UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
 _______________
  FORM
10-Q
 _______________
  x
              QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
  For
the quarterly period ended March 31, 2008
   r
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 For the transition period from
______to______.
  KRAIG
BIOCRAFT LABORATORIES, INC.
 (Exact
name of registrant as specified in Charter
  WYOMING
              
              333-146316
              
              83-0459707(State
      or other jurisdiction of
                incorporation
      or organization)
              
              (Commission
      File No.)
              
              (IRS
      Employee Identification No.)
 
 120 N. Washington
Square, Suite 805, Lansing, Michigan  48933
 (Address
of Principal Executive Offices)
 _______________
  (517)
336-0807
 (Issuer
Telephone number)
 _______________
 
 
 (Former
Name or Former Address if Changed Since Last Report)
  Check
whether the issuer (1) has filed all reports required to be filed by Section 13
or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter
period that the issuer was required to file such reports), and (2)has been
subject to such filing requirements for the past 90 days. Yes x No£
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company filer.
 See definition of “accelerated filer” and “large accelerated filer” in
Rule 12b-2 of the Exchange Act (Check one):
  Large
Accelerated Filer o     Accelerated
Filer o     Non-Accelerated
Filer o     Smaller
Reporting Company x
 
 Indicate
by check mark whether the registrant is a shell company as defined in Rule 12b-2
of the Exchange Act.
 Yes o  No x
 
 State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of asof May 12,
2008:  49,974,850 shares of Class A Common Stock.
 
  
 
 
  KRAIG
BIOCRAFT LABORATORIES, INC.
 
 FORM
10-Q
  March
31, 2008
  INDEX
  PART
I-- FINANCIAL INFORMATION
    Item
      1.
              Financial
      StatementsItem
      2.
              Management’s
      Discussion and Analysis of Financial ConditionItem
      3
              Quantitative
      and Qualitative Disclosures About Market RiskItem
      4T.
              Control
      and Procedures
   PART
II-- OTHER INFORMATION
  Item
      1
              Legal
      ProceedingsItem
      1A
              Risk
      FactorsItem
      2.
              Unregistered
      Sales of Equity Securities and Use of ProceedsItem
      3.
              Defaults
      Upon Senior SecuritiesItem
      4.
              Submission
      of Matters to a Vote of Security HoldersItem
      5.
              Other
      InformationItem
      6.
              Exhibits
      and Reports on Form 8-K
   SIGNATURE


Kraig
Biocraft Laboratories, Inc.
 (A
DEVELOPMENT STAGE COMPANY)
    CONTENTS
   PAGE
              1
              CONDENSED
      BALANCE SHEETS AS OF MARCH 31, 2008 (UNAUDITED) AND AS OF DECEMBER 31,
      2007 (AUDITED).PAGE
              2
              CONDENSED
      STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND
      2007 AND FOR THE PERIOD APRIL 25, 2006 (INCEPTION) TO MARCH 31, 2008
      (UNAUDITED).PAGES
              3
              CONDENSED
      STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT FOR THE PERIOD FROM APRIL
      25, 2006 (INCEPTION) TO MARCH 31, 2008 (UNAUDITED).PAGE
              4
              CONDENSED
      STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND
      2007 AND FOR THE PERIOD APRIL 25, 2006 (INCEPTION) TO MARCH 31, 2008
      (UNAUDITED).PAGES
              5 -
      16
              NOTES
      TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED).
   
  Kraig
      Biocraft Laboratories, Inc.(A
      Development Stage Company)Condensed
      Balance SheetsASSETSMarch
      31, 2008
                
                
                December
      31, 2007(Unaudited)
                
                
                (Audited)Current
      AssetsCash
                
                $
                68,502
                
                
                $
                105,818Prepaid
      Expenses
                
                
                450
                
                
                
                12,500Total
      Assets
                
                $
                68,952
                
                
                $
                118,318LIABILITIES AND
      STOCKHOLDERS' DEFICIENCYCurrent
      LiabilitiesAccounts
      payable
                
                $
                32,770
                
                
                $
                22,121Accounts
      Payable- related party
                
                
                120,000Payroll
      Tax Payable
                
                
                -
                
                
                
                10,352Royality
      agreement payable - related party
                
                
                
                
                
                
                120,000Accrued
      Expenses
                
                
                203,985
                
                
                
                148,042Total
      Current Liabilities
                
                
                356,755
                
                
                
                300,515Commitments
      and Contingencies
                
                
                -
                
                
                
                -Stockholders'
      DeficiencyPreferred
      stock, no par value; 10,000,000 shares authorized,none
      issued  and outstanding
                
                
                -
                
                
                
                -Common
      stock Class A,  no par value; 60,000,000 shares
      authorized,49,974,850 and
      49,934,850shares issued and outstanding at
                
                
                779,050
                
                
                
                779,050March
      31, 2008 and December 31, 2007, respectivelyCommon
      stock Class B,  no par value; 25,000,000 shares
      authorized,no
      shares issued and outstanding
                
                
                -
                
                
                
                -Common
      Stock Issuable
                
                
                4,000Additional paid-in capital
                
                
                42,060
                
                
                
                42,060Deficit
      accumulated during the development stage
                
                
                (1,112,913
                )
                
                
                (1,003,308
                )Total
      Stockholders' Deficiency
                
                
                (287,803
                )
                
                
                (182,198
                )Total
      Liabilities and Stockholders' Deficiency
                
                $
                68,952
                
                
                $
                118,317
  See
accompanying notes to condensed financial statements.
  1
  Kraig Biocraft Laboratories, Inc.(A
      Development Stage Company)Statements
      of Operations(Unaudited)For
      the Three Months Ended
                
                
                For
      the Period from April 25, 2006(Inception) toMarch
      31,
                
                
                March
      31,
                
                
                March
      31,
                
                
                (Inception)
      to2008
                
                
                2007
                
                
                2008
                
                
                12/31/2007Revenue
                
                $
                -
                
                
                $
                -
                
                
                $
                -Operating
      ExpensesGeneral
      and Administrative
                
                
                24,891
                
                
                
                5,385
                
                
                
                73,533
                
                
                
                48,642Professional
      Fees
                
                
                15,628
                
                
                
                -
                
                
                
                65,387
                
                
                
                49,759Officer's
      Salary
                
                
                51,967
                
                
                
                49,024
                
                
                
                497,835
                
                
                
                445,868Contract
      Settlement
                
                
                -
                
                
                
                -
                
                
                
                107,143
                
                
                
                107,143Payroll
      Taxes
                
                
                3,975
                
                
                
                5,613
                
                
                
                13,163
                
                
                
                9,188Research
      and Development
                
                
                15,925
                
                
                
                50,000
                
                
                
                357,857
                
                
                
                341,932Total
      Operating Expenses
                
                
                112,386
                
                
                
                110,022
                
                
                
                1,114,918
                
                
                
                1,002,532Loss
      from Operations
                
                
                (112,386
                )
                
                
                (110,022
                )
                
                
                (1,114,918
                )
                
                
                (1,002,532
                )Other
      Income/(Expenses)Other
      income
                
                
                2,781
                
                
                
                -
                
                
                
                2,005
                
                
                
                (776
                )Other
      expense
                
                
                -
                
                
                
                (122
                )
                
                
                -Total
      Other Income/(Expenses)
                
                
                2,781
                
                
                
                (122
                )
                
                
                2,005
                
                
                
                (776
                )Net
      Loss before Provision for Income Taxes
                
                
                (109,605
                )
                
                
                (110,144
                )
                
                
                (1,112,913
                )Provision
      for Income  Taxes
                
                
                -
                
                
                
                -
                
                
                
                -Net
      Loss
                
                $
                (109,605
                )
                
                $
                (110,144
                )
                
                $
                (1,112,913
                )
                
                
                (1,003,308
                )Net
      Loss Per Share  - Basic and Diluted
                
                $
                (0.00
                )
                
                $
                (0.01
                )
                
                
                
                
                
                $
                (0.03
                )Weighted
      average number of shares outstandingduring
      the period - Basic and Diluted
                
                
                49,966,938
                
                
                
                35,466,128
                
                
                
                
                
                
                
                32,950,041.00
  See accompanying notes to
condensed financial statements.
  2
  Kraig
      Biocraft Laboratories, Inc.(A
      Development Stage Company)Condensed
      Statement of Changes in Stockholders DeficitFor
      the period from April 25, 2006 (inception) to March 31,
      2008(Unaudited)DeficitAccumulatedduringPreferred
      Stock
                  
                  
                  Common
      Stock - Class A
                  
                  
                  Common
      Stock - Class B
                  
                  
                  
                  
                  
                  DevelopmentShares
                  
                  
                  Par
                  
                  
                  Shares
                  
                  
                  Par
                  
                  
                  Shares
                  
                  
                  Par
                  
                  
                  APIC
                  
                  
                  Stage
                  
                  
                  TotalBalance,
      April 25, 2006
                  
                  
                  -
                  
                  
                  $
                  -
                  
                  
                  
                  -
                  
                  
                  $
                  -
                  
                  
                  
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -Stock
      issued to founder
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  33,229,200
                  
                  
                  
                  180
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  180Stock
      issued for services ($.08/share)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,750,000
                  
                  
                  
                  140,000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  140,000Stock
      issued for services ($.08/share)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  70,000
                  
                  
                  
                  5,600
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  5,600Stock
      contributed by shareholder
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (1,166,650
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Stock
      issued for cash ($2.00/share)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  400
                  
                  
                  
                  200
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  200Stock
      issued for cash ($2.00/share)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  400
                  
                  
                  
                  200
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  200Fair
      value of warrants issued
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  126,435
                  
                  
                  
                  -
                  
                  
                  
                  126,435Net
      Loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (530,322
                  )
                  
                  
                  (530,322
                  )Balance,
      December 31, 2006
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  33,883,350
                  
                  
                  
                  146,180
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  126,435
                  
                  
                  
                  (530,322
                  )
                  
                  
                  (257,707
                  )Stock
      issued for cash ($.09/share)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  175,000
                  
                  
                  
                  15,000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  15,000Stock
      issued for cash ($.09/share)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,200,000
                  
                  
                  
                  103,000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  103,000Stock
      issued for cash ($.003/share)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  900,000
                  
                  
                  
                  3,000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  3,000Stock
      issued for cash ($.08/share)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  187,500
                  
                  
                  
                  15,000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  15,000Stock
      issued for cash ($.08/share)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  187,500
                  
                  
                  
                  15,000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  15,000-Stock
      issued for services ($.08/share)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  200,000
                  
                  
                  
                  16,000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  16,000Stock
      issued for cash ($.08/share)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,312,500
                  
                  
                  
                  105,000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  105,000Stock
      issued for cash ($.03/share)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  8,049,500
                  
                  
                  
                  241,485
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  241,485Stock
      issued for cash ($.03/share)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  20,000
                  
                  
                  
                  600
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  600Stock
      issued for c ash ($.03/share)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  830,000
                  
                  
                  
                  24,900
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  24,900Stock
      issued for cash ($.03/share)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2,500
                  
                  
                  
                  75
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  75Stock
      issued for cash ($.03/share)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  12,000
                  
                  
                  
                  360
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  360Stock
      issued for cash ($.03/share)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  102,500
                  
                  
                  
                  3,075
                  
                  
                  
                  
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  3,075Stock
      issued in connection to cash offering
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2,812,500
                  
                  
                  
                  84,375
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (84,375
                  )
                  
                  
                  -
                  
                  
                  
                  -Stock
      issued for services ($.10/share)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  60,000
                  
                  
                  
                  6,000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  6,000Net
      loss, for the year ended December 31, 2007
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (472,986
                  )
                  
                  
                  (472,986
                  )Balance,
      December 31, 2007
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  49,934,850
                  
                  
                  
                  779,050
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  42,060
                  
                  
                  
                  (1,003,308
                  )
                  
                  
                  (182,198
                  )Stock
      issuable for services ($.10/share)
                  
                  
                  -
                  
                  
                  
                  0
                  
                  
                  
                  40,000
                  
                  
                  
                  4,000
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  4,000Net
      loss, for the period ended March 31, 2008
                  
                  
                  -
                  
                  
                  
                  0
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (109,605
                  )
                  
                  
                  (109,605
                  )Balance,
      for the period ended March 31, 2008
                  
                  
                  -
                  
                  
                  $
                  -
                  
                  
                  
                  49,974,850
                  
                  
                  $
                  783,050
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  42,060
                  
                  
                  $
                  (1,112,913
                  )
                  
                  $
                  (287,803
                  )
  See accompanying notes to
condensed financial statements.
  3
  Kraig
      Biocraft Laboratories, Inc.(A
      Development Stage Company)Condensed Statement of
      Cash Flows(Unaudited)Fro
      the Three Months Ended
                
                
                For
      the Period from April 25, 2006March
31,
                
                
                (Inception)
      to2008
                
                
                2007
                
                
                3/31/08Cash
      Flows From Operating Activities:Net
      Loss
                
                $
                (109,605
                )
                
                $
                (110,144
                )
                
                $
                (1,112,913
                )Adjustments
      to reconcile net loss to net cash used in operationsStock
      issuable for services
                
                
                4,000
                
                
                
                -
                
                
                
                171,780Warrants
      issued to employees
                
                
                -
                
                
                
                -
                
                
                
                126,435Changes
      in operating assets and liabilities:Decrease
      in prepaid expenses
                
                
                12,050
                
                
                
                -
                
                
                
                (450
                )Increase
      in accrued expenses and other payables
                
                
                46,189
                
                
                
                58,000
                
                
                
                203,985Increase
      in royality agreement payable - related party
                
                
                -
                
                
                
                -
                
                
                
                120,000Increase
      in accounts payable
                
                
                10,050
                
                
                
                (5,000
                )
                
                
                32,770Net
      Cash Provided by (Used In) Operating Activities
                
                
                (37,316
                )
                
                
                (57,144
                )
                
                
                (458,393
                )Cash
      Flows From Financing Activities:Proceeds
      from Notes Payable - Stockholder
                
                
                -
                
                
                
                -
                
                
                
                10,000Repayments
      of Notes Payable - Stockholder
                
                
                -
                
                
                
                (10,000
                )
                
                
                (10,000
                )Proceeds
      from issuance of common stock
                
                
                -
                
                
                
                121,000
                
                
                
                526,895Net
      Cash Provided by Financing Activities
                
                
                -
                
                
                
                111,000
                
                
                
                526,895Net
      Increase (Decrease) in Cash
                
                
                (37,316
                )
                
                
                53,856
                
                
                
                68,502Cash
      at Beginning of Period/Year
                
                
                105,818
                
                
                
                390
                
                
                
                -Cash
      at End of Period/Year
                
                $
                68,502
                
                
                $
                54,246
                
                
                $
                68,502Supplemental
      disclosure of cash flow information:Cash
      paid for interest
                
                $
                -
                
                
                $
                -
                
                
                $
                -Cash
      paid for taxes
                
                $
                -
                
                
                $
                -
                
                
                $
                -
  SUPPLEMENTAL
      DISCLOSURE OF NON CASH ITEMSDuring
      the period ended December 31, 2006, the principal stockholder contributed
      1,166,650shares
      of common stock to the Company as an in kind contribution of
      stock. The shares wereretired
      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 2,812,500 additional shares through September 2007 as a result of
      the subsequent stock issuances  in the amount of $84,375
      ($0.03/share).
  See accompanying notes to
condensed financial statements.
  4
  KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
 AS
OF MARCH 31, 2008
 (UNAUDITED)
  NOTE
      1
              SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES AND
  ORGANIZATION
  (A)
Basis of Presentation
  The
accompanying unaudited condensed financial statements have been prepared in
accordance with accounting principles generally accepted in The United States of
America and the rules and regulations of the Securities and Exchange Commission
for interim financial information.  Accordingly, they do not include
all the information necessary for a comprehensive presentation of financial
position and results of operations.The
interim results for the period ended March 31, 2007 are not necessarily
indicative of results for the full fiscal year. It is management's opinion,
however that all material adjustments (consisting of normal recurring
adjustments) have been made which are necessary for a fair financial statements
presentation.
  (B)
Organization
  Kraig
Biocraft Laboratories, Inc. (a development stage company) (the "Company") was
incorporated under the laws of the State of Wyoming on April 25, 2006. The
Company was organized to develop high strength, protein based fiber, using
recombinant DNA technology, for commercial applications in the textile and
specialty fiber industries.
  Activities
during the development stage include developing the business plan, negotiating
intellectual property agreements and raising capital.
  (C)
Use of Estimates
  In
preparing financial statements in conformity with generally accepted accounting
principles, management is required to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and revenues and
expenses during the reported period.  Actual results could differ from
those estimates.
  (D)
Cash
  For
purposes of the cash flow statements, the Company considers all highly liquid
investments with original maturities of three months or less at the time of
purchase to be cash equivalents.
  (E)
Loss Per Share
  Basic and
diluted net loss per common share is computed based upon the weighted average
common shares outstanding as defined by Financial Accounting Standards No. 128,
“Earnings per Share.”  As of March 31, 2008 and 2007, the Company does
not have any dilutive securities outstanding.
   5
 KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
 AS
OF MARCH 31, 2008
 (UNAUDITED)
  (F)
Research and Development Costs
  The
Company expenses all research and development costs as incurred for which there
is no alternative future use. These costs also include the expensing of employee
compensation and employee stock based compensation.
  (G)
Income Taxes
  The
Company accounts for income taxes under the Statement of Financial Accounting
Standards No. 109, “Accounting for Income Taxes” (“Statement
109”).  Under Statement 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases.  Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled.  Under Statement 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.
  (H)
Stock-Based Compensation
  The
Company has adopted the provisions of SFAS No. 123R and related interpretations
as provided by SAB 107.  As such, compensation cost is measured on the
date of grant at their fair value.  Such compensation amounts, if any,
are amortized over the respective vesting periods of the option
grant.
  Common
stock, stock options and common stock warrantsissued
to other than employeesor
directors are recorded on the basis of their fair value, as required by SFAS No.
123(R), which is measured as of the date required by EITF Issue 96-18,
“Accounting for Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services.” In accordance
with EITF 96-18, the stock options or common stock warrants are valued using the
Black-Scholes option pricing model on the basis of the market price of the
underlying common stock on the “valuation date,” which for options and warrants
related to contracts that have substantial disincentives to non-performance is
the date of the contract, and for all other contracts is the vesting date.
Expense related to the options and warrants is recognized on a straight-line
basis over the shorter of the period over which services are to be received or
the vesting period. Where expense must be recognized prior to a valuation date,
the expense is computed under the Black-Scholes option pricing model on the
basis of the market price of the underlying common stock at the end of the
period, and any subsequent changes in the market price of the underlying common
stock up through the valuation date is reflected in the expense recorded in the
subsequent period in which that change occurs.
   6
  KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
 AS
OF MARCH 31, 2008
 (UNAUDITED)
 (I)
Business Segments
  The
Company operates in one segment and therefore segment information is not
presented.
  (J)
Recent Accounting Pronouncements
  In June
2007, the Emerging SEC’s Issues Task Force (“EITF”) issued EITF No. 07-3, Accounting
for Nonrefundable Advance Payments for Goods or Services to Be Used in Future
Research and Development Activities, (“EITF 07-3”). EITF 07-3 provides
guidance for upfront payments related to goods and services of research and
development costs and is effective for fiscal years beginning after December 15,
2007. The Company is currently evaluating the impact of EITF 07-3 on its
financial statements.
  In June
2007, the EITF issued EITF No. 07-01, Accounting
for Collaborative Arrangements,(“EITF 07-1”). EITF 07-1 provides
guidance for companies in the biotechnology or pharmaceutical industries that
may enter into agreements with other companies to collaboratively develop,
manufacture, and market a drug candidate (Collaboration Agreements) and is
effective for fiscal years beginning after December 15, 2007. The Company does
not expect that EITF 07-01 will have an effect on its financial condition or
results of operations.
  In
September 2006, the FASB issued Statement No. 157, Fair
Value Measurements(“FAS 157”), which defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles
and expands disclosures about fair value measurements. FAS 157 is effective for
financial statements issued for fiscal years beginning after November 15, 2007.
The Company does not expect the adoption of FAS 157 to significantly affect its
financial condition or results of operations.
  In
February 2007, the FASB issued Statement No. 159, The
Fair Value Option for Financial Assets and Financial Liabilities, Including an
amendment of SFAS 115(“FAS 159”), which permits companies to choose to
measure many financial instruments and certain other items at fair value. FAS
159 is effective for fiscal years beginning after November 15, 2007 and interim
periods within those fiscal years. The Company is currently evaluating the
effect FAS 159 will have on our consolidated financial position and results of
operations
   7
  KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
 AS
OF MARCH 31, 2008
 (UNAUDITED)
  In
December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No.
160, “Noncontrolling
Interests in Consolidated Financial Statements – an amendment of ARB No.
51”.  This statement improves the relevance, comparability, and
transparency of the financial information that a reporting entity provides in
its consolidated financial statements by establishing accounting and reporting
standards that require; the ownership interests in subsidiaries held by parties
other than the parent and the amount of consolidated net income attributable to
the parent and to the noncontrolling interest be clearly identified and
presented on the face of the consolidated statement of income, changes in a
parent’s ownership interest while the parent retains its controlling financial
interest in its subsidiary be accounted for consistently, when a subsidiary is
deconsolidated, any retained noncontrolling equity investment in the former
subsidiary be initially measured at fair value, entities provide sufficient
disclosures that clearly identify and distinguish between the interests of the
parent and the interests of the noncontrolling owners.  SFAS No. 160
affects those entities that have an outstanding noncontrolling interest in one
or more subsidiaries or that deconsolidate a subsidiary.  SFAS No. 160
is effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008. Early adoption is prohibited. The
adoption of this statement is not expected to have a material effect on the
Company's financial statements.
  In March 2008, the FASB
issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging
Activities, an amendment of FASB Statement No. 133”(SFAS161). This statement is
intended to improve transparency in financial reporting by requiring enhanced
disclosures of an entity’s derivative instruments and hedging activities and
their effects on the entity’s financial position, financial performance, and
cash flows.SFAS161
applies to all derivative instruments within the scope of SFAS 133, “Accounting
for Derivative Instruments and Hedging Activities” (SFAS 133) as well as related
hedged items, bifurcated derivatives, and nonderivative instruments that are
designated and qualify as hedging instruments. Entities with instruments subject
toSFAS161
must provide more robust qualitative disclosures and expanded quantitative
disclosures.SFAS161
is effective prospectively for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
permitted. We are currently evaluating the disclosure implications of this
statement.
  (K)
Reclassification
  The 2007
financial statements have been reclassified to conform to the 2008
presentation.
  NOTE
2  GOING
CONCERN
  As
reflected in the accompanying unaudited financial statements, the Company is in
the development stage, has a working capital deficiency and stockholders
deficiency of $287,803 and used $458,393 of cash in operations from
inception.  This raises substantial doubt about its ability to
continue as a going concern.  The ability of the Company to continue
as a going concern is dependent on the Company’s ability to raise additional
capital and implement its business plan.  The financial statements do
not include any adjustments that might be necessary if the Company is unable to
continue as a going concern.
  Management
believes that actions presently being taken to obtain additional funding and
implement its strategic plans provide the opportunity for the Company to
continue as a going concern.
    8
 KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
 AS
OF MARCH 31, 2008
 (UNAUDITED)
  NOTE
      3
              STOCKHOLDERS’
      DEFCIT
  (A)Common
Stock Issued for Cash
  On
January 8, 2007 the Company issued 175,000 shares of common stock for $15,000
($0.09/share).  This agreement was subsequently terminated effective
May 23, 2007.
  On
January 22, 2007 the Company issued 1,200,000 shares of common stock for
$103,000 ($0.09/share).   In addition, 900,000 shares were issued
for $3,000 ($0.0033/share).
  On April
4, 2007, the Company issued 187,500 shares of common stock for cash of $15,000
($0.08 per share).
  On April
20, 2007, the Company issued 187,500 shares of common stock for cash of $15,000
($0.08 per share).
  On April
28, 2006, the Company issued 800 shares of common stock for cash of $400 ($0.50
per share).
  On May
18, 2007, the Company issued 1,312,500 shares of common stock for cash of
$105,000 ($0.08 per share).
  On August
28, 2007 the Company entered into a stock purchase agreement to issue 8,049,500
shares common stock in the amount of $241,485 ($0.03/share).
  On August
29, 2007 the Company entered into a stock purchase agreement to issue 20,000
shares common stock in the amount of $600 ($0.03/share).
  On August
29, 2007 the Company entered into a stock purchase agreement to issue 830,000
shares common stock in the amount of $24,900 ($0.03/share).
  On
September 1, 2007 the Company entered into a stock purchase agreement to issue
2,500 shares common stock in the amount of $75 ($0.03/share).
  On
September 5, 2007 the Company entered into a stock purchase agreement to issue
12,000 shares common stock in the amount of $360 ($0.03/share).
  On
September 12, 2007 the Company entered into a stock purchase agreement to issue
102,500 shares common stock in the amount of $3,075($0.03/share).
   9
  KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
 AS
OF MARCH 31, 2008
 (UNAUDITED)
 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 2,812,500
additional shares through September 2007 as a result of the subsequent stock
issuances $0.03/share.
  (B)
Common Stock Issued for Intellectual Property
  On April
26, 2006, the Company issued 33,229,200 shares of common stock to its founder
having a fair value of $180 ($0.000005/share) in exchange for intellectual
property.  The fair value of the patent was determined based upon the
historical cost of the intellectual property contributed by the
founder.
  (C)
Common Stock Issued for Services
  On
January 15, 2008 the Company issued 40,000 shares of common stock for consulting
services rendered with a fair value of $4,000 ($0.10/share).
  On May 8,
2006, the Company entered into a license agreement for research and development.
Pursuant to the terms of the agreement, the Company issued 1,750,000 of common
stock upon execution of the agreement. The Company also received a five-year
call option from the license holder to repurchase 700,000 common shares at an
exercise price of $150,000 or $.21 per share. The option gives the Company the
right, but not the obligation to repurchase the shares of common
stock.  The call option expires May 4, 2011. As of March 31, 2008 the
fair value of the call option was less then the exercise price of the option and
no value has been recorded for the option (See Note 4).
  On July
1, 2006 the Company entered into a five year consulting agreement for research
and development. Pursuant to the terms of the agreement, the Company paid 70,000
shares of common stock upon execution.  These shares had a fair value
of $5,600 ($0.08/share) based upon the recent cash offering
price.  Additionally, 200,000 shares of common stock were issued on
May 18, 2007 with a fair value of $16,000 ($0.08/share).   As of
March 31, 2008 the Company issued 1000,000 shares of common stock for consulting
services rendered with a fair value of $10,000 ($0.10/share).
  (D)
Cancellation and Retirement of Common Stock
  On
December 29, 2006, the Company’s founder returned 1,166,650 shares of common
stock to the Company.  These shares were cancelled and
retired.  Accordingly, the net effect on equity is $0.
   10
 KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
 AS
OF MARCH 31, 2008
 (UNAUDITED)
  (E)
Common Stock Warrants
  During
2006, the Company issued 4,200,000 warrants to an officer under his employment
agreement.   The Company recognized an expense of $126,435 for
the period from inception to December 31, 2006.  The Company recorded
the fair value of the warrants  based on the fair value of each
warrant grant estimated on the date of grant using the Black-Scholes option
pricing model with the following weighted average assumptions used for grants in
2006, dividend yield of zero, expected volatility of 183%; risk-free interest
rates of 4.98%, expected life of one year. The warrants vested
immediately.   The options expire between 5 and 9 years from the
date of issuance and have an exercise price of between $.21 and $.40 per share.
During November 2006, the Company and the officer entered into an amendment to
the employment agreement whereby all the warrants were retired.
  NOTE
4  COMMITMENTS
AND CONTINGENCIES
  (A)
Employment Agreement
  On April
26, 2006, the Company entered into a five-year employment agreement with the
Company’s Chairman and Chief Executive Officer. The agreement renews annually so
that at all times, the term of the agreement is five years.  Pursuant
to this agreement, the Company will pay an annual base salary of $185,000 for
the period May 1, 2006 through December 31, 2006.  Base pay will be
increased each January 1st,
for the subsequent twelve month periods by six percent.  The officer
will also be entitled to life, disability, health and dental
insurance.   In addition, the officer received 700,000 five year
warrants at an exercise price of $.21 per share, 1,500,000 eight year warrants
at an exercise price of $ .33 per share and 2,000,000 nine year warrants at an
exercise price of $ .40 per share (See Note 3(E)).  The warrants fully
vested on the date of grant.  The agreement also calls for the
issuance of warrants and increase in the officer’s base compensation upon the
Company reaching certain milestones:
  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%.
   11
 KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
 AS
OF MARCH 31, 2008
 (UNAUDITED)
  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.
  On
November 6, 2006, the Company entered into an addendum to the employment
agreement whereby the officer agreed to retire all stock warrants issued or to
be issued under his employment agreement in return for an increase in his
severance allowance to $600,000 or seventy five percent of total salary due
under the remaining term of the employment agreement, which ever is greater and
a death benefit of $300,000 or thirty five percent of the total salary due under
the remaining term of the employment agreement.
  In
addition, upon expiration or termination of the employment agreement, the
Company agrees to keep the officer employed as a consultant for a period of six
years at a rate of $4,000 per month with annual increases of 3%. The agreement
also calls for certain increases based on milestones reached by the company,
including:
  1.   If
the company achieves gross sales exceeding $10 million or net income exceeding
$1 million for any two years within the ten year period after the date of this
agreement or a market capitalization in excess of $45 million for over 180
calendar days within six years from the date of this agreement, the term of the
consulting agreement will be extended to 10 years.
   12
  KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
 AS
OF MARCH 31, 2008
 (UNAUDITED)
 2.  If
the company achieves gross sales exceeding $19 million or net income exceeding
$3 million for any two years within the twelve year period after the date of
this agreement or a market capitalization in excess of $65 million for over 180
calendar days within six years from the date of this agreement, the term of the
consulting agreement will be extended to 20 years or the life of the officer and
his spouse at a rate of $6,500 per month with a 3% annual increase.
  3.  If
the company achieves gross sales exceeding $38 million or net income exceeding
$6 million for any two years within the twelve year period after the date of
this agreement or a market capitalization in excess of $120 million for over 180
calendar days within six years from the date of this agreement, the term of the
consulting agreement will be extended to 20 years or the life of the officer and
his spouse at a rate of $10,000 per month with a 3% annual
increase.
  4.  If
the company achieves gross sales exceeding $59 million or net income exceeding
$9 million for any year within the twelve year period after the date of this
agreement or a market capitalization in excess of $210 million for over 180
calendar days within six years from the date of this agreement, the term of the
consulting agreement will be extended to 20 years or the life of the officer and
his spouse at a rate of $15,000 per month with a 3% annual
increase.
  5.  If
the company achieves gross sales exceeding $78 million or net income exceeding
$12 million for any year within the twelve year period after the date of this
agreement or a market capitalization in excess of $320 million for over 180
calendar days within six years from the date of this agreement, the term of the
consulting agreement will be extended to 20 years or the life of the officer and
his spouse at a rate of $20,000 per month with a 3% annual
increase.
  (B)License
Agreement
  On May 8,
2006, the Company entered into a license agreement.  Pursuant to the
terms of the agreement, the Company paid a non-refundable license fee of
$10,000. The Company will pay a license maintenance fee of $10,000 on the one
year anniversary of this agreement and each year thereafter.  The
Company will pay an annual research fee of $13,700 with first payment due
January 2007, then on each subsequent anniversary of the effective date
commencing May 4, 2007.  Pursuant to the terms of the agreement the
Company may be required to pay additional fees aggregating up to a maximum of
$10,000 a year for patent maintenance and prosecution relating to the licensed
intellectual property.    (See Note 3(C))
   13
  KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
 AS
OF MARCH 31, 2008
 (UNAUDITED)
 (C)Royalty and Research
Agreements
  On
December 26, 2006, the Company entered into an addendum to the intellectual
property transfer agreement with an officer.  In consideration of the
Company issuing either 200,000 preferred shares with the following preferences;
no dividends and voting rights equal to 100 common shares per share of preferred
stock or the payment of $120,000, the officer agreed to terminate the royalty
payments due under the agreement and give title to the exclusive license for the
non protective apparel use of the intellectual property to the
Company.  On the date of the agreement, the Company did not have any
preferred stock authorized with the required preferences.  In
accordance with SFAS 150, the Company determined that the present value of the
payment of $120,000 that was due on December 26, 2007, the one year anniversary
of the addendum, should be recorded as an accrued expense until such time as the
Company has the ability to assert that it has preferred shares
authorized.  As of March 31, 2008, the Company has recorded $120,000
in accrued expenses- related party.  On December 21, 2007 the officer
extended the due date to July 30, 2008.
  On
February 1, 2007 the Company entered into a consulting agreement for research
and development for a period of one year. As of March 31, 2008, all
payments under the consulting agreement totaling $150,000 were fully paid and
expensed.  The agreemet terminated on January 31, 2008.
 On
February 26, 2007 the Company entered into a five year consulting agreement for
research and development. Pursuant to the terms of the agreement, the Company
paid 200,000 shares of common stock upon execution.  These shares had
a fair value of $16,000 ($0.08/share) based upon the recent cash offering price.
Additionally, the Company will be required to pay $1,000 per month, or at the
Company’s option, the consulting fee may be paid in the form of Company common
stock based upon the greater of $0.10 per share or the average of the closing
price of the Company’s shares over the five days preceding such stock
issuance.  As of March 31, 2008 the Company issued 100,000 shares of
common stock for consulting services rendered with a fair value of $10,000
($0.10/share).  The agreement also requires the Company to issue up to
450,000 additional shares to the consultant upon the consultant reaching certain
milestone events.  As of March 31, 2008, the consultant has not
reached the milestone events and no additional shares are earned.
  NOTE
5  RELATED PARTY
TRANSACTION
  On
January 1, 2007, the company entered into a one year lease agreement with an
officer for office space.  The agreement calls for monthly rent of
$100 plus the reimbursement to officer for internet services at $50 per
month.  Payments under the agreement totaled $600 for the period ended
March 31, 2008.
     14




ITEM
2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 
 Caution Regarding
Forward-Looking Information
 
 Certain
statements contained herein, including, without limitation, statements
containing the words “believes”, “anticipates”, “expects” and words of similar
import, constitute forward-looking statements. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause
the actual results, performance or achievements of the Company, or industry
results, to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements.
 
 Such
factors include, among others, the following: international, national and local
general economic and market conditions: demographic changes; the ability of the
Company to sustain, manage or forecast its growth; the ability of the Company to
successfully make and integrate acquisitions; raw material costs and
availability; new product development and introduction; existing government
regulations and changes in, or the failure to comply with, government
regulations; adverse publicity; competition; the loss of significant customers
or suppliers; fluctuations and difficulty in forecasting operating results;
changes in business strategy or development plans; business disruptions; the
ability to attract and retain qualified personnel; the ability to protect
technology; and other factors referenced in this and previous
filings.
 
 Given
these uncertainties, readers of this prospectus and investors are cautioned not
to place undue reliance on such forward-looking statements.
 
 Plan of
Operations
  During
the next twelve months, we expect to take the following steps in connection with
the further development of our business and the implementation of our plan of
operations:
  »
              We
      expect to spend approximately $150,000 on collaborative research and
      development of high strength polymers at the University of Notre Dame over
      the next twelve months.  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 $13,800 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.
 
 Limited Operating
History
 
 We have
not previously demonstrated that we will be able to expand our business through
an increased investment in our research and development efforts. We cannot
guarantee that the research and development efforts described in this
Registration Statement will be successful. Our business is subject to risks
inherent in growing an enterprise, including limited capital resources, risks
inherent in the research and development process and possible rejection of our
products in development.
 
 If
financing is not available on satisfactory terms, we may be unable to continue
expanding our operations. Equity financing will result in a dilution to existing
shareholders.
 
  15
  
 Results
of Operations for the Quarter Ended March 31, 2008.
  Revenue
for the quarter ended March 31, 2008 was $0.  This compares to $0 in
revenue for the preceding quarter ended March 31, 2007.  No sales are
anticipated during the next twelve months as the company will remain in the
research and development stage.
 
 Expenses
for the quarter ended March 31, 2008 were $112,386. This compares to $110,022 in
expenses during the three months ended March 31, 2007.  Research and
development expenses for the quarter ended March 31, 2008 were
$15,925.  This compares to $50,000 spent on research and development
during the three months ended March 31, 2007.  In addition, we had the
following expenses during the three months ended March 31, 2008: general and
administrative-$24,981, professional fees-$15,628, officer’s salary-$51,967 and
payroll taxes-$3,975.  This compares to the same expenses during the
three months ended March 31, 2007: general and administrative-$5,385,
professional fees-$0, officer’s salary-$49,024 and payroll
taxes-$5,613.
  Capital
Resources and Liquidity
  As of
March 31, 2008 we had $68,502 in cash.
  We
believe we can not satisfy our cash requirements for the next twelve months with
our current cash.  Completion of our plan of operation is subject to
attaining adequate financing.  We cannot assure investors that
adequate financing will be available. In the absence of such financing, we may
be unable to proceed with our plan of operations.
  We
anticipate that our operational, and general & administrative expenses for
the next 12 months will total approximately $400,000. We do not anticipate the
purchase or sale of any significant equipment. We also do not expect any
significant additions to the number of employees. The foregoing represents our
best estimate of our cash needs based on current planning and business
conditions. The exact allocation, purposes and timing of any monies raised in
subsequent private financings may vary significantly depending upon the exact
amount of funds raised and our progress with the execution of our business
plan.
 
 In the
event we are not successful in obtaining financing, we may not be able to
proceed with our business plan for the research and development of our
products.  We anticipate that we will incur operating losses in the
foreseeable future. Therefore, our auditors have raised substantial doubt about
our ability to continue as a going concern.
 
 Critical
Accounting Policies
 
 Our
financial statements and related public financial information are based on the
application of accounting principles generally accepted in the United States
(“GAAP”). GAAP requires the use of estimates; assumptions, judgments and
subjective interpretations of accounting principles that have an impact on the
assets, liabilities, revenue and expense amounts reported. These estimates can
also affect supplemental information contained in our external disclosures
including information regarding contingencies, risk and financial condition. We
believe our use if estimates and underlying accounting assumptions adhere to
GAAP and are consistently and conservatively applied. We base our estimates on
historical experience and on various other assumptions that we believe to be
reasonable under the circumstances. Actual results may differ materially from
these estimates under different assumptions or conditions. We continue to
monitor significant estimates made during the preparation of our financial
statements.
  Our
significant accounting policies are summarized in Note 1 of our financial
statements. While all these significant accounting policies impact its financial
condition and results of operations, we view certain of these policies as
critical. Policies determined to be critical are those policies that have the
most significant impact on our financial statements and require management to
use a greater degree of judgment and estimates. Actual results may differ from
those estimates. Our management believes that given current facts and
circumstances, it is unlikely that applying any other reasonable judgments or
estimate methodologies would cause effect on our results of operations,
financial position or liquidity for the periods presented in this
report.
 
 Recent
Accounting Pronouncements
  In June
2007, the Emerging SEC’s Issues Task Force (“EITF”) issued EITF No. 07-3, Accounting for Nonrefundable Advance
Payments for Goods or Services to Be Used in Future Research and Development
Activities, (“EITF 07-3”). EITF 07-3 provides guidance for upfront
payments related to goods and services of research and development costs and is
effective for fiscal years beginning after December 15, 2007. The Company is
currently evaluating the impact of EITF 07-3 on its financial
statements.
  In June
2007, the EITF issued EITF No. 07-01, Accounting for Collaborative
Arrangements,(“EITF 07-1”). EITF 07-1 provides guidance for companies in
the biotechnology or pharmaceutical industries that may enter into agreements
with other companies to collaboratively develop, manufacture, and market a drug
candidate (Collaboration Agreements) and is effective for fiscal years beginning
after December 15, 2007. The Company does not expect that EITF 07-01 will have
an effect on its financial condition or results of operations.
  In
September 2006, the FASB issued Statement No. 157, Fair Value Measurements(“FAS
157”), which defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles and expands disclosures about
fair value measurements. FAS 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007. The Company does not expect
the adoption of FAS 157 to significantly affect its financial condition or
results of operations.
   16
   In
February 2007, the FASB issued Statement No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities, Including an amendment of SFAS 115(“FAS 159”), which permits companies to choose to measure many financial
instruments and certain other items at fair value. FAS 159 is effective for
fiscal years beginning after November 15, 2007 and interim periods within those
fiscal years. The Company is currently evaluating the effect FAS 159 will have
on our consolidated financial position and results of operations
  In
December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No.
160, “Noncontrolling Interests
in Consolidated Financial Statements – an amendment of ARB No.
51”.  This statement improves the relevance, comparability, and
transparency of the financial information that a reporting entity provides in
its consolidated financial statements by establishing accounting and reporting
standards that require; the ownership interests in subsidiaries held by parties
other than the parent and the amount of consolidated net income attributable to
the parent and to the noncontrolling interest be clearly identified and
presented on the face of the consolidated statement of income, changes in a
parent’s ownership interest while the parent retains its controlling financial
interest in its subsidiary be accounted for consistently, when a subsidiary is
deconsolidated, any retained noncontrolling equity investment in the former
subsidiary be initially measured at fair value, entities provide sufficient
disclosures that clearly identify and distinguish between the interests of the
parent and the interests of the noncontrolling owners.  SFAS No. 160
affects those entities that have an outstanding noncontrolling interest in one
or more subsidiaries or that deconsolidate a subsidiary.  SFAS No. 160
is effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008. Early adoption is prohibited. The
adoption of this statement is not expected to have a material effect on the
Company's financial statements.
 
 In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133”
(SFAS161). This statement is intended
to improve transparency in financial reporting by requiring enhanced disclosures
of an entity’s derivative instruments and hedging activities and their effects
on the entity’s financial position, financial performance, and cash flows.SFAS161 applies to all derivative
instruments within the scope of SFAS 133, “Accounting for Derivative Instruments
and Hedging Activities” (SFAS 133) as well as related hedged items, bifurcated
derivatives, and nonderivative instruments that are designated and qualify as
hedging instruments. Entities with instruments subject toSFAS161 must provide more robust
qualitative disclosures and expanded quantitative disclosures.SFAS161 is effective prospectively for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application permitted. We are currently
evaluating the disclosure implications of this statement.
 
 Off-Balance Sheet
Arrangements
  We do not
have any outstanding derivative financial instruments, off-balance sheet
guarantees, interest rate swap transactions or foreign currency contracts. We do
not engage in trading activities involving non-exchange traded
contracts.
 
 Item
3. Quantitative and Qualitative Disclosures About Market Risk
 
 The
Company is subject to certain market risks including changes in interest rates.
 The Company does not undertake any specific actions to limit those
exposures.
  Item
4T.  Controls and Procedures
 
 Pursuant
to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”),
the Company carried out an evaluation, with the participation of the Company’s
management, including the Company’s Chief Executive Officer (“CEO”) and Chief
Accounting Officer (“CAO”) (the Company’s principal financial and accounting
officer), of the effectiveness of the Company’s disclosure controls and
procedures (as defined under Rule 13a-15(e) und er the Exchange Act) as of the
end of the period covered by this report. Based upon that evaluation, the
Company’s CEO and CAO concluded that the Company’s disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in the reports that the Company files or submits under the Exchange
Act, is recorded, processed, summarized and reported, within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to the Company’s management, including the Company’s CEO and
CAO, as appropriate, to allow timely decisions regarding required
disclosure.
 
 Internal
control over financial reporting is a process to provide reasonable assurance
regarding the reliability of consolidated financial reporting and the
preparation of financial statements for external purposes in accordance with
U.S. generally accepted accounting principles.  There has been no change in
the Company’s internal control over financial reporting during the quarter ended
March 31, 2008 that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial
reporting.
  There
have been no significant changes in the Company’s internal controls or in other
factors that could significantly affect internal controls subsequent to the date
the Chief Executive Officer and the Chief Financial Officer carried out this
evaluation.
 
 17
   
 PART
II - OTHER INFORMATION
  Item
1. Legal Proceedings.
  Currently
we are not aware of any litigation pending or threatened by or against the
Company.
  Item
1A. Risk Factors.
  None.
 
 Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
  On
January 15, 2008 the Company issued 40,000 shares of common stock for consulting
services rendered with a fair value of $4,000
($0.10/share).   Such shares were issued pursuant to an exemption
from registration at Section 4(2) of the Securities Act of 1933.
 
 Item
3. Defaults Upon Senior Securities.
  None.
  Item
4. Submission of Matters to a Vote of Security Holders.
  None.
  Item
5. Other Information.
  None
  Item
6. Exhibits and Reports of Form 8-K.
  (a)           Exhibits
  31.1
Certifications pursuant to Section 302 of Sarbanes Oxley Act of
2002
  32.1
Certifications pursuant to Section 906 of Sarbanes Oxley Act of
2002
  (b)           Reports
of Form 8-K
  None.
 
 
 18
  
  SIGNATURES
    Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
  
  KRAIG
      BIOCRAFT LABORATORIES, INC.Date:
      May 12, 2008
              By:
              /s/
      Kim ThompsonKim
      ThompsonChief
      Executive Officer
 
   19