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, 2006
                              -----------------------------


| |   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, 2006 there were 22,346,235 shares of the issuer's common stock
outstanding.

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


                                       1
<PAGE>


                           AMARILLO BIOSCIENCES, INC.

                                      INDEX


                                                                         PAGE
                                                                         ----

PART I:        FINANCIAL INFORMATION

ITEM 1.        Financial Statements

               Consolidated Balance Sheet - June 30, 2006                  3

               Consolidated Statements of Operations - Three and Six
               Months Ended June 30, 2006 and June 30, 2005                4

               Condensed Consolidated Statements of Cash Flows - Six
               Months Ended June 30, 2006 and 2005                         5

               Notes to Consolidated Financial Statements                  6


ITEM 2.        Management's Discussion and Analysis of Financial           8
               Condition and Results of Operations

ITEM 3.        Controls and Procedures                                    12



PART II:       OTHER INFORMATION

ITEM 2.        Unregistered Sales of Equity Securities and Use of
               Proceeds                                                   13

ITEM 4.        Submission of Matters to a Vote of Security Holders        14

ITEM 6.        Exhibits                                                   15


Signatures                                                                16


                                       2
<PAGE>


                         PART I - FINANCIAL INFORMATION

Item 1.         Financial Statements

                   Amarillo Biosciences, Inc. and Subsidiaries
                     Consolidated Balance Sheet - Unaudited
                                  June 30, 2006


Assets
Current assets:
   Cash                                                            $    232,282
   Other current assets                                                   6,300
                                                                   ------------
Total current assets                                                    238,582

Property & Equipment, net of accumulated depreciation of $53,765         11,234
Patents, net of accumulated amortization of $197,979                    112,717
Software, net of accumulated amortization of $44                          1,535
                                                                   ------------
Total assets                                                       $    364,068
                                                                   ============

Liabilities and Stockholders' Deficit
Current liabilities:
   Accounts payable                                                $     63,003
   Accrued interest expense                                             555,209
   Notes payable - related parties                                    2,025,000
                                                                   ------------
Total current liabilities                                             2,643,212
                                                                   ------------
Total liabilities                                                     2,643,212
                                                                   ------------
Commitments and contingencies
Stockholders' deficit
   Preferred stock, $.01 par value:
      Authorized shares - 10,000,000
      Issued shares - none
      Common stock, $.01 par value:
      Authorized shares - 50,000,000
      Issued shares - 22,346,235                                        223,462
   Additional paid-in capital                                        22,233,425
   Accumulated deficit                                              (24,736,031)
                                                                   ------------
Total stockholders' deficit                                          (2,279,144)
                                                                   ------------
Total liabilities and stockholders' deficit                        $    364,068
                                                                   ============


See accompanying notes to financial statements.


                                       3
<PAGE>


                    Amarillo Biosciences, Inc. and Subsidiaries
                 Consolidated Statements of Operations - Unaudited


<TABLE>
<CAPTION>
                                                   Three months ended               Six months ended
                                                        June 30,                        June 30,
                                              ------------------------------ -----------------------------
                                                  2006            2005            2006            2005
                                              ------------------------------ -----------------------------
<S>                                           <C>             <C>             <C>             <C>
Revenues:
Sales - Nutraceutical                         $      1,392    $     39,898    $      2,245    $     40,774
Sublicense Fee Revenue                                  --          42,134          30,000          42,134
Federal research grants                             60,023          13,614          60,023          13,614
                                              ------------------------------------------------------------
        Total Revenue                               61,415          95,646          92,268          96,522
                                              ------------------------------------------------------------
Expenses:
Cost of sales                                           --           7,808              --           7,816
Research and development expenses                  159,697          42,142         255,935          83,764
Selling, general and administrative expense        667,573          97,574       1,349,016         230,828
Interest expense                                    22,950          24,780          47,131          48,571
                                              ------------------------------------------------------------
        Total Expenses                             850,220         172,304       1,652,082         370,979
                                              ------------------------------------------------------------

Net loss                                      $   (788,805)   $    (76,658)   $ (1,559,814)   $   (274,457)
                                              ============================================================

Basic and diluted net loss per share          $      (0.04)   $      (0.00)   $      (0.07)   $      (0.02)
                                              ============================================================

Weighted average shares outstanding             21,881,155      16,162,290      21,082,874      15,605,881
                                              ============================================================
</TABLE>


See accompanying notes to financial statements.


                                       4
<PAGE>


                   Amarillo Biosciences, Inc. and Subsidiaries
           Condensed Consolidated Statements of Cash Flows - Unaudited


                                                     Six months ended June 30,
                                                       2006            2005
                                                   ------------    ------------

Net cash used in operating activities              $   (665,854)   $   (188,294)
                                                   ------------    ------------

Cash from investing activities:
   Purchases of equipment                               (10,885)             --
   Purchases of software                                 (1,579)             --
                                                   ------------    ------------
      Net cash used in investing activities             (12,464)             --
                                                   ------------    ------------

Cash from financing activities:
   Proceeds from exercise of options                     27,700              --
   Proceeds from issuance of common stock               758,085         194,499
   Principal payments on notes payable                  (68,500)             --
                                                   ----------------------------
      Net cash provided by financing activities         717,285         194,499
                                                   ----------------------------
Net increase in cash                                     38,967           6,205
Cash at beginning of period                             193,315           6,283
                                                   ----------------------------
Cash at end of period                              $    232,282    $     12,488
                                                   ============================
Supplemental Disclosure of Cash Flow Information
   Cash paid for interest                          $      2,623    $      5,154
                                                   ============    ============


See accompanying notes to financial statements.


                                       5
<PAGE>


                   Amarillo Biosciences, Inc. and Subsidiaries

             Notes To Consolidated Financial Statements - Unaudited

1. Basis of presentation. The accompanying consolidated financial statements,
   which should be read in conjunction with the consolidated financial
   statements and footnotes included in the Company's Form 10-KSB for the year
   ended December 31, 2005 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, 2006 are not necessarily
   indicative of the results that may be expected for the full year ending
   December 31, 2006.

2. Stock based compensation. Effective January 1, 2006, the Company adopted SFAS
   No. 123 (revised), "Share-Based Payment" (SFAS 123(R)) utilizing the modified
   prospective approach. Prior to the adoption of SFAS 123(R) we accounted for
   stock option grant in accordance with APB Opinion No. 25,"Accounting for
   Stock Issued to Employees," and accordingly, recognized compensation expense
   for stock option grants using the intrinsic value method.

   Under the modified prospective approach, SFAS 123(R) applies to new awards
   and to awards that were outstanding on January 1, 2006 that are subsequently
   modified, repurchased or cancelled. Under the modified prospective approach,
   compensation cost recognized in the first quarter of fiscal 2006 includes
   compensation cost for all share-based payments granted prior to, but not yet
   vested as of January 1, 2006, based on the grant-date fair value estimated in
   accordance with the original provisions of SFAS 123, and compensation cost
   for all share-based payments granted subsequent to January 1, 2006 based on
   the grant-date fair value estimated in accordance with the provisions of SFAS
   123(R). For all quarters after the first quarter of fiscal 2006, compensation
   costs recognized will include compensation costs for all share-based payments
   granted based on the grant date fair value estimated in accordance with the
   provisions of SFAS 123(R).

   The following table illustrates the effect on net loss and net loss per share
   if Amarillo had applied the fair value provisions of FASB Statement No. 123,
   Accounting for Stock-Based Compensation, to stock-based employee compensation
   prior to January 1, 2006.


                                       6
<PAGE>


                                                     Six months ended
                                                       June 30, 2005
                                                     ----------------
Net loss, as reported                                $       (274,457)
Less:  stock based compensation determined                   (181,105)
   under fair value based method
                                                     ----------------
Pro forma  net loss                                  $       (455,562)
                                                     ================
Basic and diluted net loss per share
   As reported                                       $          (0.02)
   Pro forma                                         $          (0.02)


   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 of 0.0%, expected volatility of 134.0%, risk-free
   interest rate of 1.5% and expected life of 60 months.

3. Loss per share. Loss per share is computed based on the weighted average
   number of common shares outstanding.

4. 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.

5. Line of Credit. The Company has a line of credit with Wells Fargo for
   $16,000, with interest at the prime rate plus 6.75 percent. There was an
   outstanding balance at June 30, 2006 of $7,634, which is included in accounts
   payable.

6. Equity. During the quarter ended March 31, 2006, the Board of Directors
   authorized the issuance of 9,033 shares of restricted common stock to
   consultants in lieu of cash payments. Based upon the common stock trading
   price at the time of issuance, a non-cash consulting expense of $5,200 was
   recorded for the issuance of these shares during the first quarter of 2006.

   During the quarter ended June 30, 2006, the Board of Directors authorized the
   issuance of 70,415 shares of restricted common stock to consultants in lieu
   of cash payments. Based upon the common stock trading price at the time of
   issuance, a non-cash consulting expense of $36,400 was recorded for the
   issuance of these shares during the second quarter of 2006.


                                       7
<PAGE>


   During the six months ended June 30, 2006, the Board of Directors also
   authorized the issuance of 674,000 options to purchase restricted common
   stock at a discounted price to consultants for service, in lieu of cash
   payments. These options have not been exercised. In the first quarter of
   2006, the Company issued 24,000 options to a consultant, vesting over a
   twelve month period. The value of these options will be recognized each
   quarter beginning with the first quarter of 2006 valued at $8,951 per
   quarter. In the first quarter of 2006, the Company also issued 250,000
   options, vesting immediately valued at $249,448. In the second quarter of
   2006, the Company issued 400,000 options, vesting immediately valued at
   $299,914.

   The accumulated value of the above mentioned stock and stock options for the
   six months ended June 30, 2006 is $608,864 for non-cash consulting
   compensation.

   During the six months ended June 30, 2006, the Company recognized $216,000
   (fair value) of expense in connection with the February 2006 grant of 300,000
   shares of stock to an employee of the Company. The certificate was issued in
   May 2006.

   In the first six months of 2006, the Company completed private equity
   financing by selling 1,904,917 restricted shares of common stock at a
   discount to 12 investors. The net proceeds to the Company were approximately
   $758,000.


7. License Fee. License 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
   2006, the Company entered into a License and Supply Agreement whereby the
   Company received and earned $30,000 as an initial license fee.


8. Subsequent Events. In July, the Company completed private equity financing by
   selling 110,000 restricted shares of common stock at a discount to two
   investors. The net proceeds to the Company were approximately $60,500.


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.


                                       8
<PAGE>


In the second quarter, the Company completed private equity financing by selling
restricted stock at a discount to six investors. The net proceeds to the Company
were approximately $235,800.

During the second quarter of 2006, the Company worked in three areas to improve
the Company. These are the areas 1) agroterrorism, 2) partner discussions, and
3) sales and Influenza.

Agroterrorism. Teel Bivins continues to function as a consultant to help advance
our position.

Nutraceutical Product. The Company sells ACM as Maxisal(R) to individuals and to
pharmacies in the USA and to licensed distributors overseas.

Partner/License Discussions. The Company is presently negotiating with human
health commercial development partners in various regions of the world including
South America, India, 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.

Human Clinical Studies. Houston. The Company has launched a myeloproliferative
diseases study at a major cancer center in Texas. The myeloproliferative
diseases to be studied are polycythemia vera and essential thrombocythemia. An
investigational new drug (IND) application was filed with the US Food and Drug
Administration (FDA) in the second quarter of 2005. Fourteen of twenty patients
planned for the final phase of the study have been enrolled to date.

Istanbul. Nobel Ilac Sanayii Ve Ticaret A.S., a leading Middle Eastern
pharmaceutical company that is co-sponsoring a Behcet's Disease study with the
Company, has confirmed that enrollment of 90 patients with Behcet's Disease has
commenced in Turkey. Approximately 57 patients have been screened for enrollment
and 22 have been started on treatment as of July 24, 2006. The double-blinded
Phase II Study is testing the efficacy of interferon lozenges versus placebo in
the treatment and prevention of mouth ulcers. The treatment duration is 12
weeks, with completion of the study expected within a year. Other products used
to treat mouth ulcers in Behcet'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 Behcet's Disease patients.


                                       9
<PAGE>


Multiple sites. A protocol has been filed with the FDA and clinical sites are
being enrolled to cooperate in a study of 80 HIV+ patients suffering from oral
warts. This placebo-controlled Phase II 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 the Company. Potential clinical sites are reviewing the
protocol and entering into investigator agreements prior to consideration by
their respective Institutional Review Boards (IRB). IRB approvals of the study
are expected over the summer, so patient enrollment can begin this fall. The
study will take approximately one year to complete.

Lubbock. Enrollment has been completed in an ongoing study of the use of
interferon lozenges in the treatment of idiopathic pulmonary fibrosis (IPF) at
Texas Tech University Health Sciences Center in Lubbock, Texas (TTUHSC). The
principal investigator, Lorenz Lutherer, MD, PhD, presented current findings
from the study at the Company's annual shareholders' meeting on June 22, 2006.
Dr. Lutherer reported that more than half of his patients treated for at least
one year showed no signs of disease progression as assessed by
pulmonary-functions testing and high-resolution cat scans of their lungs. IPF is
normally rapidly progressive, so the fact that half of the patients have shown
no progression of the disease during interferon lozenge treatment is very
encouraging.

Multiple sites. In the next two weeks, the Company expects to file an IND
(investigational new drug) application for a study of 60 IPF patients. These
patients will be enrolled from approximately six clinical sites in the US. The
patients will be given interferon or placebo for four weeks to assess the effect
of treatment on chronic cough. Approximately 85-90% of IPF patients complain of
a bothersome persistent cough that negatively impacts their quality of life. Dr.
Lutherer said that five of the six IPF study patients who had a long-standing
history of cough reported improvement in their cough within 1-4 weeks of
starting oral interferon treatment, with a corresponding increase in their
quality of life.

Animal Studies. Manfred Beilharz, PhD, Head of Microbiology and Immunology at
the School of Biomedical, Biomolecular and Chemical Sciences, The University of
Western Australia, reported on an influenza study in mice sponsored by the
Company at the Company's annual shareholders' meeting on June 22, 2006. An oral
dose of interferon alpha given once daily, protected mice against the weight
loss and changes in core body temperature normally associated with influenza
infections. Mice given placebo or the wrong dose of oral interferon lost weight
and suffered declining core temperature and had to be euthanized due to their
deteriorating condition, as required by Australian regulations. Dr. Beilharz is
preparing to announce the details of his findings in a major scientific journal.
Dr. Beilharz is past President of the Australian Interferon Society and an
internationally recognized authority on interferon. He and members of his
research department have 10 publications and three dissertations on the subject
of orally administered interferon.


                                       10
<PAGE>


Results of Operations:

Revenues. During the six month period ended June 30, 2006, $2,245 from product
sales was generated compared to revenues from product sales for the six month
period ended June 30, 2005 of $40,744, a decrease of $38,499. This decline in
revenue is largely due to the fact that there have been no sales of interferon
products in 2006. ABI entered into a License and Supply Agreement in the first
quarter of 2006 whereby the Company received and earned $30,000 as an initial
license fee.

Research and Development Expenses. Research and development expenses of $255,935
were incurred for the six month period ended June 30, 2006, compared to $83,764
for the six month period ended June 30, 2005, an increase of $172,171. This
increase is mainly a result of several studies that the Company has begun in
order to further its business objectives.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses of $1,349,015 were incurred for the six month period
ended June 30, 2006, compared to $230,828 for the six month period ended June
30, 2005, an increase of $1,118,187. This included $608,864 in non-cash expenses
in recognition of restricted stock issued to cover services provided by
consultants in lieu of cash, and options to purchase restricted stock in lieu of
cash. Also included in this amount is $216,000 for a stock bonus awarded on
February 20, 2006.

Non-Cash Consulting Activities. During the six month period ended June 30, 2006,
the Board of Directors authorized the issuance of shares of restricted common
stock to consultants in lieu of cash payments. Based upon the common stock
trading price at the times of issuance a non-cash consulting expense of $41,600,
the fair value, was recorded for the issuance of these shares during the six
month period ended June 30, 2006. Additionally, the Board authorized the
issuance of 674,000 options to purchase restricted common stock at a discounted
price to consultants for service, in lieu of cash payments.

Net Income (Loss). As a result of the above, in the six month period ended June
30, 2006, the Company's Net Loss was ($1,559,813) compared to a Net Loss for the
six month period ended June 30, 2005 of ($274,457). This increased loss is
primarily due to an increase in funding research activity and stock option
recognition.

Liquidity Needs:

At June 30, 2006, the Company had available cash of approximately $232,282, and
had a working capital deficit of approximately ($2,404,630). Assuming there is
no decrease in current accounts payable, and accounting for various one-time
expenses, the Company's negative cash flow is approximately $80,000 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 2006 Plan.


                                       11
<PAGE>


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 development 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.

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, 2006. 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.


                                       12
<PAGE>


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 June 30, 2006, the Board of Directors authorized the
issuance of 70,415 shares of restricted common stock to consultants in lieu of
cash payments. Based upon the common stock trading price at the time of
issuance, a non-cash consulting expense of $36,400 was recorded for the issuance
of these shares during the second quarter of 2006. The first three issuances
were to Biotech Financial and were exempt from registration under Rule 504 of
Regulation D promulgated pursuant to the Securities Act of 1933. Biotech
Financial provided financial consulting services as consideration for the
shares. The fourth issuance was to Mr. Patrick Martin and was exempt from
registration under Rule 504 of Regulation D promulgated pursuant to the
Securities Act of 1933. Mr. Martin accepted shares in lieu of cash for his
finder's fee for selling the Company's stock.

   The first issuance occurred on April 14, 2006, in the amount of 1,184 shares,
and was valued at $900 at a per share price of $.76, representing a discount of
$.69 per share, as shares of the Company closed at $1.45 on the previous day.

   The second issuance occurred on April 14, 2006, in the amount of 1,910
shares, and was valued at $3,100 at a per share price of $1.62, representing an
increase of $.17 per share, as shares of the Company closed at $1.45 on the
previous day.

   The third issuance occurred on April 30, 2006, in the amount of 938 shares,
and was valued at $1,201 at a per share price of $1.28 representing an increase
of $.06 per share, as shares of the Company closed at $1.22 on the previous
trading day.

   The fourth issuance occurred on April 18, 2006, in the amount of 66,383
shares, and was valued at $31,200 at a per share price of $.47, representing a
discount of $.89 per share, as shares of the Company closed at $1.36 on that
date.

   In the quarter ended June 30, 2006, the Company completed private equity
financing by selling 433,617 restricted shares of common stock at a discount to
six 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 $235,800. 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.


                                       13
<PAGE>


-------------------------------------------------------------------------------
                        Shares                                   Discount*
    Date (2006)   --------------------     Purchaser     ----------------------
                   Issue      Number                       Per Share   Total
                   Price
-------------------------------------------------------------------------------
 1    April 28      .47       33617       Claus Martin        .75      25213
-------------------------------------------------------------------------------
 2     May 15       .55       100000     SDP Investments      .69      69000
-------------------------------------------------------------------------------
 3     May 15       .55       100000   Hauck & Aufhaeuser     .69      69000
-------------------------------------------------------------------------------
 4     May 16       .55       50000      Thomas Huebner       .62      31000
-------------------------------------------------------------------------------
 5     May 16       .55       50000      Andrea Huebner       .62      31000
-------------------------------------------------------------------------------
 6     June 28      .55       100000   Daniel Mascarenhas     .31      31000
-------------------------------------------------------------------------------
*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 22, 2006,
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 fewer than 50% of the outstanding shares
of the Company represented at the meeting so the meeting was adjourned until
July 7, 2006, in order to solicit additional votes and obtain a quorum.

   The following persons were directors of the Company before the meeting and
continued to serve as directors of the Company until the meeting was reconvened
on July 7, 2006: Joseph M. Cummins, Stephen Chen, James Page, Dennis Moore, and
Katsuaki Hayashibara.

   The meeting reconvened on July 7, 2006, with 11,181,724 shares of the voting
common stock of the Company represented, being 51.8% of the issued and
outstanding voting common shares of the Company, 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 - 11,126,872 shares voted in favor and
54,852 share withheld;

   Director No. 2 - Stephen Chen - 11,163,449 shares voted in favor and 18,275
withheld;

   Director No. 3 - James Page - 11,159,449 shares voted in favor and 22,275
withheld;

   Director No. 4 - Dennis Moore - 11,109,001 shares voted in favor and 72,723
withheld;

   Director No. 5 - Thomas D'Alonzo - 11,159,449 shares voted in favor and
22,275 withheld; and


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<PAGE>


   Director No. 6 - Thomas Ulie - 11,109,301 shares voted in favor and 72,423
withheld.

   Proposition 2 - Authorization to vote Proxies on Other Business to Properly
Come Before the Meeting.

   Proposition 2 passed by a vote of 11,091,549 shares voted in favor, 80,900
voted against, and 9,275 shares not voted due to broker abstentions.

   Proposition 3 - Adjournment of Meeting to Solicit Additional Votes.

   Proposition 3 passed by a vote of 11,110,072 shares voted in favor, 63,677
shares voted against, and 7,975 shares not voted due to broker abstentions.

   No other business was transacted at the meeting.



Item 6.         Exhibits.

                None.


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<PAGE>


                                   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 9, 2006          By:  /s/ Joseph M. Cummins
                                 -------------------------------------------
                                   Joseph M. Cummins
                                   President and Chief Executive Officer



Date: August 9, 2006          By:  /s/ Gary Coy
                                 -------------------------------------------
                                   Gary Coy
                                   Vice President and Chief Financial Officer


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