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 **March
        31, 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
        March 31, 2007 there were 25,599,767 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 - March 31, 2007 (unaudited)
              3Statements
                  of Operations - Three Months Ended March 31, 2007 and 2006
                  (unaudited)
              4Condensed
                  Statements of Cash Flows - Three Months Ended March 31, 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
 March
        31,
        2007
 
 **Assets**Current
                  assets:Cash
                  and cash equivalents
              
              $
              156,304Other
                  current assets
              
              
              18,302Total
                  current assets
              
              
              174,606Property,
                  equipment, and software, net
              
              
              16,435Patents,
                  net
              
              
              124,126Total
                  assets
              
              $
              315,167**Liabilities
                  and Stockholders' Deficit**Current
                  liabilities:Accounts
                  payable and accrued expenses
              
              $
              127,818Accrued
                  interest - related party
              
              
              622,833Notes
                  payable - related party
              
              
              2,000,000Total
                  current liabilities
              
              
              2,750,651Total
                  liabilities
              
              
              2,750,651Commitments
                  and contingenciesStockholders'
                  deficitPreferred
                  stock, $.01 par value:Authorized
                  shares - 10,000,000Issued
                  shares - none
              
              
              -Common
                  stock, $.01par value:Authorized
                  shares - 50,000,000Issued
                  shares - 25,599,767
              
              
              255,998Additional
                  paid-in capital
              
              
              24,007,603Accumulated
                  deficit
              
              
              (26,699,085
              )Total
                  stockholders' deficit
              
              
              (2,435,484
              )Total
                  liabilities and stockholder's deficit
              
              $
              315,167
 
 *See
        accompanying notes to financial statements.*
  3
  Amarillo
        Biosciences, Inc.
 Statements
        of Operations - Unaudited
 
 Three
                  months ended March 31,2007
              
              
              2006Revenues:Dietary
                  supplement sales
              
              $
              534
              
              $
              853Sublicense
                  fee revenue
              
              
              40,000
              
              
              30,000Total
                  revenues
              
              
              40,534
              
              
              30,853Operating
                  expenses:Cost
                  of sales
              
              
              168
              
              
              -Research
                  and development expenses
              
              
              131,012
              
              
              96,238Selling,
                  general and administrative expenses
              
              
              633,575
              
              
              681,442Total
                  operating expenses
              
              
              764,755
              
              
              777,680Operating
                  loss
              
              
              (724,221
              )
              
              (746,827
              )Other
                  income (expense)Interest
                  expense
              
              
              (22,238
              )
              
              (24,181
              )Interest
                  income
              
              
              1,253
              
              
              -Investment
                  income
              
              
              -
              
              
              -Net
                  loss
              
              $
              (745,206
              )
              $
              (771,008
              )Basic
                  and diluted net loss per share
              
              
              (0.03
              )
              
              (0.04
              )Weighted
                  average shares outstanding
              
              
              24,930,331
              
              
              20,360,871
 
 *See
        accompanying notes to financial statements*
  4
  Amarillo
        Biosciences, Inc.
 Condensed
        Statements of Cash Flows - Unaudited
 
 Three
                  months ended March 31,2007
              
              
              2006Net
                  cash used in operating activities
              
              $
              (503,702
              )
              $
              (266,405
              )Cash
                  from investing activitiesPurchases
                  of equipment
              
              
              (1,265
              )
              
              (1,461
              )Patents
              
              
              (1,673
              )
              
              -Net
                  cash used in investing activities:
              
              
              (2,938
              )
              
              (1,461
              )Cash
                  from financing activities:Proceeds
                  from issuance of common stock
              
              
              449,100
              
              
              522,284Repayments
                  on notes payable
              
              
              -
              
              
              (68,500
              )Net
                  cash used in financing activities
              
              
              449,100
              
              
              453,784Net
                  increase (decrease) in cash
              
              
              (57,540
              )
              
              185,918Cash
                  and cash equivalents at beginning of period
              
              
              213,844
              
              
              193,315Cash
                  and cash equivalents at end of period
              
              $
              156,304
              
              $
              379,233Supplemental
                  Disclosure of Cash Flow InformationCash
                  paid for interest
              
              $
              107
              
              $
              2,050
 
 *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 three months ended March 31, 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.
            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 are to be issued
                in
                25,000 share portions on March 30, June 30, 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 options to employees of the Company. These
        options vest evenly over the next 4 years. The Company recognized $58,287
        expense related to the options during the first quarter of 2007. The remaining
        cost expected to be recognized if these options vest is $803,378.
 
 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.
 
 In
        the
        first three months 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. During the quarter ended March 31, 2007, finder’s
        fees paid related to private placements of
        stock
        totaled $6,750, and are included as general and administrative expenses in
        the
        Company’s statement of operations.
   6
   4.
            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. 
 5.
            Subsequent
                Events. Since March 31, 2007, the Company has sold 45,565 shares
                of
                unregistered stock for $0.45 per share in private placement offerings.
                In
                addition, 177,486 options were exercised at $0.06 to $0.44 per share.
                Total proceeds to the Company were
                $56,173. 
 
 **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 quarter 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 early 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 according to
        FDA protocol. Two more sites for enrollment of Behcet’s disease patients have
        been approved by the Turkish Ministry of Health. The two sites are being
        added
        to accelerate enrollment of 90 patients with goal of completing the Phase
        2
        trial in 2007. Approximately 100 patients have been screened for enrollment
        and
        62 have been started on treatment as of today’s date. The double-blinded 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 Clincal Trial of Oral Warts in HIV+ Patients.*  Three
        more clinical sites have agreed to join the six clinical sites currently
        approved to enroll patients in a study of HIV+ patients suffering from oral
        warts. This placebo-controlled Phase 2 study is a follow-up to two
  7
  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, 10 of 80 planned subjects have been
        enrolled. The goal is to complete the study in 2007 or early 2008.
 
 *German
        Institute for Viral Research.* During
        the first quarter, 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.* On
        December 1, 2006, the Company submitted an STTR grant application to the
        National Institutes of Health (NIH), seeking approximately $100,000 to perform
        a
        double-blind, placebo-controlled trial in the treatment of chronic cough
        in
        patients suffering from idiopathic pulmonary fibrosis (IPF). This study was
        intended to be a confirmatory follow-up to the positive, open-label pilot
        study
        conducted by Dr. Lorenz Lutherer at the Texas Tech University Health Sciences
        Center (TTUHSC) in Lubbock, TX. In the pilot study, 5 of 6 IPF subjects 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. On March
        23, the
        Company learned that the NIH had decided not to fund this project. The Company
        plans to revise and re-submit the application during a future NIH funding
        cycle.
  *COPD* .  On March
        30, 2006, Dr. Lorenz Lutherer submitted a request for an internal “seed grant”
from the TTUHSC in Lubbock, TX in the amount of $20,000 to perform a
        double-blind, placebo-controlled study of orally administered IFN-alpha in
        the
        treatment of chronic cough in 30 patients with chronic obstructive pulmonary
        disease (COPD). This study is intended to expand the positive results observed
        by Dr. Lutherer in treating IPF patients (see previous section) to another
        significant cause of chronic cough, COPD. A funding decision is expected
        in the
        2nd quarter of this year. 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 quarter
        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.
   8
  
  *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
        is
        negotiating with an entrepreneur who seeks a supply agreement to sell ACM
        for
        dry mouth.
  *Equity
        Funding.* In
        the
        first quarter, the Company completed private equity financing by selling
        restricted stock at a discount to 18 investors. The net proceeds to the Company
        were $442,350.
  Results
        of Operations:
  Revenues.
        During the three-month period ended March 31, 2007, $534 from dietary supplement
        sales was generated compared to revenues from dietary supplement sales for
        the
        three-month period ended March 31, 2006, of $853, a decrease of $319 or
        approximately 37%. In the first quarter ended March 31, 2007 a $40,000
        sublicense fee was collected compared to a $30,000 sublicense fee the first
        quarter of 2006, an increase of $10,000 or approximately 33%. There were
        no
        sales of interferon products during the first quarter of 2007.
  Research
        and Development Expenses. Research and development expenses of $131,012 were
        incurred for the three month period ended March 31, 2007, compared to $96,238
        for the three month period ended March 31, 2006, an increase of $34,774.
        R&D
        expenses are higher in 2007 since enrollment began for Phase 2 oral warts
        studies in the US.
  Selling,
        General and Administrative Expenses. Selling, general and administrative
        expenses of $633,575 were incurred for the three-month period ended March
        31,
        2007, compared to $681,442 for the three-month period ended March 31, 2006,
        a
        decrease of $47,867. Salaries excluding non-cash stock grant and option
        recognition expenses were $27,687 higher in the first quarter of 2007, since
        2007 included two additional employees. Expenses were increased by the addition
        of $34,533 of accrued liability for vacation time and $12,390 of D&O
        insurance costs during the first quarter of 2007. Accounting fees increased
        $15,167 during the first quarter of 2007 over the first quarter of 2006.
        License
        and royalty fees were $27,491 in the first quarter of 2007 compared to $15,000
        in the first quarter of 2006, an increase of $12,491. During the first quarter
        of 2007 the Company recognized $58,287 (based on Black-Scholes option pricing
        model) of non-cash expenses related to employee stock options granted in
        2006.
        In the first quarter of 2006, $216,000 (fair value) of non-cash expense was
        recognized for a stock grant to an employee. Excluding the one-time stock
        grant
        to an employee, expenses increased during the first quarter of 2007 compared
        to
        the first quarter of 2006 as a result of increased clinical trial
        activities.
 
 Non-cash
        Consulting Activities. During the three-month period ended March 31, 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 are to be issued in 25,000 share portions on March 30, June
        30,
        September 30 and December 31 during fiscal 2007. The accumulated value of
        the
        above mentioned stock for the first quarter of 2007 is $166,000 for non-cash
        consulting compensation. In the first quarter of 2006, non-cash consulting
        compensation was approximately $224,000.
 
 Net
        Income (Loss). As a result of the above, in the three-month period ended
        March
        31, 2007, the Company's net loss was ($745,206) compared to a net loss for
        the
        three-month period ended March 31, 2006 of ($771,008).
  9
  Liquidity
        Needs:
 On
        March
        31, 2007, the Company had available cash of approximately $156,304, and had
        a
        working capital deficit (current assets less current liabilities) of
        approximately $2,576,045. Current liabilities includes two $1 million notes
        plus
        $622,832 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 $169,000
        per
        month. The Company's continued losses and lack of liquidity indicate that
        the
        Company may not be 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
        Securities 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 uncertainties 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: promulgation and implementation
        of regulations by the U.S. Food and Drug Administration ("FDA"); promulgation
        and implementation of regulations by foreign governmental instrumentalities
        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, 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.
   10
  **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 March 31, 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 at 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 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 are to be issued in 25,000 share portions on March
        30,
        June 30, September 30 and December 31 during fiscal 2007. The shares will
        be
        registered on Form S-8.
  In
        the
        quarter ended March 31, 2007, the Company completed private equity financing
        by
        selling 998,300 restricted shares of common stock at a discount to 18 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 $449,100. 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 $6,750 in finder’s fees.
  
 **Date
                  (2007)**
              **Shares**
              **Purchaser**
              **Discount*****Issue
                  Price**
              **Number**
              **Per
                  Share**
              **Total**1
              January
                  22
              .45
              50000
              Stuart
                  Needleman Trust
              .33
              165002
              January
                  22, February 22
              .45
              100000
              L.E.
                  International Trust
              .425
              425003
              February
                  6
              .45
              50000
              Joan
                  Kanter
              .33
              16500
  11
  
 4
              February
                  6,9
              .45
              50000
              Claudia
                  Walters
              .31
              155005
              February
                  7
              .45
              10000
              Gretchen
                  Coy Trust
              .31
              31006
              February
                  16
              .45
              50000
              Pablo
                  Kaufmann
              .40
              200007
              February
                  20
              .45
              25000
              Gary
                  W. Coy
              .37
              92508
              February
                  20
              .45
              50000
              Francine
                  Garofalo
              .37
              185009
              February
                  23
              .45
              2300
              Donna
                  Wesling
              .61
              140310
              February
                  26
              .45
              100000
              Dipayan
                  Sarkar
              .50
              5000011
              February
                  27
              .45
              100000
              Harvey
                  Bibicoff
              .42
              4200012
              March
                  1
              .45
              50000
              Rajan
                  Vaz
              .38
              1900013
              March
                  1
              .45
              130000
              Clarence
                  McDaniel
              .38
              4940014
              March
                  2
              .45
              50000
              Vincent
                  Fiorino
              .43
              2150015
              March
                  5
              .45
              4889
              Earl
                  McDaniel
              .39
              1906.7116
              March
                  6
              .45
              50000
              Wesley
                  Harris
              .39
              1950017
              March
                  8
              .45
              50000
              Jennifer
                  Vlamis
              .37
              1850018
              March
                  9
              .45
              75811
              Sean
                  Brooks
              .40
              30324.40
 *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 Stockholders of Amarillo Biosciences, Inc. (the "Company")
        will be held on the 1 st day of
        June, 2007 at 7:00 p.m., local time, at the Ambassador Hotel Ballroom, 3100
        I-40
        West, Amarillo, Texas, 79102, for the following purposes:
 
 1.
              To
                  elect six Directors to serve until the next Annual Meeting and
                  until their
                  respective successors are elected and
                  qualify.
 
 2.
              To
                  consider and vote upon an amendment to the Company’s Articles of
                  Incorporation to increase by 50,000,000 (to an aggregate of 100,000,000)
                  the number of shares of the Company’s voting common stock, par value
                  $0.01, authorized for issuance.
 
 3.  To
        act
        upon such other business as may properly come before the meeting.
 
 4.  To
        adjourn the meeting, if necessary, for the purpose of soliciting additional
        votes.
  Only
        stockholders of record as of the close of business on April 5, 2007 are entitled
        to receive notice of and to vote at the meeting. A list of such stockholders
        shall be open to the examination of any stockholder during ordinary business
        hours, for a period of ten (10) days prior to the meeting, at the principal
        executive offices of the Company, 4134 Business Park Drive, Amarillo, Texas
        79110.
  The
        vote
        to increase the number of shares of the Company’s voting common stock from 50
        million to 100 million shares requires the affirmative vote of two-thirds
        (2/3)
        of all of the issued and outstanding shares of common stock of those
        shareholders of record as of the close of business on April 5, 2007 (25,476,767
        shares of Common Stock). The shareholders of record on April 5, 2007 do not
        include 125,000 shares of stock grants to consultants, which are authorized
        by
        the board but not yet physically issued. The reason for the proposed amendment
        is that the Board anticipates a need in the future for additional authorized
        shares to assist the Company
  12
  in
        the
        raising of additional capital. The Board believes that approximately 15.6
        million authorized shares available for future issuance (net of unissued
        shares
        which are reserved for issuance) are inadequate to satisfy the Company’s
        long-term requirements.
 
 For
        more
        information about the annual meeting scheduled for June 1, 2007, see the
        Company’s Proxy materials filed with the Securities and Exchange
        Commission.
   **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:
        May
        10, 2007    By: /s/
        Joseph M. Cummins
 Joseph
        M. Cummins
 President
        and Chief Executive
        Officer
   Date:
        May
        10, 2007    By: /s/
        Gary W. Coy
 Gary
        W. Coy
 Vice
        President and Chief
        Financial Officer
  
   14