United
      States


**SECURITIES
      AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549





**FORM
      10-QSB**








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





For
      the
      quarterly period ended **June
      30, 2007**





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





Commission
      File Number 0-20791





**AMARILLO
      BIOSCIENCES, INC.**


(Exact
      name of small business issuer as specified in its charter)





TEXAS
            75-1974352(State
                or other jurisdiction of
            (IRS
                Employer Identification No.)incorporation
                or organization)





4134
                Business Park Drive, Amarillo, Texas
            79110(Address
                of principal executive offices)
            (Zip
                Code)





806-376-1741
            FAX
                806-376-9301(Issuer's
                telephone number, including area code)





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 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  .





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act) Yes  No X .





As
      of
      June 30, 2007 there were 26,225,080 shares of the issuer's common stock
      outstanding.





Transitional
      Small Business Disclosure Format (check one) Yes ___. No X .


1


**AMARILLO
      BIOSCIENCES, INC.**





INDEX








PAGE
                NO.PART
                I:
            FINANCIAL
                INFORMATIONITEM
                1.
            Financial
                StatementsBalance
                Sheet - June 30, 2007 (unaudited)
            3Statements
                of Operations - Three and Six Months Ended June 30, 2007 and 2006
                (unaudited)
            4Condensed
                Statements of Cash Flows - Six Months Ended June 30, 2007 and 2006
                (unaudited)
            5Notes
                to Unaudited Financial Statements
            6ITEM
                2.
            Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations
            7ITEM
                3.
            Controls
                and Procedures
            11PART
                II:
            OTHER
                INFORMATIONITEM
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            11ITEM
                4.
            Submission
                of Matters to a Vote of Security Holders
            12ITEM
                6.
            Exhibits
            13Signatures
            
            14





2


**PART
      I - FINANCIAL INFORMATION**





**Item
      1.**  **Financial
      Statements**





Amarillo
      Biosciences, Inc.


Balance
      Sheet - Unaudited


June
      30,
      2007





**Assets**Current
                assets:Cash
                and cash equivalents
            
            $
            50,138Other
                current assets
            
            
            44,420Total
                current assets
            
            
            94,558Property,
                equipment, and software, net
            
            
            15,231Patents,
                net
            
            
            122,977Total
                assets
            
            $
            232,766**Liabilities
                and Stockholders' Deficit**Current
                liabilities:Accounts
                payable and accrued expenses
            
            $
            194,670Accrued
                interest - related party
            
            
            645,209Notes
                payable - related party
            
            
            2,000,000Total
                current liabilities
            
            
            2,839,879Total
                liabilities
            
            
            2,839,879Commitments
                and contingenciesStockholders'
                deficitPreferred
                stock, $.01 par value:Authorized
                shares - 10,000,000Issued
                shares - none
            
            
            -Common
                stock, $.01par value:Authorized
                shares - 100,000,000Issued
                shares - 26,225,080
            
            
            262,251Additional
                paid-in capital
            
            
            24,441,330Accumulated
                deficit
            
            
            (27,310,694
            )Total
                stockholders' deficit
            
            
            (2,607,113
            )Total
                liabilities and stockholder's deficit
            
            $
            232,766





*See
      accompanying notes to financial statements.*


3


Amarillo
      Biosciences, Inc.


Statements
      of Operations - Unaudited





Three
                months ended June 30,
            Six
                months ended June 30,2007
            
            
            2006
            
            
            2007
            
            
            2006Revenues:Dietary
                supplement sales
            
            $
            614
            
            $
            1,392
            
            $
            1,148
            
            $
            2,245Sublicense
                fee revenue
            
            
            -
            
            
            -
            
            
            40,000
            
            
            30,000Federal
                research grants
            
            
            -
            
            
            60,023
            
            
            -
            
            
            60,023Total
                revenues
            
            
            614
            
            
            61,415
            
            
            41,148
            
            
            92,268Operating
                expenses:Cost
                of sales
            
            
            186
            
            
            -
            
            
            354
            
            
            -Research
                and development expenses
            
            
            112,231
            
            
            159,697
            
            
            243,243
            
            
            255,935Selling,
                general and administrative expenses
            
            
            478,348
            
            
            667,573
            
            
            1,111,924
            
            
            1,349,016Total
                operating expenses
            
            
            590,765
            
            
            827,270
            
            
            1,355,521
            
            
            1,604,951Operating
                loss
            
            
            (590,151
            )
            
            (765,855
            )
            
            (1,314,373
            )
            
            (1,512,683
            )Other
                income (expense)Interest
                expense
            
            
            (22,436
            )
            
            (22,950
            )
            
            (44,673
            )
            
            (47,131
            )Interest
                income
            
            
            978
            
            
            -
            
            
            2,230
            
            
            -Net
                loss
            
            $
            (611,609
            )
            
            (788,805
            )
            
            (1,356,816
            )
            $
            (1,559,814
            )Basic
                and diluted net loss per share
            
            
            (0.02
            )
            
            (0.04
            )
            
            (0.05
            )
            
            (0.07
            )Weighted
                average shares outstanding
            
            
            25,444,815
            
            
            21,881,155
            
            
            25,953,645
            
            
            21,082,874





*See
      accompanying notes to financial statements*


4


Amarillo
      Biosciences, Inc.


Condensed
      Statements of Cash Flows - Unaudited





Six
                months ended June 30,2007
            
            
            2006Net
                cash used in operating activities
            
            $
            (804,894
            )
            $
            (665,854
            )Cash
                from investing activitiesPurchases
                of equipment
            
            
            (1,265
            )
            
            (12,464
            )Patent
                expenditures
            
            
            (3,942
            )
            
            -Net
                cash used in investing activities:
            
            
            (5,207
            )
            
            (12,464
            )Cash
                from financing activities:Proceeds
                from exercise of options
            
            
            45,889
            
            
            27,700Proceeds
                from sale of common stock
            
            
            600,506
            
            
            758,085Repayments
                on notes payable
            
            
            -
            
            
            (68,500
            )Net
                cash provided by financing activities
            
            
            646,395
            
            
            717,285Net
                increase (decrease) in cash
            
            
            (163,706
            )
            
            38,967Cash
                and cash equivalents at beginning of period
            
            
            213,844
            
            
            193,315Cash
                and cash equivalents at end of period
            
            $
            50,138
            
            $
            232,282Supplemental
                Disclosure of Cash Flow InformationCash
                paid for interest
            
            $
            165
            
            $
            2,623





*See
      accompanying notes to financial statements.*


5


**Amarillo
      Biosciences, Inc.**





**Notes
      To Financial Statements - Unaudited**





1.
            Basis
                of presentation. The accompanying financial statements, which should
                be
                read in conjunction with the financial statements and footnotes included
                in the Company's Form 10-KSB for the year ended December 31, 2006
                filed
                with the Securities and Exchange Commission, are unaudited, but have
                been
                prepared in accordance with accounting principles generally accepted
                in
                the United States for interim financial information. Accordingly,
                they do
                not include all of the information and footnotes required by accounting
                principles generally accepted in the United States for complete financial
                statements. In the opinion of management, all adjustments (consisting
                only
                of normal recurring adjustments) considered necessary for a fair
                presentation have been included.





Operating
      results for the six months ended June 30, 2007 are not necessarily indicative
      of
      the results that may be expected for the full year ending December 31,
      2007.





2.
            Financial
                Condition. The Company's viability is dependent upon successful
                commercialization of products resulting from its research and product
                development activities. The Company plans on working with commercial
                development partners in the United States and in other parts of the
                world
                to provide the necessary sales, marketing and distribution infrastructure
                to successfully commercialize the interferon alpha product for both
                human
                and animal applications. The Company's products will require significant
                additional development, laboratory and clinical testing and investment
                prior to the Company obtaining regulatory approval to commercially
                market
                its product(s). Accordingly, for at least the next few years, the
                Company
                will continue to incur research and development and general and
                administrative expenses and may not generate sufficient revenues
                from
                product sales to support its
                operations.





3.
            Line
                of Credit. The Company has a line of credit with Wells Fargo for
                $20,000,
                with an interest rate of prime rate plus 6.75 percent. There was
                an
                outstanding balance on June 30, 2007 of $4,744, which is included
                in
                accounts payable.





4.
            Equity.
                During the quarter ended March 31, 2007, the Board of Directors authorized
                stock grants to two consultants: 100,000 shares to Claus Martin on
                3/5/07
                ($84,000 fair value) and 100,000 shares to David Stewart on 3/30/07
                ($82,000 fair value). The shares to David Stewart were issued in
                25,000
                share portions on March 30 and June 30; the remaining shares are
                to be
                issued in 25,000 portions on September 30 and December 31 during
                fiscal
                2007. The entire expense of $82,000 was recognized in the quarter
                ending
                March 31, 2007.





During
      2006, the Company issued 1,200,000 stock options to employees of the Company.
      These options vest evenly over the next 4 years. The Company recognized a
      $58,287 expense related to the options during the first quarter and a $55,304
      expense during the second quarter of 2007. The remaining cost expected to be
      recognized if these options vest is $748,074. The fair value of each option
      granted is estimated on the date of grant using the Black-Scholes option-pricing
      model with the following weighted average assumptions: dividend yield 0.0%,
      expected volatility of 133.61 - 138.31%, risk-free interest rate of 1.5% and
      expected life of 60 months.


6


During
      the second quarter of 2007, the Company issued 500,000 stock options for
      services. The Company recognized a $187,383 expense related to the options
      during the first six months of 2007. The fair
      value of each option granted is estimated on the date of grant using the
      Black-Scholes option-pricing model with the following weighted average
      assumptions: dividend yield 0.0%, expected volatility of 115.76%, risk-free
      interest rate of 4.617% and expected life of 3 months.


During
      the second quarter of 2007, 249,486 options were exercised at $0.06 to $0.44
      per
      share generating $45,889 in cash. A Director exercised 6,000 cashless options
      at
      $0.44 per share and received 1,672 shares of Common Stock valued at $0.61 per
      share.





In
      the
      first quarter of 2007, the Company completed private equity financing by selling
      998,000 restricted shares of common stock at a discount to 18 investors,
      generating $449,100 in cash. In the second quarter of 2007, the Company
      completed private equity financing by selling 349,155 restricted shares of
      common stock at a discount to eight investors, generating $151,405 in cash.
      Cash
      generated from selling restricted shares during the first six months of 2007
      totaled $600,505. During the six months ended June 30, 2007, finder’s fees paid
      related to private placements of stock totaled $7,750, and are included as
      general and administrative expenses in the Company’s statement of
      operations.




5.
            License
                and Sublicense Agreements. Sublicense fee revenue is recognized upon
                completion of all significant initial services provided to the licensee
                and upon satisfaction of all material conditions of the license
                agreement.  In the first quarter of 2007 ABI received a $40,000
                sublicense fee. A $19,992 sublicense fee payable to HBL was included
                in
                accounts payable based on sublicense fee income earned by the Company
                during the first quarter of 2007. A $7,500 minimum cash royalty fee
                was
                paid by the Company to Texas A&M University System during the first
                quarter of 2007.





6.
            Subsequent
                Events. Since June 30, 2007, the Company has sold 60,000 shares of
                unregistered stock for $0.35 per share and 145,000 shares for $0.20
                per
                share in private placement offerings. In addition, 150,000 options
                were
                exercised at $0.20 per share. Total proceeds to the Company were
                $80,000.





On
      July
      20, 2007, the Company executed a consulting agreement with Commonwealth
      Associates to provide general financial consulting services and assist with
      capital formation to accelerate ABI’s ongoing Phase 2 clinical trials in oral
      warts in HIV+ patients and its Behcet’s disease study. The Company agreed to
      grant a 12 months stock option to purchase 1,000,000 shares of common stock
      at
      the strike price of $0.20 per share.





On
      July
      31, 2007, a five year stock option to purchase 10,000 shares of stock at the
      strike price of $0.40 was granted to a Scientific Advisory Board member. The
      Scientific Advisory Board member released a stock option to purchase 5,000
      shares of stock at the strike price of $4.00 with term expiring on October
      17,
      2007.





At
      the
      Annual Shareholder Meeting on June 1, 2007, the common stock shareholders
      approved an amendment to the Company’s Articles of Incorporation to increase the
      number of authorized shares of common stock from 50,000,000 to 100,000,000.
      The
      Restated Articles of Incorporation amending Article Four to change the number
      of
      shares authorized to 100,000,000 were filed on July 5, 2007 at the Office of
      the
      Secretary of State of Texas.


7




**Item
      2.**  **Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations**





*The
      following discussion should be read in conjunction with our financial statements
      and the notes thereto which appear elsewhere in this report. The results shown
      herein are not necessarily indicative of the results to be expected in any
      future periods. This discussion contains forward-looking statements based on
      current expectations, which involve uncertainties. Actual results and the timing
      of events could differ materially from the forward-looking statements as a
      result of a number of factors. Readers should also carefully review factors
      set
      forth in other reports or documents that we file from time to time with the
      Securities and Exchange Commission.*




*Company
      Goal.* During
      the first six months of 2007, ABI focused on its goal of completing Phase 2
      clinical trials for low-dose oral interferon-alpha treatment of Behcet’s disease
      and oral warts in HIV positive patients by the end of 2007 or the first half
      of
      2008. The Company has obtained FDA Orphan Disease Designation for these diseases
      and believes this is a faster, less expensive way to obtain FDA approval of
      low-dose oral interferon-alpha.




*Enrollment
      in Phase 2 Clinical Trial of Behcet’s Disease.* Nobel
      Ilac Sanayii Ve Ticaret A.S., a leading Turkish pharmaceutical company, is
      funding and co-sponsoring a Behçet’s Disease Phase 2 study with ABI under an IND
      granted to ABI by the US FDA. Two new clinical sites (for a total of 4) were
      added to accelerate enrollment of 90 patients, with goal of completing the
      Phase
      2 trial in 2007 or early 2008. Approximately 109 patients have been screened
      for
      enrollment and 68 have been started on treatment as of today’s date. The
      double-blind Phase 2 study is testing the efficacy of interferon lozenges versus
      placebo in the treatment and prevention of mouth ulcers. The treatment duration
      is 12 weeks. Other products used to treat mouth ulcers in Behçet’s Disease, such
      as corticosteroids, have significant side effects. ABI’s non-toxic oral
      interferon product potentially represents a substantial improvement in the
      treatment of the mouth ulcers suffered by virtually all Behçet’s Disease
      patients.




*Enrollment
      in Phase 2 Clinical Trial of Oral Warts in HIV+ Patients.*  Two
      new
      sites were added to the project in July 2007 and four more clinical sites have
      agreed to join the eight clinical sites that are currently approved to enroll
      patients in a study of HIV+ patients suffering from oral warts. These 4 new
      sites should start screening subjects for study inclusion in September. This
      placebo-controlled Phase 2 study is a follow-up to two successful studies that
      have already been completed. In the most recent study, 57% of HIV patients
      given
      the optimum dose of oral interferon experienced a complete or almost complete
      clearance of their oral warts. No products are currently approved by the FDA
      for
      this condition, so treatment of oral warts represents a unique market for ABI.
      As of today’s date, 22 of 80 planned subjects have been enrolled. The goal is to
      complete the study in the first half of 2008.




*German
      Institute for Viral Research.* During
      the first six months, the Company provided murine interferon to Professor Oliver
      Planz to be used for clinical studies of oral interferon treatment of mice
      challenged with H7N7 and H5N1 influenza viruses.




*Idiopathic
      Pulmonary Fibrosis.* An
      open-label pilot study conducted by Dr. Lorenz Lutherer of the Texas Tech
      University Health Sciences Center (TTUHSC) in Lubbock, TX found that 5 of 6
      subjects with idiopathic pulmonary fibrosis (IPF) who were treated with orally
      administered IFN-alpha experienced a significant improvement in their chronic
      cough, a bothersome symptom that affects 80-90% of IPF patients and which has
      a
      significant negative impact on quality-of-life. In addition, treatment with
      oral
      IFN-alpha appeared to prevent or delay progression of disease in a number of
      IPF
      patients who received the therapy for 1-5 years. Publication of these results
      in
      a leading pulmonary journal is planned.




8




*COPD.*  Dr.
      Lorenz Lutherer, the principal investigator in the IPF study described above,
      received an internal “seed grant” from the TTUHSC in Lubbock, TX of
      approximately $20,000 to perform a double-blind, placebo-controlled study of
      orally administered IFN-alpha in the treatment of chronic cough in 40 patients
      with chronic obstructive pulmonary disease (COPD). This study is intended to
      expand the positive results observed by Dr. Lutherer in treating IPF patients
      to
      another significant cause of chronic cough, COPD. The study is expected to
      start
      after funds become available in the 3 rd quarter
      of this year and will take approximately 1 year to complete.




*License
      Partners.* The
      Company continued to work with license partners during the first six months
      of
      2007. CytoPharm, Inc., a Taipei, Taiwan-based biopharmaceutical company whose
      parent company is Vita Genomics, Inc., the largest biotech company in Taiwan,
      has entered into discussions with regulatory agencies in Taiwan to conduct
      clinical trials for oral interferon treatment of hepatitis B & C and
      influenza.




*Partner/License
      Discussions.* The
      Company is presently negotiating with human health commercial development
      partners in various regions of the world including South America, the United
      States and South East Asia. These agreements could generally include provisions
      for the commercial partner to pay the Company a technology access fee, could
      include payments for a portion of the clinical trial expenses, could include
      payment obligations to the Company upon the accomplishment of certain defined
      tasks and/or could provide for payments relating to the future sales of
      commercial product. These agreements could be an important source of funds
      for
      the Company. However, there can be no assurance that the Company will be
      successful in obtaining additional funding from either human health and animal
      health commercial development partners or private investors. If the Company
      is
      not successful in raising additional funds, it will need to significantly
      curtail clinical trial expenditures and to reduce staff and administrative
      expenses and may be forced to cease operations.




*Nutraceutical
      Product* .
      The
      Company sells anhydrous crystalline maltose (ACM) as Maxisal® to individuals and
      to pharmacies in the USA and to licensed distributors overseas. The company
      seeks to out-license Maxisal®.




*Equity
      Funding.* In
      the
      first six months, the Company completed private equity financing by selling
      restricted stock at a discount to 26 investors. The net proceeds to the Company
      were $600,505.




Results
      of Operations:




Revenues.
      During the six-month period ended June 30, 2007, $1,148 from dietary supplement
      sales was generated compared to revenues from dietary supplement sales for
      the
      six-month period ended June 30, 2006, of $2,245, a decrease of $1,097 or
      approximately 49%. In the six-month period ended June 30, 2007 a $40,000
      sublicense fee was collected compared to a $30,000 sublicense fee the first
      six
      months of 2006, an increase of $10,000 or approximately 33%. There were no
      sales
      of interferon products during the first six months of 2007.




Research
      and Development Expenses. Research and development expenses of $243,243 were
      incurred for the six month period ended June 30, 2007, compared to $255,935
      for
      the six month period ended June 30, 2006, a decrease of $12,692
      (5%).




Selling,
      General and Administrative Expenses. Selling, general and administrative
      expenses of $1,111,924 were incurred for the six-month period ended June 30,
      2007, compared to $1,349,016 for the six-month period ended June 30, 2006,
      a
      decrease of $237,092 (17.6%). This expense reduction




9


is
      mostly
      due to a $255,482 non-cash stock grant and option recognition expensed for
      consultants in the first six months of 2007 compared to the first six months
      of
      2006. Excluding consultant non-cash expenses, selling, general and
      administrative expenses increased approximately 1.4% during the first six months
      of 2007 over the first six months of 2006.




Non-cash
      Consulting Activities. During the first quarter of 2007, the Board of Directors
      authorized the issuance of shares of common stock to consultants: 100,000 shares
      to Claus Martin on 3/5/07 ($84,000 fair value) and 100,000 shares to David
      Stewart on 3/30/07 ($82,000 fair value). The shares to David Stewart were issued
      in 25,000 share portions on March 30, June 30, and are to be issued on September
      30 and December 31 during fiscal 2007. The accumulated value of the above
      mentioned stock for the first six months of 2007 is $166,000 for non-cash
      consulting compensation. During the second quarter of 2007, the Company issued
      500,000 options for services. The Company recognized $187,382 expense related
      to
      the options during the second quarter of 2007. Non-cash consulting activities
      totaled $353,382 during the first six months of 2007. In the first six months
      of
      2006, non-cash consulting compensation was approximately $608,864.




Net
      Income (Loss). As a result of the above, in the six-month period ended June
      30,
      2007, the Company's net loss was ($1,356,816) compared to a net loss for the
      six-month period ended June 30, 2006 of ($1,559,814).




Liquidity
      Needs: On June 30, 2007, the Company had available cash of approximately $50,138
      and had a working capital deficit (current assets less current liabilities)
      of
      approximately $2,745,321. Current liabilities includes two $1 million notes
      plus
      $645,209 of accrued interest owed to Hayashibara Biochemical Laboratories,
      Inc.
      (HBL), the Company’s largest shareholder and benefactor. Assuming there is no
      decrease in current accounts payable, and accounting for various one-time
      expenses, the Company’s negative cash flow for operating activities plus
      equipment purchases, patent filings (burn rate) is approximately $135,000 per
      month. The Company's continued losses and lack of liquidity raise substantial
      doubt about whether the Company is able to continue as a going concern for
      a
      reasonable period of time. The Company's ability to continue as a going concern
      is dependent upon several factors including, but not limited to, the Company's
      ability to generate sufficient cash flows to meet its obligations on a timely
      basis, obtain additional financing and continue to obtain supplies and services
      from its vendors. The Company will need to raise additional funds in order
      to
      fully execute its 2007 Plan.




Forward-Looking
      Statements: Certain statements made in this Plan of Operations and elsewhere
      in
      this report are "forward-looking statements" within the meaning of the Private
      Securi-ties Litigation Reform Act of 1995 (the "Act"). Forward-looking
      statements include, without limitation, any statement that may predict,
      forecast, indicate or imply future results, performance, achievements, costs
      or
      expenses and may contain words such as "believe," "anticipate," "expect,"
      "estimate," "project," "budget," or words or phrases of similar meaning.
      Forward-looking statements involve risks and uncertainties which may cause
      actual results to differ materially from those projected in the forward-looking
      statements. Such risks and uncertain-ties are detailed from time to time in
      reports filed by the Company with the Securities and Exchange Commission,
      including Forms 8-K, 10-QSB and 10-KSB and include among others the following:
      promulga-tion and imple-mentation of regulations by the U.S. Food and Drug
      Administra-tion ("FDA"); promul-gation and implementation of regulations by
      foreign governmen-tal instru-mentalities with functions similar to those of
      the
      FDA; costs of research and develop-ment and clinical trials, including without
      limitation, costs of clinical supplies, packaging and inserts, patient
      recruitment, trial monitoring, trial evaluation and publication; and possible
      difficulties in enrolling a sufficient number of qualified patients for certain
      clinical trials. The Company is also dependent upon a broad range of general
      economic and financial risks,




10


such
      as
      possible increases in the costs of employing and/or retaining qualified
      personnel and consultants and possible inflation which might affect the
      Company's ability to remain within its budget forecasts. The principal
      uncertainties to which the Company is presently subject are its inability to
      ensure that the results of trials performed by the Company will be sufficiently
      favorable to ensure eventual regulatory approval for commercial sales, its
      inability to accurately budget at this time the possible costs associated with
      hiring and retaining of additional personnel, uncertainties regarding the terms
      and timing of one or more commercial partner agreements and its ability to
      continue as a going concern.




The
      risks
      cited here are not exhaustive. Other sections of this report may include
      additional factors which could adversely impact the Company's business and
      future prospects. Moreover, the Company is engaged in a very competitive and
      rapidly changing industry.




New
      risk
      factors emerge from time to time and it is not possible for management to
      predict all such risk factors, nor can it assess the impact of all such risk
      factors on the Company's business, or the extent to which any factor or
      combination of factors may cause actual results to differ materially from those
      projected in any forward-looking statements. Given these risks and
      uncertainties, investors should not place undue reliance on forward-looking
      statements as a prediction of actual future events.




**Item
      3.**   **Controls
      and Procedures**




As
      required by Rule 13a-15 under the Exchange Act, we have carried out an
      evaluation of the effectiveness of the design and operation of our company’s
      disclosure controls and procedures as of the end of the period covered by this
      quarterly report, being June 30, 2007. This evaluation was carried out under
      the
      supervision and with the participation of our company’s management, including
      our company’s president and chief executive officer. Based upon that evaluation,
      our company’s president and chief executive officer concluded that our company’s
      disclosure controls and procedures are effective as of the end of the period
      covered by this report. There have been no significant changes in our company’s
      internal controls or in other factors, which could significantly affect internal
      controls subsequent to the date we carried out our evaluation.




Disclosure
      controls and procedures are controls and other procedures that are designed
      to
      ensure that information required to be disclosed in our company’s reports filed
      or submitted under the Exchange Act is recorded, processed, summarized and
      reported, within the time periods specified in the Securities and Exchange
      Commission’s rules and forms. Disclosure controls and procedures include,
      without limitation, controls and procedures designed to ensure that information
      required to be disclosed in our company’s reports filed under the Exchange Act
      is accumulated and communicated to management, including our company’s president
      and chief executive officer as appropriate, to allow timely decisions regarding
      required disclosure.









**PART
      II - OTHER INFORMATION**




**Item
                2.**
            
            **Unregistered
                Sales of Equity Securities and Use of
                Proceeds**




During
      the second quarter of 2007, the Company issued 25,000 shares of common stock
      registered on Form 8 to a consultant, David Stewart. The fair value of the
      shares ($20,500) was expensed during the first quarter of 2007.


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In
      the
      three months ended June 30, 2007, the Company completed private equity financing
      by selling 349,155 restricted shares of common stock at a discount to eight
      investors. The shares are restricted and are transferable pursuant to Rule
      144
      promulgated under the Securities Act of 1933. The net proceeds to the Company
      were approximately $151,405. All shares sold were exempt from registration
      pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities
      Act
      of 1933. No underwriters were involved in any of the unregistered share sales
      and no commissions were paid. The Company paid $1,000 in finder’s
      fees.







**Date
                (2007)**
            **Shares**
            **Purchaser****Issue
                Price**
            **Number**1
            April
                3
            .45
            2000
            Jonathan
                & Brianne Braudt2
            April
                19
            .45
            7780
            Noelle
                Gehm3
            April
                19
            .45
            4450
            Terry
                Lynn Gehm4
            April
                22
            .45
            33335
            Terry
                & Paula Gehm5
            May
                16
            .45
            111112
            Bob
                & Karen Barnett6
            May
                21
            .45
            111112
            Tom
                Sooy7
            May
                25
            .45
            22223
            Bhushan
                Dandawate8
            June
                21
            .35
            57143
            Griffin
                Family Trust


*Discounts
      were calculated based on the last transaction on each date.







**Item
      4.**  **Submission
      of Matters to a Vote of Security Holders.**




The
      annual meeting of shareholders was noticed and convened on June 1, 2007, to
      consider the election of directors, the authorization to vote proxies on other
      business to properly come before the meeting, and to adjourn the meeting to
      solicit additional votes. There were 76.92% of the outstanding shares of the
      Company represented at the meeting and constituting a quorum.




**Proposition
      1 - Election of Directors.**




The
      following directors were elected at the meeting to serve until the next annual
      meeting of shareholders or until their successor shall have been duly elected
      and qualified:




Director
      No. 1 - Joseph M. Cummins - 19,531,455 shares voted in favor and 66,022 shares
      withheld;




Director
      No. 2 - Stephen Chen - 19,582,836 shares voted in favor and 14,641 withheld;




Director
      No. 3 - James Page - 19,574,836 shares voted in favor and 22,641 withheld;




Director
      No. 4 - Dennis Moore - 19,582,836 shares voted in favor and 14,641 withheld;




Director
      No. 5 - Thomas D’Alonzo - 19,582,836 shares voted in favor and 14,641 withheld;
      and




Director
      No. 6 - Thomas Ulie - 19,582,579 shares voted in favor and 14,898 withheld.




**Proposition
      2 - Approve an amendment to the Company’s articles of Incorporation to Increase
      the Number of Authorized Shares of Common Stock from 50,000,000 to
      100,000,000.**




Proposition
      2 passed by a vote of 19,346,958 shares voted in favor, 248,595 voted against,
      and 1,922 shares not voted due to broker abstentions.


12




**Proposition
      3 - Authorization to vote Proxies on Other Business to Properly Come Before
      the
      Meeting.**




Proposition
      3 passed by a vote of 19,334,376 shares voted in favor, 207,001 voted against,
      and 56,097 shares not voted due to broker abstentions.




**Proposition
      4 - Adjournment of Meeting to Solicit Additional Votes.**




Proposition
      4 passed by a vote of 19,420,018 shares voted in favor, 172,884 shares voted
      against, and 4,575 shares not voted due to broker abstentions.




No
      other
      business was transacted at the meeting.








**Item
                6.**
            **Exhibits.**




None.




13







**SIGNATURES**




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




**AMARILLO BIOSCIENCES, INC.**









Date:
      August 10, 2007   By: /s/
      Joseph M. Cummins


Joseph
      M.
      Cummins


President
      and Chief
      Executive Officer














Date:
      August 10, 2007   By: /s/
      Gary W. Coy


Gary
      W.
      Coy


Vice
      President and
      Chief Financial Officer









14