U.S. Securities and Exchange Commission

Washington, D.C. 20549

Form 10-K

(Mark One)

[ X ]	Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [Fee Required] For the Fiscal Year Ended December 31, 2016
[     ]	Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 [No Fee Required] Commission File Number 0-20791
	AMARILLO BIOSCIENCES, INC. (Exact name of Registrant as specified in its charter)
	Texas (State of other jurisdiction of incorporation or organization)	75-1974352 (I.R.S. Employer Identification No.)
	4134 Business Park Drive, Amarillo, Texas (Address of principal executive offices)	79110-4225 (Zip Code)
	Issuer's telephone number, including area code:   (806) 376-1741

Securities registered under Section 12(b) of the Exchange Act:

None.

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, Par Value $.01

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  [  ] Yes   [√] No

Indicate by check mark whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.  [  ] Yes   [√] No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 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   [ ] No

Indicate by check mark if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K (Sec.229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  [√ ]

Indicate by check mark whether the registrant is a large accelerated filer, and accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]	Accelerated filer [ ]
Non-accelerated filer [ ] (do not check if smaller reporting company)	Smaller reporting company [√]

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).      [  ] Yes   [√] No

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As of December 31, 2016, there were outstanding 21,916,143 shares of the registrant's common stock, par value $.01, which is the only class of common or voting stock of the registrant. As of that date, the aggregate market value of 12,972,667 shares of common stock held by non-affiliates of the registrant (based on the closing price of $0.27 for the common stock on the OTC BB.AMAR December 31, 2016) was approximately $3,502,620. Shares of common stock held by officers, directors and each shareholder owning ten percent or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates.

The number of shares of the Registrant's common stock outstanding as of April 14, 2017 was 22,350,935.

PART I

The following contains forward-looking statements that involve risks and uncertainties. The Company's actual results could differ materially from those discussed in the forward-looking statements as a result of certain factors, including those set forth in "Management's 2017 Plan of Operations" as well as those discussed elsewhere in this Form 10-K. The following discussion should be read in conjunction with the Financial Statements and the Notes thereto included elsewhere in this Form 10-K.

ITEM 1. BUSINESS.

General

We are a Texas corporation formed in 1984 that is engaged in developing biologics for the treatment of human and animal diseases. Our current focus is research aimed at the treatment of human disease indications, particularly influenza, hepatitis C, thrombocytopenia, and other indications using natural human interferon alpha that is administered in a proprietary low dose oral form.

We currently own or license three issued patents related to the low-dose oral delivery of interferon and we own one issued patent on our dietary supplement, Maxisal^®.  On December 27, 2016, the United States Patent and Trademark Office (USPTO) approved the Company's pending patent and issued the new patent which applies low dose oral interferon to the treatment of Thrombocytopenia.  The issuing of this patent increased ABI's total owned or licensed issued patents to four.  In our history, we have completed more than 100 pre-clinical (animal) and human studies on the safety and efficacy of low-dose orally administered interferon.  On October 31, 2013, Amarillo Biosciences, Inc., (ABI) filed a voluntary petition in the Bankruptcy Court for the Northern District of Texas, for protection under Chapter 11 of Title 11 of the U.S. code.  The Company successfully reorganized both organizationally and financially.

In addition to the core technology discussed in the first paragraph of this section, ABI is currently working at instituting new revenue streams along with the core technology thus expanding the Company's current focus into a diversified business portfolio.

Current Status

The Company completely reorganized and was restructured into three business units: the Medical, Pharmaceutical, and Consumer Product Divisions. Historically, the Company has focused on R&D involving low-dose, orally administered lozenges containing interferon-alpha as a treatment for a variety of conditions. Under the leadership of Dr. Chen, ABI began its new life with a valuable intellectual property portfolio including issued patents, a trademark, and a new patent which was issued on December 27, 2016.  Additionally, ABI has a library of almost thirty years of scientific and clinical data on the human and animal applications of low dose oral interferon. Through the Pharmaceutical Product Division along with technology and know-how available in the collection of intellectual property as well as the proprietary research history, ABI will out-license, or leverage, its core technology and form partnerships with other pharmaceutical companies to develop new discoveries and commercialize the resulting products.

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An integral part of the ABI Operating Plan is to create multiple revenue streams through the implementation of programs (including but not limited to in-licensing) of medical and health care products and processes. The Medical Division and Consumer Products Division will facilitate the enhancement of those revenue streams. These programs will be the catalyst which allows ABI to enter markets in Taiwan, Hong Kong, China, and other Asian countries for the distribution of these new medical and health care products. Already, the Medical Division is preparing to deploy unique diabetic treatment centers in Taiwan beginning sometime in the third quarter of 2017. These centers will provide a novel therapy (Artificial Pancreas Treatment, or "APT") for the management of Type 1 and Type 2 diabetes along with the reversal of the complications that historically accompany this insidious disease and plague patients. APT also appears to have the ability to reduce health care costs through its probable capacity to decrease the number and frequency of diabetes related emergency room (ER) visits, subsequent patient hospital admissions and a reduction in the length of the hospital stays. Likewise, the Consumer Product Division is presently working on three major endeavors. First, this ABI division will offer a delivery system for nutraceuticals and food supplements such as Vitamin C. Additionally, the delivery system can be topically used to administer quality skin care products. Secondly, Consumer Products has commenced negotiations to import and distribute to the Asian markets a unique natural resource product which can be modified for human, animal, or agricultural applications. Finally, ABI in conjunction with Hidden Valley Herbs of Kentucky, which is owned and operated by ABI Director and Stockholder Paul Tibbits, will endeavor to enter the alternative medicine market through domestic and international distribution of natural Kentucky Wild Ginseng and other medicinal herbs.

The overall operating strategy is for ABI to create a world-wide network of strategic alliances capitalizing on advanced and emerging technologies in order to engineer a diversified enterprise having a major impact on every aspect of the healthcare and life sciences industries; and assemble an exhaustive pipeline of technologically-advanced, cutting edge products and services with which to compete in the American and Asian markets. To support this strategy, ABI has opened its Asian Operations Center (AOC) in order to increase the Company's presence in Taiwan and access growing Asian markets.

Core Technology

Injectable interferon is FDA-approved to treat some neoplastic, viral and autoimmune diseases.  Many patients experience moderate to severe side effects, causing them to discontinue injectable interferon therapy. Our core technology is a natural human interferon alpha that is delivered into the oral cavity as a lozenge in low (nanogram) doses. The lozenge dissolves in the mouth where interferon binds to surface (mucosal) cells in the mouth and throat, resulting in stimulation of immune mechanisms.  Orally delivered interferon has been shown to activate hundreds of immune system genes in the peripheral blood.  Human studies have shown that oral interferon is safe and effective against viral and autoimmune diseases. Oral interferon is given in concentrations 10,000 times less than that usually given by injection. The Company's low dose formulation results in almost no side effects, in contrast to high dose injectable interferon, which causes adverse effects in at least 50% of recipients.

The Company also has a dietary supplement product, Maxisal^® that is useful in the symptomatic relief of dry mouth.

Governmental or FDA approval is required for low dose oral interferon.  Our progress toward approval is discussed under each specific indication, below.

We believe that our technology is sound and can be commercialized.  Due to occurrences in the interferon market over the past several years, we have been unsuccessful at such commercialization.

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Interferon Supply

The Company's long-time human interferon producer is no longer able to provide the essential supply of interferon.  Without the interferon, the Company is unable to continue its research, conduct clinical trials, and ultimately unable to commercialize a product.  Options available to ABI to find a suitable interferon source include:  (1) locating a laboratory/production facility that could follow the same path and development model for natural human interferon which was viable for the Company in the past; (2) restart the process from the original cell line and develop the natural human interferon in the laboratory on a commercial level; or (3) select the best source of recombinant interferon which can be developed for the Company's goals.  The Company is exploring its options to determine the optimal choice of interferon supplies to commercialize the products.

Regardless of which interferon source is selected, numerous studies and clinical trials will have to be performed.  Although repeating the studies will be both costly and time consuming, the Company will be able to use the thirty years of data that has been previously generated from the numerous studies performed using the original natural human interferon source.  Rather than having to start from the very beginning, the Company will be able to make good use of its history, past results, and data library to employ previously successful developmental models and minimize the trial-and-error searching present in commercial research.

While the pharmaceutical industry is creating and marketing new and effective anti-viral medications, ABI believes that there is still sufficient time to develop and commercialize low dose interferon for treatment of such diseases as Influenza, Chronic Cough in COPD, Hepatitis B, C, and D, and Thrombocytopenia caused by other diseases and as a side effect of treatment of other diseases.  The Company also has the opportunity to capitalize on its new access to the Far Eastern markets to explore sources of raw materials, capital, production facilities, and new customers.

Patents and Proprietary Rights

Since inception, the Company has worked to build an extensive patent portfolio for low-dose orally administered interferon. This portfolio consists of patents with claims that encompass method of use or treatment, and/or composition of matter and manufacturing. As listed below, we presently own or license four issued patents, including one patent on our dietary supplement.  Additionally, ABI has one patent pending as shown below.

Patents with Method of Treatment Claims for Interferon Alpha

1. "TREATMENT OF FIBROMYALGIA WITH LOW DOSE INTERFERON" as described and claimed in U.S. Patent No. 6,036,949 issued March 2000, Owned. Expiration: March 2018.

2. "TREATMENT OF THROMBOCYTOPENIA USING ORALLY ADMINISTERED INTERFERON" as described and claimed in U.S. Patent No. 9,526,694 B2 issued December 27, 2016, Owned. Expiration: April 2033.

Patents with Formulation Claims

3. "INTERFERON DOSAGE FORM AND METHOD THEREFOR" as described and claimed in U.S. Patent No. 6,372,218 B1 issued April 2002, Licensed. Expiration: April 2019.

4. "COMPOSITION AND METHOD FOR PROMOTING ORAL HEALTH" as described and claimed in U.S. Patent No. 6,656,920 B2 issued December 2003, Owned. Expiration: April 2021.

Patent Pending

5. "TREATMENT OF THROMBOCYTOPENIA USING ORALLY ADMINISTERED INTERFERON" as described and claimed in Taiwan Patent Application 102115953 filed May 3, 2013.

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There are no current patent litigation proceedings involving us.

Cost of Compliance with Environmental Regulations

We incurred no costs to comply with environment regulations in 2016.

Competition

The pharmaceutical industry is an expanding and rapidly changing industry characterized by intense competition. We believe that our ability to compete will be dependent in large part upon our ability to successfully operate the newly reorganized business, bring in new business lines, continue recapitalization, redevelop and test our products and continually enhance and improve our products and leverage our core technologies. In order to do so, we must effectively utilize and expand our research and development capabilities and, once developed, expeditiously convert new technology into products and processes, which can be commercialized. Competition is based primarily on scientific and technological superiority, technical support, availability of patent protection, access to adequate capital, the ability to develop, acquire and market products and processes successfully, the ability to obtain governmental approvals and the ability to serve the particular needs of commercial customers.  Corporations and institutions with greater resources than us, therefore, have a significant competitive advantage. Our potential competitors include entities that develop and produce therapeutic agents for treatment of human and animal disease. These include numerous public and private academic and research organizations and pharmaceutical and biotechnology companies pursuing production of, among other things, biologics from cell cultures, genetically engineered drugs and natural and chemically synthesized drugs. Almost all of these potential competitors have substantially greater capital resources, research and development capabilities, manufacturing and marketing resources and experience than us. Our competitors may succeed in developing products or processes that are more effective or less costly than any that may be developed by us or that gain regulatory approval prior to our products.  We also expect that the number of competitors and potential competitors will increase as more interferon alpha products receive commercial marketing approvals from the FDA or analogous foreign regulatory agencies. Any of these competitors may be more successful than us in manufacturing, marketing and distributing its products. There can be no assurance that we will be able to compete successfully.

United States Regulation

Before products with health claims can be marketed in the United States, they must receive approval from the FDA. To receive this approval, any drug must undergo rigorous preclinical testing and clinical trials that demonstrate the product candidate's safety and effectiveness for each indicated use. This extensive regulatory process controls, among other things, the development, testing, manufacture, safety, efficacy, record keeping, labeling, storage, approval, advertising, promotion, sale, and distribution of pharmaceutical products.

In general, before any ethical pharmaceutical product can be marketed in the United States, the FDA will require the following process:

• preclinical laboratory and animal tests;

• submission of an investigational new drug application, or IND, which must become effective before human clinical trials may begin;

• adequate and well-controlled human clinical trials to establish the safety and efficacy of the proposed drug for its intended use;

• pre-approval inspection of manufacturing facilities and selected clinical investigators;

• Submission of a New Drug Application (NDA) to the FDA; and

• FDA approval of an NDA, or of an NDA supplement (for subsequent indications or other modifications, including a change in location of the manufacturing facility).

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Substantial financial resources are necessary to fund the research, clinical trials, and related activities necessary to satisfy FDA requirements or similar requirements of state, local, and foreign regulatory agencies. At such time as ABI undertakes to commercialize any of its products, all necessary preclinical testing, clinical trials, data review, and approval steps will be judiciously executed to insure that the product satisfies all regulatory requirements at all levels.

505(b)(2)

ABI has historically followed and will continue to follow the traditional approval process for New Drugs as set out in Section 505(b)(1) of the Federal Food, Drug, and Cosmetic Act. If an alternative path to FDA approval for new or improved formulations of previously approved products is scientifically and economically feasible and beneficial to the Company and the public, ABI may choose to follow this alternative path as established by section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act. This section of the Act permits the applicant to rely on certain preclinical or clinical studies conducted for an approved product as some of the information required for approval and for which the applicant has not obtained a right of reference.  The process of approval under 505(b)(2) will be followed as judiciously as 505(b)(1) or any regulation.

Orphan Drug Designation

Under the Orphan Drug Act, the FDA may grant orphan drug designation to drugs intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States. ABI may choose to seek approval for a product satisfying the definition of and Orphan Drug if that product can be used to treat such an indication.  Orphan drug designation does not convey any advantage in or shorten the duration or rigidity of the regulatory review and approval process.

Foreign Regulation

In addition to regulations in the United States, a variety of foreign regulations govern clinical trials and commercial sales and distribution of products in foreign countries. Whether or not the Company obtains FDA approval for a product, the Company must obtain approval of a product by the comparable regulatory authorities of foreign countries before the Company can commence clinical trials or market the product in those countries. The approval process varies from country to country, and the time may be longer or shorter than that required for FDA approval. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country.

The policies of the FDA and foreign regulatory authorities may change and additional government regulations may be enacted which could prevent or delay regulatory approval of investigational drugs or approval of new diseases for existing products and could also increase the cost of regulatory compliance. It is not possible to predict the likelihood, nature or extent of adverse governmental regulation that might arise from future legislative or administrative action, either in the United States or abroad.

Research and Development

During the years ended December 31, 2016 and 2015, the Company did not incur any research and development expenses. An integral part of the reorganization process has been to refocus and realign research and development activities.  If a satisfactory replacement source of interferon is located and will serve the goals of the Company, adequate funds to conduct research and development will be allocated.  These research activities include revitalization of the Company's core technology.  Additionally, any number of other attractive technologies might be investigated.

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Employees

The Company has 3 full-time employees and 1 part-time employee. Of these employees, 2 are executive officers and 2 work in administrative and research and development capacities; although no costs of these employees are currently allocated to research and development. Consultants in business and research development are also engaged as needed.

ITEM 2. DESCRIPTION OF PROPERTY

Our executive and administrative offices are located at 4134 Business Park Drive, Amarillo, Texas in a 1,800 square-foot facility rented by us. The lease expires on June 30, 2017 and our monthly rent is $1,070 per month. We believe that the facilities are well maintained and generally suitable and adequate for our current and projected operating needs.

ITEM 3. LEGAL PROCEEDINGS

There are currently no legal proceedings involving the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES.

Common Stock

The Company is presently traded on the OTC Bulletin Board under the symbol AMAR.  Our common stock is presently considered a "penny stock" and is subject to such market rules. The range of high and low bids as quoted on the OTC Bulletin Board for each quarter of 2016 and 2015 were as follows:

	2016				2015
Quarter	$ High		$ Low		$ High		$ Low
First		0.180		0.130		0.430		0.183
Second		0.300		0.100		0.350		0.189
Third		0.299		0.120		0.400		0.160
Fourth		0.300		0.150		0.350		0.050

The quotations reflect inter-dealer bids without retail markup, markdown, or commission, and may not represent actual transactions. As of December 31, 2016, the Company had approximately 1,687 shareholders of record.

The Company has 100,000,000 shares of voting common shares authorized for issuance.  As of December 31, 2016, a total of 26,226,782 shares of common stock were either outstanding (21,916,143) or reserved for issuance upon exercise of options or convertible debt (4,310,639).

The Company issued common stock in 2016 and 2015 as follows:

Common Stock Issued in 2016	Shares		Issue Price		Net Price
Private placements – cash		1,771,333	$	0.1875	$	332,125
Total Common Stock Issued in 2016		1,771,333	$	0.1875	$	332,125

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Common Stock Issued in 2015	Shares		Issue Price		Net Price
None		-		-		-
Total Common Stock Issued in 2015		-		-		-

During the years ended December 31, 2016 and 2015, there were no finder's fees paid related to private placements of stock.

We have not paid any dividends to our common stock shareholders to date, and have no plans to do so in the immediate future.

We use the services of American Stock Transfer and Trust Company as our transfer agent.

Preferred Stock

The shareholders have authorized 10,000,000 shares of preferred stock shares for issuance.

No Preferred Equity was outstanding as of December 31, 2016 and none is outstanding as of the Balance Sheet date of this report.

At December 31, 2016, $34,279 of unpaid dividends have been accrued on Preferred Equity previously owned by Mr. Paul Tibbits, a stockholder and director.  The dividends accrued between the filling dates of the Company's Chapter 11 Bankruptcy, October 31, 2013, and the Effective Date of the Plan of Reorganization, November 20, 2014 and are owed to Mr. Tibbits.

Stock Options and Warrants

During 2016, no options or warrants were issued to consultants, advisors, directors, employees, or investors. Consequently, there were no related expenses.

Directors, officers and consultants did not exercise any options in 2016 or 2015, see table below.

A summary of the Company's stock option activity and related information for the years ended December 31, 2016 and 2015 is as follows:

	2016					2015
	Options			Price		Options			Price
Outstanding Beg. of Year*		8,568		$	0.95		81,726		$	0.76-1.235
Granted		-			-		-			-
Cancelled/Expired		(8,568	)		0.95		(73,158	)	$	0.76-1.235
Exercised		-			-		-			-
Outstanding End of Year		-		$	-		8,568		$	0.95
Exercisable End of Year		-		$	-		8,568		$	0.95

*All options went through a 1-for-19 reverse split

No warrants were exercised in 2016 or 2015.

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A summary of the Company's stock warrant activity and related information for the years ended December 31, 2016 and 2015 is as follows:

	2016				2015
	Warrants		Price Range		Warrants			Price Range
Outstanding Beg. of Year*		-	$	-		52,632		$	0.57
Granted		-		-		-			-
Cancelled/Expired		-		-		(52,632	)	$	0.57
Exercised		-		-		-			-
Outstanding End of Year		-	$	-		-		$	-
Exercisable End of Year		-	$	-		-		$	-

*All options went through a 1-for-19 reverse split

Insurance

As of December 31, 2016, the Company has an outstanding balance of $4,418 for a financing agreement for the periodic payment of Directors & Officers Liability Insurance premium for 2016 – 2017.  The terms of the agreement are as follows:  Payee – CAA Premium Finance, LLC; Effective Date – April 4, 2016; Total Premiums - $63,923; Cash Down Payment - $16,731 (paid to DFB Insurance Group/Amarillo); Amount Financed - $47,192; Annual Percentage Rate – 5.89%; Finance Charge - $1,401; Total Payments - $48,593; Periodic Payment - $4,418; Number of Payments – 11 (eleven); First Payment May 4, 2016.

Convertible Notes Payable and Other Related Party Transactions

During the fiscal year ended December 31, 2016, a payable in the amount of $144,426 to Dr. Stephen T. Chen, Chairman, CEO and President of the Company, was exchanged for a convertible promissory note.  The note was executed on January 11, 2016, is payable on demand, and is unsecured.  The interest rate is .75%, the Annual Federal Rate (AFR), the rate in effect when the note was made.  The Payee, Dr. Chen, may convert all or some part of the note to the Maker's (ABI's) common voting stock at a conversion price of $.168 per share.

On March 18, 2016, Dr. Chen purchased a Convertible Promissory Note in the amount of $262,500 through the Company's Private Placement Convertible Note Security Offering entitled Private Placement 2016-1 (previously approved by the ABI Board of Directors on March 10, 2016).  The note is payable on demand, unsecured, carries interest at the Short Term Annual Federal Rate (AFR) of .65% per annum, and is convertible into ABI 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. Chen in exchange for the aggregated amounts of two existing Notes Payable – Related Party (Yang Group).  The Convertible Note is due on demand, is 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.

In other Related Party Transactions, on April 4, 2016, Dr. Chen received $75,000 for repayment of funds advanced to the Company between January 18, 2016 and March 18, 2016, which were to be used for general operating expenses.

On May 23, 2016, Amarillo Biosciences, Inc. ("ABI"), the Principal, entered into an Agency and Service Agreement with ACTS Global Healthcare, Inc. ("ACTS Global"), a Taiwan Corporation, the Agent. ABI advanced ACTS Global "Principal Funds" in the amount of NTD $3,000,681 ($91,968 USD), to be utilized and /or expended by ACTS Global solely as instructed by ABI.  Additional advances may be made by ABI to ACTS Global as necessary.  For their services, ACTS Global, is be paid by ABI, one percent (1%) of the Principal's services expended by the Agent at the Principal's direction. Any other services rendered by the Agent will be paid for by the Principal based on comparable and/or reasonable values of the service rendered.  As of December 31, 2016, ACTS Global has expended $54,133 for the benefit of the Company, leaving a balance of $37,835, which is included on the Company Balance Sheet in Prepaid Expenses.

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ITEM 6. SELECTED FINANCIAL DATA

This item is not applicable to smaller reporting companies.

ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION:

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.

Overview. ABI has been (and is) engaged in the business of biopharmaceutical research and development. Its primary focus historically has been the development of low-dose, orally administered interferon. ABI holds or licenses various patents; it also is the developer of Maxisal^®, a dietary supplement to treat dry-mouth symptoms.

The Company's goal is to expand the reach of its research, development, and marketing of biopharmaceutical, biotechnical, health and life science related products.  ABI will continue to leverage its core technology going forward by using its thirty years of scientific and clinical data to establish interferon-alpha lozenges as a therapeutic agent for conditions such as influenza, hepatitis C, and various causes of thrombocytopenia just to name a few.  The Company is committed to expanding its business operations from the currently narrow focus to encompass a wide variety of licensing, partnerships, and development opportunities in the aforementioned sectors. This commitment extends not only to the U.S., but to Taiwan, China, and other Asian Countries.

Company Management and Employees. On December 31, 2016, ABI had four employees, five directors, and three consultants. Presently, ABI has four employees, five directors, and three consultants. The employees include the following persons:

Stephen T. Chen: Dr. Chen was named Chairman of the Board in February 2012, and he has been a director of the Company since February 1996. He currently executes the management functions as not only Chairman, but Chief Executive Officer (CEO), President, and Chief Operating Officer. He has been President and Chief Executive Officer of STC International, Inc., a health care investment firm, since May 1992. Dr. Chen has over thirty years of international business experience, including an extensive background in pharmaceutical product acquisition and licensing, development of joint venture agreements, execution of business strategy, and leadership of start-up companies in the pharmaceutical, biotechnology and nutraceutical industries. Dr. Chen has held executive positions in R&D and business development at several major pharmaceutical companies, including Borroughs Wellcome (presently GlaxoSmithKline), Miles Pharmaceuticals (presently Bayer), ICI America (presently AstraZeneca), and Ciba-Geigy (presently Novartis). He received a Ph.D. in Industrial & Physical Pharmacy from Purdue University in 1977.

Bernard Cohen: Chief Financial Officer (CFO). Mr. Cohen holds BBA and MPA degrees from West Texas A&M University. He is a long time Amarillo resident with over thirty years of management experience. Mr. Cohen has been with ABI since October 2009. Mr. Cohen works with Ms. Shelton and provides reporting necessary for ABI's various SEC filings, and he also provides ordinary-course internal bookkeeping and accounting services.

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Chrystal Shelton: Office manager and administrative support. Ms. Shelton has been with ABI since 1987. In addition to handling routine office administration, Ms. Shelton is familiar with the form and format of SEC filings and interacts with outside professionals who assist ABI in its various compliance measures.  She is an integral part of the reporting process.

Edward L. Morris: JD, Secretary and acting general counsel. Mr. Morris practiced law in Amarillo, Texas, prior to his retirement from full time practice in 2011. His practice included substantial time devoted to corporate and securities law, including services for ABI. Mr. Morris was graduated from Yale College before obtaining his law degree from Harvard Law School.

Directors.  The board of directors of ABI consists of the following persons: Stephen T. Chen, Ph.D., Paul Tibbits, Yasushi Chikagami, Daniel Fisher, and Nicholas Moren.

Consultants.  From time to time, the Company engages consultants as needed for specific areas of responsibility.  Presently, the Company has engaged the following three consultants:  Dr. Yung-Hsiang Hung – Medical Affairs Director; Dr. Ching-Yuan Lee, Director of Research and Development; and Ms. Maggie Wang, Business Development Manager.

Assets, Liquidity, and Capital.  ABI holds various patents and related intellectual property, which are described earlier in this document.

At December 31, 2016, we had available cash of $134,125 whereas we had a cash position of $21,138 as of December 31, 2015. The Company had working capital deficit of $549,945 at the end of fiscal year 2015.  For 2016, the working capital deficit was $1,010,176.  The burn rate is between $50,000 and $60,000 per month.  The Company is striving to establish new revenue streams and to return to the status of a going concern by having reduced operating losses and subsequently becoming profitable.  As indicated throughout this document, two other major goals of ABI are to (1) leverage the core technology, low-dose oral interferon, and (2) diversify Company operations to incorporate additional lines of business which will extend the reach of ABI into additional economic sectors such as biotech / bio-pharmaceutical / health care products and life sciences business.  ABI aggressively seeks to monetize its existing and any newly developed intellectual property. ABI estimates its immediate development financing needs to be between $1,000,000 and $1,600,000.

Dr. Chen and the present management team will continue to operate ABI.

Pending Litigation

To the best of management's knowledge, the Company does not believe that there is any pending litigation against ABI.

Comparison of results for the fiscal year ended December 31, 2016, to the fiscal year ended December 31, 2015.

Revenues.  During the fiscal years ended December 31, 2016 and 2015, the Company had no revenues.

Selling, General and Administrative Expenses.  Costs were up in 2016.  Selling, General and Administrative expenses increased from $519,821 for the fiscal year ended December 31, 2015 to $667,111 for the fiscal year ended December 31, 2016, an increase of $147,290 or approximately 28%. Increases in the following expense accounts were the main constituents of the increase in Selling, General, and Administrative expenses: Rent increased $41,019 (302%), salaries increased $79,675 (46%), travel was up $11,928 (44%) and meals $7,903 (213%) increased significantly also.

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Research and Development Expenses.  Research and development expenses were not incurred for the fiscal years ended 2016 and 2015.

Net Loss.  Net loss for the fiscal year ended December 31, 2016 was $669,982 compared to net loss of $521,874 for the fiscal year ended December 31, 2015, a difference of $148,108 or approximately 28%.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable to a "smaller reporting company: as defined in Item 10(f)(1) of SEC Regulation.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The financial statements of the Company are set forth beginning on page F-1 immediately following the signature page of this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

At the end of the period covered by this Annual Report on Form 10-K for the fiscal year ended  December 31, 2016, an evaluation was carried out under the supervision of and with the participation of our management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the design and operations of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act). Based on that evaluation, the CEO and the CFO have concluded that as of the end of the period covered by this Annual Report, our disclosure controls and procedures were not effective in ensuring that: (i) information required to be disclosed by us in reports that we file or submit to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow for accurate and timely decisions regarding required disclosure.

Management's Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles ("GAAP"). Management has assessed the effectiveness of internal control over financial reporting based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control-Integrated Framework. A material weakness, as defined by SEC rules, is a control deficiency, or combination of control deficiencies, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses in internal control over financial reporting that were identified are:

12

a) We did not maintain sufficient personnel with an appropriate level of technical accounting knowledge, experience, and training in the application of GAAP commensurate with our complexity and our financial accounting and reporting requirements. We have limited experience in the areas of financial reporting and disclosure controls and procedures. Also, we do not have an independent audit committee. As a result, there is a lack of monitoring of the financial reporting process and there is a reasonable possibility that material misstatements of the financial statements, including disclosures, will not be prevented or detected on a timely basis; and

b) Due to our small size, we do not have a proper segregation of duties in certain areas of our financial reporting process. The areas where we have a lack of segregation of duties include cash receipts and disbursements, approval of purchases and approval of accounts payable invoices for payment. This control deficiency, which is pervasive in nature, results in a reasonable possibility that material misstatements of the financial statements will not be prevented or detected on a timely basis.

c) We do not have sufficient controls over authorization and documentation of revenue and equity transactions.

As a result of the existence of these material weaknesses as of December 31, 2016, management has concluded that we did not maintain effective internal control over financial reporting as of December 31, 2016, based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.

This annual report does not include an attestation report of the Company's independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the SEC that permit the company to provide only management's report in this annual report.

Changes to Internal Controls and Procedures over Financial Reporting

We intend that our internal control over financial reporting will be modified during our most recent year by adding additional advisors to address deficiencies in the financial closing, review and analysis process, which will improve our internal control over financial reporting.

Management's Remediation Plans

We will look to increase our personnel resources and technical accounting expertise within the accounting function as funds become available. Management believes that hiring additional knowledgeable personnel with technical accounting expertise will remedy the following material weakness: insufficient personnel with an appropriate level of technical accounting knowledge, experience, and training in the application of GAAP commensurate with our complexity and our financial accounting and reporting requirements.

13

PART III

ITEM 10.DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.

As of December 31, 2016, the directors and executive officers of the Company were as follows:

Name	Age	Position
Stephen Chen, PhD (1)	67	Chairman of the Board, Chief Executive Officer President, Chief Operating Officer and Director
Bernard Cohen	63	Vice President and Chief Financial Officer
Paul Tibbits	76	Director
Yasushi Chikagami	77	Director
Daniel Fisher……………………………	72	Director
Nicholas Moren…………………………	70	Director

(1) Member of the Executive Committee.

Stephen Chen was named Chairman of the Board in February 2012 and has been a director of the Company since February 1996. He has been President and Chief Executive Officer of STC International, Inc., a health care investment firm, since May 1992. Dr. Chen has over thirty years of international business experience, including an extensive background in pharmaceutical product acquisition and licensing, development of joint venture agreements, execution of business strategy, and leadership of start-up companies in the pharmaceutical, biotechnology and nutraceutical industries. Dr. Chen has held executive positions in R&D and business development at several major pharmaceutical companies, including Burroughs Wellcome (presently GlaxoSmithKline), Miles Pharmaceuticals (presently Bayer), ICI America (presently AstraZeneca), and Ciba-Geigy (presently Novartis). He received a Ph.D. in Industrial & Physical Pharmacy from Purdue University in 1977.

Paul Tibbits was added to the board of directors in October 2010.  Mr. Tibbits is a graduate of Western Kentucky University who joined the board after a career in the United States Army at Fort Knox and the Civil Service.  Prior to retiring in 1997 Mr. Tibbits served in a management position with General Electric Company and owned his own business. Mr. Tibbits retired from Civil Service to raise cattle and farm.

Yasushi Chikagami was added to the board of directors in June 2012. Mr. Chikagami holds a B.S. Degree in Agricultural Engineering from National Taiwan University, and an M.S. Degree in Engineering from the University of Tokyo. Mr. Chikagami has principally been engaged in the technology industry during his business career, continues to serve on several boards, and is currently serving as Chairman for Arise Corporation (Taiwan), Good TV Broadcasting Corporation (Taiwan), and ZMOS Technology, Inc. (US).

14

Daniel Fisher was added to the board of directors in July 2015. Mr. Fisher is the co-founder, and President of Nano BioMed, Locust Valley, New York. The base technologies are licensed from The Albert Einstein College of Medicine. The licensed technologies are a drug delivery system for the delivery of nitric oxide. In addition, the company has licensed a magnetic nano drug targeting technology. Mr. Fisher negotiated the license from Einstein, closed the company's first sublicenses, arranged for investment financing, and developed the business plan. Mr. Fisher, co-founder of BioZone Laboratories, Inc., served as its President for 22 years. Based near San Francisco, California, BioZone specializes in research, development and manufacturing of products utilizing its drug delivery technologies. He was awarded three patents for his work with liposomal drug delivery technology. In addition, Mr. Fisher was president of Equalan Pharma LLC, which marketed GlyDerm professional skincare products to dermatologists and direct marketing companies. Prior to forming BioZone in 1989, Mr. Fisher's experience base included more than twenty years in sales and marketing management positions for consumer and technical product companies, including Dun & Bradstreet, General Foods Corporation and Control Data Corporation. His memberships include being the founding secretary of the Foundation for Global Skin Health Strategies. He holds a B.S. in Marketing from San Francisco State University.

Nicholas Moren was added to the board of directors in July 2015. Mr. Moren is currently retired. Prior to that he was a senior financial executive with several major public companies, including Loral Space & Communications, Inc., Transworld Corporation and Trans World Airlines, Inc. He brings with him extensive understanding and knowledge of a wide range of businesses, and substantial financial expertise and insightful perspectives relating to economic, financial and business conditions acquired during more than 20 years of serving as a senior executive. He received a B.A. in Engineering from Brown University and a M.B.A. from Wharton Graduate Division, University of Pennsylvania.

The Company's directors are elected at the annual meeting of shareholders to hold office until the annual meeting of shareholders for the ensuing year or until their successors have been duly elected and qualified. Directors receive compensation of $1,000 per day for attendance at meetings, $250 per day for regularly scheduled teleconference meetings, and are reimbursed for any out-of-pocket expenses in connection with their attendance at meetings.

Officers are elected annually by the Board of Directors and serve at the discretion of the Board.

The Bylaws provided for the appointment of members to the Board of Directors when and as necessary.  As the Company progresses and achieves operational goals and addition revenue producing businesses, it is anticipated that the Audit Committee will resume its function.  While there have been no changes in internal controls, the Company continually reviews all existing internal controls.  From time to time, the Company contracts Ms. Brianne Braudt, an independent internal control auditor who consults with the Company on its existing internal controls and possible changes or augmentations to those controls.

Code of Ethics

The Company's Code of Ethics may be found on the Company's website, www.amarbio.com.

Compliance with Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") requires directors and officers of the Company and persons who own more than 10 percent of the Company's common stock to file with the Securities and Exchange Commission (the "Commission") initial reports of ownership and reports of changes in ownership of the common stock. Directors, officers and more than 10% shareholders are required by the Exchange Act to furnish the Company with copies of all Section 16(a) forms they file.

To the Company's knowledge based solely on a review of the copies of such reports furnished to the Company, the following persons have failed to file, on a timely basis, the identified reports required by the Exchange Act during the most recent fiscal year:

15

Name and Principal Position	Number of Late Reports	Known Failures to File a Required Form
Dr. Stephen T. Chen, Chairman of the Board, President, and Chief Executive Officer	0	0
Bernard Cohen, Vice President and Chief Financial Officer	0	0
Paul Tibbits, Director	0	0
Yasushi Chikagami, Director	0	0
Daniel Fisher, Director	0	0
Nicholas Moren, Director	0	0

ITEM 11.EXECUTIVE COMPENSATION.

The following table sets forth for the three years ended December 31, 2016 compensation paid by the Company to its Chairman of the Board and Chief Executive Officer; to its Chief Operating Officer and Director of Research; to its Vice President of Clinical and Regulatory Affairs and  to its Vice President and Chief Financial Officer.

Summary Compensation Table
		Annual Compensation						Long Term Compensation
Name and Principal Position	Year	Salary		Bonus		Other Compensation		Securities Underlying Options*
Dr. Stephen T. Chen,**   Chairman of the Board,   President and Chief   Executive Officer	2016	$	40,000	$	60,500	$	-		-
	2015	$	34,842	$	-
	2014	$	34,719	$	-
Mr. Bernard Cohen,***  Vice President and Chief   Financial Officer	2016	$	40,000	$	17,500	$	-		-
	2015	$	38,729	$	-	$	793		-
	2014	$	40,319	$	-	$	-		-

*All existing employee options have expired. No additional new options were issued.

**At a Special Meeting of the Board of Directors on December 21, 2016, the BOD voted to give Dr. Chen a bonus of $25,000 payable in cash and $35,500 payable in shares, the shares to be issued in 2017.

***At a Special Meeting of the Board of Directors on December 21, 2016, the BOD voted to give Mr. Cohen a bonus of $12,500 payable in cash and $5,000 payable in shares, the shares to be issued in 2017.

      Bernard Cohen was paid $793 of the $13,222 owed to him for unpaid wages at the time of the bankruptcy. This amount represents the 6% payout rate of a class four claim.

16

Option Grants in 2016

There were no options granted to the executive officers named above, during 2016.

Director Compensation for Last Fiscal Year

Directors receive $1,000 compensation for attendance at directors' meetings and $250 for regularly scheduled teleconference meetings. There were no regularly scheduled meetings during 2016.

No director agreements were executed in 2016.

ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

As of December 31, 2016, there were 21,916,143 shares of the Company's common stock outstanding. The following table sets forth as of December 31, 2016, the beneficial ownership of each person who owns more than 5% of such outstanding common stock:

Name and Address	Amount and Nature of Beneficial Ownership	Percent of Class Owned(1)
Anxon International, Inc. 9F.-3, No.32, Sec. 1, ChengGong Rd., NanGang Dist. Taipei City 115, Taiwan (R.O.C.)	2,133,333	8.13%
Ching Lam Carmen Cheung Flat AI, 4/F, Tower A, Wilshire Towers 200 Tin HauTemple Rd. Hong Kong	1,766,667	6.74%
Kairos Capital Co., Ltd. 6F., No. 285, Sec. 4, Zhongxiao E. Rd., Da'an Dist., Taipei City 106, Taiwan (R.O.C.)	1,611,585	6.14%
Lien Chuang Investment Co., Ltd. 3F., No.108, Ruiguang Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.)	1,550,000	5.91%
Te-Li Kuo 7F, No. 48, Yi-Xian Rd. Xinyi Dist., Taipei 100, Taiwan (R.O.C.)	1,320,000	5.03%

(1) Applicable percentage ownership is based on 26,226,782 shares of common stock (outstanding and reserved for note conversion) as of December 31, 2016, plus the additional shares that the stockholder is deemed to beneficially own.  Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock that are currently exercisable or exercisable within 60 days of December 31, 2016, are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

17

The following table sets forth the beneficial ownership of the Company's stock as of December 31, 2016 by each executive officer and director and by all executive officers and directors as a group:

Name and Address of Owner	Amount and Nature of Beneficial Ownership	Percent of Class Owned1
Stephen T. Chen 31 Service Drive Wellesley, MA 02482	8,050,3962	30.70%
Bernard Cohen 2803 S. Travis St. Amarillo, TX 79109	19,387	0.07%
Paul Tibbits 2371 Blueball Road Rineyville, KY 40162	667,553	2.55%
Daniel Fisher 36 Marlee Road Pleasant Hill, CA 94523	-	-
Yasushi Chikagami 9F, No. 29, Ln. 107, Sec. 2 Heping E. Rod., Da'an Dist. Taipei City 106, Taiwan (ROC)	206,140	0.79%
Nicholas Moren PO Box 6873 Incline Village, NV 89450	-	-
Total Group (all directors and executive officers – 6 persons)	8,943,4763	34.10%

(1) Applicable percentage ownership is based on 26,226,782 shares of common stock (outstanding and reserved for note conversion) as of December 31, 2016, plus the additional shares that the stockholder is deemed to beneficially own.  Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock that are currently exercisable or exercisable within 60 days of December 31, 2016, are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

(2)  Includes 2,969,111 shares owned by Dr. Chen, 683,801 shares owned by STC International, Inc., which Dr. Chen is the majority owner and serves as Chairman, President and a Board member. Also includes 39,473 shares owned by ACTS Biosciences, Inc., which Dr. Chen serves as Chairman and a Board member and 47,372 shares owned by Virginia M. Chen Defined Benefit Plan, Dr. Chen's spouse.  Includes 4,310,639 shares of common stock reserved for note conversions beneficially owned by Dr. Chen exercisable within 60 days.

(3)  Directors and officers percentage ownership is calculated based on 26,226,782 total shares (outstanding and reserved for note conversions) plus Directors and Officers options beneficially owned.

Equity Compensation Plan Information

Stock Plans *	Issue Date Range	Total Shares Authorized	Shares Issued	Shares Remaining
2008 Stock Incentive Plan	5/23/08 – 10/11/11	600,000	463,420	136,580

*       The Board of Directors has approved all stock, stock option and stock warrant issuances.

18

ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Historically, ABI has relied upon certain relationships which gave rise to related transactions. These relationships have helped ABI with financing, ingredients to potential products, research, and technology.  All future transactions and loans between the Company and its officers, directors and 5% shareholders will be on terms no less favorable to the Company than could be obtained from independent third parties. There can be no assurance, however, that future transactions or arrangements between the Company and its affiliates will be advantageous, that conflicts of interest will not arise with respect thereto or that if conflicts do arise, that they will be resolved in favor of the Company.

Currently there are no such arrangements that have not already been disclosed in this document.

ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES.

The following summarizes the fees incurred by the Company during 2016 and 2015 for accountant and related services.

Audit Fees

	2016		2015
LBB & Associates Ltd., LLP	$	32,300	$	38,150

All Other Fees

None.

Accountant Approval Policy

Before an accountant is engaged by the Company to perform audit or non-audit services, the accountant must be approved by the Company's Audit Committee, or the Executive Committee in the absence of an Audit Committee.

PART IV

ITEM 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

EXHIBIT INDEX

3(i)	Restated Certificate of Formation of the Company, dated and filed July 27, 2015.
3(ii)	Bylaws of the Company, as amended July 10, 2015.
4.1*	Specimen Common Stock Certificate.
4.2*	Form of Underwriter's Warrant.
10.1(11)	2008 Stock Incentive Plan dated May 20, 2008.
10.2*	License Agreement dated as of March 22, 1988 between the Company and The Texas A&M University System.
10.30***	Amendment No. 1 dated September 28, 1998 to License Agreement of March 22, 1988 between The Texas A&M University System and the Company.
10.71	License and Supply Agreement dated January 7, 2010, between the Company and Intas Pharmaceuticals, Ltd.

99.1906 Certification

*The Exhibit is incorporated by reference to the exhibit of the same number to the Company's Registration Statement on Form SB-2 filed with and declared effective by the Commission (File No. 333-4413) on August 8, 1996.

***The Exhibit is incorporated by reference to the Company's 1998 Annual Report on Form 10-KSB filed with the Commission on or before March 31, 1999.

(11) The Exhibit is incorporated by reference to the Company's Report on Form S-8 filed with the SEC on May 22, 2008.

19

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the 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:   April 14, 2017	By: /s/ Stephen Chen Stephen Chen, Chairman of the Board, and Chief Executive Officer
Date:   April 14, 2017	By:/s/ Bernard Cohen Bernard Cohen, Vice President, Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Stephen Chen	Chairman of the Board, Director and Chief Executive Officer	April 14, 2017
Stephen Chen
/s/ Paul Tibbits	Director	April 14, 2017
Paul Tibbits
/s/ Yasushi Chikagami	Director	April 14, 2017
Yasushi Chikagami
/s/ Daniel Fisher	Director	April 14, 2017
Daniel Fisher
/s/ Nicholas Moren	Director	April 14, 2017
Nicholas Moren

20

Amarillo Biosciences, Inc.

Financial Statements

Years ended December 31, 2016 and 2015

Contents
Report of Independent Registered Public Accounting Firm	F-1
Balance Sheets	F-2
Statements of Operations	F-3
Statements of Stockholders' Deficit	F-4
Statements of Cash Flows	F-5
Notes to Financial Statements	F-6

LBB & ASSOCIATES LTD., LLP

10260 Westheimer Road, Suite 310

Houston, TX 77042

Phone: (713) 800-4343 Fax: (713) 456-2408

Report of Independent Registered Public Accounting Firm

To the Board of Directors of

Amarillo Biosciences, Inc.

Amarillo, TX

We have audited the accompanying balance sheets of Amarillo Biosciences, Inc. (the "Company") as of December 31, 2016 and 2015, and the related statements of operations, stockholders' deficit, and cash flows for each of the years in the two-year period ended December 31, 2016. Amarillo Biosciences, Inc.'s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Amarillo Biosciences, Inc. as of December 31, 2016 and 2015, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the financial statements, the Company's absence of significant revenues, recurring losses from operations, and its need for additional financing in order to fund its projected loss in 2017 raise substantial doubt about its ability to continue as a going concern. These 2016 financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ LBB & Associates Ltd., LLP

LBB & Associates Ltd., LLP

Houston, Texas

April 14, 2017

F - 1

Amarillo Biosciences, Inc.

Balance Sheets

	December 31, 2016			December 31, 2015
Assets
Current assets:
Cash and cash equivalents	$	134,125		$	21,138
Inventory		14,700			-
Advance to related party		37,835			-
Prepaid expense and other current assets		75,739			18,154
Total current assets		262,399			39,292
Patents, net		156,063			72,105
Property and equipment, net		44,214			5,798
Total assets	$	462,676		$	117,195
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable and accrued expenses	$	165,502		$	58,550
Accrued interest - related parties		3,259			1,706
Accounts payable – related parties		-			144,426
Advance from related party		187,500			-
Customer deposits – related party		124,833			-
Notes payable – related parties		-			384,555
Convertible note payable – related party		791,481			-
Total current liabilities		1,272,575			589,237
Total liabilities		1,272,575			589,237
Commitments and contingencies
Stockholders' deficit
Preferred stock, $0.01 par value:
Authorized shares - 10,000,000,
Issued and outstanding shares – 0 at December 31, 2016 and December 31, 2015		-			-
Common stock, $0.01 par value:
Authorized shares - 100,000,000,
Issued and outstanding shares – 21,916,143 and 20,144,810 at December 31, 2016 and 2015, respectively		219,161			201,448
Additional paid-in capital		237,540			(76,872	)
Accumulated deficit		(1,266,600	)		(596,618	)
Total stockholders' deficit		(809,899	)		(472,042	)
Total liabilities and stockholders' deficit	$	462,676		$	117,195

The accompanying notes are an integral part of these financial statements.

F - 2

Amarillo Biosciences, Inc.

Statements of Operations

	Year ended December 31,
		2016			2015
Revenues	$	-		$	-
Cost of revenues		-			-
Gross margin (loss)		-			-
Operating expenses:
Research and development expenses		-			-
Selling, general and administrative expenses		667,111			519,821
Total operating expenses		667,111			519,821
Operating loss		(667,111	)		(519,821	)
Other income (expense):
Interest expense		(2,871	)		(2,053	)
Net loss	$	(669,982	)	$	(521,874	)
Basic and diluted net loss per average share available to common shareholders	$	(0.03	)	$	(0.03	)
Weighted average common shares outstanding – basic and diluted		21,055,886			20,144,810

The accompanying notes are an integral part of these financial statements.

F - 3

Amarillo Biosciences, Inc.

Statements of Stockholders' Deficit

Years Ended December 31, 2016 and 2015

									Additional						Total
	Preferred Stock				Common Stock				Paid in			Accumulated			Stockholders'
	Shares		Amount		Shares		Amount		Capital			Deficit			Deficit
Balance at December 31, 2014		-	$	-		20,144,810	$	201,448	$	(157,446	)	$	(74,744	)	$	(30,742	)
Cash received from stock subscription		-		-		-		-		80,574			-			80,574
Net loss for the year ended December 31, 2015		-		-		-		-		-			(521,874	)		(521,874	)
Balance at December 31, 2015		-		-		20,144,810		201,448		(76,872	)		(596,618	)		(472,042	)
Issuance of stock for cash in private placements		-		-		1,771,333		17,713		314,412			-			332,125
Net loss for the year ended December 31, 2016		-		-		-		-		-			(669,982	)		(669,982	)
Balance at December 31, 2016		-	$	-		21,916,143	$	219,161	$	237,540		$	(1,266,600	)	$	(809,899	)

The accompanying notes are an integral part of these financial statements.

F - 4

Amarillo Biosciences, Inc.

Statements of Cash Flows

	Year Ended December 31, 2016			Year Ended December 31, 2015
Cash flows from Operating Activities
Net loss	$	(669,982	)	$	(521,874	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		25,956			19,772
Changes in operating assets and liabilities:
Inventory		(14,700	)		-
Prepaid expense and other current assets		(95,420	)		(1,272	)
Accounts payable and accrued expenses		106,952			(8,609	)
Accrued interest – related parties		1,553			1,143
Accounts payable – related party		-			144,426
Customer deposits		124,833			-
Net cash used in operating activities		(520,808	)		(366,414	)
Cash flows from Investing Activities
Investment in patents		(100,644	)		(4,497	)
Capital expenditures		(47,686	)		(7,081	)
Net cash used in investing activities		(148,330	)		(11,578	)
Cash flows from Financing Activities
Cash received from stock subscription		-			80,574
Proceeds from private placement offering		332,125			-
Advance from related party		187,500
Proceeds from convertible note payable - related party		262,500			-
Net cash provided by financing activities		782,125			80,574
Net change in cash		112,987			(297,418	)
Cash and cash equivalents at beginning of period		21,138			318,556
Cash and cash equivalents at end of period	$	134,125		$	21,138
Supplemental Cash Flow Information
Cash paid for interest	$	1,318		$	910
Cash paid for income taxes	$	-		$	-
Non-Cash Transactions
Conversion of accounts payable - related party to convertible note payable – related party	$	144,426		$	-
Conversion of notes payable - related party to convertible note payable – related party	$	384,555		$	-

The accompanying notes are an integral part of these financial statements.

F - 5

Amarillo Biosciences, Inc.

Notes to Financial Statements

December 31, 2016 and 2015

1. Organization and Summary of Significant Accounting Policies

Organization and Business

Amarillo Biosciences, Inc. (the "Company" or "ABI"), a Texas corporation formed in 1984, is engaged in developing biologics for the treatment of human and animal diseases.  The Company's current focus is research aimed at the treatment of human disease indications, particularly influenza, hepatitis C, thrombocytopenia, and other indications using natural human interferon alpha that is administered in a proprietary low dose oral form.  In addition to the above core technology, which is included in the Pharmaceutical Division, ABI is exploring the possibility of instituting new revenue streams with a Medical Division and a Consumer Products Division.

The Medical Division is preparing to deploy diabetic treatment centers in Taiwan beginning sometime in the third quarter of 2017. These centers will provide a therapy (Artificial Pancreas Treatment, or "APT") for the management of Type 1 and Type 2 diabetes along with the reversal of the complications that historically accompany this disease and plague patients. The Consumer Product Division is presently working on a delivery system for nutraceuticals and food supplements such as Vitamin C, negotiations to import and distribute to the Asian markets a natural resource product which can be modified for human, animal, or agricultural applications, and enter the alternative medicine market through domestic and international distribution of natural Kentucky Wild Ginseng and other medicinal herbs.

Going Concern

These financial statements have been prepared in accordance with United States generally accepted accounting principles, on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has not yet achieved operating income, and its operations are funded primarily from debt and equity financings. However, losses are anticipated in the ongoing development of its business and there can be no assurance that the Company will be able to achieve or maintain profitability.

The continuing operations of the Company and the recoverability of the carrying value of assets is dependent upon the ability of the Company to obtain necessary financing to fund its working capital requirements, and upon future profitable operations. The accompanying financial statements do not include any adjustments relative to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.

There can be no assurance that capital will be available as necessary to meet the Company's working capital requirements or, if the capital is available, that it will be on terms acceptable to the Company. The issuances of additional equity securities by the Company may result in dilution in the equity interests of its current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase the Company's liabilities and future cash commitments. If the Company is unable to obtain financing in the amounts and on terms deemed acceptable, the business and future success may be adversely affected and the Company may cease operations. These factors raise substantial doubt regarding our ability to continue as a going concern.

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Fair Value of Financial Instruments

Under the Financial Account Standards Board Accounting Standards Codification ("FASB ASC"), we are permitted to elect to measure financial instruments and certain other items at fair value, with the change in fair value recorded in earnings. We elected not to measure any eligible items using the fair value option. Consistent with Fair Value Measurement Topic of the FASB ASC, we implemented guidelines relating to the disclosure of our methodology for periodic measurement of our assets and liabilities recorded at fair market value.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-tier fair value hierarchy prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

· Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

· Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

· Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one more significant inputs or significant value drivers are unobservable.

Our Level 1 assets and liabilities primarily include our cash and cash equivalents. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. The carrying amounts of accounts receivable, accounts payable, accrued liabilities, and notes payable approximate fair value due to the immediate or short-term maturities of these financial instruments.

Stock-Based Compensation

Stock-based compensation expense is recorded in accordance with FASB ASC Topic 718, Compensation – Stock Compensation, for stock and stock options awarded in return for services rendered. The expense is measured at the grant-date fair value of the award and recognized as compensation expense on a straight-line basis over the service period, which is the vesting period. The Company estimates forfeitures that it expects will occur and records expense based upon the number of awards expected to vest.

Cash and Cash Equivalents

The Company classifies investments as cash equivalents if the original maturity of an investment is three months or less.

Allowance for Doubtful Accounts

The Company establishes an allowance for doubtful accounts to ensure trade and notes receivable are not overstated due to uncollectability.  The Company's allowance is based on a variety of factors, including age of the receivable, significant one-time events, historical experience, and other risk considerations. The Company had no material accounts receivable and no allowance at December 31, 2016 and 2015.  No uncollectible accounts receivables were written off in 2016.

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Inventory

Inventories are stated at the lower of cost or market. Cost is determined on a first-in, first-out basis. The Company continually assesses the appropriateness of inventory valuations giving consideration to slow-moving, non-saleable, out-of-date or close-dated inventory. As of December 31, 2016 and 2015, the Company has a balance of $14,700 and $0, respectively, in inventory.

Property and Equipment

Property and equipment are stated on the basis of historical cost less accumulated depreciation.  Depreciation is provided using the straight-line method over the two to seven year estimated useful lives of the assets.

Patents and Patent Expenditures

ABI holds patent license agreements and holds patents that are owned by the Company. All patent license agreements remain in effect over the life of the underlying patents. Accordingly, the patent license fee is being amortized over the estimated life of the patent using the straight-line method. Patent fees and legal fees associated with the issuance of new owned patents are capitalized and amortized over the estimated 15 to 20 year life of the patent.  The Company continually evaluates the amortization period and carrying basis of patents to determine whether subsequent events and circumstances warrant a revised estimated useful life or impairment in value. To date, no such impairment has occurred. To the extent such events or circumstances occur that could affect the recoverability of our patents, we may incur charges for impairment in the future.

Long-lived Assets

Impairment losses are recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount.  No impairment losses have been recorded since inception.

Income Taxes

The asset and liability approach is used to account for income taxes by recognizing deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. The Company records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized.

Research and Development

Research and development costs are expensed as incurred.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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Basic and Diluted Net Income (Loss) Per Share

Net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of common shares outstanding. For the year ended December 31, 2016 and 2015, options and warrants outstanding (if any) were antidilutive and not included in the calculation of fully diluted net income (loss) per share.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentration of credit risk consist principally of cash.

The Company has cash balances in a single financial institution which, from time to time, could exceed the federally insured limit of $250,000.  No loss has been incurred related to this concentration of cash.

Recent Accounting Pronouncements

Management does not anticipate that any recently issued but not yet effective accounting pronouncements will materially impact the Company's financial condition.

2. Property, Equipment and Software, net

Property, equipment and software are stated at cost less accumulated depreciation and consist of the following at December 31, 2016 and 2015:

	2016			2015
Furniture and equipment	$	92,988		$	45,302
Software		8,012			8,012
		101,000			53,314
Less:  accumulated depreciation		(56,786	)		(47,516	)
Property, equipment and software, net	$	44,214		$	5,798

Depreciation expense amounted to $9,270 for the year ended December 31, 2016 and $1,283 for the year ended December 31, 2015 and is included in selling, general and administrative expenses.

3. Patents, net

Patents are stated at cost less accumulated amortization and consist of the following at December 31, 2016 and 2015:

	2016			2015
Patents	$	289,228		$	188,584
Less: accumulated amortization		(133,165	)		(116,479	)
Patents, net	$	156,063		$	72,105

Amortization expense amounted to $16,686 for the year ended December 31, 2016 and $18,489 December 31, 2015, respectively, and is included in selling, general and administrative expenses.

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Estimated future amortization expense is as follows:

2017	$	16,807
2018		15,444
2019		9,793
2020		6,584
2021		4,379
Thereafter		103,056
Total expense	$	156,063

4. Notes Payable - Related Party

	2016		2015
Note payable – related party	$	-	$	234,555
Note payable – related party		-		150,000
		-		384,555
Less: current portion		-		(384,555	)
Notes payable – related party, long term	$	-	$	-

On November 20, 2014, the Class Three Secured Claim of Yang was deemed allowed in the amount of $150,000, secured by the same assets that secured Yang's prepetition secured claim (See Texas Financing Statement No. 13-0029795076). This claim bears interest at the Applicable Federal Rate, will be fully amortized and paid as follows: four (4) consecutive equal annual installments of combined principal and interest, beginning September 1, 2015, and continuing on the same date of each succeeding year until September 1, 2018, when the obligation is due and payable in full.  The first payment was due on September 1, 2015, in the amount of $37,811 (principal and interest).  To date, no payments have been made and there has been no demand for the payment.

Subsequent to consummation of the Plan, The Yang Group provided $234,555 for post-reorganization financing.  This is unsecured and draws interest at the short term Applicable Federal Rate.  On June 30, 2016, the two debts were consolidated into one convertible promissory note. The convertible promissory 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 price of $.1875 per share.  The amounts owed to The Yang Group after the debts were consolidated totaled $384,555 which represented all amounts then owed to The Yang Group. Those debts along with the associated liens, security interests, and accrued interest were assigned by The Yang Group to Dr. Stephen T. Chen, effective as of June 30, 2016. Subsequent to the assignment, Dr. Chen released the lien (Texas file #13-0029795076) and authorized Amarillo Biosciences, Inc. to file a UCC-3 Amendment Statement terminating the lien.

5. Convertible Notes Payable – Related Party

	2016		2015
Convertible Note payable – related party	$	144,426	$	-
Convertible Note payable – related party		262,500		-
Convertible Note payable – related party		384,555		-
Convertible Notes payable – related party	$	791,481	$	-

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During the fiscal year ended December 31, 2016, a payable in the amount of $144,426 to Dr. Stephen T. Chen, Chairman, CEO and President of the Company, was exchanged for a convertible promissory note.  The note was executed on January 11, 2016, is payable on demand, and is unsecured.  The interest rate is .75%, the Annual Federal Rate (AFR), the rate in effect when the note was made.  The Payee, Dr. Chen, may convert all or some part of the note to the Maker's (ABI's) common voting stock at a conversion price of $.168 per share.

On March 18, 2016, Dr. Chen purchased a Convertible Promissory Note in the amount of $262,500 through the Company's Private Placement Convertible Note Security Offering entitled Private Placement 2016-1 (previously approved by the ABI Board of Directors on March 10, 2016).  The note is payable on demand, unsecured, carries interest at the Short Term Annual Federal Rate (AFR) of .65% per annum, and is convertible into ABI 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. Chen in exchange for the aggregated amounts of two existing Notes Payable – Related Party.  The Convertible Note is due on demand, is 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.

6. Related Party Transactions

On April 4, 2016, Dr. Chen received $75,000 for repayment of funds advanced to the Company between January 18, 2016 and March 18, 2016, which were to be used for general operating expenses.

On May 23, 2016, Amarillo Biosciences, Inc. ("ABI"), the Principal, entered into an Agency and Service Agreement with ACTS Global Healthcare, Inc. ("ACTS Global"), a Taiwan Corporation, the Agent. ABI advanced ACTS Global "Principal Funds" in the amount of NTD $3,000,681 ($91,968 USD), to be utilized and /or expended by ACTS Global solely as instructed by ABI.  Additional advances may be made by ABI to ACTS Global as necessary.  For their services, ACTS Global, is be paid by ABI, one percent (1%) of the Principal's services expended by the Agent at the Principal's direction. Any other services rendered by the Agent will be paid for by the Principal based on comparable and/or reasonable values of the service rendered.  As of December 31, 2016, ACTS Global has expended $54,133 for the benefit of the Company, leaving a balance of $37,835, which is included on the Company Balance Sheet in Advances to related party.  The agency fee to ACTS Global was $546 for 2016.

During the year ended December 31, 2016, the Company purchased ginseng at a cost of $17,929 from Hidden Valley Herbs of Kentucky, which is owned and operated by ABI Director and Stockholder Paul Tibbits.

On November 7, 2016, the Company received a deposit in the amount of $124,833 from Amarillo Biosciences (Hong Kong) Ltd., an entity consisting of the Company's certain private placement shareholders and other shareholders who are not related parties, for the purchase of medical equipment. The medical equipment was delivered on January 13, 2017.

In April 2016, the Company received proceeds of $187,500 from an investor related to Amarillo Biosciences (Hong Kong) Ltd. in exchange for the potential issuance of 1,000,000 shares of common stock (Private Placement 2016-2).  As of December 31, 2016, the shares have not been issued and the amount received is included in Advances from related party.  As of the filing date, the stock subscription has not been executed.

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On December 20, 2016, the Board of Directors approved the award of bonuses to Dr. Stephen T. Chen, Chairman of the Board, CEO, and President; and Bernard Cohen, Vice President and Chief Financial Officer.  Dr. Chen received a cash bonus of $25,000 and shares of the Company's unregistered, voting common stock in the amount of $37,500.  Bernard Cohen received a cash bonus of $12,500 and shares of the Company's unregistered, voting common stock in the amount of $5,000.  The cash bonuses were paid on December 30, 2016 and the stock award is included in Accounts Payable and Accrued Expenses as of December 31, 2016.  The stock award was issued on January 3, 2017.  Shares were priced at the average of all trading day closing quotes on the OTC-BB for the month of December 2016.

7. Common Stock

The Company has 100,000,000 shares of voting common shares authorized for issuance.  As of December 31, 2016, a total of 26,226,782 shares of common stock were either outstanding (21,916,143) or reserved for issuance upon exercise of options or convertible debt (4,310,639).

On March 10, 2016, the Board of Directors approved the Company to enter into private placements for the sale of up to 5,000,000 shares of the Company's common stock (Private Placement 2016-2) at a price of $.1875 per share (aggregate offering amount of $937,500).

During the second quarter of 2016, the Company received $234,375 from individual, outside investors for the purchase of a total of 1,250,000 shares of common stock through the 2016-2 Security Offering which contemplates the sale of a maximum of 5,000,000 shares at a cost of $.1875 per share. The required SEC Form D was filed on May 6, 2016. On July 11, 2016, 1,250,000 shares were issued.

On September 30, 2016, the Board of Directors approved the Company to amend the previously authorized Private Placement 2016-2 offer, sale, and issuance of unregistered securities.  The Private Placement 2016-2 was amended to offer up to 10,000,000 shares of the Company's commons stock at a price of $.1875 per share for an aggregate offering amount of $1,875,000.  The offering is to be completed within one (1) year of the date of approval.  During the fourth quarter of 2016, the Company sold 521,333 shares of common stock at $.1875 per share for proceeds of $97,750.

8.  Preferred Stock

The shareholders have authorized 10,000,000 shares of preferred stock shares for issuance.

No Preferred Equity was outstanding as of December 31, 2016 and 2015 and none is outstanding as of the date of this report.

At December 31, 2016, $34,279 of unpaid dividends have been accrued on Preferred Equity previously owned by Mr. Paul Tibbits, a stockholder and director.  The dividends accrued between the filling dates of the Company's Chapter 11 Bankruptcy, October 31, 2013, and the Effective Date of the Plan of Reorganization, November 20, 2014 and are owed to Mr. Tibbits.

9. Stock Option and Stock Plans

Stock Plans *	Issue Date Range	Total Shares Authorized	Shares Issued	Shares Remaining
2008 Stock Incentive Plan	5/23/08 – 10/11/11	600,000	463,420	136,580

*       The Board of Directors has approved all stock, stock option and stock warrant issuances.

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10.  Stock Options and Warrants

Stock Options:

During 2016, no options or warrants were issued to consultants, advisors, directors, employees, or investors. Consequently, there were no related expenses.

Directors, officers and consultants did not exercise any options in 2016 or 2015, see table below.

A summary of the Company's stock option activity and related information for the years ended December 31, 2016 and 2015 is as follows:

	2016					2015
	Options			Price		Options			Price
Outstanding Beg. of Year*		8,568		$	0.95		81,726		$	0.76-1.235
Granted		-			-		-			-
Cancelled/Expired		(8,568	)		0.95		(73,158	)	$	0.76-1.235
Exercised		-			-		-			-
Outstanding End of Year		-		$	-		8,568		$	0.95
Exercisable End of Year		-		$	-		8,568		$	0.95

*All options went through a 1-for-19 reverse split

Stock Warrants:

A summary of the Company's stock warrant activity and related information for the years ended December 31, 2016 and 2015 is as follows:

	2016				2015
	Warrants		Price Range		Warrants			Price Range
Outstanding Beg. of Year*		-	$	-		52,632		$	0.57
Granted		-		-		-			-
Cancelled/Expired		-		-		(52,632	)	$	0.57
Exercised		-		-		-			-
Outstanding End of Year		-	$	-		-		$	-
Exercisable End of Year		-	$	-		-		$	-

*All options went through a 1-for-19 reverse split

11.  Income Taxes

Income tax expense (benefit) attributable to income from continuing operations differed from the amounts computed by applying the U.S. Federal income tax of 34% to pretax income from continuing operations as a result of the following:

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	December 31, 2016			December 31, 2015
Provision (benefit) at statutory rate	$	228,000		$	177,000
Change in valuation allowance		(228,000	)		(177,000	)
	$	-		$	-

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2016 and 2015, are presented below:

	December 31, 2016			December 31, 2015
Deferred tax assets:
Net operating loss carryforward	$	7,601,000		$	7,373,000
Deferred tax assets		7,601,000			7,373,000
Deferred tax liabilities:		-			-
Net deferred tax assets		7,601,000			7,373,000
Valuation allowance		(7,601,000	)		(7,373,000	)
	$	-		$	-

At December 31, 2016, the Company has estimated net operating loss carryforwards of approximately $22,357,000 for federal income tax purposes expiring in 2016 through 2035. The ability of the Company to utilize these carryforwards may be difficult and directly dependent upon many factors outside of the Company's control, including, but not limited to, changes in the legal and regulatory framework and the operational and corporate structure of ABI and shareholders, or sales or transfers of stock by or among shareholders. For example, if ABI has experienced a change of control as defined in the relevant provisions of the IRC,² the use of any existing tax attributes could be severely limited. ABI does not believe the reorganization has or will impair any tax attributes; however, obtaining value from the tax attributes is a function of the Company's return to profitable operations and the timeframe of that return. While we believe it is possible, there is no assurance that ABI will return to profitability in the future.

² See 26 U.S.C. § 382 (known as Section 382 of the IRC) and related regulations.

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12. Commitments and Contingencies

Lease commitment

Our executive and administrative offices are located at 4134 Business Park Drive, Amarillo, Texas in a 1,800 square-foot facility rented by the Company. The lease expires on June 30, 2017 and our monthly rent is $1,070 per month. During the years ended December 31, 2016 and 2015, the Company incurred $12,715 and $13,585 in rent expense, respectively.

The Company shares office space with ACTS Global Healthcare, Inc. in Taipei, Taiwan. The lease expires on October 31, 2018 and our monthly rent is NTD $70,000 per month. During the years ended December 31, 2016 and 2015, the Company incurred $41,889 and $0 in rent expense, respectively.

Litigation

The Company is not a party to any litigation and is not aware of any pending litigation or unasserted claims or assessments as of December 31, 2016.

Officer Compensation

On December 20, 2016, effective January 1, 2017, the Board of Directors approved a resolution whereby Dr. Chen's annual compensation was changed to $90,000 cash per annum and $75,000 per annum payable in the Company's unregistered, voting common stock.  The Board also approved the change in compensation to Bernard Cohen to $65,000 cash per annum and $10,000 per annum payable in the Company's unregistered, voting common stock. The cash compensation is to be paid on the normal payroll cycle of 15^th and 31^st of each month and stock compensation to be paid quarterly.  Shares are to be priced at the average of all trading day closing quotes on the OTC-BB for the month preceding date of issuance, with such shares to be issued on the first business day after the close of each calendar quarter or as soon thereafter as practicable.  The first such issuance to occur on April 3, 2017.

13. Subsequent Events

In January 2017, the Company sold 270,000 shares of common stock at $.1875 per share for proceeds of $50,625.  As of the filing date, these shares have not yet been issued.

In January 2017, the Company issued a total of 164,792 shares of common stock at $.2579 per share as payment for the 2016 compensation bonus for Dr. Stephen T. Chen, and Bernard Cohen.

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