UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549


_______________




AMENDMENT
NO. 1 to 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 June 30, 2009




o
              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)




Indicate
by check mark whether the registrant (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 o




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files).


Yes o No o





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):


Yes o No o





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 oNo x





State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of August 13, 2009:  513,011,325shares of Common Stock.









Explanatory
Note:
 
 Kraig
Biocraft Laboratories, Inc. (the “Company”) is filing this Amendment No. 1
to its Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 to
restate the financials and to update the disclosures regarding compliance with
Section 16(a) of the Exchange Act.
 
 We are
amending the following items:
 
 Part
      I
              Financial
      Statements and Supplementary DataPart
      I Item 2
              Management’s
      Discussion and Analysis of Financial
  Condition
 
 Specifically the Company has amended the financial statements and
supplementary data in the Form 10-Q to properly account for the embedded
derivative liability associated with our CEO’s employment
agreement.    For the convenience of the
reader, the Company is re-filing its Form 10-Q originally filed on August 13,
2009 (the “Original Filing”) in its entirety in this Form 10-Q/A. This Form
10-Q/A continues to speak as of the date of the Original Filing and other than
with respect to items described above does not reflect events occurring after
the filing of the Original Filing. Accordingly, in conjunction with reading this
amendment to the Original Filing, you should also read all other filings we have
made with the Securities and Exchange Commission since August 13,
2009.













KRAIG
BIOCRAFT LABORATORIES, INC.





FORM
10-Q


June
30, 2009


INDEX




PART
I-- FINANCIAL INFORMATION




Item
      1.
            Financial
      Statements
            1Item
      2.
            Management’s
      Discussion and Analysis of Financial Condition
            17Item
      3
            Quantitative
      and Qualitative Disclosures About Market Risk
            19Item
      4T.
            Control
      and Procedures
            19




PART
II-- OTHER INFORMATION




Item
      1
            Legal
      Proceedings
            20Item
      1A
            Risk
      Factors
            20Item
      2.
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            20Item
      3.
            Defaults
      Upon Senior Securities
            20Item
      4.
            Submission
      of Matters to a Vote of Security Holders
            20Item
      5.
            Other
      Information
            20Item
      6.
            Exhibits
      and Reports on Form 8-K
            20




SIGNATURE











Item
1. Financial Information





Kraig
Biocraft Laboratories, Inc.
 (A
DEVELOPMENT STAGE COMPANY)
 
 
 
 CONTENTS
 
  PAGE
                1
                CONDENSED
      BALANCE SHEETS AS OF JUNE 30, 2009 (UNAUDITED)( RESTATED ) AND DECEMBER 31, 2008.PAGE
                2
                CONDENSED
      STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2009
      ( RESTATED ) AND 2008 AND FOR THE PERIOD APRIL
      25, 2006 (INCEPTION) TO JUNE 30, 2009 (UNAUDITED) ( RESTATED ).PAGES
                3
                CONDENSED
      STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT FOR THE PERIOD FROM APRIL
      25, 2006 (INCEPTION) TO JUNE 30, 2009 (UNAUDITED) ( RESTATED ).PAGE
                4
                CONDENSED
      STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2009 ( RESTATED ) AND 2008 AND FOR THE PERIOD APRIL 25, 2006
      (INCEPTION) TO JUNE 30, 2009 (UNAUDITED) (RESTATED ).PAGES
                5 -
      16
                NOTES
      TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
    
  Kraig
      Biocraft Laboratories, Inc.(A
      Development Stage Company)Condensed
      Balance SheetsASSETSJune 30, 2009
                                  
                                  
                                  December 31, 2008(Unaudited)
                                    AS
      RESTATED
                                      NOTE
      2Current
      AssetsCash
                                  
                                  $
                                  5,402
                                  
                                  
                                  $
                                  9,537Prepaid
      Expenses
                                  
                                  
                                  8,165
                                  
                                  
                                  
                                  3,123Total
      Assets
                                  
                                  $
                                  13,567
                                  
                                  
                                  $
                                  12,660LIABILITIES AND STOCKHOLDERS'
      DEFICITCurrent
      LiabilitiesAccounts payable
                                  
                                  $
                                  144,070
                                  
                                  
                                  $
                                  65,750Payroll
      Tax Payable
                                  
                                  
                                  1,726
                                  
                                  
                                  
                                  16,933Royalty
      agreement payable - related party
                                  
                                  
                                  120,000
                                  
                                  
                                  
                                  120,000Accrued
      Expenses  - related party
                                  
                                  
                                  497,440
                                  
                                  
                                  
                                  348,278Derivative
      Liability
                                  
                                  
                                  3,572,747
                                  
                                  
                                  
                                  -Total
      Current Liabilities
                                  
                                  
                                  4,335,983
                                  
                                  
                                  
                                  550,961Commitments
      and ContingenciesStockholders'
      DeficitPreferred stock, no par value; unlimited shares
authorized,none issued  and outstanding
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Common stock Class A,  no par value; unlimited shares
      authorized,501,848,500 and 499,348,500 shares issued and outstanding,
      respectively
                                  
                                  
                                  9,049,900
                                  
                                  
                                  
                                  779,050Common stock Class B,  no par value; unlimited shares
      authorized,no shares issued and outstanding
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Common Stock Issuable, 400,000 shares
                                  
                                  
                                  4,000
                                  
                                  
                                  
                                  4,000Additional paid-in capital
                                  
                                  
                                  42,060
                                  
                                  
                                  
                                  42,060Deficit accumulated during the development stage
                                  
                                  
                                  ( 13,418,376
                                  )
                                  
                                  
                                  (1,363,411
                                  )Total
      Stockholders' Deficit
                                  
                                  
                                  ( 4,322,416
                                  )
                                  
                                  
                                  (538,301
                                  )Total
      Liabilities and Stockholders' Deficit
                                  
                                  $
                                  13,567
                                  
                                  
                                  $
                                  12,660
   See
accompanying notes to condensed unaudited financial statements
 1
  Kraig
      Biocraft Laboratories, Inc.(A
      Development Stage Company)Condensed
      Statements of Operations(Unaudited)For
      the Three Months Ended
                
                
                For
      the Six Months Ended
                
                
                For
      the Period from April 25, 2006June
      30,
                
                
                June
      30,
                
                
                June
      30,
                
                
                June
      30,
                
                
                (Inception)
      to2009
                
                
                2008
                
                
                2009
                
                
                2008
                
                
                June
      30, 2009AS
      RESTATED NOTE 2
                
                
                
                
                
                AS
      RESTATED NOTE 2
                
                
                
                
                
                AS
      RESTATED NOTE 2Revenue
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -Operating
      ExpensesGeneral
      and Administrative
                
                
                14,201
                
                
                
                24,555
                
                
                
                25,448
                
                
                
                49,449
                
                
                
                148,151Professional
      Fees
                
                
                13,039
                
                
                
                6,819
                
                
                
                16,039
                
                
                
                22,446
                
                
                
                96,864Officer's
      Salary
                
                
                55,084
                
                
                
                51,967
                
                
                
                110,169
                
                
                
                103,933
                
                
                
                763,903Contract
      Settlement
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                107,143Payroll
      Taxes
                
                
                4,398
                
                
                
                3,856
                
                
                
                8,612
                
                
                
                7,831
                
                
                
                27,376Research
      and Development
                
                
                51,963
                
                
                
                5,261
                
                
                
                57,908
                
                
                
                21,186
                
                
                
                432,917Total
      Operating Expenses
                
                
                138,685
                
                
                
                92,458
                
                
                
                218,176
                
                
                
                204,845
                
                
                
                1,576,354Loss
      from Operations
                
                
                (138,685
                )
                
                
                (92,458
                )
                
                
                (218,176
                )
                
                
                (204,845
                )
                
                
                (1,576,354
                )Other
      Income/(Expenses)Derivative
      Income/(Expense)
                
                
                (3,572,747
                )
                
                
                -
                
                
                
                (3,572,747
                )
                
                
                -
                
                
                
                (3,572,747
                )Other
      income
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                2,781
                
                
                
                2,781Interest
      expense
                
                
                (10,248
                )
                
                
                
                
                
                
                (18,192
                )
                
                
                -
                
                
                
                (26,206
                )Total
      Other Income/(Expenses)
                
                
                ( 3,582,995
                )
                
                
                -
                
                
                
                ( 3,590,939
                )
                
                
                2,781
                
                
                
                ( 3,596,172
                )Net
      Loss before Provision for Income Taxes
                
                
                ( 3,721,680
                )
                
                
                (92,458
                )
                
                
                ( 3,809,115
                )
                
                
                (202,064
                )
                
                
                ( 5,172,526
                )Provision
      for Income  Taxes
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Net
      Loss
                
                $
                ( 3,721,490
                )
                
                $
                (92,458
                )
                
                $
                ( 3,809,115
                )
                
                $
                (202,064
                )
                
                $
                ( 5,172,526
                )Net
      Loss Per Share  - Basic and Diluted
                
                $
                ( 0.01
                )
                
                $
                (0.00
                )
                
                $
                ( 0.01
                )
                
                $
                (0.00
                )Weighted
      average number of shares outstandingduring
      the period - Basic and Diluted
                
                
                501,035,313
                
                
                
                499,748,500
                
                
                
                500,196,566
                
                
                
                499,717,560
    See
accompanying notes to condensed unaudited financial statements
 2
   Kraig
      Biocraft Laboratories, Inc.(A
      Development Stage Company)Condensed
      Statement of Changes in Stockholders DeficitAs
      Restated Note 2For
      the period from April 25, 2006 (inception) to June 30,
      2009(Unaudited)Common
      Stock -
                              
                              
                              
                              
                              
                              Deficit
                                AccumulatedPreferred
      Stock
                              
                              
                              Common
      Stock -
                                Class
      A
                              
                              
                              Common
      Stock - Class B
                              
                              
                              Class
      A SharesTo be
      issued
                              
                              
                              
                              
                              
                              during
                                DevelopmentShares
                              
                              
                              Par
                              
                              
                              Shares
                              
                              
                              Par
                              
                              
                              Shares
                              
                              
                              Par
                              
                              
                              Shares
                              
                              
                              Par
                              
                              
                              APIC
                              
                              
                              Stage
                              
                              
                              TotalBalance,
      April 25, 2006
                              
                              
                              -
                              
                              
                              $
                              -
                              
                              
                              
                              -
                              
                              
                              $
                              -
                              
                              
                              
                              -
                              
                              
                              $
                              -
                              
                              
                              
                              -
                              
                              
                              $
                              -
                              
                              
                              $
                              -
                              
                              
                              $
                              -
                              
                              
                              $
                              -Stock
      issued to founder
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              332,292,000
                              
                              
                              
                              180
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              180Stock
      issued for services ($.01/share)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              17,500,000
                              
                              
                              
                              140,000
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              140,000Stock
      issued for services ($.01/share)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              700,000
                              
                              
                              
                              5,600
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              5,600Stock
      contributed by shareholder
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (11,666,500
                              )
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -Stock
      issued for cash ($.05/share)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              4,000
                              
                              
                              
                              200
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              200Stock
      issued for cash ($.05/share)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              4,000
                              
                              
                              
                              200
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              200Fair
      value of warrants issued
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              126,435
                              
                              
                              
                              -
                              
                              
                              
                              126,435Net
      Loss
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (530,321
                              )
                              
                              
                              (530,321
                              )Balance,
      December 31, 2006
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              338,833,500
                              
                              
                              
                              146,180
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              126,435
                              
                              
                              
                              (530,321
                              )
                              
                              
                              (257,706
                              )Stock
      issued for cash ($.01/share)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              1,750,000
                              
                              
                              
                              15,000
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              15,000Stock
      issued for cash ($.01/share)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              12,000,000
                              
                              
                              
                              103,000
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              103,000Stock
      issued for cash ($.0003/share)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              9,000,000
                              
                              
                              
                              3,000
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              3,000Stock
      issued for cash ($.01/share)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              1,875,000
                              
                              
                              
                              15,000
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              15,000Stock
      issued for cash ($.01/share)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              1,875,000
                              
                              
                              
                              15,000
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              15,000-Stock
      issued for services ($.01/share)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              2,000,000
                              
                              
                              
                              16,000
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              16,000Stock
      issued for cash ($.01/share)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              13,125,000
                              
                              
                              
                              105,000
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              105,000Stock
      issued for cash ($.003/share)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              80,495,000
                              
                              
                              
                              241,485
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              241,485Stock
      issued for cash ($.003/share)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              200,000
                              
                              
                              
                              600
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              600Stock
      issued for cash ($.003/share)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              8,300,000
                              
                              
                              
                              24,900
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              24,900Stock
      issued for cash ($.003/share)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              25,000
                              
                              
                              
                              75
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              75Stock
      issued for cash ($.003/share)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              120,000
                              
                              
                              
                              360
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              360Stock
      issued for cash ($.003/share)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              1,025,000
                              
                              
                              
                              3,075
                              
                              
                              
                              
                              
                              
                              
                              -
                              
                              
                              
                              
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              3,075Stock
      issued in connection to cash offering
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              28,125,000
                              
                              
                              
                              84,375
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (84,375
                              )
                              
                              
                              -
                              
                              
                              
                              -Stock
      issued for services ($.01/share)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              600,000
                              
                              
                              
                              6,000
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              6,000Net
      loss, for the year ended December 31, 2007
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (472,986
                              )
                              
                              
                              (472,986
                              )Balance,
      December 31, 2007
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              499,348,500
                              
                              
                              
                              779,050
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              42,060
                              
                              
                              
                              (1,003,307
                              )
                              
                              
                              (182,197
                              )Stock
      issuable for services ($.01/share)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              400,000
                              
                              
                              
                              4,000
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              4,000Net
      loss, for the year ended December 31, 2008
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (360,104
                              )
                              
                              
                              (360,104
                              )Balance,
      for the year ended December 31, 2008
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              499,348,500
                              
                              
                              
                              779,050
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              400,000
                              
                              
                              
                              4,000
                              
                              
                              
                              42,060
                              
                              
                              
                              (1,363,411
                              )
                              
                              
                              (538,301
                              )Stock
      issued for cash ($.01/share)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              2,500,000
                              
                              
                              
                              25,000
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              25,000Stock
      dividend
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              8,245,850
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (8,245,850
                              )
                              
                              
                              -Net
      loss for the period ended June 30, 2009
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              ( 3,809,115
                              )
                              
                              
                              (236,368
                              )Balance,
      for the period ended June 30, 2009
                              
                              
                              -
                              
                              
                              $
                              -
                              
                              
                              
                              501,848,500
                              
                              
                              $
                              9,049,900
                              
                              
                              
                              -
                              
                              
                              $
                              -
                              
                              
                              
                              400,000
                              
                              
                              $
                              4,000
                              
                              
                              $
                              42,060
                              
                              
                              $
                              ( 13,418,376
                              )
                              
                              $
                              ( 4,322,416
                              )
   See
accompanying notes to condensed unaudited financial statements
 3
  Kraig
      Biocraft Laboratories, Inc.(A
      Development Stage Company)Condensed
      Statements of Cash Flows(Unaudited)For
      the Six Months Ended June 30,
                
                
                For
      the Period from April 25, 2006(Inception)
      to2009
                
                
                2008
                
                
                June
      30, 2009AS
      RESTATED NOTE 2
                
                
                
                
                
                AS
      RESTATED NOTE 2Cash
      Flows From Operating Activities:Net Loss
                
                $
                ( 3,809,115
                )
                
                $
                (202,064
                )
                
                $
                ( 5,172,526
                )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:Change in Fair Value of Derivative
      Liability
                
                
                3,572,747
                
                
                
                -
                
                
                
                ( 3,572,747 )(Increase)Decrease
      in prepaid expenses
                
                
                (5,042
                )
                
                
                4,036
                
                
                
                (8,165
                )Increase
      in accrued expenses and other payables - related party
                
                
                131,653
                
                
                
                (23,587
                )
                
                
                499,166Increase
      in royalty agreement payable - related party
                
                
                -
                
                
                
                120,000
                
                
                
                120,000Increase
      in accounts payable
                
                
                80,622
                
                
                
                24,017
                
                
                
                144,070Net
      Cash Used In Operating Activities
                
                
                (29,135
                )
                
                
                (73,598
                )
                
                
                (546,493
                )Cash
      Flows From Financing Activities:Proceeds
      from Notes Payable - Stockholder
                
                
                -
                
                
                
                -
                
                
                
                10,000Repayments
      of Notes Payable - Stockholder
                
                
                -
                
                
                
                -
                
                
                
                (10,000
                )Proceeds
      from issuance of common stock
                
                
                25,000
                
                
                
                -
                
                
                
                551,895Net
      Cash Provided by Financing Activities
                
                
                25,000
                
                
                
                -
                
                
                
                551,895Net
      Increase (Decrease) in Cash
                
                
                (4,135
                )
                
                
                (73,598
                )
                
                
                5,402Cash
      at Beginning of Period
                
                
                9,537
                
                
                
                105,818
                
                
                
                -Cash
      at End of Period
                
                $
                5,402
                
                
                $
                32,220
                
                
                $
                5,402Supplemental
      disclosure of cash flow information:Cash
      paid for interest
                
                $
                -
                
                
                $
                -
                
                
                $
                -Cash
      paid for taxes
                
                $
                -
                
                
                $
                -
                
                
                $
                -Supplemental
      disclosure of non-cash investing and financing activities:Shares
      issued in connection with stock dividend
                
                $
                8,245,850
                
                
                $
                -
                
                
                $
                8,245,850
  SUPPLEMENTAL
DISCLOSURE OF NON CASH ITEMS
  During
the period ended December 31, 2006, the principal stockholder contributed
11,666,500 shares of
common stock to the Company as an in kind contribution of stock.  The
shares were retired
by the Company.
  In
accordance with the May 2007 stock purchase agreement which contains an
anti-dilution clause which requires the Company to issue additional common
shares under the stock purchase agreement for any subsequent issuance at a price
below $.08 per share for a period of 12 months. The Company has issued
28,125,000 additional shares through September 2007 as a result of the
subsequent stock issuances  in the amount of $84,375
($0.003/share).
   See
accompanying notes to condensed unaudited financial statements
 4
  KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 AS
RESTATED NOTE 2
 AS
OF JUNE 30, 2009
 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.
 
 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.  The results for the interim period
are not necessarily indicative of the results to be expected for the
year.
 
 Activities
during the development stage include developing the business plan and raising
capital.
 
 (B) 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.
 
 (C) 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.
 
 (D) 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 June 30, 2009 and 2008, the Company does
not have any dilutive securities outstanding.
   5
  KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 AS
RESTATED NOTE 2
 AS
OF JUNE 30, 2009
 (E) 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.
 
 (F) 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.
 
 (G) 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.
 
 (H) Business
Segments
 
 The
Company operates in one segment and therefore segment information is not
presented.
   6
  KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 AS
RESTATED NOTE 2
 AS
OF JUNE 30, 2009
 
 (I) Recent Accounting
Pronouncements
 
 In May
2009, the FASB issued SFAS No. 165 “Subsequent Events” (“SFAS 165”). SFAS 165
establishes general standards of accounting for and disclosure of events that
occur after the balance sheet date but before financial statements are issued or
are available to be issued. SFAS 165 sets forth (1) The period after the balance
sheet date during which management of a reporting entity should evaluate events
or transactions that may occur for potential recognition or disclosure in the
financial statements, (2) The circumstances under which an entity should
recognize events or transactions occurring after the balance sheet date in its
financial statements and (3) The disclosures that an entity should make about
events or transactions that occurred after the balance sheet date. SFAS 165 is
effective for interim or annual financial periods ending after June 15, 2009.
The adoption of this statement did not have any effect on the financial
statements.
 
 In June
2009, the FASB issued SFAS No. 166 “Accounting for Transfers of Financial
Assets—an amendment of FASB Statement No. 140” (“SFAS 166”). SFAS 166 improves
the relevance, representational faithfulness, and comparability of the
information that a reporting entity provides in its financial statements about a
transfer of financial assets; the effects of a transfer on its financial
position, financial performance, and cash flows; and a transferor’s continuing
involvement, if any, in transferred financial assets. SFAS 166 is effective as
of the beginning of each reporting entity’s first annual reporting period that
begins after November 15, 2009, for interim periods within that first annual
reporting period and for interim and annual reporting periods thereafter. The
Company is evaluating the impact the adoption of SFAS 166 will have on its
financial statements.
 
 In June
2009, the FASB issued SFAS No. 167 “Amendments to FASB Interpretation No. 46(R)”
(“SFAS 167”). SFAS 167 improves financial reporting by enterprises involved with
variable interest entities and to address (1) the effects on certain provisions
of FASB Interpretation No. 46 (revised December 2003), “Consolidation of
Variable Interest Entities”, as a result of the elimination of the qualifying
special-purpose entity concept in SFAS 166 and (2) constituent concerns about
the application of certain key provisions of Interpretation 46(R), including
those in which the accounting and disclosures under the Interpretation do not
always provide timely and useful information about an enterprise’s involvement
in a variable interest entity. SFAS 167 is effective as of the beginning of each
reporting entity’s first annual reporting period that begins after November 15,
2009, for interim periods within that first annual reporting period, and for
interim and annual reporting periods thereafter. The Company is evaluating the
impact the adoption of SFAS 167 will have on its financial
statements.
 
 In June
2009, the FASB issued SFAS No. 168 “The FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principles—a replacement of
FASB Statement No. 162”. The FASB Accounting Standards Codification
(“Codification”) will be the single source of authoritative nongovernmental U.S.
generally accepted accounting principles. Rules and interpretive releases of the
SEC under authority of federal securities laws are also sources of authoritative
GAAP for SEC registrants. SFAS 168 is effective for interim and annual periods
ending after September 15, 2009. All existing accounting standards are
superseded as described in SFAS 168. All other accounting literature not
included in the Codification is nonauthoritative. The Codification is not
expected to have a significant impact on the Company’s financial
statements.
   7
  KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 AS
RESTATED NOTE 2
 AS
OF JUNE 30, 2009
 (J)
Reclassification
 
 The 2008
financial statements have been reclassified to conform to the 2009
presentation.
 
 NOTE
2      RESTATEMENT
 On
November 23, 2009, the Company determined that it had not properly accounted for
a derivative liability as required by SFAS 150.  As a result of these
adjustments, the Company was required to restate its financial statements and
amend its 10Q for the period ended June 30, 2009 with an increase in derivative
liabilities of $3,572,747 and an increase in derivative expense of
$3,572,747.
  The
following table sets forth the effects of the restatement to certain line items
within the Company's previously reported balance sheet:
 
 
 June
      30, 2009As
      PreviouslyReported
                  
                  
                  Adjustments
                  
                  
                  As
      RestatedDerivative
      Liability
                  
                  $
                  -
                  
                  
                  $
                  3,572,747
                  
                  
                  $
                  3,572,747Total
      Current Liabilities
                  
                  $
                  763,236
                  
                  
                  $
                  3,572,747
                  
                  
                  $
                  4,335,983Deficit
      Accumulated during the development stage
                  
                  $
                  (9,845,629
                  )
                  
                  $
                  (3,572,747
                  )
                  
                  $
                  (13,418,376
                  )Total
      Stockholder's Equity
                  
                  $
                  (749,669)
                  
                  
                  $
                  (3,572,747
                  )
                  
                  $
                  (4,322,416
                  )
  The
following table sets forth the effects of the restatement to certain line items
within the Company’s previously reported statement of
operations:
 For
      the Period fromFor
      the Three Months
                        
                        For
      the Six Months
                        
                        April
      25, 2006 (Inception)Ended
      June 30, 2009
                        
                        Ended
      June 30, 2009
                        
                        to
      June 30, 2009As
                        
                        
                        
                        
                        
                        As
                        
                        
                        
                        
                        
                        AsPreviously
                        
                        Adjustments
                        
                        As
                        
                        Previously
      Reported
                        
                        Adjustments
                        
                        As
      Restated
                        
                        Previously
      Reported
                        
                        Adjustments
                        
                        As
      RestatedReported
                        
                        RestatedDerivative
      Income/(Expense)
                        
                        $
                        -
                        
                        
                        $
                        (3,572,747
                        
                        
                        $
                        (3,572,747
                        )
                        
                        $
                        -
                        
                        
                        $
                        (3,572,747
                        )
                        
                        $
                        (3,572,747
                        )
                        
                        $
                        -
                        
                        
                        $
                        (3,572,747
                        )
                        
                        $
                        (3,572,747
                        )Net
      Loss before Income Taxes
                        
                        $
                        (148,933
                        )
                        
                        $
                        (3,572,747
                        )
                        
                        $
                        (3,721,680
                        )
                        
                        $
                        (236,368
                        )
                        
                        $
                        (3,572,747
                        )
                        
                        
                        (3,809,115
                        )
                        
                        $
                        (1,599,779
                        )
                        
                        $
                        (3,572,747
                        )
                        
                        
                        (5,172,526
                        )Provision
      for Income Taxes
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -Net
      Loss
                        
                        $
                        (148,933
                        )
                        
                        $
                        (3,572,747
                        )
                        
                        $
                        (3,721,680
                        )
                        
                        
                        (236,368
                        )
                        
                        $
                        (3,572,747
                        )
                        
                        $
                        (3,809,115
                        )
                        
                        
                        (1,599,779
                        )
                        
                        $
                        (3,572,747
                        )
                        
                        $
                        (5,172,526
                        )Net
      Loss Per Share - Basic and Diluted
                        
                        $
                        (0.00
                        )
                        
                        $
                        (0.01
                        )
                        
                        $
                        (0.01
                        )
                        
                        
                        (0.00
                        )
                        
                        $
                        (0.01
                        )
                        
                        $
                        (0.01
                        )
      
 
  KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 AS
RESTATED NOTE 2
 AS
OF JUNE 30, 2009
  
 NOTE  3      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 $ 4,322,416 and used $546,493 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.
 
 NOTE  4 STOCKHOLDERS’
DEFCIT
  (A) Common Stock Issued for
Cash
 
 On April
28, 2006, the Company issued 8,000 shares of common stock for cash of $400
($0.05 per share).
 
 On
January 8, 2007 the Company issued 1,750,000 shares of common stock for $15,000
($0.01/share).  This agreement was subsequently terminated effective
May 23, 2007.
 
 On
January 22, 2007 the Company issued 12,000,000 shares of common stock for
$103,000 ($0.01/share).   In addition, 9,000,000 shares were
issued for $3,000 ($0.0003/share).
 
 On April
4, 2007, the Company issued 1,875,000 shares of common stock for cash of $15,000
($0.01 per share).
 
 On April
20, 2007, the Company issued 1,875,000 shares of common stock for cash of
$15,000 ($0.01 per share).
   8
   KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 AS
RESTATED NOTE 2
 AS
OF JUNE 30, 2009
 On May
18, 2007, the Company issued 13,125,000 shares of common stock for cash of
$105,000 ($0.01 per share).
 
 On August
28, 2007 the Company entered into a stock purchase agreement to issue 80,495,000
shares common stock in the amount of $241,485 ($0.003/share).
 
 On August
29, 2007 the Company entered into a stock purchase agreement to issue 200,000
shares common stock in the amount of $600 ($0.003/share).
 
 On August
29, 2007 the Company entered into a stock purchase agreement to issue 8,300,000
shares common stock in the amount of $24,900 ($0.003/share).
 
 On
September 1, 2007 the Company entered into a stock purchase agreement to issue
25,000 shares common stock in the amount of $75 ($0.003/share).
 
 On
September 5, 2007 the Company entered into a stock purchase agreement to issue
120,000 shares common stock in the amount of $360 ($0.003/share).
 
 On
September 12, 2007 the Company entered into a stock purchase agreement to issue
1,025,000 shares common stock in the amount of $3,075
($0.003/share).
 
 In
accordance with the May 2007 stock purchase agreement which contains an
anti-dilution clause which requires the Company to issue additional common
shares under the stock purchase agreement for any subsequent issuance at a price
below $.08 per share for a period of 12 months, the Company has issued
28,125,000 additional shares through September 2007 as a result of the
subsequent stock issuances at $0.003/share.
 
 On April
24, 2009 the Company issued 2,000,000 shares of common stock for $20,000
($0.01/share).
 
 On May
22, 2009, the Company issued 500,000 shares of common stock for $5,000
($0.01/share).
 
 (B) Common Stock Issued for
Intellectual Property
 
 On April
26, 2006, the Company issued 332,292,000 shares of common stock to its founder
having a fair value of $180 ($0.000001/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.
   9
  KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 AS
RESTATED NOTE 2
 AS
OF JUNE 30, 2009
 (C) Common Stock Issued for
Services
 
 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 17,500,000 shares of
common stock upon execution of the agreement. The Company also received a
five-year call option from the license holder to repurchase 7,000,000 common
shares at an exercise price of $150,000 or $.02 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 June 30, 2009 the
value of the stock was $.02 per share.  However, the Company does not
have the obligation to repurchase the shares.
 
 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
700,000 shares of common stock upon execution.  These shares had a
fair value of $5,600 ($0.01/share) based upon the recent cash offering
price.  Additionally, 2,000,000 shares of common stock were issued on
May 18, 2007 with a fair value of $16,000 ($0.01/share).   As of
December 31, 2008, the Company issued 600,000 shares of common stock for
consulting services rendered with a fair value of $6,000
($0.01/share).  On January 15, 2008 the Company authorized the
issuance of 400,000 shares of common stock for consulting services rendered with
a fair value of $4,000 ($0.01/share).
 
 (D) Cancellation and
Retirement of Common Stock
 
 On
December 29, 2006, the Company’s founder returned 11,666,500 shares of common
stock to the Company.  These shares were cancelled and
retired.  Accordingly, the net effect on equity is $0.
 
 (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.
 
 (F)  Amendment to
Articles of Incorporation
 
 On
February 16, 2009, the Company amended its articles of incorporation to amend
the number and class of shares the Company is authorized to issue as
follows:
 
 ·
                      Common
      stock Class A, unlimited number of shares authorized, no par
      value
 ·
                      Common
      stock Class B, unlimited number of shares authorized, no par
      value
 ·
                      Preferred
      stock, unlimited number of shares authorized, no par
  value
   10
  KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 AS
RESTATED NOTE 2
 AS
OF JUNE 30, 2009
 (G) Stock Split
Effected in the Form of a Stock Dividend
 
 On March
23, 2009, the Company's Board of Directors declared a nine-for-one stock
dividend.  The stock split was distributed to shareholders of record
as of April 27, 2009.  A total of 449,773,650 shares of common stock
were issued.  All basic and diluted loss per share and average shares
outstanding information has been adjusted to reflect the aforementioned stock
dividend.
 
 NOTE  5      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 4 (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 FINANCIAL STATEMENTS
 AS
RESTATED NOTE 2
 AS
OF JUNE 30, 2009
 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 FINANCIAL STATEMENTS
 AS
RESTATED NOTE 2
 AS
OF JUNE 30, 2009
 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.
 
 On
October 10, 2008, the Company entered into an addendum to the employment
agreement whereby all unpaid back salary will accrue interest at 7% per
year.  At June 30, 2009, the Company recorded interest expense and
related accrued interest payable of $19,377.  In addition, the Company
granted the CEO the right to convert any accrued salary into Class “A” Common
Stock at either 1) The lowest price at which the Company’s Class “A” Common
Stock has traded over the preceding twelve month period, 2) At the lowest bid
price for the preceding thirty days, 3) The lowest price paid in cash for the
Class “A” Common Stock during the twelve months preceding the
conversion.  The conversion price is the lesser of options 1-3 or
$0.002.  As of June 30, 2009, no accrued salary has been converted to
Class “A” Common Stock.  As of June 30, 2009 the Company owes $443,625
in accrued salary (See Note 6 ).
   13
 
   KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 AS
RESTATED NOTE 2
 AS
OF JUNE 30, 2009
  (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. As of June 30, 2009, the Company has not made the
required payments and has accrued $45,602 under the
agreement   (See Note 4 (C))
  (C)Royalty and Research
Agreements
 
 On May 1,
2008 the Company entered into a five year consulting agreement for research and
development. Pursuant to the terms of the agreement, 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 $0.05
per share or the average of the closing price of the Company’s shares over the
five days preceding such stock issuance.  As of June 30, 2009 the
Company accrued $14,000 of accounts payable for the services
provided.  These services were paid in common stock on July 1, 2009
(see Note 7 ).
 
 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 June 30, 2009, 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 May 30, 2008 the officer
extended the due date to December 31, 2008.  On October 10, 2008, the
officer extended the due date to the earlier of (a) March 30, 2010 or (b) upon
demand by the officer.  Additionally, the accrued expenses are
accruing 7% interest per year.  At June 30, 2009, the Company recorded
interest expense and related accrued interest payable of $6,053.
 
 On
February 1, 2007 the Company entered into a consulting agreement for research
and development for period of one year at a cost of $150,000.  In April
2008, this agreement was extended through March 31, 2009 on a cost reimbursement
basis.  Reimbursements are to be made quarterly and are not to exceed
$35,000.  As of today, the Company is negotiating a new consulting
agreement.
  14
  KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 AS
RESTATED NOTE 2
 AS
OF JUNE 30, 2009
 
 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
700,000 shares of common stock upon execution.  These shares had a
fair value of $5,600 ($0.01/share) based upon the recent cash offering
price.  Additionally, 2,000,000 shares of common stock were issued on
May 18, 2007 with a fair value of $16,000 ($0.01/share).   As of
December 31, 2008, the Company issued 600,000 shares of common stock for
consulting services rendered with a fair value of $6,000
($0.01/share).  On January 15, 2008 the Company authorized the
issuance of 400,000 shares of common stock for consulting services rendered with
a fair value of $4,000 ($0.01/share).
  NOTE  6     RELATED PARTY
TRANSACTIONS
 
 On
October 6, 2006 the Company received $10,000 from a principal
stockholder.    Pursuant to the terms of the loan, the
advance bears interest at 12%, is unsecured and matures on May 1, 2007. At June
30, 2009, the Company recorded interest expense and related accrued interest
payable of $776.   As of June 30, 2009, the loan principle was
repaid.
 
 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 June 30, 2009, the Company has recorded $120,000 in
royalty agreement payable- related party.  On December 21, 2007 the
officer extended the due date to July 30, 2008.  On May 30, 2008 the
officer extended the due date to March 31, 2009.  On October 10, 2008,
the officer extended the due date to the earlier of (a) March 30, 2010 or (b)
upon demand by the officer.  Additionally, the accrued expenses are
accruing 7% interest per year.  At June 30, 2009, the Company recorded
interest expense and related accrued interest payable of $6,053 (See Note 5 (C).
 
 As of
June 30, 2009 the Company owes $443,625 in accrued salary to principal
stockholder.  On October 10, 2008, the Company entered into an
addendum to the employment agreement whereby all unpaid back salary will accrue
interest at 7% per year.  At June 30, 2009, the Company recorded
interest expense and related accrued interest payable of $19,377.  In
addition, the Company granted the CEO the right to convert any accrued salary
into Class “A” Common Stock at either 1) The lowest price at which the Company’s
Class “A” Common Stock has traded over the preceding twelve month period, 2) At
the lowest bid price for the preceding thirty days, 3) The lowest price paid in
cash for the Class “A” Common Stock during the twelve months preceding the
conversion.   The conversion price for all salary
accrued through March 1, 2009 is the lesser of options 1-3 or
$0.002.  The conversion price for all salary accrued from March 1,
2009 through June 30, 2009 is the lesser of options 1-3.  As of June
30, 2009, no accrued salary has been converted to Class “A” Common
Stock.  As of June 30, 2009 the Company has accrued a derivative
liability of $3,572,747 for the potential benefit of the convertible accrued
salary as per SFAS 150 (see Note 5).
   15
 
  KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 AS
RESTATED NOTE 2
 AS
OF JUNE 30, 2009
   NOTE  7     SUBSEQUENT
EVENTS
 
 In
preparing these financial statements, the Company has evaluated the events and
transactions for potential recognition or disclosure through August 15, 2009,
the date the financial statements were issued.
 
 On July
1, 2009, the issuance of 280,000 shares was approved by the board of directors
as repayment for services previously provided to the Company by a consultant
having a fair value of $14,000 ($0.05/share) in accordance with a consulting
agreement (see Note 4( C)).
 
 On July
1, 2009, the issuance of 482,825 shares was approved by the board of directors
as partial payment for services previously provided to the Company by a
consultant in accordance with a consulting agreement.  The total amount of
issuable shares for the consultant is 882,825 shares, which includes 400,000
issuable shares previously approved by the board of directors. (see Note  4 (C)).
 
 On July
17, 2009, the Company entered into an agreement with an investor group where the
Company will issue up to $120,000 in convertible units.  The
debentures will be in the face amount of $10,000 each, mature on December 31,
2010, bear interest at the rate of 5% simple interest per annum, payable at
maturity or convertible with the principal, and the principal and interest shall
be convertible at the option of the holder at a fixed price of $0.018 per
share.  Each debenture shall have a warrant attached exercisable for
the purchase of 500,000 shares of common stock.  The warrants shall
expire on December 31, 2011, have a cashless exercise provision, and be
exercisable at a fixed price of $0.02.  The agreement also requires
the investment group to purchase up to $1,000,000 of common stock monthly at the
lesser of $75,000 or 200% of the average daily volume multiplied by the average
of the daily closing prices for the ten days immediately preceding the exercise
date.  Each investment by the investment group is priced at the lowest
closing “bid” price of the common stock during the five days immediately before
the investment.  The term of the funding shall be the earlier of (a)
the drawing down of the entire $1,000,000 or (b) 24 months after the Effective
Date, July 17, 2011.  In addition, the Company is required to file and
maintain an effective registration statement covering the convertible units,
cannot issue more than 5% of its common stock outstanding without the investor
group’s consent and must maintain a contractual relationship with a public
relations firm. The Company has issued $90,000 of convertible debt to
date.
 
 On August
3, 2009, the Company entered into an agreement with a consultant to provide
investor relations services.  The Company issued 10,000,000 shares
with a fair value of $100,000 ($0.01/share) to a consultant for investor
relations to be provided over a term of six months through February 3,
2010.
   16
  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 up to $35,000 per quarter through March 2010 on
      collaborative research and development of high strength polymers at the
      University of Notre Dame. We believe that this research is essential to
      our product development. If our financing will allow, management will give
      strong consideration to accelerating the pace of spending on research and
      development within the University of Notre Dame’s laboratories. No fees
      have been accrued under these terms to date.»
                    We
      expect to spend approximately $13,700 on collaborative research and
      development of high strength polymers and spider silk protein at the
      University of Wyoming over the next twelve months. We believe that this
      research is important to our product development. This level of research
      spending at the university is also a requirement of our licensing
      agreement with the university. If our financing will allow, management
      will give strong consideration to accelerating the pace of spending on
      research and development within the University of Wyoming’s
      laboratories.»
                    We
      will actively consider pursuing collaborative research opportunities with
      other university laboratories in the area of high strength polymers. If
      our financing will allow, management will give strong consideration to
      increasing the depth of our research to include polymer production
      technologies that are closely related to our core
  research»
                    We
      will consider buying an established revenue producing company which is
      operating in the biotechnology arena, in order to broaden our financial
      base and increase our research and development capability. We expect to
      use a combination of stock and cash for any such
  purchase.»
                    We
      will also actively consider pursuing collaborative research opportunities
      with university laboratories in areas of research which overlap the
      company’s existing research and development. One such potential area for
      collaborative research which the company is considering is protein
      expression platforms. If our financing will allow, management will give
      strong consideration to increasing the breadth of our research to include
      protein expression platform
technologies.
 
 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.
   17
 
  Results
of Operations for the Three Months ended June 30, 2009.
  Revenue
for the three months ended June 30, 2009 was $0.  This compares to $0
in revenue for the preceding three months ended June 30, 2008.  No
sales are anticipated during the next twelve months as the company will remain
in the development stage.
 
 Operating
expenses for the three months ended June 30, 2009 were $138,685. This compares
to $92,458 in expenses during the three months ended June 30, 2008. Research and
development expenses for the three months ended June 30, 2009 were $51,963. This
compares to $5,261 spent on research and development during the three months
ended June 30, 2008. In addition, we had the following expenses during the three
months ended June 30, 2009: general and administrative $14,201, professional
fees $13,309, officer’s salary $55,084 and payroll taxes $4,398. This compares
to the same expenses during the three months ended June 30, 2008: general and
administrative $24,555, professional fees $6,819, officer’s salary $51,967 and
payroll taxes $3,856.
  Total
Other Income/(Expense) increased from $0 for the three months ending June 30,
2008 to $3,582,995.  This 100% increase is solely due to the
recognition of derivative expense for the three months ending June 30, 2009 for
the convertible accrued salary owed to the CEO.
 Results
of Operations for the Six Months ended June 30, 2009.
  Revenue
for the six months ended June 30, 2009 was $0.  This compares to $0 in
revenue for the preceding six months ended June 30, 2008.  No sales
are anticipated during the next twelve months as the company will remain in the
development stage.
 
 Operating
expenses for the six months ended June 30, 2009 were $218,176. This compares to
$204,845 in expenses during the six months ended June 30, 2008. Research and
development expenses for the six months ended June 30, 2009 were $57,908. This
compares to $21,186 spent on research and development during the six months
ended June 30, 2008. In addition, we had the following expenses during the six
months ended June 30, 2009: general and administrative $25,448, professional
fees $16,039, officer’s salary $110,169 and payroll taxes $8,612. This compares
to the same expenses during the six months ended June 30, 2008: general and
administrative $49,449, professional fees $22,446, officer’s salary $103,933 and
payroll taxes $7,831.
  Total
Other Income/(Expense) increased from $2,781 for the three months ending June
30, 2008 to ($3,590,939).  This increase is solely due to the
recognition of derivative expense for the three months ending June 30, 2009 for
the convertible accrued salary owed to the CEO.
 
 Capital
Resources and Liquidity
  As of
June 30, 2009 we had $5,402 in cash compared to $9,537 as of December 31,
2008.
  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.
 
 On March
23, 2009, the Company's Board of Directors declared a nine-for-one stock
dividend.  The stock dividend was distributed to shareholders of
record on April 27, 2009.  A total of 449,773,650 shares of
common stock were issued.  All basic and diluted loss per share and
average shares outstanding information has been adjusted to reflect the
aforementioned stock dividend.
 
 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.
  18
   Recent
Accounting Pronouncements
  In May
2009, the FASB issued SFAS No. 165 “Subsequent Events” (“SFAS 165”). SFAS 165
establishes general standards of accounting for and disclosure of events that
occur after the balance sheet date but before financial statements are issued or
are available to be issued. SFAS 165 sets forth (1) The period after the balance
sheet date during which management of a reporting entity should evaluate events
or transactions that may occur for potential recognition or disclosure in the
financial statements, (2) The circumstances under which an entity should
recognize events or transactions occurring after the balance sheet date in its
financial statements and (3) The disclosures that an entity should make about
events or transactions that occurred after the balance sheet date. SFAS 165 is
effective for interim or annual financial periods ending after June 15, 2009.
The adoption of this statement did not have any effect on the financial
statements.
  In June
2009, the FASB issued SFAS No. 166 “Accounting for Transfers of Financial
Assets—an amendment of FASB Statement No. 140” (“SFAS 166”). SFAS 166 improves
the relevance, representational faithfulness, and comparability of the
information that a reporting entity provides in its financial statements about a
transfer of financial assets; the effects of a transfer on its financial
position, financial performance, and cash flows; and a transferor’s continuing
involvement, if any, in transferred financial assets. SFAS 166 is effective as
of the beginning of each reporting entity’s first annual reporting period that
begins after November 15, 2009, for interim periods within that first annual
reporting period and for interim and annual reporting periods thereafter. The
Company is evaluating the impact the adoption of SFAS 166 will have on its
financial statements.
  In June
2009, the FASB issued SFAS No. 167 “Amendments to FASB Interpretation No. 46(R)”
(“SFAS 167”). SFAS 167 improves financial reporting by enterprises involved with
variable interest entities and to address (1) the effects on certain provisions
of FASB Interpretation No. 46 (revised December 2003), “Consolidation of
Variable Interest Entities”, as a result of the elimination of the qualifying
special-purpose entity concept in SFAS 166 and (2) constituent concerns about
the application of certain key provisions of Interpretation 46(R), including
those in which the accounting and disclosures under the Interpretation do not
always provide timely and useful information about an enterprise’s involvement
in a variable interest entity. SFAS 167 is effective as of the beginning of each
reporting entity’s first annual reporting period that begins after November 15,
2009, for interim periods within that first annual reporting period, and for
interim and annual reporting periods thereafter. The Company is evaluating the
impact the adoption of SFAS 167 will have on its financial
statements.
  In June
2009, the FASB issued SFAS No. 168 “The FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principles—a replacement of
FASB Statement No. 162”. The FASB Accounting Standards Codification
(“Codification”) will be the single source of authoritative nongovernmental U.S.
generally accepted accounting principles. Rules and interpretive releases of the
SEC under authority of federal securities laws are also sources of authoritative
GAAP for SEC registrants. SFAS 168 is effective for interim and annual periods
ending after September 15, 2009. All existing accounting standards are
superseded as described in SFAS 168. All other accounting literature not
included in the Codification is nonauthoritative. The Codification is not
expected to have a significant impact on the Company’s financial
statements.
 
 Off-Balance Sheet
Arrangements
  We do not
have any off-balance sheet arrangements, financings, or other relationships with
unconsolidated entities or other persons, also known as “special purpose
entities” (SPEs).
  Item
3. Quantitative and Qualitative Disclosures About Market Risk
 
 Not
required for Smaller Reporting Companies.
  Item
4T.  Controls and Procedures
 
 a)
  Evaluation of
Disclosure Controls. 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 Financial Officer (“CFO”) (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) under the Exchange Act) as of the end of the period covered by this
report. Based upon that evaluation, the Company’s CEO and CFO 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 CFO, as appropriate, to
allow timely decisions regarding required disclosure.
 
 (b)
  Changes in
internal control over financial reporting. There have been no changes in
our internal control over financial reporting that occurred during the last
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
 
  19
    PART
II - OTHER INFORMATION
  Item
1. Legal Proceedings.
  We are
currently not involved in any litigation that we believe could have a material
adverse effect on our financial condition or results of operations. There is no
action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the executive officers of our company or any of our
subsidiaries, threatened against or affecting our company, our common stock, any
of our subsidiaries or of our companies or our subsidiaries’ officers or
directors in their capacities as such, in which an adverse decision could have a
material adverse effect.
  Item
1A. Risk Factors.
  None.
 
 Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
  None.
 
 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.
 
  
 20
  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:
      November 23 , 2009
                    By:
                    /s/ Kim
      ThompsonKim
      Thompson
                      Chief
      Executive Officer
 
     
 21