**SECURITIES      AND EXCHANGE      COMMISSION**

**FORM      10-QSB**

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

**September      30, 2007 **

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

**AMARILLO      BIOSCIENCES, INC. **

| 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) |

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**AMARILLO      BIOSCIENCES, INC.**

|                                 |                                                                                                                                                                                                               |  PAGE                  NO. |
|--------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------|
| PART                  I:             |  FINANCIAL                  INFORMATION                                                                                                                                                                       |                            |
|  ITEM                  1.       |  Financial                  Statements                                                                                                                                                                        |                            |
|                                 |  Balance                  Sheet - September 30, 2007 (unaudited)                                                                                                                                              |  3                         |
|                                 |  Statements                  of Operations - Three and Nine Months Ended September 30, 2007                  and                  September 30, 2006 (unaudited)                  .......... |  4                         |
|                                 |  Condensed                  Statements of Cash Flows - Nine Months Ended September 30, 2007                  and 2006                  (unaudited)                                                            |  5                         |
|                                 |  Notes                  to Financial Statements (unaudited)                                                                                                                                                   |  6                         |
|   ITEM                  2. |   Management's                  Discussion and Analysis of Financial Condition and Results of                  Operations                                                                                |   9                   |
|  ITEM                  3.       |  Controls                  and Procedures                                                                                                                                                                     |  13                        |
|                                 |                                                                                                                                                                                                               |                            |
|  PART                  II:      |  OTHER                  INFORMATION                                                                                                                                                                           |                            |
|                                 |                                                                                                                                                                                                               |                            |
| ITEM                  2.             | Unregistered                  Sales of Equity Securities and Use of Proceeds                                                                                                                                       | 14                              |
|                                 |                                                                                                                                                                                                               |                            |
| ITEM                  4.        | Submission                  of Matters to a Vote of Security Holders                                                                                                                                               | 15                              |
| ITEM                  6.             | Exhibits.....................................................................                                          | 16                              |
|   Signatures               |                                                                                                                                                                                                               |   17                  |
|                                 |                                                                                                                                                                                                               |                            |
|                                 |                                                                                                                                                                                                               |                            |

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**PART      I - FINANCIAL INFORMATION**

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

| **Assets**                                                   |   |   |        |   |
|--------------------------------------------------------------|--------|--------|-------------|--------|
| Current                  assets:                             |   |   |        |   |
| Cash                  and cash equivalents                   |   | $      | 33,822      |   |
| Other                  current assets                        |   |   | 31,804      |   |
| Total                  current assets                        |   |   | 65,626      |   |
| Property,                  equipment, and software, net      |   |   | 14,026      |   |
| Patents,                  net                                |   |   | 120,029     |   |
| Total                  assets                                |   | $      | 199,681     |   |
|                                                         |   |   |        |   |
| **Liabilities                  and Stockholders' Deficit**   |   |   |        |   |
| Current                  liabilities:                        |   |   |        |   |
| Accounts                  payable and accrued expenses       |   | $      | 193,861     |   |
| Accrued                  interest - related party            |   |   | 667,832     |   |
| Notes                  payable - related party               |   |   | 2,000,000   |   |
| Total                  current liabilities                   |   |   | 2,861,693   |   |
| Total                  liabilities                           |   |   | 2,861,693   |   |
| Commitments                  and contingencies               |   |   |        |   |
| Stockholders'                  deficit                       |   |   |        |   |
| Preferred                  stock, $.01 par value:            |   |   |        |   |
| Authorized                  shares - 10,000,000              |   |   |        |   |
| Issued                  shares - none                        |   |   | -           |   |
| Common                  stock, $.01par value:                |   |   |        |   |
| Authorized                  shares - 100,000,000             |   |   |        |   |
| Issued                  and outstanding shares - 27,405,080  |   |   | 274,051     |   |
| Additional                  paid-in capital                  |   |   | 25,090,288  |   |
| Accumulated                  deficit                         |   |   | (28,026,351 | )      |
| Total                  stockholders' deficit                 |   |   | (2,662,012  | )      |
| Total                  liabilities and stockholder's deficit |   | $      | 199,681     |   |
|                                                         |   |   |        |   |

*See      accompanying notes to financial statements.*

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|                                                             |   |                                    Three months ended                                            September 30,  |                                         Nine months ended                                             September 30, |
|-------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                        |   |                                                                                                                                                                                                                                                                                                                                                            | 2007                                                                                                                                                                                                                                                                                                                                                                                         |   |   | 2006 |   |   | 2007 |   |   | 2006 |   |
|                                                        |   |                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| Revenues:                                                   |   |                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| Dietary                supplement sales                     |   | $                                                                                                                                                                                                                                                                                                                                                               | 624                                                                                                                                                                                                                                                                                                                                                                                          |   | $ | 609 |   | $ | 1,772 |   | $ | 2,854 |   |
| Sublicense                fee revenue                       |   |                                                                                                                                                                                                                                                                                                                                                            | -                                                                                                                                                                                                                                                                                                                                                                                            |   |   | - |   |   | 40,000 |   |   | 30,000 |   |
| Federal                research grants                      |   |                                                                                                                                                                                                                                                                                                                                                            | -                                                                                                                                                                                                                                                                                                                                                                                            |   |   | - |   |   | - |   |   | 60,023 |   |
| Total                revenues                               |   |                                                                                                                                                                                                                                                                                                                                                            | 624                                                                                                                                                                                                                                                                                                                                                                                          |   |   | 609 |   |   | 41,772 |   |   | 92,877 |   |
|                                                        |   |                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| Operating                expenses:                          |   |                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| Cost                of sales                                |   |                                                                                                                                                                                                                                                                                                                                                            | 204                                                                                                                                                                                                                                                                                                                                                                                          |   |   | - |   |   | 559 |   |   | - |   |
| Research                and development expenses            |   |                                                                                                                                                                                                                                                                                                                                                            | 141,351                                                                                                                                                                                                                                                                                                                                                                                      |   |   | 174,371 |   |   | 384,593 |   |   | 430,306 |   |
| Selling,                general and administrative expenses |   |                                                                                                                                                                                                                                                                                                                                                            | 551,988                                                                                                                                                                                                                                                                                                                                                                                      |   |   | 589,174 |   |   | 1,663,912 |   |   | 1,873,868 |   |
| Total                operating expenses                     |   |                                                                                                                                                                                                                                                                                                                                                            | 693,543                                                                                                                                                                                                                                                                                                                                                                                      |   |   | 763,545 |   |   | 2,049,064 |   |   | 2,304,174 |   |
|                                                        |   |                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| Operating                loss                               |   |                                                                                                                                                                                                                                                                                                                                                            | (692,919                                                                                                                                                                                                                                                                                                                                                                                     | ) |   | (762,936 | ) |   | (2,007,292 | ) |   | (2,211,297 | ) |
|                                                        |   |                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| Other                income (expense)                       |   |                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| Interest                expense                             |   |                                                                                                                                                                                                                                                                                                                                                            | (22,898                                                                                                                                                                                                                                                                                                                                                                                      | ) |   | (23,062 | ) |   | (67,571 | ) |   | (70,193 | ) |
| Interest                income                              |   |                                                                                                                                                                                                                                                                                                                                                            | 159                                                                                                                                                                                                                                                                                                                                                                                          |   |   | 1,295 |   |   | 2,389 |   |   | 1,295 |   |
| Net                loss                                     |   | $                                                                                                                                                                                                                                                                                                                                                               | (715,658                                                                                                                                                                                                                                                                                                                                                                                     | ) | $ | (784,703 | ) | $ | (2,072,474 | ) | $ | (2,280,195 | ) |
|                                                        |   |                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| Basic                and diluted net loss per share         |   | $                                                                                                                                                                                                                                                                                                                                                               | (0.03                                                                                                                                                                                                                                                                                                                                                                                        | ) | $ | (0.03 | ) | $ | (0.08 | ) | $ | (0.10 | ) |
|                                                        |   |                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| Weighted                average shares outstanding          |   |                                                                                                                                                                                                                                                                                                                                                            | 26,712,223                                                                                                                                                                                                                                                                                                                                                                                   |   |   | 23,270,391 |   |   | 25,870,142 |   |   | 21,819,372 |   |
|                                                        |   |                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |

*See      accompanying notes to financial statements.*

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|                                                            |   | Nine                months ended September 30, |       |
|-----------------------------------------------------------------|--------|------------------------------------------------|------------|
|                                                            |   | 2007                                           |       | 2006 |   |
|                                                            |   |                                           |       |   |   |
| Net                cash used in operating activities            |   | $                                              | (1,057,740 | ) | $ | (1,144,162 | ) |
|                                                            |   |                                           |       |   |   |   |   |
| Cash                from investing activities                   |   |                                           |       |   |   |   |   |
| Purchases                of equipment                           |   |                                           | (1,265     | ) |   | (10,987 | ) |
| Purchases                of software                            |   |                                           | -          |   |   | (1,579 | ) |
| Patent                expenditures                              |   |                                           | (4,411     | ) |   | (13,905 | ) |
| Net                cash used in investing activities:           |   |                                           | (5,676     | ) |   | (26,471 | ) |
|                                                            |   |                                           |       |   |   |   |   |
| Cash                from financing activities:                  |   |                                           |       |   |   |   |   |
| Proceeds                from exercise of options                |   |                                           | 90,889     |   |   | 30,400 |   |
| Proceeds                from sale of common stock               |   |                                           | 792,505    |   |   | 1,536,585 |   |
| Repayments                on notes payable                      |   |                                           | -          |   |   | (93,500 | ) |
| Net                cash provided by financing activities        |   |                                           | 883,394    |   |   | 1,473,485 |   |
| Net                increase (decrease) in cash                  |   |                                           | (180,022   | ) |   | 302,852 |   |
| Cash                and cash equivalents at beginning of period |   |                                           | 213,844    |   |   | 193,315 |   |
| Cash                and cash equivalents at end of period       |   | $                                              | 33,822     |   | $ | 496,167 |   |
| Supplemental                disclosure of cash flow information |   |                                           |       |   |   |   |   |
| Cash                paid for interest                           |   | $                                              | 440        |   | $ | 3,062 |   |
|                                                            |   |                                           |       |   |   |   |   |

*See      accompanying notes to financial statements.*

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**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. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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 September 30, 2007 of $9,887, which is included                in                accounts payable. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.   | Equity.                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, $55,304 expense during the second quarter and $60,270 expense                during the third quarter of 2007. The remaining cost expected to                be                recognized if these options vest is $687,804. 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. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 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. An annual $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 September 30, 2007, the Company sold 1,310,000 shares                of                unregistered stock for $0.20 per share in private placement offerings.                In                addition, 25,000 options were exercised at $0.20 per share and 30,000                warrants have been exercised at $0.22 per share. Total proceeds to                the                Company were $273,600. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**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 - FDA Approval and Commercialization of Oral Interferon. *

*Behcet’s      Disease.*

*Enrollment      in Phase 2 Clinical Trial of Behcet’s Disease. *

*Oral      Warts in HIV+ Patients.*

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*Enrollment      in Phase 2 Clinical Trial of Oral Warts in HIV+ Patients. *

*Influenza.      *

*Influenza      - German Institute for Viral Research. *

*Influenza      - University of Western Australia.*

*Chronic      Cough - Idiopathic Pulmonary Fibrosis. *

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*Chronic      Cough - COPD.*

*License      Partners. *

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*Partner/License      Discussions.*

*Nutraceutical      Product*

*Equity      Funding. *

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

**PART      II - OTHER INFORMATION**

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

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|                           | **Date                (2007)** | **Shares** | **Purchaser** |
|--------------------------------|--------------------------------|------------|---------------|
| **Issue                Price** | **Number**                     |
| 1                              | July                17         | .35        | 40,000        | Pablo                Kaufmann |
| 2                              | July                25         | .20        | 20,000        | Jake                Richards |
| 3                              | July                31         | .20        | 100,000       | Thomas                Ulie |
| 4                              | August                6        | .20        | 25,000        | Gretchen                Coy Trust |
| 5                              | August                17       | .20        | 75,000        | Joan                Kanter |
| 6                              | August                17       | .20        | 75,000        | Francine                Garofalo |
| 7                              | August                16       | .20        | 35,000        | S.                H. Webster |
| 8                              | August                20       | .20        | 10,000        | Jack                Nunley |
| 9                              | August                20       | .20        | 75.000        | Stephen                Chen |
| 10                             | August                31       | .20        | 100,000       | Dennis                Moore |
| 11                             | September                4     | .20        | 15,000        | Thomas                D’Alonzo |
| 12                             | September                14    | .20        | 50,000        | Gordon                Segal |
| 13                             | September                14    | .20        | 10,000        | Kris                Creek |
| 14                             | September                24    | .20        | 25,000        | Gaskill                Family Trust |
| 15                             | September                25    | .20        | 250,000       | SDP                Investments, Ltd. |
| 16                             | September                28    | .20        | 25,000        | Bryan                & Tammy Kerr |

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

**Proposition      1 - Election of Directors. **

**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.**

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

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

| **Item                6.** | **Exhibits.** |
|----------------------------|---------------|

|   | None. |
|--------|-------|

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**SIGNATURES**

**AMARILLO      BIOSCIENCES, INC.**