<PAGE>   1
                                 United States
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                 FORM 10-QSB/A1


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


For the quarterly period ended              JUNE 30, 1997
                               ------------------------------------------------


[ ]  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
incorporation or organization)                        Identification No.)

800 West Ninth, Amarillo, TX                                79101
--------------------------------------------------------------------------------
(Address of principal executive offices)                  (Zip Code)

                                  806-376-1741
--------------------------------------------------------------------------------
               (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 [ ]

As of July 17, 1997, there were 5,414,232 shares of the issuer's common stock
outstanding.


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<PAGE>   2
                           AMARILLO BIOSCIENCES, INC.


                                     INDEX



<TABLE>
<CAPTION>
PART I:    FINANCIAL INFORMATION                                             PAGE NO.
                                                                             --------
<S>                                                                            <C>
Item 1.    Financial Statements
           Consolidated Balance Sheets - December 31, 1996 and June
           30, 1997..........................................................   3

           Consolidated Statements of Operations - Three Months and
           Six Months Ended June 30, 1996 and 1997 and Cumulative
           from June 25, 1984 (Inception) through June 30, 1997..............   4

           Condensed Consolidated Statements of Cash Flows - Six
           Months Ended June 30, 1996 and 1997 and Cumulative
           from June 25, 1984 (Inception) through June 30, 1997..............   5

           Notes to Consolidated Financial Statements........................   6

Item 2.    Management's Discussion and Analysis of Results of
           Operations and Financial Condition................................   7

PART II:   OTHER INFORMATION

Item 6.    Exhibits and Reports on Form 8-K..................................  10

Signatures ..................................................................  11
</TABLE>



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                  AMARILLO BIOSCIENCES, INC. AND SUBSIDIARIES
                      (COMPANIES IN THE DEVELOPMENT STAGE)
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                    December 31,      June 30,
                                                                        1996            1997
                                                                    ------------    ------------
<S>                                                                 <C>             <C>         
ASSETS
Current assets:
  Cash and cash equivalents                                         $  2,799,297    $  1,533,029
  Marketable securities                                                5,984,370       5,984,370
  Prepaid expenses                                                       107,535          56,926
  Other current assets                                                      --           173,849
                                                                    ------------    ------------
   Total current assets                                                8,891,202       7,748,174
Property and equipment, net                                              144,507         136,691
Patent license, net of accumulated amortization of $66,471 and
  $70,117 at December 31, 1996 and June 30, 1997, respectively            58,529          54,883
Organization costs, net of accumulated amortization of $4,667 and
  $4,799 at December 31, 1996 and June 30, 1997, respectively                330             198
Investment in ISI common stock                                           471,500         625,000
                                                                    ------------    ------------
Total assets                                                        $  9,566,068    $  8,564,946
                                                                    ============    ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                                  $    138,298    $     74,801
  Accrued interest expense                                               273,296         332,546
  Other accrued expenses                                                  65,357          18,886
                                                                    ------------    ------------
    Total current liabilities                                            476,951         426,233
Notes payable to related party                                         2,300,000       2,300,000
                                                                    ------------    ------------
Total liabilities                                                      2,776,951       2,726,233
STOCKHOLDERS' EQUITY:
  Common stock, $.01 par value:
    Authorized shares - 10,000,000
    Issued shares - 5,414,232                                             54,142          54,142
  Additional paid-in capital                                          13,312,638      13,312,638
  Deficit accumulated during the development stage                    (6,574,163)     (7,678,067)
  Unrealized gain (loss) on marketable securities                         (3,500)        150,000
                                                                    ------------    ------------
Total stockholders' equity                                             6,789,117       5,838,713
                                                                    ------------    ------------
Total liabilities and stockholders' equity                          $  9,566,068    $  8,564,946
                                                                    ============    ============
</TABLE>

                            See accompanying notes.


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<PAGE>   4
                  AMARILLO BIOSCIENCES, INC. AND SUBSIDIARIES
                      (COMPANIES IN THE DEVELOPMENT STAGE)

                     CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                                                               Cumulative
                                                                                                  from
                                                                                                June 25,
                                                                                                  1984
                                   Three months ended              Six months ended            (Inception)
                                        June 30,                        June 30,                through
                              ----------------------------    ----------------------------      June 30,
                                  1996            1997            1996            1997            1997
                              ------------    ------------    ------------    ------------    ------------
<S>                           <C>             <C>             <C>             <C>             <C>         
Revenues:
  Contract revenues           $     14,566    $       --      $    417,140    $       --      $  9,000,000
  Interferon sales                   4,805            --             6,805            --           420,578
  Interest income                    8,941         120,602          20,095         221,670         927,788
  Sublicense fees                     --              --              --              --           113,334
  Royalty income                      --              --              --              --            31,544
  Other                               --              --              --            26,000         578,371
                              ------------    ------------    ------------    ------------    ------------
                                    28,312         120,602         444,040         247,670      11,071,615

Expenses:
  Research and
    development expenses           120,236         327,702         254,445         586,027       7,681,257
  Selling, general, and
    administrative expenses         96,898         323,154         335,610         706,297      10,392,291
  Interest expense                  31,667          29,625          61,667          59,250         641,134
                              ------------    ------------    ------------    ------------    ------------
                                   248,801         680,481         651,722       1,351,574      18,714,682
                              ------------    ------------    ------------    ------------    ------------

Loss before Income taxes          (220,489)       (559,879)       (207,682)     (1,103,904)     (7,643,067)
Income tax expense                    --              --              --              --            35,000
                              ------------    ------------    ------------    ------------    ------------
Net loss                      $   (220,489)   $   (559,879)   $   (207,682)   $ (1,103,904)   $ (7,678,067)
                              ============    ============    ============    ============    ============
Net loss per share            $      (0.07)   $      (0.10)   $      (0.07)   $      (0.20)
                              ============    ============    ============    ============
Weighted average shares
  outstanding                    3,035,232       5,414,232       3,035,232       5,414,232
                              ============    ============    ============    ============
</TABLE>



                            See accompanying notes.


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<PAGE>   5
                  AMARILLO BIOSCIENCES, INC. AND SUBSIDIARIES
                      (COMPANIES IN THE DEVELOPMENT STAGE)

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                          Cumulative from
                                                                           June 25,1984
                                                 Six months ended           (Inception) 
                                                     June 30,                 through
                                           ----------------------------       June 30, 
                                               1996            1997            1997
                                           ------------    ------------    ------------
<S>                                        <C>             <C>             <C>          
Net cash used in operating activities      $   (868,691)   $ (1,263,323)   $ (6,620,951)
                                           ------------    ------------    ------------

Net cash used in investing activities            (2,467)         (2,945)     (7,023,039)
                                           ------------    ------------    ------------
Net cash provided by financing
activities                                    1,000,000            --        15,177,019
                                           ------------    ------------    ------------
Net increase (decrease) in cash and cash
 equivalents                                    128,842      (1,266,268)      1,533,029
                                           ------------    ------------    ------------
Cash and cash equivalents at beginning
 of period                                    1,108,527       2,799,297            --
                                           ------------    ------------    ------------
Cash and cash equivalents at end of
 period                                    $  1,237,369    $  1,533,029    $  1,533,029
                                           ------------    ------------    ------------
Supplemental Disclosure of Cash Flow
  Information

Cash paid for income taxes                 $       --      $       --      $     37,084
                                           ============    ============    ============
Cash paid for interest                     $       --      $       --      $      6,466
                                           ============    ============    ============
</TABLE>





                            See accompanying notes.


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<PAGE>   6
                  AMARILLO BIOSCIENCES, INC. AND SUBSIDIARIES
                      (COMPANIES IN THE DEVELOPMENT STAGE)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, are
     unaudited (except for the December 31, 1996 consolidated balance sheet
     which was derived from the Company's audited financial statements), but
     have been prepared in accordance with generally accepted accounting
     principles for interim financial information. Accordingly, they do not
     include all of the information and footnotes required by generally
     accepted accounting principles for complete financial statements. In the
     opinion of management, all adjustments (consisting only of normal
     recurring adjustments) considered necessary for a fair presentation have
     been included.

     Operating results for the three months and six months ended June 30, 1997
     are not necessarily indicative of the results that may be expected for the
     full year ending December 31, 1997.

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

     During March 1997, the Financial Accounting Standards Board issued
     Statement No. 128, "Earnings per Share". This statement currently has no
     effect on the computation of loss per share as the Company is in a net
     loss position and the potential dilutive effect of common stock
     equivalents is not considered in the computation.

3.   Initial public offering. On August 13, 1996, the Company completed its
     initial public offering of 2,000,000 shares of its common stock. Net
     proceeds to the Company were approximately $8,072,000. On August 29, 1996,
     the underwriter exercised its option to acquire an additional 300,000
     shares of common stock with net proceeds to the Company of $1,305,000.



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<PAGE>   7

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
        FINANCIAL CONDITION

        RESULTS OF OPERATIONS

        Three Months Ended June 30, 1996 Compared to Three Months Ended June
        30, 1997.

        During the three months ended June 30, 1996, the Company had total
        revenues of $28,312 compared to total revenues of $120,602 during the
        three months ended June 30, 1997. During the 1996 second quarter, the
        remaining deferred contract revenues of $14,566 were recorded as
        earned. Other 1996 revenues consisted of interest income of $8,941 and
        interferon sales of $4,805. The 1997 second quarter revenues consisted
        solely of interest income.

        During the 1996 quarter, research and development expenses were
        $120,236 as compared to $327,702 during the 1997 quarter. The increase
        of $207,466 in 1997 was the result of certain clinical studies being
        started in 1997.

        During 1996 and 1997, the Company incurred general and administrative
        expenses of $96,898 and $323,154, respectively. The 1997 second quarter
        expenses were $226,256 more than the 1996 second quarter due primarily
        to an overall increase in the Company's activities and the additional
        cost associated with the Company being a publicly-held company in 1997.
        The major increases were experienced in the following expense items --
        consultants $72,754 over 1996, travel $32,225 over 1996, general
        insurance $15,088 over 1996, public and investor relations $25,035 over
        1996, legal $33,087 over 1996, and clinical supplies $21,465 over 1996.




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<PAGE>   8
Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1997

During the six months ended June 30, 1996, the Company had total revenues of
$444,040 compared to total revenues of $247,670 during the six months ended
June 30, 1997. Revenues for 1996 consisted of interest income of $20,095 and
deferred contract revenues recognized in the amount of $417,140 based on
research and development and administrative costs incurred. Revenues for 1997
consisted of interest income of $221,670 and other income of $26,000.

During 1996, research and development expenses were $254,445 as compared to
$586,027 during 1997. The increase of $331,582 in 1997 was the result of
certain clinical studies being started in 1997.

During 1996 and 1997, the Company incurred general and administrative expenses
of $335,610 and $706,297, respectively. The 1997 general and administrative
expenses exceeded 1996 by $370,687 due primarily to an increase in the
Company's activities and the additional costs associated with the Company being
a publicly-held company in 1997. The major increases were experienced in the
following expense items -- consultants $105,704 higher than 1996, conferences &
meetings $42,915 higher than 1996, travel $29,543 higher than 1996, general
insurance $33,198 higher than 1996, public and investor relations $72,260
higher than 1996, legal $59,068 higher than 1996, and clinical supplies $21,465
over 1996.



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<PAGE>   9
LIQUIDITY AND CAPITAL RESOURCES

At June 30, 1997, the Company had cash of $1,533,029 and marketable securities
of $5,984,370 with accounts payable of $74,801 and other funding commitments
for clinical studies of approximately $1.7 million.

The Company intends to focus its development activities on the treatment of
Sjogrens syndrome, oral mucositis in cancer patients, hepatitis B and C and the
common cold ("Primary Development Projects").

The Company anticipates, based on its currently proposed plans and assumptions
relating to its operations (including assumptions regarding the progress of its
research and development and the timing and costs associated with its Primary
Development Projects), that the Company's existing capital resources will be
sufficient to satisfy the Company's estimated cash requirements for at least
the next 21 months. Unless the Company generates significant revenues during
such period, which the Company believes is unlikely, the Company will need
additional financing to fully fund such development. Moreover, the Company's
estimate of the amount required to complete its Primary Development Projects
may prove to be inaccurate. The Company has no current arrangements with
respect to, or sources of, additional financing and it is not anticipated that
any of the officers, directors or stockholders of the Company will provide any
portion of the Company's future financing requirements. There can be no
assurance that, when needed, additional financing will be available to the
Company on commercially reasonable terms, or at all. In the event that the
Company's plans change, its assumptions change or prove inaccurate, or if the
remaining net proceeds of the Company's recent public offering, together with
other capital resources, otherwise prove to be insufficient to fund operations,
the Company could be required to seek additional financing sooner than
currently anticipated. Any inability to obtain additional financing when needed
would have a material adverse effect on the Company, including requiring the
Company to significantly curtail or possibly cease its operations.





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<PAGE>   10
                          PART II - OTHER INFORMATION


ITEM 5. OTHER INFORMATION

The Company announced on July 14, 1997 that it has engaged PPD Pharmaco, a
leading clinical research organization, to conduct Amarillo Biosciences' Phase
III clinical trial testing low dose oral interferon alpha in patients
experiencing dry mouth due to Sjogren's syndrome. Under the terms of the
agreement, PPD Pharmaco will manage the trial and assist the Company in
preparing a development plan including a Food and Drug Administration approval
application. The trial is anticipated to begin in early 1998.

PPD Pharmaco is a wholly-owned subsidiary of Pharmaceutical Product
Development, Inc. of Wilmington, N.C. Tom D'Alonzo, a director of the Company
since March 1997, is the President and COO of Pharmaceutical Product
Development, Inc.

In April 1996, the National Institutes of Health ("NIH") announced that it
would be conducting a clinical trial of the use of low dose oral IFN alpha
therapy for the treatment of AIDS-related symptoms. The study was to enroll 560
AIDS patients and test three different forms of IFN alpha, including the form
produced by Hayashibara Biochemical Laboratories as well as forms produced by
two licensees of the Company. On June 12, 1997, the NIH announced that the
clinical trial of three preparations of Low-Dose Oral Alpha Interferon in
HIV-Infected Patients was to be closed. The Division of AIDS (DAIDS) determined
that the clinical trial would not reach a successful conclusion due to poor
accrual, missing data, and high drop-out rate. The protocol called for
completion of accrual within one year of its opening in April 1996. Only 263 of
the proposed 560 patients had been accrued and greater than 20% of those
patients dropped out of the study before completing the required study visits
or had not been seen for at least three of the six sequential monthly visits.

The extent of any further development work, for the treatment of AIDS-related
symptoms, to be undertaken by the Company has not been determined at this time.
The clinical study of IFN as it relates to AIDS, has not been a Primary
Development Project of the Company (See Liquidity and Capital Resources).




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        Exhibit 27.   Financial Data Schedule



        No reports on Form 8-K were filed during the quarter ended June 30,
1997.


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                                   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 12, 1997                   By:   /s/ JOSEPH M. CUMMINS
                                           -------------------------------
                                                Joseph M. Cummins
                                                   President and
                                             Chief Executive Officer




Date: August 12, 1997                   By:   /s/ CHARLES H. HUGHES
                                           -------------------------------
                                                 Charles H. Hughes
                                            Executive Vice President and
                                               Chief Financial Officer
                                             (Chief Accounting Officer)


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