Note 7 - Convertible Note Payable - Related Party

9 Months Ended

Sep. 30, 2016

7.	Convertible Notes Payable – Related Party. During the nine months ended September 30, 2016, a payable of $144,426 to Dr. Stephen Chen was converted to a convertible promissory note with a conversion rate of $0.168 per share.

On March 10, 2016, the Board of Directors approved the Company to enter into private placements for the sale of up to $1,000,000 in face amount of the Company’s Convertible Promissory Notes (Private Placement 2016-1), payable on demand, and convertible into the Company’s common stock at a conversion rate of $.1875 per share.

During the period ended September 30, 2016, the Company received $262,500 from Dr. Stephen T. Chen for the purchase of Convertible Promissory Notes in connection with a $1,000,000 Private Placement Convertible Note Security Offering entitled Private Placement 2016-1.

The Note is due on demand, bears interest at the Short-Term Applicable Federal Rate of .65% per annum, and is convertible into Amarillo Biosciences, Inc. Common Stock at a price of $.1875 per share.

On June 30, 2016, a Convertible Promissory Note in the amount of $384,555 was issued to Dr. Stephen T Chen in exchange for the aggregated amounts of the two Notes Payable – Related Party described in Note 6. The Convertible Note is due on demand, unsecured, bears interest at the Short-Term Applicable Federal Rate of .64% per annum, and is convertible into Amarillo Biosciences, Inc. Common Stock at a stock price of $.1875 per share.