----

----

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

| r | 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                                              |
|---------------|------------------------------------------------------------------------|
| Item      2.  | Management’s      Discussion and Analysis of Financial Condition |
| Item      3   | Quantitative      and Qualitative Disclosures About Market Risk        |
| Item      4T. | Control      and Procedures                                            |

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

----

|   |        |                                                                                                                                                                                    |
|--------|-------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| PAGE   | 1           | CONDENSED      BALANCE SHEETS AS OF JUNE 30, 2008 (UNAUDITED) AND AS OF DECEMBER 31,      2007                                                                                          |
|   |        |                                                                                                                                                                                    |
| PAGE   | 2           | CONDENSED      STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008      AND 2007 AND FOR THE PERIOD APRIL 25, 2006 (INCEPTION) TO JUNE 30, 2008      (UNAUDITED). |
|   |        |                                                                                                                                                                                    |
| PAGES  | 3           | CONDENSED      STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT FOR THE PERIOD FROM APRIL      25, 2006 (INCEPTION) TO JUNE 30, 2008 (UNAUDITED).                                    |
|   |        |                                                                                                                                                                                    |
| PAGE   | 4           | CONDENSED      STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007      AND FOR THE PERIOD APRIL 25, 2006 (INCEPTION) TO JUNE 30, 2008      (UNAUDITED).           |
|   |        |                                                                                                                                                                                    |
| PAGES  | 5 -      14 | NOTES      TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED).                                                                                                                               |
|   |        |                                                                                                                                                                                    |

----

| Kraig      Biocraft Laboratories, Inc.                                                             |   |
|----------------------------------------------------------------------------------------------------|--------|
| (A      Development Stage Company)                                                                 |   |
| Condensed      Balance Sheets                                                                      |   |
|                                                                                               |   |   |   |   |   |   |
|                                                                                               |   |   |   |   |   |   |
|                                                                                               |   |   |   |   |
|                                                                                               |   |   |   |   |
|                                                                                               |   |   |   |   |   |   |
| ASSETS                                                                                             |   |
|                                                                                               |   |   |   |   |   |   |
|                                                                                               |   | June 30, 2008 |   |   | December 31, 2007 |   |
|                                                                                               |   | (Unaudited) |   |   |   |   |
|                                                                                               |   |   |   |   |   |   |
| Current      Assets                                                                                |   |   |   |   |   |   |
|    Cash                                                                             |   | $ | 32,220 |   |   | $ | 105,818 |   |
| Prepaid      Expenses                                                                              |   |   | 8,464 |   |   |   | 12,500 |   |
| Total      Assets                                                                                  |   | $ | 40,684 |   |   | $ | 118,318 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| LIABILITIES AND      STOCKHOLDERS' DEFICIENCY                                                      |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| Current      Liabilities                                                                           |   |   |   |   |   |   |   |   |
|     Accounts      payable                                                      |   | $ | 46,137 |   |   | $ | 22,121 |   |
| Accounts      Payable- related party                                                               |   |   | 120,000 |   |   |   | - |   |
|  Payroll      Tax Payable                                                                     |   |   | 1,808 |   |   |   | 10,352 |   |
| Royality      agreement payable - related party                                                    |   |   | - |   |   |   | 120,000 |   |
| Accrued      Expenses                                                                              |   |   | 253,000 |   |   |   | 148,042 |   |
| Total      Current Liabilities                                                                     |   |   | 420,945 |   |   |   | 300,515 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| Commitments      and Contingencies                                                                 |   |   | - |   |   |   | - |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| Stockholders'      Deficiency                                                                      |   |   |   |   |   |   |   |   |
|   Preferred      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, |   |   |   |   |   |   |   |   |
| 49,934,850      and 49,934,850 shares issued and outstanding during                                |   |   | 779,050 |   |   |   | 779,050 |   |
| 2007      and 2006, respectively                                                                   |   |   |   |   |   |   |   |   |
|   Common      stock Class B,  no par value; 25,000,000 shares      authorized, |   |   |   |   |   |   |   |   |
| no      shares issued and outstanding                                                              |   |   | - |   |   |   | - |   |
| Common      Stock Issuable  (40,000      shares)                                              |   |   | 4,000 |   |   |   | - |   |
|   Additional      paid-in capital                                                        |   |   | 42,060 |   |   |   | 42,060 |   |
|   Deficit      accumulated during the development stage                                  |   |   | (1,205,371 | ) |   |   | (1,003,307 | ) |
|                                                                                               |   |   |   |   |   |   |   |   |
| Total      Stockholders' Deficiency                                                                |   |   | (380,261 | ) |   |   | (182,197 | ) |
|                                                                                               |   |   |   |   |   |   |   |   |
| Total      Liabilities and Stockholders' Deficiency                                                |   | $ | 40,684 |   |   | $ | 118,318 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
|                                                                                               |   |   |   |   |   |   |   |   |

----

| Kraig Biocraft Laboratories, Inc.                      |   |
|--------------------------------------------------------|--------|
| (A      Development Stage Company)                     |   |
| Statements      of Operations                          |   |
| (Unaudited)                                            |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                   |   | For      the Three Months Ended |   |   | For      the Six Months Ended |   |   | For      the Period from April 25, 2006 |   |
|                                                   |   | June      30, |   |   | June      30, |   |   | June      30, |   |   | June      30, |   |   | (Inception)      to |   |
|                                                   |   | 2008 |   |   | 2007 |   |   | 2008 |   |   | 2007 |   |   | June      30, 2008 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenue                                                |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      Expenses                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General      and Administrative                        |   |   | 24,555 |   |   |   | 8,225 |   |   |   | 49,449 |   |   |   | 11,233 |   |   |   | 98,090 |   |
| Professional      Fees                                 |   |   | 6,819 |   |   |   | 1,500 |   |   |   | 22,446 |   |   |   | 1,500 |   |   |   | 72,205 |   |
| Officer's      Salary                                  |   |   | 51,967 |   |   |   | 53,026 |   |   |   | 103,933 |   |   |   | 98,050 |   |   |   | 549,801 |   |
| Contract      Settlement                               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 107,143 |   |
| Payroll      Taxes                                     |   |   | 3,856 |   |   |   | 1,862 |   |   |   | 7,831 |   |   |   | 7,475 |   |   |   | 17,019 |   |
| Research      and Development                          |   |   | 5,261 |   |   |   | 45,169 |   |   |   | 21,186 |   |   |   | 95,169 |   |   |   | 363,118 |   |
| Total      Operating Expenses                          |   |   | 92,458 |   |   |   | 109,782 |   |   |   | 204,845 |   |   |   | 213,427 |   |   |   | 1,207,376 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from Operations                              |   |   | (92,458 | ) |   |   | (109,782 | ) |   |   | (204,845 | ) |   |   | (213,427 | ) |   |   | (1,207,376 | ) |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      Income/(Expenses)                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      income                                      |   |   | - |   |   |   | - |   |   |   | 2,781 |   |   |   | - |   |   |   | 2,005 |   |
| Other      expense                                     |   |   | - |   |   |   | - |   |   |   |   |   |   |   | (6,498 | ) |   |   | - |   |
| Total      Other Income/(Expenses)                     |   |   | - |   |   |   | - |   |   |   | 2,781 |   |   |   | (6,498 | ) |   |   | 2,005 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Loss before Provision for Income Taxes        |   |   | (92,458 | ) |   |   | (109,782 | ) |   |   | (202,064 | ) |   |   | (219,925 | ) |   |   | (1,205,371 | ) |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision      for Income  Taxes             |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Loss                                          |   | $ | (92,458 | ) |   | $ | (109,782 | ) |   | $ | (202,064 | ) |   | $ | (219,925 | ) |   | $ | (1,205,371 | ) |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Loss Per Share  - Basic and Diluted |   | $ | (0.00 | ) |   | $ | (0.01 | ) |   | $ | (0.00 | ) |   | $ | (0.01 | ) |   |   |   |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average number of shares outstanding     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   during      the period - Basic and Diluted |   |   | 49,974,850 |   |   |   | 36,158,350 |   |   |   | 49,971,756 |   |   |   | 36,361,458 |   |   |   |   |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Kraig      Biocraft Laboratories, Inc.                               |   |
|----------------------------------------------------------------------|--------|
| (A      Development Stage Company)                                   |   |
| Condensed      Statement of Changes in Stockholders Deficit          |   |
| For the period from      April 25, 2006 (inception) to June 30, 2008 |   |
| (Unaudited)                                                          |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Deficit |   |   |   |   |
|                                                                 |   | Preferred      Stock |   |   | Common      Stock - Class A |   |   | Common      Stock - Class B |   |   |   |   |   | Accumulated      during |   |   |   |   |
|                                                                 |   | Shares |   |   | Par |   |   | Shares |   |   | Par |   |   | Shares |   |   | Par |   |   | APIC |   |   | Development      Stage |   |   | Total |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      April 25, 2006                                         |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      issued to founder                                         |   |   | - |   |   |   | - |   |   |   | 33,229,200 |   |   |   | 180 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 180 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      issued for services ($.08/share)                          |   |   | - |   |   |   | - |   |   |   | 1,750,000 |   |   |   | 140,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 140,000 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      issued for services ($.08/share)                          |   |   | - |   |   |   | - |   |   |   | 70,000 |   |   |   | 5,600 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5,600 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      contributed by shareholder                                |   |   | - |   |   |   | - |   |   |   | (1,166,650 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      issued for cash ($2.00/share)                             |   |   | - |   |   |   | - |   |   |   | 400 |   |   |   | 200 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 200 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      issued for cash ($2.00/share)                             |   |   | - |   |   |   | - |   |   |   | 400 |   |   |   | 200 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 200 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair      value of warrants issued                                   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 126,435 |   |   |   | - |   |   |   | 126,435 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Loss                                                        |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (530,321 | ) |   |   | (530,321 | ) |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      December 31, 2006                                      |   |   | - |   |   |   | - |   |   |   | 33,883,350 |   |   |   | 146,180 |   |   |   | - |   |   |   | - |   |   |   | 126,435 |   |   |   | (530,321 | ) |   |   | (257,706 | ) |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      issued for cash ($.09/share)                              |   |   | - |   |   |   | - |   |   |   | 175,000 |   |   |   | 15,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 15,000 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      issued for cash ($.09/share)                              |   |   | - |   |   |   | - |   |   |   | 1,200,000 |   |   |   | 103,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 103,000 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      issued for cash ($.003/share)                             |   |   | - |   |   |   | - |   |   |   | 900,000 |   |   |   | 3,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,000 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      issued for cash ($.08/share)                              |   |   | - |   |   |   | - |   |   |   | 187,500 |   |   |   | 15,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 15,000 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      issued for cash ($.08/share)                              |   |   | - |   |   |   | - |   |   |   | 187,500 |   |   |   | 15,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 15,000 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| Stock      issued for services ($.08/share)                          |   |   | - |   |   |   | - |   |   |   | 200,000 |   |   |   | 16,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 16,000 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      issued for cash ($.08/share)                              |   |   | - |   |   |   | - |   |   |   | 1,312,500 |   |   |   | 105,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 105,000 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      issued for cash ($.03/share)                              |   |   | - |   |   |   | - |   |   |   | 8,049,500 |   |   |   | 241,485 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 241,485 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      issued for cash ($.03/share)                              |   |   | - |   |   |   | - |   |   |   | 20,000 |   |   |   | 600 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 600 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      issued for c ash ($.03/share)                             |   |   | - |   |   |   | - |   |   |   | 830,000 |   |   |   | 24,900 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 24,900 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      issued for cash ($.03/share)                              |   |   | - |   |   |   | - |   |   |   | 2,500 |   |   |   | 75 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 75 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      issued for cash ($.03/share)                              |   |   | - |   |   |   | - |   |   |   | 12,000 |   |   |   | 360 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 360 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      issued for cash ($.03/share)                              |   |   | - |   |   |   | - |   |   |   | 102,500 |   |   |   | 3,075 |   |   |   |   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,075 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      issued in connection to cash offering                     |   |   | - |   |   |   | - |   |   |   | 2,812,500 |   |   |   | 84,375 |   |   |   | - |   |   |   | - |   |   |   | (84,375 | ) |   |   | - |   |   |   | - |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      issued for services ($.10/share)                          |   |   | - |   |   |   | - |   |   |   | 60,000 |   |   |   | 6,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 6,000 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss, for the year ended December 31, 2007                  |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (472,986 | ) |   |   | (472,986 | ) |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      December 31, 2007                                      |   |   | - |   |   |   | - |   |   |   | 49,934,850 |   |   |   | 779,050 |   |   |   | - |   |   |   | - |   |   |   | 42,060 |   |   |   | (1,003,307 | ) |   |   | (182,197 | ) |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      issuable for services ($.10/share)                        |   |   | - |   |   |   | 0 |   |   |   | 40,000 |   |   |   | 4,000 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 4,000 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss, for the six months ended June 30, 2008                |   |   | - |   |   |   | 0 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (202,064 | ) |   |   | (202,064 | ) |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      for the period ended June 30, 2008                     |   |   | - |   |   | $ | - |   |   |   | 49,974,850 |   |   | $ | 783,050 |   |   | $ | - |   |   | $ | - |   |   | $ | 42,060 |   |   | $ | (1,205,371 | ) |   | $ | (380,261 | ) |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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| Kraig      Biocraft Laboratories, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| (A      Development Stage Company)                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |
| Condensed Statement of Cash      Flows                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
| (Unaudited)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | Fro      the Six Months Ended June 30, |   |   | For      the Period from April 25, 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |   |   |   | (Inception)      to |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | 2008 |   |   | 2007 |   |   | June      30, 2008 |   |
| Cash      Flows From Operating Activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |
| Net      Loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $ | (202,064 | ) |   | $ | (219,925 | ) |   | $ | (1,205,371 | ) |
|   Adjustments      to reconcile net loss to net cash used in operations                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|       Stock      issued for services                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   | 4,000  |   |   |   | 16,000 |   |   |   | 171,780  |   |
|       Warrants      issued to employees                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   | - |   |   |   | - |   |   |   | 126,435 |   |
|   Changes      in operating assets and liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
|       (Increase)Decrease      in prepaid expenses                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   | 4,036 |   |   |   | (37,900 | ) |   |   | (8,464 | ) |
|       Increase      in accrued expenses and other payables                                                                                                                                                                                                                                                                                                                                                                                                             |   |   | (23,587 | ) |   |   | 38,505 |   |   |   | 254,808 |   |
|       Increase      in royality agreement payable - related party                                                                                                                                                                                                                                                                                                                                                                                                      |   |   | 120,000 |   |   |   | - |   |   |   | 120,000 |   |
|       Increase      in accounts payable                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   | 24,017 |   |   |   | 2,169 |   |   |   | 46,137 |   |
| Net      Cash Used In Operating Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   | (73,598 | ) |   |   | (201,151 | ) |   |   | (494,675 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      Flows From Financing Activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds      from Notes Payable - Stockholder                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   | - |   |   |   | - |   |   |   | 10,000 |   |
| Repayments      of Notes Payable - Stockholder                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   | - |   |   |   | (10,000 | ) |   |   | (10,000 | ) |
| Proceeds      from issuance of common stock                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   | - |   |   |   | 256,000 |   |   |   | 526,895 |   |
| Net      Cash Provided by Financing Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   | - |   |   |   | 246,000 |   |   |   | 526,895 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Increase (Decrease) in Cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   | (73,598 | ) |   |   | 44,849 |   |   |   | 32,220 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      at Beginning of Period/Year                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   | 105,818 |   |   |   | 390 |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      at End of Period/Year                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | $ | 32,220 |   |   | $ | 45,239 |   |   | $ | 32,220 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| 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      1,166,650                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |
| 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 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). |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |

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| NOTE      1 | SUMMARY OF SIGNIFICANT      ACCOUNTING POLICIES ANDORGANIZATION |
|-------------|-----------------------------------------------------------------|

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(SFAS 
161). This statement is intendedto improve transparency in financial reporting by requiring enhanced disclosuresof an entity’s derivative instruments and hedging activities and their effectson the entity’s financial position, financial performance, and cash flows.
SFAS 
161 applies to all derivativeinstruments within the scope of SFAS 133, “Accounting for Derivative Instrumentsand Hedging Activities” (SFAS 133) as well as related hedged items, bifurcatedderivatives, and nonderivative instruments that are designated and qualify ashedging instruments. Entities with instruments subject to 
SFAS 
161 must provide more robustqualitative disclosures and expanded quantitative disclosures. 
SFAS 
161 is effective prospectively forfinancial statements issued for fiscal years and interim periods beginning afterNovember 15, 2008, with early application permitted. We are currentlyevaluating the disclosure implications of this statement.

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| NOTE      2 | GOING      CONCERN |
|-------------|--------------------|

| NOTE      3 | STOCKHOLDERS’      DEFCIT |
|-------------|---------------------------------|

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| NOTE      4 | COMMITMENTS AND      CONTINGENCIES |
|-------------|------------------------------------|

| 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 by14%. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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 by15%. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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%. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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 by8%. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 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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| NOTE      5 | RELATED PARTY      TRANSACTIONS |
|-------------|---------------------------------|

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| » | 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.                                                                                                                    |

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|                             | KRAIG      BIOCRAFT LABORATORIES, INC. |
|----------------------------------|----------------------------------------|
|                             |                                   |
| Date:      August 18, 2008  | By:                          | /s/ Kim Thompson |
|                             |                                   | Kim      Thompson |
|                             |                                   | Chief      Executive Officer |