier), NeoDerma/Skin
Glow (a moisturizing supplement), Metabolic Co-Factor (support for utilization
and metabolism of essential fatty acids), Super D3 (high potency vitamin D),
Guggul Lipids (an ancient Ayervedic botanical), Lumbrokinase (an isolated,
purified enzyme derived from earthworms), and Aller-Aid Herbal (a combination of
herbs used for immune balancing) These statements have not been evaluated by the
Food and Drug Administration. The products are not intended to diagnose, treat,
cure, or prevent any disease.

Management believes that the Company has good relations with all of its current
manufacturers and suppliers. During 2001 and during the period ending September
30, 2002, we experienced a concentration of approximately 57% 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 31%, M&L Pharmaceuticals at 10%, and Softgel Technologies and
ABCO Laboratories, Inc. both at 8%. 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.

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 SEPTEMBER 30, 2002 COMPARED TO SEPTEMBER 30, 2001
         --------------------------------------------------------------

REVENUES. The Company's net sales were $3,000,925 for the third quarter and
$9,241,237 for the nine months ended September 30, 2002, compared with
$2,974,478 and $8,862,155, respectively, for the same periods in 2001. The
increase of $26,447, or 1%, in the third quarter is due to increased marketing
efforts and due to the introduction of new products. The increase of $379,082,
or 4%, for the nine-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 decreased $8,360 to $1,816,288 for the three
months ended September 30, 2002, compared to $1,824,648 for the three months
ended September 30, 2001. For the nine months ended September 30, 2002 cost of
sales increased $315,273 from $5,334,358 in 2001 to $5,649,631 in 2002, a
corresponding increase resulting from the increase in sales in January 2002 due
to some of our larger customers waiting to order until after year-end. Gross
profit margins increased approximately .8% for the third quarter and decreased
..9% year to date, approximating 39% for 2002. Profit margins showed a small
increase for the third quarter, but decreased year to date 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 $1,056,744 for the third
quarter and $2,965,947 for the nine months ended September 30, 2002, compared
with $1,041,743 and $3,080,754, respectively, for the same periods in 2001. The
decrease of $114,807 for the nine months ended September 30, 2002 was primarily
due to a decrease in selling, general and administrative expenses such as
administrative payroll, legal settlements, directors and officers insurance and
office supplies. The increase of $15,001 for the third quarter 2002 compared to
the same period in 2001 was primarily due to increased legal fees associated
with a court hearing to obtain a judgment in the Harris matter discussed in Part
II, Item 1 of this filing.

                                       9
<PAGE>

INTEREST EXPENSE. Interest expense was $7,675 for the third quarter and $29,591
for nine months ended September 30, 2002, a decrease of $9,659 and $107,405,
respectively, for the same periods in 2001. The considerable 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 $572,064 at September 30, 2001 to $242,497 at September 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.

PROVISION FOR INCOME TAXES. As of September 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 nine-month period ended September 30, 2002,
the Company recorded net income of $122,064 and $636,712, respectively, compared
to net income of $93,453 and $415,342 for the same period in 2001. The increase
of $28,611 for the quarter and $221,370 for year-to-date is due primarily to a
decrease in selling, general and administrative expenses such as administrative
payroll, conventions, directors and officers insurance, legal settlements, 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 $0.04
per share for the three and nine months ended September 30, 2002, versus $0.01
and $0.03 per share for the same periods in 2001.

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

Current Financial Condition

At September 30, 2002, the Company had positive working capital of $1,488,929,
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 and increased revenue. 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 September 30, 2002
was $242,497 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
$445,326 for the nine months ended September 30, 2002. This was primarily the
result of net income of $636,712, increased by depreciation expense of $166,292.
These figures were offset by an increase in accounts receivable of $71,324, an
increase in inventory of $202,999 and a decrease of accounts payable and accrued
liabilities of $38,394. Net cash flow provided by operating activities for the
nine months ended September 30, 2001 was $342,745, due to net income of $415,342
increased by depreciation of $167,221, an increase in accounts payable and
accrued liabilities of $36,551, and a decrease in life insurance surrendered for
cash value of $45,290. These were offset by an increase in accounts receivable
of $46,340, an increase in inventory of $96,110, an increase in prepaid expenses
and other assets of $89,799, and an increase in deferred tax assets of $96,910.

                                       10
<PAGE>

INVESTING ACTIVITIES. Net cash flow used in investing activities was $42,715 and
$7,624 for the nine months ended September 30, 2002 and September 30, 2001,
respectively, which was used primarily for the acquisition of property and
equipment, increased in 2002 by advances to officers of $6,219 (accrued
interest) and offset in 2001 by repayments from officers of $10,364.

FINANCING ACTIVITIES. Net cash flow used in financing activities was $434,292
for the nine months ended September 30, 2002, representing repayments under the
line of credit and capital lease obligations of $368,342 and $65,950 for the
purchase of treasury shares. For the same period ended September 30, 2001, net
cash flow used in financing activities was $447,278, representing advances drawn
on the line of credit of $74,604 offset by repayments on the line of credit and
the capital lease obligations of $521,882.

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 succeeding 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. Since the
inception of the plan through September 30, 2002, the Company repurchased
339,750 shares of common stock for $65,950.

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)               $242,497           $242,497
----------------------- ------------------ ------------------ ------------------ -------------- -------------
Capital Lease
Obligations                       $63,086            $55,214             $7,872
----------------------- ------------------ ------------------ ------------------ -------------- -------------

Operating Leases                 $617,379           $387,870           $229,509
----------------------- ------------------ ------------------ ------------------ -------------- -------------
Total Cash
Contractual
Obligations                      $922,962           $685,581           $237,381
----------------------- ------------------ ------------------ ------------------ -------------- -------------
</TABLE>

         (1)      This represents the Company's borrowings under its line of
                  credit with Merrill Lynch. The Merrill Lynch line of credit
                  was activated on August 19, 2002 and provides for maximum
                  financing of $500,000, bearing interest at the London
                  Interbank Offered Rate (LIBOR) plus 3.15%, computed on a
                  monthly basis. As of September 30, 2002, the interest rate on
                  the line of credit was 4.97% 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 Merrill Lynch it could have
                  material adverse impact on the Company's business and
                  financial position. The officers of the Company have
                  personally guaranteed the line of credit.

                                       11
<PAGE>

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 September 30, 2002, IBM owes Allergy Research Group
approximately $28,337. The continued viability of IBM may depend on the ability
of the Company to provide additional funding.

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. Since the inception of the plan, the Levines
purchased 289,750 shares of common stock at prices ranging from $.16 to $.28 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


                                       12
<PAGE>

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 7.25% of total assets at September 30, 2002.

RECENT ACCOUNTING PRONOUNCEMENTS
--------------------------------

The Financial Accounting Standards Board has issued the following accounting
pronouncements, none of which are expected to have a significant effect, if any,
on the company's financial statements:

APRIL 2002 - SFAS NO. 145 - "RESCISSION OF FASB STATEMENTS NO. 4, 44, AND 64,
AMENDMENT OF FASB STATEMENT NO. 13, AND TECHNICAL CORRECTIONS." This statement
is effective for fiscal years beginning after May 15, 2002.

JUNE 2002 - SFAS NO. 146 - "ACCOUNTING FOR COSTS ASSOCIATED WITH EXIT OR
DISPOSAL ACTIVITIES," which applies to costs associated with an exit activity
that does not involve an entity newly acquired in a business combination or with
a disposal activity covered by FASB Statement No. 144, "ACCOUNTING FOR THE
IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS." Effective for exit or disposal
activities initiated after December 31, 2002.

OCTOBER 2002 - SFAS NO. 147 - "ACQUISITIONS OF CERTAIN FINANCIAL INSTITUTIONS,
AN AMENDMENT OF FASB STATEMENTS NO. 72 AND 144 AND FASB INTERPRETATION NO. 9, "
which applies to the acquisition of all or part of a financial institution,
except for a transaction between two or more mutual enterprises. Effective for
acquisitions for which the date of acquisition is on or after October 1, 2002.

ITEM 3. CONTROLS AND PROCEDURES

The President, who is also the chief executive officer and the chief financial
officer of the Registrant, has concluded based on his evaluation as of a date
within 90 days prior to the date of the filing of this Report, that the
Registrant's disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Registrant in the reports filed or
submitted by it under the Securities Act of 1934, as amended, is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms, and include controls and
procedures designed to ensure that information required to be disclosed by the
Registrant in such reports is accumulated and communicated to the Registrant's
management, including the president, as appropriate to allow timely decisions
regarding required disclosure.

There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
such evaluation.

                                       13
<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.
The court has ordered the payment of attorneys' fees of approximately $120,000,
as well as costs (expected to be approximately $10,000) to NutriCology. A
hearing took place on November 8, 2002 to determine whether this amount will be
increased, and a decision on that matter is pending. At this time, no estimate
can be made as to the time or the amount, if any, of ultimate recovery.

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. Since inception of the plan, the Company
purchased 383,250 shares of common stock for a total of $77,793.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

         Not Applicable.

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

         On September 23, 2002, the Company held its annual meeting of
shareholders at which the shareholders voted to (1) re-elect each of the
Company's directors, (2) ratify the selection of the Company's independent
auditor for the fiscal year ending December 31, 2002, and (3) approved an
amendment of the Company's 1998 Incentive Stock Option Plan 1 to extend the term
of the Plan to July 10, 2008. The voting totals were as follows:

                                      For             Against          Abstain
                                      ---             -------          -------
(1)  Directors - Stephen Levine    10,482,075            -               200
(1)  Directors - Susan Levine      10,481,975           100              200
(1)  Directors - Edward Kane       10,482,075            -               200
(3)  Independent Auditors          10,481,075           100             1,100
(4)  Stock Option Plan             10,457,075         24,800             400


Item 5. OTHER INFORMATION

         Not Applicable.

                                       14
<PAGE>

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

    (a) Exhibits
         99.1     Certification of Stephen A Levine Pursuant to Section 1350 of
                  Chapter 63 of Title 18 United States Code.

    (b) Reports on Form 8-K
         None


                          ALLERGY RESEARCH GROUP, INC.
                                    SIGNATURE

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

                                                 ALLERGY RESEARCH GROUP, INC.
                                                 Registrant



Dated:  November 13, 2002
                                                 By: /s/ Stephen A. Levine
                                                     -------------------------
                                                   Chief Executive Officer and
                                                   Chief Financial Officer

                                       15
<PAGE>

                          ALLERGY RESEARCH GROUP, INC.
                              a Florida corporation
                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER
                           AND CHIEF FINANCIAL OFFICER


I, Stephen A. Levine, certify that:

         1.       I have reviewed this quarterly report on Form 10QSB of Allergy
                  Research Group, Inc.;
         2.       Based on my knowledge, this quarterly report does not contain
                  any untrue statement of a material fact or omit to state a
                  material fact necessary to make the statements made, in light
                  of the circumstances under which such statements were made,
                  not misleading with respect to the period covered by this
                  quarterly report;
         3.       Based on my knowledge, the financial statements, and other
                  financial information included in this quarterly report,
                  fairly present in all material respects the financial
                  condition, results of operations and cash flows of the
                  registrant as of, and for, the periods presented in this
                  quarterly report;
         4.   The registrant's other certifying officers and I are responsible
              for establishing and maintaining disclosure controls and
              procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
              for the registrant and have:
                  a) designed such disclosure controls and procedures to ensure
                     that material information relating to the registrant,
                     including its consolidated subsidiaries, is made known to
                     us by others within those entities, particularly during the
                     period in which this quarterly report is being prepared;
                  b) evaluated the effectiveness of the registrant's disclosure
                     controls and procedures as of a date within 90 days prior
                     to the filing date of this quarterly report (the
                     "Evaluation Date"); and
                  c)  presented in this quarterly report our conclusions
                      about the effectiveness of the disclosure controls
                      and procedures based on our evaluation as of the
                      Evaluation Date;
         5.   The registrant's other certifying officers and I have disclosed,
              based on our most recent evaluation, to the registrant's auditors
              and the audit committee of registrant's board of directors (or
              persons performing the equivalent functions):
                  a) all significant deficiencies in the design or operation of
                     internal controls which could adversely affect the
                     registrant's ability to record, process, summarize and
                     report financial data and have identified for the
                     registrant's auditors any material weaknesses in internal
                     controls; and
                  b) any fraud, whether or not material, that involves
                     management or other employees who have a significant
                     role in the registrant's internal controls; and
         6.   The registrant's other certifying officers and I have indicated in
              this annual report whether there were significant changes in
              internal controls or in other factors that could significantly
              affect internal controls subsequent to the date of our most recent
              evaluation, including any corrective actions with regard to
              significant deficiencies and material weaknesses.

Date: November 13, 2002


/s/ Stephen A. Levine
---------------------

Stephen A. Levine


Chief Executive Officer and Chief Financial Officer

                                       16