Note 10. Subsequent Events

9 Months Ended

Sep. 30, 2011

10.	Subsequent Events.

On October 11, 2011, the Company issued 200,000 shares of stock to consultants Edward L. Morris and Kimball Miller for a total of 400,000 shares, as per their consulting contract.

On October 13, 2011, the Company entered into a promissory agreement with Paul Tibbits, a Director, for $10,000. A note was executed and includes interest at 0.16% per annum, the note is due upon demand, or if no demand is made, on January 14, 2012.

On October 27, 2011, a Notice of Conversion was received from Hope Capital, the Holder of the first Asher note dated April 15, 2011. The notice requested conversion of $10,000 of the $63,000 debt at the Fixed Conversion Price of $0.04 per share. The number of shares issued on that date was 250,000, and the remaining balance of the note was $53,000.

On October 27, 2011, the Stock Option Committee issued a consent resolution calling for the voluntary relinquishment and cancellation of all options now held by ABI employees, and the Company would issue new five (5) year options of the same number of nonqualified options under the Company’s already approved 2009A Officers, Directors, Employees and Consultants Nonqualified Stock Option Plan, to vest immediately, options along with Limited Rights, with the exercise price of the closing price of stock on October 26, 2011, and subject to the further terms and conditions of the Plan.

On November 5, 2011, Amarillo Biosciences, Inc. sold 2,666,667 private placement shares at $0.03 per share along with 1,000,000 warrants exercisable at $0.03 per share. The Base Share Price for this dilutive issuance was $0.03 per share. ABI sent a Dilutive Issuance Notice to Warrant Strategies, Inc. on November 7, 2011. The notice was sent pursuant to the Series A Common Stock Purchase Warrant dated June 16, 2009, Section 3(b), “…the Exercise Price shall be reduced to equal the Base Share Price and the number of Warrant Shares issuable hereunder shall be increased such that the aggregate Exercise price issuable hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the aggregate Exercise Price prior to such adjustment.”

ABI issued a new Purchase Warrant dated November 7, 2011 reflecting the new Warrant Share amount of 1,493,330 shares and an adjusted Exercise Price of $0.03 per share. The new warrant was sent to Warrant Strategies, Inc. and return of the old warrant was requested.