----

----

| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|-----------------------------------------------------------------------------------------|

| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|------------------------------------------------------------------------------------------|

| Wyoming                                                       |   | 333-146316            |   | 83-0459707                        |
|---------------------------------------------------------------|--------|-----------------------|--------|-----------------------------------|
| (State or other jurisdiction ofincorporation or organization) |   | (Commission File No.) |   | (IRS Employee Identification No.) |

----

----

----

| Item 1.  | Financial Statements                                                                        | 1  |
|----------|---------------------------------------------------------------------------------------------|----|
| Item 2.  | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 20 |
| Item 3   | Quantitative and Qualitative Disclosures About Market Risk                                  | 23 |
| Item 4T. | Control and Procedures                                                                      | 23 |

| Item 1  | Legal Proceedings                                           | 24 |
|---------|-------------------------------------------------------------|----|
| Item 1A | Risk Factors                                                | 24 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 24 |
| Item 3. | Defaults Upon Senior Securities                             | 24 |
| Item 4. | Submission of Matters to a Vote of Security Holders         | 24 |
| Item 5. | Other Information                                           | 24 |
| Item 6. | Exhibits and Reports on Form 8-K                            | 24 |

----

| Part I         | Financial Statements and Supplementary Data                                                 |
|----------------|---------------------------------------------------------------------------------------------|
| Part I Item 2  | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
| Part I Item 4T | Control and Procedures                                                                      |

----

| PAGE   | 1           | CONDENSED BALANCE SHEETS AS OF SEPTEMBER 30, 2009 (UNAUDITED) (RESTATED) AND DECEMBER 31, 2008 (RESTATED).                                                                                                |
|--------|-------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |        |                                                                                                                                                                                                      |
| PAGE   | 2           | CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 (RESTATED) AND 2008 AND FOR THE PERIOD APRIL 25, 2006 (INCEPTION) TO SEPTEMBER 30, 2009 (UNAUDITED) (RESTATED). |
|   |        |                                                                                                                                                                                                      |
| PAGES  | 3 - 4       | CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT FOR THE PERIOD FROM APRIL 25, 2006 (INCEPTION) TO SEPTEMBER 30, 2009 (UNAUDITED) (RESTATED).                                                |
|   |        |                                                                                                                                                                                                      |
| PAGE   | 5           | CONDENSED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 (RESTATED) AND 2008 AND FOR THE PERIOD APRIL 25, 2006 (INCEPTION) TO SEPTEMBER 30, 2009 (UNAUDITED) (RESTATED).           |
|   |        |                                                                                                                                                                                                      |
| PAGES  | 6 - 19 | NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) AS RESTATED – NOTE 2                                                                                                                            |

----

| Kraig Biocraft Laboratories, Inc.                                                       |   |
|-----------------------------------------------------------------------------------------|--------|
| (A Development Stage Company)                                                           |   |
| Condensed Balance Sheets                                                                |   |
|                                                                                    |   |   |   |   |   |   |
| ASSETS                                                                                  |   |
|                                                                                    |   |   |   |   |   |   |
|                                                                                    |   | September 30, 2009 |   |   | December 31, 2008 |   |
|                                                                                    |   | (Unaudited)  (Restated) |   |   | (Restated) |   |
| Current Assets                                                                          |   |   |   |   |   |   |
|    Cash                                                                  |   | $ | 34,119 |   |   | $ | 9,537 |   |
| Other receivables                                                                       |   |   | 23,900 |   |   |   | - |   |
| Prepaid Expenses                                                                        |   |   | 5,644 |   |   |   | 3,123 |   |
| Total Assets                                                                            |   | $ | 63,663 |   |   | $ | 12,660 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' DEFICIT                                                   |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| Current Liabilities                                                                     |   |   |   |   |   |   |   |   |
|     Accounts payable                                                |   | $ | 76,650 |   |   | $ | 65,750 |   |
| Royalty agreement payable - related party                                               |   |   | 105,000 |   |   |   | 120,000 |   |
| Accrued Expenses  - related party                                             |   |   | 568,252 |   |   |   | 365,211 |   |
| Derivative Liability                                                                    |   |   | 251,729 |   |   |   | - |   |
| Derivative Liability- related party                                                     |   |   | 3,029,291 |   |   |   | 1,361,052 |   |
| Total Current Liabilities                                                               |   |   | 4,030,922 |   |   |   | 1,912,013 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| Long Term Liabilities                                                                   |   |   |   |   |   |   |   |   |
| Convertible note payable - net of debt discount                                         |   |   | 4,059 |   |   |   | - |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| Total Liabilities                                                                       |   |   | 4,034,981 |   |   |   | 1,912,013 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| Commitments and Contingencies                                                           |   |   | - |   |   |   | - |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| Stockholders' Deficit                                                                   |   |   |   |   |   |   |   |   |
|   Preferred stock, no par value; unlimited shares authorized,                 |   |   |   |   |   |   |   |   |
| none issued  and outstanding                                                  |   |   | - |   |   |   | - |   |
|   Common stock Class A,  no par value; unlimited shares authorized, |   |   |   |   |   |   |   |   |
| 502,495,099 and 499,348,500 shares issued and outstanding, respectively                 |   |   | 821,050, |   |   |   | 779,050 |   |
|   Common stock Class B,  no par value; unlimited shares authorized, |   |   |   |   |   |   |   |   |
| no shares issued and outstanding                                                        |   |   | - |   |   |   | - |   |
|   Common Stock Issuable, 1,122,311 and 400,000 shares, respectively           |   |   | 22,000 |   |   |   | 4,000 |   |
|   Additional paid-in capital                                                  |   |   | 42,060 |   |   |   | 42,060 |   |
|   Deficit accumulated during the development stage                            |   |   | (4,856,428 | ) |   |   | (2,724,463 | ) |
|                                                                                    |   |   |   |   |   |   |   |   |
| Total Stockholders' Deficit                                                             |   |   | (3, 971,318 | ) |   |   | ( 1,899,353 | ) |
|                                                                                    |   |   |   |   |   |   |   |   |
| Total Liabilities and Stockholders' Deficit                                             |   | $ | 63,663 |   |   | $ | 12,660 |   |

----

| Kraig Biocraft Laboratories, Inc.                                   |   |
|---------------------------------------------------------------------|--------|
| (A Development Stage Company)                                       |   |
| Condensed Statements of Operations                                  |   |
| (Unaudited)                                                         |   |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   | For the Three Months Ended |   |   | For the Nine Months Ended |   |   | For the Period from April 25, 2006 |   |
|                                                                |   | September 30, |   |   | September 30, |   |   | September 30, |   |   | September 30, |   |   | (Inception) to |   |
|                                                                |   | 2009 |   |   | 2008 |   |   | 2009 |   |   | 2008 |   |   | September 30, 2009 |   |
|                                                                |   | (Restated) |   |   |   |   |   | (Restated) |   |   |   |   |   | (Restated) |   |
| Revenue                                                             |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating Expenses                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General and Administrative                                          |   |   | 12,785 |   |   |   | 8,383 |   |   |   | 38,235 |   |   |   | 57,831 |   |   |   | 16 0 ,9 38 |   |
| Professional Fees                                                   |   |   | 6,785 |   |   |   | 4,765 |   |   |   | 22,824 |   |   |   | 27,211 |   |   |   | 103,649 |   |
| Officer's Salary                                                    |   |   | 55,154 |   |   |   | 52,905 |   |   |   | 173,935 |   |   |   | 164,669 |   |   |   | 846,433 |   |
| Contract Settlement                                                 |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 107,143 |   |
| Research and Development                                            |   |   | 5,946 |   |   |   | 5,945 |   |   |   | 63,854 |   |   |   | 27,131 |   |   |   | 438,863 |   |
| Total Operating Expenses                                            |   |   | 80,670 |   |   |   | 71,998 |   |   |   | 298,848 |   |   |   | 276,842 |   |   |   | 1,6 57 ,0 26 |   |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from Operations                                                |   |   | ( 80,670 | ) |   |   | (71,998 | ) |   |   | ( 298,848 | ) |   |   | (276,842 | ) |   |   | (1, 657,026 | ) |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Income/(Expenses)                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income                                                        |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,781 |   |   |   | 2,781 |   |
| Amortization of Debt Discount                                       |   |   | (4,059) |   |   |   |   |   |   |   | (4,059) |   |   |   |   |   |   |   | (4,059) |   |
| Change in fair value of embedded derivative liability               |   |   | (131,729) |   |   |   |   |   |   |   | (131,729) |   |   |   |   |   |   |   | (131,729) |   |
| Change in fair value of embedded derivative liability-related party |   |   | 543,456 |   |   |   | - |   |   |   | ( 1,668,239 | ) |   |   |   |   |   |   | (3,029,291 | ) |
| Interest expense                                                    |   |   | (10,898 | ) |   |   | - |   |   |   | (29,090 | ) |   |   | - |   |   |   | (37,104 | ) |
| Total Other Income/(Expenses)                                       |   |   | 396,770 |   |   |   | - |   |   |   | ( 1,833,117 | ) |   |   | 2,781 |   |   |   | (3, 199,402 | ) |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net (Income) Loss before Provision for Income Taxes                 |   |   | 316,100 |   |   |   | (71,998 | ) |   |   | ( 2,131,965 | ) |   |   | (274,061 | ) |   |   | (4, 856,428 | ) |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision for Income  Taxes                               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Income (Loss)                                                   |   | $ | 316,100 |   |   | $ | (71,998 | ) |   | $ | ( 2,131,965 | ) |   | $ | (274,061 | ) |   | $ | (4, 856,428 | ) |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Income (Loss) Per Share  - Basic and Diluted          |   | $ | 0.00 |   |   | $ | (0.00 | ) |   | $ | (0.00 | ) |   | $ | (0.00 | ) |   |   |   |   |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of shares outstanding                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   during the period - Basic and Diluted                   |   |   | 502,998,686 |   |   |   | 499,748,500 |   |   |   | 500,837,646 |   |   |   | 499,727,990 |   |   |   |   |   |

----

| Kraig Biocraft Laboratories, Inc.                                    |            |
|----------------------------------------------------------------------|-----------------|
| (A Development Stage Company)                                        |            |
| Condensed Statement of Changes in Stockholders Deficit               |            |
| For the period from April 25, 2006 (inception) to September 30, 2009 |            |
| (Unaudited)  (Restated)                                         |            |
|                                                                 |            |
|                                                                 |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Deficit |   |   |   |
|                                                                 |            |   |   |   |   | Common |   |   |   |   |   |   |   |   |   |   |   | Common Stock - |   |   |   |   | Accumulated |   |   |   |
|                                                                 |            |   |   |   |   | Stock - |   |   |   |   |   | Common Stock - |   |   | Class A Shares |   |   |   |   | during |   |   |   |
|                                                                 | Preferred Stock |   |   | Class A |   |   |   |   |   | Class B |   |   | To be issued |   |   |   |   | Development |   |   |   |
|                                                                 | Shares          |   | Par |   |   | Shares |   |   | Par |   |   | Shares |   |   | Par |   |   | Shares |   |   | Par |   |   | APIC |   | Stage |   | Total |   |
|                                                                 |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,April 25, 2006                                               | -               |   | $ | - |   |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   | $ | - |   | $ | - |   | $ | - |   |
|                                                                 |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued to founder                                              | -               |   |   | - |   |   |   | 332,292,000 |   |   |   | 180 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   | - |   |   | 180 |   |
|                                                                 |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for services ($.01/share)                               | -               |   |   | - |   |   |   | 17,500,000 |   |   |   | 140,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   | - |   |   | 140,000 |   |
|                                                                 |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for services ($.01/share)                               | -               |   |   | - |   |   |   | 700,000 |   |   |   | 5,600 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   | - |   |   | 5,600 |   |
|                                                                 |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock contributed by shareholder                                     | -               |   |   | - |   |   |   | (11,666,500 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   | - |   |   | - |   |
|                                                                 |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for cash ($.05/share)                                   | -               |   |   | - |   |   |   | 4,000 |   |   |   | 200 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   | - |   |   | 200 |   |
|                                                                 |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for cash ($.05/share)                                   | -               |   |   | - |   |   |   | 4,000 |   |   |   | 200 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   | - |   |   | 200 |   |
|                                                                 |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair value of warrants issued                                        | -               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 126,435 |   |   | - |   |   | 126,435 |   |
|                                                                 |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Loss                                                             | -               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   | (530,321 | ) |   | (530,321 | ) |
|                                                                 |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,December 31, 2006                                            | -               |   |   | - |   |   |   | 338,833,500 |   |   |   | 146,180 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 126,435 |   |   | (530,321 | ) |   | (257,706 | ) |
|                                                                 |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for cash ($.01/share)                                   | -               |   |   | - |   |   |   | 1,750,000 |   |   |   | 15,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   | - |   |   | 15,000 |   |
|                                                                 |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for cash ($.01/share)                                   | -               |   |   | - |   |   |   | 12,000,000 |   |   |   | 103,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   | - |   |   | 103,000 |   |
|                                                                 |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for cash ($.0003/share)                                 | -               |   |   | - |   |   |   | 9,000,000 |   |   |   | 3,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   | - |   |   | 3,000 |   |
|                                                                 |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for cash ($.01/share)                                   | -               |   |   | - |   |   |   | 1,875,000 |   |   |   | 15,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   | - |   |   | 15,000 |   |
|                                                                 |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for cash ($.01/share)                                   | -               |   |   | - |   |   |   | 1,875,000 |   |   |   | 15,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   | - |   |   | 15,000 |   |
|                                                                 |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| Stock issued for services ($.01/share)                               | -               |   |   | - |   |   |   | 2,000,000 |   |   |   | 16,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   | - |   |   | 16,000 |   |
|                                                                 |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for cash ($.01/share)                                   | -               |   |   | - |   |   |   | 13,125,000 |   |   |   | 105,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   | - |   |   | 105,000 |   |
|                                                                 |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for cash ($.003/share)                                  | -               |   |   | - |   |   |   | 80,495,000 |   |   |   | 241,485 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   | - |   |   | 241,485 |   |
|                                                                 |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for cash ($.003/share)                                  | -               |   |   | - |   |   |   | 200,000 |   |   |   | 600 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   | - |   |   | 600 |   |
|                                                                 |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for cash ($.003/share)                                  | -               |   |   | - |   |   |   | 8,300,000 |   |   |   | 24,900 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   | - |   |   | 24,900 |   |

----

|                                             |   |   |   |   |   |   |   |        |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |    |   |   |        |   |   |        |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|-------------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|-------------|--------|--------|-------------|--------|
| Stock issued for cash ($.003/share)              | -      |   |   | -      |   |   |   | 25,000      |   |   |   | 75      |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | -       |   |   | -           |   |   | 75          |   |
|                                             |   |   |   |   |   |   |   |        |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |    |   |   |        |   |   |        |   |
| Stock issued for cash ($.003/share)              | -      |   |   | -      |   |   |   | 120,000     |   |   |   | 360     |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | -       |   |   | -           |   |   | 360         |   |
|                                             |   |   |   |   |   |   |   |        |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |    |   |   |        |   |   |        |   |
| Stock issued for cash ($.003/share)              | -      |   |   | -      |   |   |   | 1,025,000   |   |   |   | 3,075   |   |   |   |   |   |   |   | -      |   |   |   |      |   |   |   | -      |   |   |   | -       |   |   | -           |   |   | 3,075       |   |
|                                             |   |   |   |   |   |   |   |        |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |    |   |   |        |   |   |        |   |
| Stock issued in connection to cash offering      | -      |   |   | -      |   |   |   | 28,125,000  |   |   |   | 84,375  |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | (84,375 | )      |   | -           |   |   | -           |   |
|                                             |   |   |   |   |   |   |   |        |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |    |   |   |        |   |   |        |   |
| Stock issued for services ($.01/share)           | -      |   |   | -      |   |   |   | 600,000     |   |   |   | 6,000   |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | -       |   |   | -           |   |   | 6,000       |   |
|                                             |   |   |   |   |   |   |   |        |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |    |   |   |        |   |   |        |   |
| Net loss, for the year ended December 31, 2007   | -      |   |   | -      |   |   |   | -           |   |   |   | -       |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | -       |   |   | (472,986    | )      |   | (472,986    | )      |
|                                             |   |   |   |   |   |   |   |        |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |    |   |   |        |   |   |        |   |
| Balance, December 31, 2007                       | -      |   |   | -      |   |   |   | 499,348,500 |   |   |   | 779,050 |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | 42,060  |   |   | (1,003,307  | )      |   | (182,197    | )      |
|                                             |   |   |   |   |   |   |   |        |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |    |   |   |        |   |   |        |   |
| Stock issuable for services ($.01/share)         | -      |   |   | -      |   |   |   | -           |   |   |   | -       |   |   |   | -      |   |   |   | -      |   |   |   | 400,000   |   |   |   | 4,000  |   |   |   | -       |   |   | -           |   |   | 4,000       |   |
|                                             |   |   |   |   |   |   |   |        |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |    |   |   |        |   |   |        |   |
| Net loss, for the year ended December 31, 2008   | -      |   |   | -      |   |   |   | -           |   |   |   | -       |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | -       |   |   | ( 1,721,156 | )      |   | ( 1,712,156 | )      |
|                                             |   |   |   |   |   |   |   |        |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |    |   |   |        |   |   |        |   |
|  Balance,December 31, 2008                  | -      |   |   | -      |   |   |   | 499,348,500 |   |   |   | 779,050 |   |   |   | -      |   |   |   | -      |   |   |   | 400,000   |   |   |   | 4,000  |   |   |   | 42,060  |   |   | ( 2,724,463 | )      |   | ( 1,899,353 | )      |
|                                             |   |   |   |   |   |   |   |        |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |    |   |   |        |   |   |        |   |
|  Stock issued for cash ($.01/share)         | -      |   |   | -      |   |   |   | 2,500,000   |   |   |   | 25,000  |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | -       |   |   | -           |   |   | 25,000      |   |
|                                             |   |   |   |   |   |   |   |        |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |    |   |   |        |   |   |        |   |
|  Stock issued for cash ($.008/share)        | -      |   |   | -      |   |   |   | 366,599     |   |   |   | 3,000   |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | -       |   |   | -           |   |   | 3,000       |   |
|                                             |   |   |   |   |   |   |   |        |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |    |   |   |        |   |   |        |   |
|  Stock issued for services                  | -      |   |   | -      |   |   |   | 280,000     |   |   |   | 14,000  |   |   |   | -      |   |   |   | -      |   |   |   | 722,311   |   |   |   | 18,000 |   |   |   | -       |   |   | -           |   |   | 32,000      |   |
|                                             |   |   |   |   |   |   |   |        |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |    |   |   |        |   |   |        |   |
| Net loss for the period ended September 30, 2009 | -      |   |   | -      |   |   |   | -           |   |   |   | -       |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | -       |   |   | ( 2,131,965 | )      |   | ( 2,131,965 | )      |
|                                             |   |   |   |   |   |   |   |        |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |    |   |   |        |   |   |        |   |
| Balance,September 30, 2009                       | -      |   | $      | -      |   |   |   | 502,495,099 |   |   |   | 821,050 |   |   |   | -      |   |   | $      | -      |   |   |   | 1,122,311 |   |   | $      | 22,000 |   |   | $      | 42 ,060 |   |   | ( 4,856,428 | )      | $      | ( 3,971,318 | )      |

----

| Kraig Biocraft Laboratories, Inc.                                                                    |   |
|------------------------------------------------------------------------------------------------------|--------|
| (A Development Stage Company)                                                                        |   |
| Condensed Statements of Cash Flows                                                                   |   |
| (Unaudited)                                                                                          |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |
|                                                                                                 |   | For the Nine Months Ended September 30, |   |   | For the Period from April 25, 2006 |   |
|                                                                                                 |   |   |   |   |   |   |   | (Inception) to |   |
|                                                                                                 |   | 2009 |   |   | 2008 |   |   | September 30, 2009 |   |
|                                                                                                 |   | (Restated) |   |   |   |   |   | (Restated) |   |
| Cash Flows From Operating Activities:                                                                |   |   |   |   |   |   |   |   |   |
| Net Loss                                                                                             |   | $ | ( 2,131,965 | ) |   | $ | (274,061 | ) |   | $ | ( 4,856,428 | ) |
|   Adjustments to reconcile net loss to net cash used in operations                         |   |   |   |   |   |   |   |   |   |   |   |   |
|       Stock issuable for services                                      |   |   | 18,000 |   |   |   | 4,000 |   |   |   | 22,000 |   |
|       Change in Fair Value of Derivative Liability                     |   |   | 1,799,968 |   |   |   | - |   |   |   | 3,161,020 |   |
|       Stock issued for services                                        |   |   | 14,000 |   |   |   | - |   |   |   | 181,780 |   |
|       Amortization of debt discount                                    |   |   | 4,059 |   |   |   | - |   |   |   | 4,059 |   |
|       Warrants issued to employees                                     |   |   | - |   |   |   | - |   |   |   | 126,435 |   |
|   Changes in operating assets and liabilities:                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|       (Increase)Decrease in prepaid expenses                           |   |   | (2,521 | ) |   |   | 6,706 |   |   |   | (5,644 | ) |
|       (Increase)Decrease in other receivables                          |   |   | (23,900 | ) |   |   | - |   |   |   | (23,900 | ) |
|       Increase in accrued expenses and other payables - related party  |   |   | 203,041 |   |   |   | 26,805 |   |   |   | 568,252 |   |
|       (Decrease) Increase in royalty agreement payable - related party |   |   | (15,000 | ) |   |   | 120,000 |   |   |   | 105,000 |   |
|       Increase in accounts payable                                     |   |   | 10,900 |   |   |   | 32,238 |   |   |   | 76,650 |   |
| Net Cash Used In Operating Activities                                                                |   |   | (123,418 | ) |   |   | (84,312 | ) |   |   | (640,776 | ) |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash Flows From Financing Activities:                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from Notes Payable - Stockholder                                                            |   |   | - |   |   |   | - |   |   |   | 10,000 |   |
| Repayments of Notes Payable - Stockholder                                                            |   |   | - |   |   |   | - |   |   |   | (10,000 | ) |
| Proceeds from issuance of convertible note                                                           |   |   | 120,000 |   |   |   | - |   |   |   | 120,000 |   |
| Proceeds from issuance of common stock                                                               |   |   | 28,000 |   |   |   | - |   |   |   | 554,895 |   |
| Net Cash Provided by Financing Activities                                                            |   |   | 148,000 |   |   |   | - |   |   |   | 674,895 |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Increase (Decrease) in Cash                                                                      |   |   | 24,582 |   |   |   | (84,312 | ) |   |   | 34,119 |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash at Beginning of Period                                                                          |   |   | 9,537 |   |   |   | 105,818 |   |   |   | - |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash at End of Period                                                                                |   | $ | 34,119 |   |   | $ | 21,506 |   |   | $ | 34,119 |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Supplemental disclosure of cash flow information:                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash paid for interest                                                                               |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Cash paid for taxes                                                                                  |   | $ | - |   |   | $ | - |   |   | $ | - |   |

| SUPPLEMENTAL DISCLOSURE OF NON CASH ITEMS                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
| During the period ended December 31, 2006, the principal stockholder contributed 11,666,500  shares of common stock to the Company as an in kind contribution of stock.  The shares were retired by the Company.                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
| In accordance with the May 2007 stock purchase agreement which contains an anti-dilution clause which requires the Company to issue additional common shares under the stock purchase agreement for any subsequent issuance at a price below $.08 per share for a period of 12 months. The Company has issued 28,125,000 additional shares through September 2007 as a result of the subsequent stock issuances  in the amount of $84,375 ($0.003/share). |

----

----

----

----

|   | Level 1:  | Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.                                                                                                                                                          |
|--------|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Level 2:  | Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. |
|   | Level 3:  | Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.                                                                          |

----

|                                                                          |          | Balance at September 30, 2009 |      |   | Quoted Prices in Active Markets for Identical Assets |   |   | Significant Other Observable Inputs |   |   | Significant Unobservable Inputs |   |
|-------------------------------------------------------------------------------|---------------|-------------------------------|-----------|--------|------------------------------------------------------|--------|--------|-------------------------------------|--------|--------|---------------------------------|--------|
| Liabilities                                                                   |          |                          |      |   | (Level 1)                                            |   |   | (Level 2)                           |   |   | (Level 3)                       |   |
|                                                                          |          |                          |      |   |                                                 |   |   |                                |   |   |                            |   |
| Fair value of liabilities for warrant derivative instruments                  |          | $                             | 119,909   |   |                                                 | $      | -      |                                |   | $      | -                               |   |   | $ | 119,909 |   |
| Fair value of liability for embedded conversion option derivative instruments |          | $                             | 3,029,291 |   |                                                 | $      |   |                                |   | $      |                            |   |   | $ | 3,029,291 |   |
| Fair value of liability for embedded conversion option derivative instruments |          | $                             | 131,820   |   |                                                 | $      | -      |                                |   | $      | -                               |   |   | $ | 131,820 |   |
|    Total Financial Liabilities                                 |     | $                             | 3,281,020 |   |                                                 | $      | -      |                                |   | $      | -                               |   |   | $ | 3,281,020 |   |

|                                             |   | September 30, 2009     |        |
|--------------------------------------------------|--------|------------------------|-------------|
|                                             |   | As previously Reported |        |   | Adjustments |   |   | As Restated |   |
| Common Stock                                     |   | $                      | 9,066,900   |   |   | $ | (8,245,850 | ) |   | $ | 821,050 |   |
| Additional paid-In Capital                       |   | $                      | 162,060     |   |   | $ | (120,000 | ) |   | $ | 42,060 |   |
| Deficit Accumulated during the development stage |   | $                      | (12,970,549 | ) |   | $ | 8,114,121 |   |   | $ | (4,856,428 | ) |
| Total Stockholder’s Deficit                |   | $                      | (3,719,589  | ) |   | $ | (251,729 | ) |   | $ | (3,917,318 | ) |

|                                                                 |   | For the three monthsEnded September 30, 2009 |    |   | for the nine monthsEnded September 30, 2009 |   |     | for the Period formApril 25,2006 (Inception)to September 30, 2009 |   |
|----------------------------------------------------------------------|--------|----------------------------------------------|---------|--------|---------------------------------------------|--------|----------|-------------------------------------------------------------------|--------|
|                                                                 |   | As Previously Reported                       |    |   | Adjustments                                 |   |     | As Restated                                                       |   |   | As Previously Reported |   |   | Adjustments |   |   | As Restated |   |   | As Previously Reported |   |   | Adjustment |   |   | As Restated |   |
| Change in fair value of embedded derivative liability                |   | $                                            | — |   |                                        | $      | (131,729 | )                                                                 |   | $ | (131,729 | ) |   | $ | — |   |   | $ | (131,729 | ) |   | $ | (131,729 | ) |   | $ | — |   |   | $ | (131,729 | ) |   | $ | (131,729 | ) |
|                                                                 |   |                                         |    |   |                                        |   |     |                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change in fair value of embedded derivative liability- related party |   | $                                            | 543,456 |   |                                        | $      | —  |                                                              |   | $ | 543,456 |   |   | $ | (3,029,291 | ) |   | $ | 1,361,052 |   |   | $ | (1,668,239 | ) |   | $ | (3,029,291 | ) |   | $ | — |   |   | $ | 3,029,291 |   |
|                                                                 |   |                                         |    |   |                                        |   |     |                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Income/(Loss) before Inome Taxes                                 |   | $                                            | 447,829 |   |                                        | $      | (131,729 | )                                                                 |   | $ | 316,100 |   |   | $ | (3,361,288 | ) |   | $ | 1,229,323 |   |   | $ | (2,131,965 | ) |   | $ | (4,724,699 | ) |   | $ | (131,729 | ) |   | $ | (4,856,428 | ) |
|                                                                 |   |                                         |    |   |                                        |   |     |                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision for Income Taxes                                           |   | $                                            | — |   |                                        | $      | —  |                                                              |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |
|                                                                 |   |                                         |    |   |                                        |   |     |                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Income/(Loss)                                                    |   | $                                            | 447,829 |   |                                        | $      | (131,729 | )                                                                 |   | $ | 316,100 |   |   | $ | (3,361,288 | ) |   | $ | 1,229,323 |   |   | $ | (2,131,965 | ) |   | $ | (4,724,699 | ) |   | $ | (131,729 | ) |   | $ | (4,856,428 | ) |

----

| Table 1                 |   | Black Scholes Inputs for the Convertible Debt and Derivative Financial Instruments |
|-------------------------|--------|------------------------------------------------------------------------------------|
| Warrants                |   |                                                                               |   |   |   |
|                    |   | Issuance of Warrants – September 14, 2009                                    |   | As of September 30, 2009 |   |   |
| Expected Volatility     |   | 448.66%                                                                            |   | 448.62% |   |   |
| Expected Term           |   | 2.3 years                                                                          |   | 2.25 years |   |   |
| Expected Dividends      |   | 0%                                                                                 |   | 0% |   |   |
| Risk Free Interest Rate |   | 1.49%                                                                              |   | 1.45% |   |   |

|   |   |
|--------|--------|

|                        |   | Issuance of Convertible Note                      |    | As of September 30, 2009 |   |   |
|-----------------------------|--------|---------------------------------------------------|---------|-------------------------------|--------|--------|
| Embedded Conversion Options |   |                                              |    |                          |   |
| Volatility                  |   | 448.66%        | 448.62% |                          |   |
| Expected Term               |   | 1.3 years                                         |    | 1.25 years                    |   |   |
| Expected Dividends          |   | 0%                                                |    | 0%                            |   |   |
| Risk Free Interest Rate     |   | 1.49%                                             |    | 1.45%                         |   |   |

|   | The following table summarizes convertible note payable outstanding as of September 30, 2009: |
|--------|-----------------------------------------------------------------------------------------------|

|                                    |   | Conventional Debt |    |
|-----------------------------------------|--------|-------------------|---------|
| Conventional debt                       |   | $                 | 120,000 |   |
| Less: debt discount                     |   | $                 | 115,941 |   |
| Conventional debt, net of debt discount |   | $                 | 4,059   |   |

----

----

----

| 2009 Warrants Outstanding |   |   | Options Exercisable                    |   |
|--------------------------------|--------|--------|----------------------------------------|--------|
| Range ofExercise Price         |   |   | NumberOutstanding atSeptember 30, 2009 |   |   | Weighted Average Remaining Contractual Life |   |   | Weighted Average Exercise Price |   |   | NumberExercisable atSeptember 30, 2009 |   |   | Weighted Average Exercise Price |   |
| $                              | 0.02   |   |                                   |   | 6,000,000 |   |   |   | 2.25 |   |   | $ | 0.02 |   |   |   | 6,000,000 |   |   | $ | 0.02 |   |
|                           |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| ·   | Common stock Class A, unlimited number of shares authorized, no par value |
|--------------------|---------------------------------------------------------------------------|

| ·   | Common stock Class B, unlimited number of shares authorized, no par value |
|--------------------|---------------------------------------------------------------------------|

| ·   | Preferred stock, unlimited number of shares authorized, no par value |
|--------------------|----------------------------------------------------------------------|

| 1.   | Upon the Company’s successful laboratory development of a new silk fiber composed of one or more proteins that are exogenous to a host, the Company will issue 500,000 eight year warrants at an exercise price of $.20 per share and raise executive’s base salary by 14%. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   |  Upon the Company’s successful laboratory development of a new silk fiber composed of two or more proteins that are exogenous to a host, the Company will issue 600,000 eight year warrants at an exercise price of $.18 per share and raise executive’s base salary by 15%. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.   | Upon the Company’s successful laboratory development of a new silk fiber composed of at least in part of one or more synthetic proteins, the Company will issue 900,000 eight year warrants at an exercise price of $.18 per share and raise executive’s base salary by 18%. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 4.   | Upon the Company’s successful laboratory development of a new silk fiber composed of at least in part of one or more proteins that are genetic modifications or induced mutations of a host silk protein, the Company will raise the executive’s base salary by 8%. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.   | Upon the Company becoming either a registered company or upon its stock trading and the company achieving a market capitalization in excess of $35 million for over 120 calendar day period, the executive’s base salary will increase to $225,000. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6.   | Upon the Company becoming either a registered company or upon its stock trading and the company achieving a market capitalization in excess of $65 million for over 91 calendar day period, the executive’s base salary will increase to $260,000. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7.   | Upon the Company becoming either a registered company or upon its stock trading and the company achieving a market capitalization in excess of $100 million for over 91 calendar day period, the executive’s base salary will increase to $290,000. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.   | Upon the Company becoming either a registered company or upon its stock trading and the company achieving a market capitalization in excess of $200 million for over 120 calendar day period, the executive’s base salary will increase to $365,000. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9.   | Upon the Company becoming either a registered company or upon its stock trading and the company achieving a market capitalization in excess of $350 million for over 150 calendar day period, the executive’s base salary will increase to $420,000. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Date                                            |   | Accrued Salary |    |      | Conversion Rate |   |   | Derivative Liability |   |
|-------------------------------------------------|--------|----------------|---------|-----------|-----------------|--------|--------|----------------------|--------|
|                                            |   |           |    |      |            |   |   |                 |   |
| 3/1/2009                                        |   | $              | 388,718 |      |            | $      | 0.002  |                 |   | $ | 2,876,514 |   |
|                                            |   |           |    |      |            |   |   |                 |   |   |   |   |
| 3/1/09-3/31/10                                  |   | $              | 138,888 |      |            | $      | 0.008  |                 |   | $ | 152,777 |   |
|                                            |   |           |    |      |            |   |   |                 |   |   |   |   |
|                                            |   |           |    |      |            |   |   |                 |   |   |   |   |
| Total Derivative Liability Less Accrued Salary: |   |           | $       | 3,029,291 |            |

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| » | We expect to spend up to $35,000 per quarter through March 2010 on collaborative research and development of high strength polymers at the University of Notre Dame. We believe that this research is essential to our product development. If our financing will allow, management will give strong consideration to accelerating the pace of spending on research and development within the University of Notre Dame’s laboratories.                                                                                                                                                |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| » | We expect to spend approximately $13,700 on collaborative research and development of high strength polymers and spider silk protein at the University of Wyoming over the next twelve months. We believe that this research is important to our product development. This level of research spending at the university is also a requirement of our licensing agreement with the university. If our financing will allow, management will give strong consideration to accelerating the pace of spending on research and development within the University of Wyoming’s laboratories. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| » | We will actively consider pursuing collaborative research opportunities with other university laboratories in the area of high strength polymers. If our financing will allow, management will give strong consideration to increasing the depth of our research to include polymer production technologies that are closely related to our core research                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| » | We will consider buying an established revenue producing company which is operating in the biotechnology arena, in order to broaden our financial base and increase our research and development capability. We expect to use a combination of stock and cash for any such purchase.                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| » | We will also actively consider pursuing collaborative research opportunities with university laboratories in areas of research which overlap the company’s existing research and development. One such potential area for collaborative research which the company is considering is protein expression platforms. If our financing will allow, management will give strong consideration to increasing the breadth of our research to include protein expression platform technologies.                                                                                               |

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|   | 1. | We will continue to educate our management personnel to comply with the disclosure requirements of Securities Exchange Act of 1934 and Regulation S-K; and |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 2. | We will increase management oversight of accounting and reporting functions in the future.                                                                 |

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|                        | KRAIG BIOCRAFT LABORATORIES, INC. |
|-----------------------------|-----------------------------------|
|                        |                              |
| Date: May 28 , 20 1 0  | By:                     | /s/ Kim Thompson |
|                        |                              | Kim ThompsonChief Executive Officer |
|                        |                              |   |