UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
ALLERGY RESEARCH GROUP, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
______________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
______________________________________________________________________
(4) Date Filed:
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ALLERGY RESEARCH GROUP, INC.
2300 North Loop Road
Alameda, California 94502
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 7, 2005
TO THE SHAREHOLDERS OF ALLERGY RESEARCH GROUP, INC.:
The annual meeting of the shareholders of Allergy Research Group, Inc.
(the "Company") will be held at 2300 North Loop Road, Alameda, California 94502,
on June 7, 2005 at 11:00 A.M. local time for the following purposes:
1. To elect a Board of Directors for the Company.
2. To approve the continuation of Clancy and Co., P.L.L.C. as the
Company's independent registered public accounting firm for
the fiscal year ending December 31, 2005.
3. To transact such other business as may properly come before
the meeting or any adjournment thereof.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT YOU VOTE FOR EACH
OF THE NOMINEES TO THE BOARD OF DIRECTORS AND RECOMMENDS THAT YOU VOTE "FOR"
APPROVAL OF EACH OTHER ITEM LISTED ON THIS NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS.
Shareholders of record at the close of business on April 21, 2005, are
the only persons entitled to notice of and to vote at the meeting.
Your attention is directed to the attached Proxy Statement. WHETHER OR
NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE FILL IN, SIGN, DATE
AND MAIL THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO SAVE THE COMPANY
FURTHER SOLICITATION EXPENSE. If you are present at the meeting, you may then
revoke your proxy and vote in person, as explained in the Proxy Statement in the
section entitled "ANNUAL MEETING OF SHAREHOLDERS - June 7, 2005." A return
envelope is enclosed for your convenience.
/s/ Susan D. Levine
------------------------------
Susan D. Levine
Secretary
Dated: May 9, 2005
----------------------------------------
PROXY STATEMENT
----------------------------------------
ALLERGY RESEARCH GROUP, INC.
2300 North Loop Road
Alameda, California 94502
ANNUAL MEETING OF SHAREHOLDERS - JUNE 7, 2005
The enclosed Proxy is solicited by the Board of Directors of Allergy
Research Group, Inc. (the "Board") in connection with the annual meeting of
shareholders of Allergy Research Group, Inc. (the "Company") to be held on June
7, 2005 at 11:00 A.M. local time at 2300 North Loop Road, Alameda, California
94502, and at any adjournments thereof. The cost of solicitation, including the
cost of preparing and mailing the Notice of Shareholders' Meeting and this Proxy
Statement, will be paid by the Company. Such mailing took place on approximately
May 9, 2005. Representatives of the Company may, without cost to the Company,
solicit Proxies for the management of the Company by means of mail, telephone or
personal calls.
A Proxy with respect to the Company may be revoked before the meeting
by giving written notice of revocation to the Secretary of the Company, or may
be revoked at the meeting, prior to voting. Unless revoked, properly executed
Proxies with respect to the Company will be voted as indicated in this Proxy
Statement. In instances where choices are specified by the shareholders in the
Proxy, those Proxies will be voted or the vote will be withheld in accordance
with each shareholder's choice. An "abstention" on any proposal will be counted
as present for purposes of determining whether a quorum of shares is present at
the meeting with respect to the proposal on which the abstention is noted, but
will be counted as a vote "against" such proposal. Should any other matters come
before the meeting, it is the intention of the persons named as Proxies in the
enclosed Proxy to act upon them according to their best judgment.
Only shareholders of record at the close of business on April 21, 2005
may vote at the meeting or any adjournments thereof. As of that date there were
approximately 14,516,605 outstanding common shares of all classes, $.001 par
value, of the Company. Each shareholder of the Company is entitled to one vote
for each share of the Company held. Voting for the election of directors is not
cumulative, which means that the holders of a majority of the Company's
outstanding shares have the power to elect the entire Board of the Company. None
of the matters to be presented at the meeting will entitle any shareholder of
the Company to appraisal rights. In the event that Proxies which are sufficient
in number to constitute a quorum are not received by June 3, 2005, the persons
named as Proxies may propose one or more adjournments of the meeting to permit
further solicitation of Proxies. Such adjournments will require the affirmative
vote of the holders of a majority of the shares present in person or by Proxy at
the meeting. The persons named as Proxies will vote in favor of such
adjournment. At the annual meeting, the shareholders of the Company will be
asked to re-elect the current members of the Board and to approve the selection
of the independent public accountant for the Company.
SHARE OWNERSHIP
The following table provides information as of April 21, 2005 concerning
the beneficial ownership of the Company's common stock by (i) each director,
(ii) each named executive officer, (iii) each shareholder known by the Company
to be the beneficial owner of more than 5% of its outstanding Common Stock, and
(iv) the directors and officers as a group. Except as otherwise indicated, the
persons named in the table have sole voting and investing power with respect to
all shares of Common Stock owned by them.
- ------------------------------ ----------------------------------- ---------------------------- --------------------
Name and Address of Beneficial Amount and Nature of Percent of
Title of Class Owner Beneficial Ownership Class(1)(4)
- ------------------------------ ----------------------------------- ---------------------------- --------------------
$.001 par value common stock Stephen Levine, Ph.D. 10,113,250 (2) 70%
Susan Levine
2300 North Loop Road
Alameda, California 94502
$.001 par value common stock Manfred Salomon 99,750 .7%(3)
2300 North Loop Road
Alameda, CA 94502
$.001 par value common stock Officers and Directors as a group 10,114,750 70%
(1) Where persons listed on this table have the right to obtain additional
shares of Common Stock through the exercise of outstanding options or
warrants or the conversion of convertible securities within sixty (60) days
from April 21, 2005, these additional shares are deemed to be outstanding
for the purpose of computing the percentage of Common Stock owned by such
persons, but are not deemed outstanding for the purpose of computing the
percentage owned by any other person.
(2) Represents shares held jointly by Stephen and Susan Levine as community
property.
(3) Included in this table is a fully vested option held by Manfred Salomon to
purchase 98,250 shares of common stock at an exercise price of $.40 per
share.
(4) Percentages are based on 14,516,605 shares outstanding on April 21, 2005.
ANNUAL REPORT OF THE COMPANY
The annual report of the Company containing audited financial
statements for the twelve months ended December 31, 2004 was mailed to the
shareholders on or about May 9, 2005.
PROPOSAL 1
ELECTION OF DIRECTORS
It is intended that the enclosed Proxy will be voted for the election
of the three (3) persons named below as directors for the Company unless such
authority has been withheld in the respective Proxy. The term of office of each
person elected to be a director of the Company will be until the next regular or
annual meeting of the shareholders at which election of directors is an agenda
item and until his or her successor is duly elected and shall qualify. Pertinent
information regarding each nominee for the past five years is set forth
following his or her name below.
2
- ------------------- ------------------------------------------------------------ -------------------------
NAME AND AGE POSITION WITH THE COMPANY AND PRINCIPAL OCCUPATIONS ADDRESS
- ------------------- ------------------------------------------------------------ -------------------------
Stephen Levine, Dr. Levine has served as the Company's Chief Executive 2300 North Loop Road
Ph.D. (55) Officer from December 1997 to January 1999 and recommenced Alameda, California
service to the Company in that capacity in January 2000, 94502
upon resignation of the interim CEO. Dr. Levine has been
Chairman of the Board and a Director of the Company since
December 1997. In January 2001, Levine was appointed Chief
Financial Officer of the Company. Dr. Levine graduated cum
laude from the State University College in Buffalo, New York
and received his Ph.D. from the University of California,
Berkeley. In 1979, Dr. Levine founded NutriCology/Allergy
Research Group and was employed as its owner and operator
from that time until 1998, when NutriCology was acquired by
the Company. He now serves as Chairman of the Board of
Directors, as well as being employed as the Chief Executive
Officer. Dr. Levine is the author of AntiOxidant Adaption,
Its Role in Free Radical Pathology. Dr. Levine is the
husband of Susan Levine, who acts as Vice President,
Secretary and Director for the Company.
- ------------------- ------------------------------------------------------------ -------------------------
Susan Levine Mrs. Levine has served as the Secretary and Vice President 2300 North Loop Road
(51) of the Company since December 1997, and was elected to the Alameda, California
Board at that time. Mrs. Levine resigned her board 94502
membership temporarily between January 1999 and January
2000. In addition, Susan Levine acts as the Company's Public
Relations and Conventions and Travel Specialist. Since 1980,
Mrs. Levine has worked with her husband, Dr. Stephen Levine,
in the creation and development of NutriCology. Prior to
working for the Company, Mrs. Levine was the Director of
Senior Housing ECHO, a non-profit organization located in
Hayward, California, where her duties included grant writing
and coordination of workers for social programs.
- ------------------- ------------------------------------------------------------ -------------------------
Ed Kane Mr. Kane has served as a Director of the Company since 2300 North Loop Road
(78) November 8, 2000. From 1955 to present, Mr. Kane has acted Alameda, California
as the sole owner and Chairman of the Board of Kane Steel. 94502
Mr. Kane also started K-TRON International ("KTII") in 1964.
KTII was the first to digitize weigh feeding, which is a
system used to continuously weigh and feed material for the
process industries. KTII is listed on the over-the-counter
market, with plants in Switzerland and the United States. In
addition, Mr. Kane started K-FLOW International ("KFI") in
1980 to manufacture a patented mass flow meter. KFI was
merged into the instrument division of the Swiss firm ABB in
1991. Expanding into the health field ten years ago, Mr.
Kane and his wife Patricia, a Ph.D., founded BodyBio
Corporation, a specialized laboratory analysis service
utilized by physicians worldwide in interpreting blood test
results. Mr. Kane is currently the chief executive officer
of BodyBio Corporation. Mr. Kane has been a student of
science and medicine for most of his adult life, and holds a
degree from Temple University. Mr. Kane's particular focus
has been on fatty acid metabolism. Mr. Kane presently sits
on the Advisory Board of UMDNJ- School of Osteopathic
Medicine. He has been a visiting professor at the Wharton
School of Business in Philadelphia and instructs physicians
in a biomedical course on lipid metabolism five times
yearly. Mr. Kane holds several U.S. patents on steel
structures, instrumentation and biochemistry. The city of
Millville, New Jersey recognized Mr. Kane as one of the
three leading industrialists of the last half century.
- ------------------- ------------------------------------------------------------ -------------------------
3
None of the persons named as nominees for the Company are directors of
any other Reporting Companies. "Reporting Companies" include companies with a
class of securities registered pursuant to Section 12 of the Securities Exchange
Act of 1934, as amended (the "1934 Act") or subject to the requirements of
Section 15(d) of the 1934 Act, or any company registered as an investment
company under the Investment Company Act of 1940, as amended (the "1940 Act").
In voting for directors, you must vote all of your shares
noncumulatively. This means that the owners of a majority of the Company's
outstanding shares have the power to elect the Company's entire Board. The vote
of a majority of shares of the Company represented at the meeting, provided at
least a quorum (a majority of the outstanding shares) is represented in person
or by proxy, is sufficient for the election of the above nominees to the Board.
By completing the Proxy, you give the Proxy the right to vote for the persons
named in the table above. If you elect to withhold authority for any individual
nominee or nominees, you may do so by making an "X" in the box marked "VOTE FOR
NOMINEE(S) NOT LINED OUT," and by striking a line through the nominees' name or
names on the Proxy for which you do not vote.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETING ATTENDANCE
The Company currently has a medical advisory board. The Company does
not have standing audit, nominating or compensation committees. All of the
responsibilities which would normally fall upon an audit committee under the
provisions of the Securities Act of 1934 and the Corporate Fraud Accountability
Act of 2002 are and will be the responsibility of the full Board. It is the
practice of the Board to review the Company's audited annual financial
statements and unaudited quarterly financial statements with the Company's
independent auditors.
Management is responsible for the Company's financial statements and
the financial reporting process, including internal controls. The independent
auditors' are responsible for performing an independent audit of the Company's
consolidated financial statements in accordance with generally accepted auditing
standards in the United States of America and for issuing a report thereon. The
Board's responsibility is to monitor and oversee these processes.
In this context, the Board has held discussions with management and the
independent auditors regarding the matters required to be discussed by Statement
on Auditing Standards ("SAS") No. 61, "COMMUNICATION WITH AUDIT COMMITTEES" and
SAS No. 90, "AUDIT COMMITTEE COMMUNICATIONS." These matters included a
discussion of the independent auditors' judgments about the quality (not just
the acceptability) of the Company's accounting principles as applied to
financial reporting. Management represented to the Board that the Company's
consolidated financial statements were prepared in accordance with generally
accepted accounting principles in the United States of America, and the Board
has reviewed and discussed the consolidated financial statements with management
and the independent auditors. The independent auditors also provided the Board
with the written disclosures and letter required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), and the Board
discussed with the independent auditors that firm's independence.
4
The Board of Directors is responsible for considering and making
recommendations to the shareholders concerning nominees for election as director
at the Company's meetings of shareholders, and nominees for appointments to fill
any vacancy on the Board. Because of the practical necessity that a candidate
for director must be acceptable to Dr. Levine, in his capacity as holder of a
majority of the Company's voting stock, in order to be elected, the Board
believes it is desirable for the nominations function to be fulfilled by the
full Board, including Dr. Levine, rather than by a nominating committee that
does not include him. When the need for a new director arises (whether because
of a newly created Board seat or vacancy), the Board will proceed by whatever
means it deems appropriate to identify a qualified candidate or candidates. The
Board will evaluate the qualifications of each candidate.
The Board has no established policy with regard to the consideration of
any director or candidate recommended by shareholders of the Company. Because of
the practical necessity that a candidate for director must be acceptable to Dr.
Levine, in his capacity as holder of a majority of the Company's voting stock,
in order to be elected, the Board does not believe that such a policy is
necessary at this time. However, the Board will consider including in its slate
of director nominees for an annual shareholders' meeting a nominee submitted to
the Company by a shareholder. In order for the Board to consider such nominees,
the nominating shareholder should submit the information about the nominee and
nominating shareholder to the President at the Company's principal executive
offices at least 120 days before the first anniversary of the date that the
Company's Proxy Statement was released to shareholders in connection with the
previous year's annual meeting of shareholders. The nominating shareholder
should expressly indicate that such shareholder desires that the Board consider
such shareholder's nominee for inclusion with the Board's slate of nominees for
the meeting. The nominating shareholder and shareholder's nominee should
undertake to provide, or consent to the Company obtaining, all other information
the Board requests in connection with its evaluation of the nominee. The Board
did not receive any nominations for director from any holder of 5% or more of
the Company's common stock within the prescribed time period for presentation at
the 2005 meeting.
ATTENDANCE AT MEETINGS
The Board for the Company took action eight times during its last
fiscal year by unanimous written consent. The 2004 Annual Shareholders' Meeting
was attended by all board members except Mr. Kane. Although directors are
encouraged to attend the annual meetings, the Company does not have a policy on
individual director attendance at shareholder meetings.
COMMUNICATION WITH SHAREHOLDERS
Shareholders who wish to communicate with members of the Board of
Directors, including independent directors, individually or as a group, may send
correspondence to them in care of the Secretary of the Company's principal
office at 2300 North Loop Road, Alameda, California 94502.
DIRECTOR COMPENSATION
The Company does not maintain any separate pension, retirement or other
arrangement for compensating its Directors. No compensation was paid to
Directors during the fiscal year ended December 31, 2004, and the Company does
not currently compensate directors. Directors who also act as officers of the
Company may receive compensation for services rendered to the Company in those
other capacities.
5
EXECUTIVE OFFICERS
Certain information about the current executive officers of the Company
is set forth below. Each executive officer of the Company may be removed from
office at any time by a majority of the Company's Board of Directors with or
without cause.
STEPHEN LEVINE, PH.D. (55) has served as the Company's Chief Executive
Officer from December 1997 to January 1999 and recommenced service to the
Company in that capacity in January 2000, upon resignation of the interim CEO.
Dr. Levine has been Chairman of the Board and a Director of the Company since
December 1997. In January 2001, Levine was appointed Chief Financial Officer of
the Company. Dr. Levine graduated cum laude from State University College in
Buffalo, New York and received his Ph.D. from the University of California,
Berkeley. In 1979, Dr. Levine founded NutriCology/Allergy Research Group and was
employed as its owner and operator from that time until 1998, when NutriCology
was acquired by the Company. He now serves as Chairman of the Board of
Directors, as well as being employed as the Chief Executive Officer. Dr. Levine
is the author of AntiOxidant Adaption, Its Role in Free Radical Pathology. Dr.
Levine is the husband of Susan Levine, who acts as Vice President, Secretary and
Director of the Company.
FRED SALOMON (66) has served as President since August 12, 2003. He was
hired in 2002 to fill the role of Director of Operations. Mr. Salomon brings 40
years of executive management experience. He comes from the home-sewing and
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 manager of Lion Notions, Inc. and
Fantasy Importers, Inc., both privately held corporations.
SUSAN LEVINE (51) has served as the Secretary, Director and Vice
President to the Company since December 1997. Mrs. Levine resigned her board
membership temporarily between January 1999 and January 2000. In addition, Susan
Levine acts as the Company's Public Relations and Conventions and Travel
Specialist. Since 1980, Mrs. Levine has worked with her husband, Dr. Stephen
Levine, in the creation and development of NutriCology. Prior to working for the
Company, Mrs. Levine was the Director of Senior Housing ECHO, a non-profit
organization located in Hayward, California, where her duties included grant
writing and coordination of workers for social programs.
6
Susan Levine is the wife of Stephen Levine. There are no other family
relationships between the executive officers and/or the proposed directors. The
Company's address is: 2300 North Loop Road, Alameda, California 94502.
EXECUTIVE OFFICER COMPENSATION
The following table sets forth the remuneration to the Company's
executive officers for the past three fiscal years:
SUMMARY COMPENSATION TABLE
Long Term Compensation
------------------------- ------------
Annual Compensation Awards Payouts
---------------------------------- ------------------------- ------------
Other
Annual Restricted Securities All Other
Name and Principal Compensation Stock Underlying LTIP Compensation
Position Year Salary ($) Bonus ($) ($) Award(s)($) Options(#) Payouts($) ($)
- -------------------- -------- ----------- ---------- ----------- ------------ ------------ ------------ ------------
Stephen Levine, CEO 2002 250,000 90,000 16,505
2003 299,846 10,890
2004 324,477 125,000 25,422
Manfred (Fred) 2002 43,077 25,000
Salomon, 2003 112,308 100,000 98,250 3,923
President 2004 120,923 120,000 12,231
Susan Levine, 2002 141,940 50,000 7,500
Secretary 2003 179,255 -- 8,743
2004 195,517 50,000 19,580
During the last fiscal year ended December 31, 2004, the Company did not
grant any stock options to executive officers. Options granted in 2003 are
included in the table below:
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Number of Securities % of Total
Underlying Options/ Options/SAR's Granted
SARs to Employees in Exercise or Base Expiration
Name Granted (#) Fiscal Year Price ($/Sh) Date
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Manfred Salomon 98,250 26% $.40 per share 05/12/2008
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
The following table is intended to provide information as to the number of
stock options exercised by each of the executive officers listed above, the
value realized upon exercise of such options, and the number and value of any
unexercised options still held by such individuals.
Number of
Securities
Underlying Value of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)
Shares Acquired on Exercisable/ Exercisable/
Name Exercise (#) Value Realized ($) Unexercisable Unexercisable
- -------------------------- ---------------------- --------------------- --------------------- ----------------------
Manfred Salomon 0 0 98,250/0 37,335/0(1)
(1) On May 12, 2003, the Company issued options to purchase 98,250 shares
of Common Stock to Manfred Salomon under the Company's 1998 Incentive
Stock Option Plan. These options can be exercised for $.40 per share
and were fully vested on the grant date. The options expire on May 12,
2008.
7
EMPLOYMENT AGREEMENTS
The Company does not have a current employment agreement with its Chief
Executive Officer and Chief Financial Officer or with its President.
EMPLOYEE BENEFITS
1998 INCENTIVE STOCK OPTION PLAN. The Company's Board of Directors and
shareholders adopted the 1998 Incentive Stock Option Plan on July 10, 1998 and
reserved an aggregate of 1,000,000 shares of Common Stock for grants of stock
options under the plan. The purposes of the 1998 Incentive Stock Option Plan are
(a) to attract and retain the best available people for positions of substantial
responsibility and (b) to provide additional incentive to the employees of the
Company and to promote the success of the Company's business.
The 1998 Incentive Stock Option Plan is administered by the Board of
Directors, which has the authority to select individuals who are to receive
options under the Plan and to specify the terms and conditions of each option so
granted (incentive or nonqualified), the vesting provisions, the option term and
the exercise price. The 1998 Incentive Stock Option Plan includes two separate
plans: Plan A provides for the granting of options that are intended to qualify
as incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), and Plan B provides for the
granting of non-qualified stock options. Each Plan will terminate on September
23, 2012, unless sooner terminated by the Board.
An option granted under the 1998 Incentive Stock Option Plan expires
five (5) years from the date of grant or, if earlier, on the date of the
optionee's termination of employment or service, no more than six (6) months of
the optionee's death or disability. Options granted under the 1998 Incentive
Stock Option Plan are not generally transferable by the optionee except by will
or the laws of descent and distribution and generally are exercisable during the
lifetime of the optionee only by such optionee. The Board of Directors has
authority to grant options under the 1998 Incentive Stock Option Plan to
non-officer employees (including outside directors) of the Company and
consultants to the Company at an exercise price not greater than the fair market
value of the Common Stock on the date of grant.
In the event of (i) the merger or consolidation of the Company in which
it is not the surviving corporation, or pursuant to which shares of Common Stock
are converted into cash, securities or other property (other than a merger in
which holders of Common Stock immediately before the merger have the same
proportionate ownership of the capital stock of the surviving corporation
immediately after the merger), (ii) the sale, lease, exchange or other transfer
of all or substantially all of the Company's assets (other than a transfer to a
majority-owned subsidiary), or (iii) the approval by the holders of Common Stock
of any plan or proposal for the Company's liquidation or dissolution (each,
"Corporate Transaction"), the Board of Directors will determine whether
provision will be made in connection with the Corporate Transactions for
assumption of the options under the 1998 Incentive Stock Option Plan or
substitution of appropriate new options covering the stock of the successor
corporation, or an affiliate of the successor corporation. If the Board of
Directors determines that no such assumption or substitution will be made, each
outstanding option under the 1998 Incentive Stock Option Plan shall
automatically accelerate so that it will become 100% vested and exercisable
immediately before the Corporate Transaction.
8
RULE 401(k) RETIREMENT PLAN. In January 1997, the Company adopted the
NutriCology, Inc. 401(k) Retirement Plan (the "401(k) Plan"). Eligible employees
may contribute any portion of their annual compensation, subject to the
limitations established annually by the Internal Revenue Service, and the
Company will match 100 percent of an employee's contribution, limited to 5% of
the employee's compensation. Total provisions with respect to this plan
approximated $43,600 and $91,000, for the years ended December 31, 2003 and
2004, respectively.
CAFETERIA PLAN. In May 1999, the Company adopted the NutriCology,
Inc./Allergy Research Group, Inc. Cafeteria Plan pursuant to section 125 of the
Internal Revenue Code ("Cafeteria Plan"), retroactive to January 1999. Eligible
employees may contribute a portion of their upcoming pay to special funds or
accounts to pay for certain benefits under the Cafeteria Plan, including health
care reimbursement, day-care assistance and insurance premiums on health care
insurance programs. Ordinarily, these expenses would be paid with out-of-pocket,
taxable dollars. Under the Cafeteria Plan, the amounts contributed are not
subject to Federal income or Social Security taxes. Employees may submit
requests for reimbursement of these expenses to the administrator of the
Cafeteria Plan, BenefitStreet.com, at any time during a plan year. At the end of
each plan year, the employees will forfeit any unspent monies unless requests
for reimbursement are made no later than 60 days after the end of the year. We
automatically contribute enough of the employee's compensation to pay for
insurance coverage provided under its health plan; however, it is up to the
employee to determine the amount of any additional contributions.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information about our common stock that
may be issued upon the exercise of options, warrants and rights under all of our
existing equity compensation plans as of December 31, 2004.
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Plan Category Number of Securities to Be Weighted-average Exercise Number of Securities
Issued Upon Exercise of Price of Outstanding Available For Future
Outstanding Options, Options, Warrants and Issuance Under Equity
Warrants And Rights Rights Compensation Plans
(Excluding Securities
Reflected in Column (a))
(a) (b) (c)
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Equity compensation plans 338,750 common shares(1) $.40 661,250 common shares
approved by security holders
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Equity compensation plans None None None
not approved by security
holders
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Total 338,750 common shares $.40 661,250(2) common shares
- ------------------------------ ---------------------------- --------------------------- ----------------------------
(1) Issued under Allergy Research Group, Inc.'s 1998 Incentive Stock Option
Plan 1 in 2003.
(2) Represents common shares issuable under 1998 Incentive Stock Option Plan 1.
9
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To our knowledge, all reports which were required to be filed by our
directors, officers or principal shareholders during 2004 under Section 16(a) of
the Securities Exchange Act of 1934, were timely filed.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Stephen Levine, the Company's Chief Executive Officer, Chief Financial
Officer and Chairman of the Board of Directors, and Susan Levine, the Company's
Secretary, are husband and wife.
Stephen and Susan Levine loaned NutriCology approximately $286,000
prior to its reverse acquisition by the Company in 1998. The loan has been
offset and exceeded by advances made to the Levines between 1997 and 1999,
seventy-three percent (73%) of which were made prior to the reverse acquisition.
Each advance has been made as a non-interest bearing, due on demand loan on the
books of the Company. Interest (8% per annum) has been accrued on these loans in
the amount of $3,088 and $5,137 for the years ended December 31 2004 and
December 31, 2003, respectively. The Company's audited financial statements
indicate that as of December 31, 2004 and 2003, the amounts due from Dr. Levine
were $28,818 and $55,730, respectively. No new advances or adjustments to the
terms of the loans were made after July 30, 2002.
On January 4, 2005, the Company entered into a lease for office and
warehouse space located at 2300 North Loop Road, Alameda, California with AriBen
Corporation, a single-purpose California corporation that is wholly-owned by
Stephen and Susan Levine. The leased premises consist of approximately 29,821
square feet of office and industrial space. The lease, which has a term of ten
years with options to renew for two subsequent periods of ten and five years,
respectively, has a base monthly rent of $24,000 for the initial period, $30,000
for the first option period and $35,000 for the second option period. Rent will
be adjusted annually during the second five years of each 10-year lease period
based on the consumer price index, with a minimum increase of three percent. No
security deposit is required under the lease.
We have reimbursed AriBen Corporation for some of the tenant
improvements which were built out to our specifications in the amount of
$350,000. We believe that the new facilities provide a more geographically
beneficial location, closer to our existing and potential workforce, and the
facilities can accommodate internal manufacturing, greater quality control and
expansion better than our prior facilities.
REQUIRED VOTE
Each of the nominees has agreed to serve as a director of the Company
until his or her replacement is elected and qualified. If any unforeseen event
prevents one or more of the nominees from serving as a director, your votes will
be cast for the election of a substitute or substitutes selected by the Board.
In no event, however, can the Proxies be voted for a greater number of persons
than the number of nominees named. Unless otherwise instructed, the proxies will
vote for the election of each nominee to serve as a director of the Company.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE TO ELECT EACH OF THE
NOMINEES TO THE BOARD OF DIRECTORS OF THE COMPANY.
10
PROPOSAL 2
RATIFICATION OR REJECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors has selected Clancy and Co., P.L.L.C. as the
Company's independent registered public accounting firm for the fiscal year
ending December 31, 2005 and has directed that management submit the selection
of independent registered public accounting firm to the shareholders for
ratification at the Annual Meeting. Clancy and Co., P.L.L.C. audited the
Company's financial statements for fiscal 2004. No representative of Clancy and
Co., P.L.L.C. is expected to be present at the Annual Meeting.
Shareholders are not required to ratify the selection of Clancy and
Co., P.L.L.C. as the Company's independent registered public accounting firm.
However, the Board is submitting the selection of Clancy and Co., P.L.L.C. to
the shareholders for ratification as a matter of good corporate practice. If the
shareholders fail to ratify the selection, the Board will reconsider whether or
not to retain that firm. Even if the selection is ratified, the Board in its
discretion may direct the appointment of a different independent registered
public accounting firm at any time during the year if they determine that such a
change would be in the best interests of the Company and its shareholders.
AUDIT FEES
The aggregate fees billed by Clancy and Co., P.L.L.C. for professional
services rendered for the audit of the Company's annual financial statements on
Form 10-KSB and the reviews of the financial statements included in the
Company's Form 10-QSB's for the fiscal years ended December 31, 2004 and 2003
was $42,500 and $40,500, respectively.
TAX FEES
The aggregate fees billed for tax compliance rendered by our
independent auditors for the years ended December 31, 2003 and 2004 was $5,000
for each year.
ALL OTHER FEES
None.
The affirmative vote of the holders of a majority of the shares
represented and voting at the meeting will be required to ratify the selection
of Clancy and Co., P.L.L.C.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE SHAREHOLDERS
OF THE COMPANY VOTE IN FAVOR OF THE PROPOSAL. UNLESS OTHERWISE INSTRUCTED, THE
PROXIES WILL VOTE IN FAVOR OF THE PROPOSAL TO RATIFY THE SELECTION OF THE
COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
11
OTHER MATTERS
Management does not intend to present any business at the meeting not
mentioned in this Proxy Statement, and currently knows of no other business to
be presented. If any other matters are brought before the meeting, the appointed
proxies will vote all Proxies on such matters in accordance with their judgment
of the best interests of the Company.
SHAREHOLDER PROPOSALS
Proposals of shareholders of the Company which are intended to be
presented by such shareholders at the Company's next Annual Meeting of
Shareholders must be received by the Company no later than March 1, 2006 in
order to be considered for inclusion in the Company's proxy statement and form
of proxy relating to that meeting.
/s/ Susan D. Levine
-----------------------------------
Susan D. Levine
Secretary
Dated: May 9, 2005
12
PROXY PROXY
ALLERGY RESEARCH GROUP, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 7, 2005
The undersigned hereby appoints Stephen Levine and Susan Levine, CEO
and Secretary, respectively, and each of them, as attorneys and Proxies of the
undersigned, with full power of substitution, to vote all of the shares of stock
of Allergy Research Group, Inc. (the "Company") which the undersigned may be
entitled to vote at the Annual Meeting of Shareholders of the Company to be held
at 2300 North Loop Road, Alameda, California 94502 on June 7, 2005 at 11:00 A.M.
local time and at any and all continuations and adjournments or postponements
thereof, with all powers that the undersigned would possess if personally
present, on the following matters, in accordance with the following
instructions, and on all matters that may properly come before the meeting. With
respect to any matter not known to the Company as of May 9, 2005, such proxies
are authorized to vote in their discretion.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2 MORE SPECIFICALLY DESCRIBED
IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL
BE VOTED IN ACCORDANCE THEREWITH.
YOUR VOTE IS IMPORTANT. THEREFORE, YOU ARE URGED TO COMPLETE,
SIGN, DATE AND PROMPTLY RETURN THIS PROXY
IN THE ENCLOSED ENVELOPE.
(Continued and to be signed on the other side)
ALLERGY RESEARCH GROUP, INC.
PLEASE MARK VOTE IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES
FOR DIRECTOR AND FOR PROPOSAL 2.
1. To elect three directors to hold office until the 2006 Annual Meeting of
Shareholders.
FOR WITHHELD VOTE FOR NOMINEE(S) NOT LINED OUT
[ ] [ ] [ ] Strike a line through the nominee(s)
name or names below that you do not
vote for
NOMINEES: Susan Levine, Stephen Levine and Ed Kane
2. To approve the continuation of Clancy and Co., P.L.L.C. as the Company's
independent registered public accounting firm for the fiscal year ending
December 31, 2005.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
_____________ _____________________ ________________________________________
Date Shares Held Signature
________________________________________
Print Name
_____________ _____________________ ________________________________________
Date Shares Held Signature
________________________________________
Print Name
Please vote, sign, date and promptly return this proxy in the enclosed return
envelope, which is postage paid if mailed in the United States.
Please sign exactly as your name appears on your stock certificate. If the stock
is registered in the names of two or more persons, each should sign. Executors,
administrators, trustees, guardians and attorneys-in-fact should add their
titles. If signer is a corporation, please give full corporate name and have a
duly authorized officer sign, stating title. If signer is a partnership or
limited liability company, please sign the company name by authorized person.