Exhibit
4.2


Description
of Securities


 


General


 


Our
original articles of incorporation authorized 60,000,000 shares of Class A common stock, 25,000,000 shares of Class B common stock
with no par value per share and 10,000,000 shares of preferred stock with no par value per share on a pre-reverse split basis.
On March 18, 2009, we amended our articles of incorporation to provide for unlimited authorized shares, no par value, of Class
A common stock and Class B common stock, and preferred stock. In December 2013, we further amended our articles of incorporation
to designate Series A of the Company’s preferred stock, no par value; there are two shares of Series A preferred stock authorized.
There are no provisions in our charter or by-laws that would delay, defer or prevent a change in our control. As of the date hereof,
we have 854,410,001 shares of Class A common stock, 0 shares of Class B common stock and 2 shares of Series A Preferred Stock
outstanding. The Class B common stock is not listed on the OTCQB or any other market and we are not seeking to have it listed
on Nasdaq or another national exchange.


 


At
our 2019 annual stockholder meeting, our stockholders approved a reverse stock split of the Company’s issued and outstanding
Common Stock by a ratio of not less than one-for-ten and not more than one-for-forty at any time prior to July 23, 2020, with
the exact ratios to be set at a whole number within this range, as determined by our Board in its sole discretion and approved
and adopted the articles of amendment to our articles of incorporation to affect the same. As we continue the uplisting process
with Nasdaq, but are past July 23, 2020, such stockholder approval expired. However, on January 25, 2021, we obtained the written
consent from a majority of our stockholders to effect the Reverse Stock Split before December 31, 2021, at a whole number of not
less than one-for-ten and not more than one-for-one hundred, and file articles of amendment to our articles of incorporation to
affect same (the “Common Stock Written Consent”); the Board again retains sole discretion to determine the final ratio
and timing to implement the Reverse Stock Split.


 


In
line with the Reverse Stock Split, the sole holder of our Series A Preferred Stock, Mr. Thompson, who is our CEO and sole director,
approved, via written consent, to reduce the voting rights of the Series A preferred stock by a ratio equal to the ratio that
will be used with the Reverse Stock Split (the “Reduced Voting Power”), to be effective as of the date of the Reverse
Stock Split. Mr. Thompson’s consent, together with the Common Stock Written Consent, gives the Board the authority to amend
our articles of incorporation to reflect the Reduced Voting Power, at a time when they deem best suited for the Company and its
stockholders.


 


The
Reverse Stock Split will not impact the number of authorized shares of Common Stock or Series A Preferred Stock.


 


Common
Stock


 


As
of the date hereof, 854,410,001 shares of Class A common stock were issued and outstanding and held by 33 stockholders of record,
and we had no shares of Class B common stock issued and outstanding. Holders of our Common Stock are entitled to one vote for
each share on all matters submitted to a stockholder vote; Class B common stock does not have any voting rights.


 


Holders
of Common Stock do not have cumulative voting rights.


 


Holders
of a majority of the shares of Common Stock voting for the election of directors can elect all of the directors. Holders of our
common stock representing a majority of the voting power of our capital stock issued and outstanding and entitled to vote, represented
in person or by proxy, are necessary to constitute a quorum at any meeting of our stockholders. A vote by the holders of a majority
of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment
to our Articles of Incorporation.


 


Although
there are no provisions in our charter or by-laws that may delay, defer or prevent a change in control, we are authorized, without
stockholder approval, to issue shares of preferred stock that may contain rights or restrictions that could have this effect.


 


Holders
of both classes of common stock are entitled to share in all dividends that the Board, in its discretion, declares from legally
available funds. In the event of liquidation, dissolution or winding up, each outstanding share entitles its holder to participate
pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference
over the common stock. Holders of both classes of our common stock have no pre-emptive rights, no conversion rights and there
are no redemption provisions applicable to our common stock.


 


Preferred
Stock


 


Our
Board has the authority, without further action by the stockholders, to issue from time to time the preferred stock in one or
more series for such consideration and with such relative rights, privileges, preferences and restrictions that the Board may
determine. The preferences, powers, rights and restrictions of different series of preferred stock may differ with respect to
dividend rates, amounts payable on liquidation, voting rights, conversion rights, redemption provisions, sinking fund provisions
and purchase funds and other matters. The issuance of preferred stock could adversely affect the voting power or other rights
of the holders of common stock.


 






    	 



    	 



    

 


Effective
December 17, 2013, the Company amended its Articles of Incorporation to designate Series A of the Company’s preferred stock,
no par value. Under the amendment, there are two shares of Series A preferred stock authorized. The holders of Series A preferred
stock are entitled to vote together with the holders of the Company’s common stock on all matters upon which the Company’s
stockholders may vote.


 


Each
share of Series A preferred stock is entitled to 200,000,000 votes on all such matters on a pre-reverse basis. Each share of Series
A preferred stock is convertible into one share of the Company’s common stock at the holder’s option. On December
19, 2013, the Company issued two shares of Series A preferred stock to Kim Thompson, the Company’s founder, CEO, CFO, President,
and sole director.


 


The
shares of Series A preferred stock were issued to Mr. Thompson in exchange for an agreement to extend to October, 30, 2014 the
date on which the Company would pay certain debts owed to Mr. Thompson. As part of the transaction, Mr. Thompson also agreed to
forgive $30,000 which the Company owed to him as compensation. In connection with the transaction, the Company incurred a loss
on settlement of debt of $5,187,800.


 


Dividends


 


Since
inception we have not paid any cash dividends on our capital stock. We currently do not anticipate paying any cash dividends in
the foreseeable future on our common stock. Although we intend to retain our earnings,
if any, to finance the exploration and growth of our business, our Board will have the discretion to declare and pay dividends
in the future. Payment of dividends in the future will depend upon our earnings, capital requirements, and other factors, which
our Board may deem relevant.


 


Certain
Anti-Takeover Effects


 


Certain
provisions of Wyoming law may have an anti-takeover effect and may delay or prevent a tender offer or other acquisition transaction
that a shareholder might consider to be in his or her best interest. The summary of the provisions of Wyoming law set forth below
does not purport to be complete and is qualified in its entirety by reference to Wyoming law.


 


The
issuance of shares of preferred stock, the issuance of rights to purchase such shares, and the imposition of certain other adverse
effects on any party contemplating a takeover could be used to discourage an unsolicited acquisition proposal. For instance, the
issuance of the preferred stock, if the option to acquire such shares is exercised, would impede a business combination by the
voting rights that would enable a holder to block such a transaction. In addition, under certain circumstances, the issuance of
other preferred stock could adversely affect the voting power of holders of our common stock.


 


Under
Wyoming law, a director, in determining what he reasonably believes to be in or not opposed to the best interests of the corporation,
does not need to consider only the interests of the corporation’s stockholders in any takeover matter but may also, in his
discretion, may consider any of the following:


 


	 	(i)	The
    interests of the corporation’s employees, suppliers, creditors and customers;
	 	 	 
	 	(ii)	The
    economy of the state and nation;
	 	 	 
	 	(iii)	The
    impact of any action upon the communities in or near which the corporation’s facilities or operations are located;
	 	 	 
	 	(iv)	The
    long-term interests of the corporation and its stockholders, including the possibility that those interests may be best served
    by the continued independence of the corporation; and
	 	 	 
	 	(v)	Any
    other factors relevant to promoting or preserving public or community interests.


 






    	 



    	 



    

 


The
outstanding Series A Preferred Stock can deter a takeover.


 


Because
our Board is not required to make any determination on matters affecting potential takeovers solely based on its judgment as to
the best interests of our stockholders, our board of directors could act in a manner that would discourage an acquisition attempt
or other transaction that some, or a majority, of our stockholders might believe to be in their best interests or in which such
stockholders might receive a premium for their stock over the then market price of such stock. Our Board of directors presently
does not intend to seek stockholder approval prior to the issuance of currently authorized stock, unless otherwise required by
law or applicable stock exchange rules.


 


Transfer
Agent


 


The
transfer agent for our Common Stock is Olde Monmouth Stock Transfer Co., Inc.


 


Listing


 


Our
Common stock is quoted on the OTCQB under the trading symbol KBLB”. We have applied to have our Common Stock listed on the
Nasdaq Capital Market under the symbol “KBLB” and our Purchase Warrants listed on the Nasdaq Capital Market under
the symbol “KBLBW”.


 


Limitation
on Liability and Indemnification Matters


 


Our
amended and restated articles of incorporation and amended and restated bylaws include provisions limiting the liability of directors
and officers and indemnifying them under certain circumstances. Accordingly, we may indemnify any person (including his estate)
made or threatened to be made a party to any suit or proceeding, whether civil or criminal, by reason of the fact that he was
one of our directors or officers or served at our request as one of our directors or officers of a subsidiary, against judgments,
fines, amounts paid in settlement and reasonable expenses, including attorney fees actually and necessarily incurred as a result
of such threat, suit or proceeding, or any appeal therein, to the fullest extent permitted by the General Corporation Law of the
State of Wyoming.


 


Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers
or persons controlling the Company pursuant to Wyoming law, we are informed that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.


 


Penny
Stock Regulation


 


The
SEC has adopted regulations which generally define “penny stock” to be any equity security that has a market
price of less than Five Dollars ($5.00) per share or an exercise price of less than Five Dollars ($5.00) per share. Such securities
are subject to rules that impose additional sales practice requirements on broker-dealers who sell them. For transactions covered
by these rules, the broker-dealer must make a special suitability determination for the purchaser of such securities and have
received the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving
a penny stock, unless exempt, the rules require the delivery, prior to the transaction, of a disclosure schedule prepared by the
SEC relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer
and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the
broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Finally, among other requirements,
monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on
the limited market in penny stocks.