Convertible Notes Payable – Related Party. On July 31, 2015, two investors paid a total of $225,000 for their subscribed investment to the Yang Group for an investment in 1,200,000 shares of ABI common stock. The investors agreed to pay a premium of $0.07 per share over the original cost of the stock, which was $0.12 per share. The Company allocated $144,426 as an Accounts payable – related party to Dr. Chen for his previous advances to the Company through The Yang Group. The remaining $80,574 was recognized as “additional paid in capital” (APIC) during the year ended December 31, 2015.

Shares Subscribed	Purchase Price		Purchase Premium		Total
200,000	$	24,071	$	13,429	$	37,500
1,000,000		120,355		67,145		187,500
1,200,000	$	144,426	$	80,574		225,000
Less: Due to Dr. Stephen Chen						(144,426	)
Additional paid in capital					$	80,574

Subsequently, an offering of $1,000,000 of Convertible Notes was made with a conversion rate of $0.168 per share. The SEC Form D was filed on April 7, 2016, and the first sale was a Convertible Promissory Note for the face amount of $144,426 to Dr. Stephen Chen, who as consideration to the Company, forwent immediate collection of the $144,126 discussed above.

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

During the period ended June 30, 2016, the Company received $250,000 from Dr. Stephen T. Chen for the purchase of Convertible Promissory Notes in connection with a $1,000,000 Private Placement Convertible Note Security Offering entitled Private Placement 2016-1. In addition, Dr. Chen paid $12,500 for the purchase of Convertible Promissory Notes in connection with the same offering. Both receipts of cash were aggregated and one Convertible Note in the amount of $262,500 was issued to Dr. Chen as of March 18, 2016. The Note is due on demand, bears interest at the Short-Term Applicable Federal Rate of .65% per annum, and is convertible into Amarillo Biosciences, Inc. Common Stock at a price of $.1875 per share.

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