UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
 _______________
  FORM
10-Q
 _______________
  x
                QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
  For
the quarterly period ended March 31, 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 No x
 
 State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of May 20, 2009:  501,748,500 shares of Common Stock.
   
  KRAIG
BIOCRAFT LABORATORIES, INC.
 
 FORM
10-Q
 March
31, 2009
 INDEX
  PART
I-- FINANCIAL INFORMATION
  Item
      1.
                Financial
      Statements
                1Item
      2.
                Management’s
      Discussion and Analysis of Financial Condition
                16Item
      3
                Quantitative
      and Qualitative Disclosures About Market Risk
                18Item
      4T.
                Control
      and Procedures
                18
  PART
II-- OTHER INFORMATION
  Item
      1
                Legal
      Proceedings
                19Item
      1A
                Risk
      Factors
                19Item
      2.
                Unregistered
      Sales of Equity Securities and Use of Proceeds
                19Item
      3.
                Defaults
      Upon Senior Securities
                19Item
      4.
                Submission
      of Matters to a Vote of Security Holders
                19Item
      5.
                Other
      Information
                19Item
      6.
                Exhibits
      and Reports on Form 8-K
                19
  SIGNATURE
   
  Item 1. Financial
Information
 
 Kraig
Biocraft Laboratories, Inc.
 (A
DEVELOPMENT STAGE COMPANY)
  
 CONTENTS
 
 PAGE
                1
                CONDENSED
      BALANCE SHEETS AS OF MARCH 31, 2009 (UNAUDITED) AND DECEMBER 31,
      2008.PAGE
                2
                CONDENSED
      STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND
      2008 AND FOR THE PERIOD APRIL 25, 2006 (INCEPTION) TO MARCH 31, 2009
      (UNAUDITED).PAGES
                3
                CONDENSED
      STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT FOR THE PERIOD FROM APRIL
      25, 2006 (INCEPTION) TO MARCH 31, 2009 (UNAUDITED).PAGE
                4
                CONDENSED
      STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND
      2008 AND FOR THE PERIOD APRIL 25, 2006 (INCEPTION) TO MARCH 31, 2009
      (UNAUDITED).PAGES
                5 -
      17
                NOTES
      TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
   
  Kraig
      Biocraft Laboratories, Inc.(A
      Development Stage Company)Balance
      SheetsASSETSMarch 31, 2009
                                          
                                          
                                          December 31, 2008(Unaudited)Current
      AssetsCash
                                          
                                          $
                                          1,387
                                          
                                          
                                          $
                                          9,537Prepaid Expenses
                                          
                                          
                                          603
                                          
                                          
                                          
                                          3,123Total
      Assets
                                          
                                          $
                                          1,990
                                          
                                          
                                          $
                                          12,660LIABILITIES AND STOCKHOLDERS'
      DEFICITCurrent
      LiabilitiesAccounts payable
                                          
                                          $
                                          75,271
                                          
                                          
                                          $
                                          65,750Payroll
      Tax Payable - related party
                                          
                                          
                                          21,148
                                          
                                          
                                          
                                          16,933Royality
      agreement payable - related party
                                          
                                          
                                          120,000
                                          
                                          
                                          
                                          120,000Accrued
      Expenses  - related party
                                          
                                          
                                          411,307
                                          
                                          
                                          
                                          348,278Total
      Current Liabilities
                                          
                                          
                                          627,726
                                          
                                          
                                          
                                          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,499,348,500
      and 499,348,500 shares issued and outstanding,
respectively
                                          
                                          
                                          9,024,900
                                          
                                          
                                          
                                          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
                                          
                                          
                                          (9,696,696
                                          )
                                          
                                          
                                          (1,363,411
                                          )Total
      Stockholders' Deficit
                                          
                                          
                                          (625,736
                                          )
                                          
                                          
                                          (538,301
                                          )Total
      Liabilities and Stockholders' Deficit
                                          
                                          $
                                          1,990
                                          
                                          
                                          $
                                          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 Period from April 25, 2006March
      31,
                            
                            
                            March
      31,
                            
                            
                            (Inception)
      to2009
                            
                            
                            2008
                            
                            
                            March
      31, 2009Revenue
                            
                            $
                            -
                            
                            
                            $
                            -
                            
                            
                            $
                            -Operating
      ExpensesGeneral
      and Administrative
                            
                            
                            11,247
                            
                            
                            
                            24,891
                            
                            
                            
                            133,950Professional
      Fees
                            
                            
                            3,000
                            
                            
                            
                            15,628
                            
                            
                            
                            83,825Officer's
      Salary
                            
                            
                            55,085
                            
                            
                            
                            51,967
                            
                            
                            
                            708,819Contract
      Settlement
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            107,143Payroll
      Taxes
                            
                            
                            4,214
                            
                            
                            
                            3,975
                            
                            
                            
                            22,978Research
      and Development
                            
                            
                            5,945
                            
                            
                            
                            15,925
                            
                            
                            
                            380,954Total
      Operating Expenses
                            
                            
                            79,491
                            
                            
                            
                            112,386
                            
                            
                            
                            1,437,669Loss
      from Operations
                            
                            
                            (79,491
                            )
                            
                            
                            (112,386
                            )
                            
                            
                            (1,437,669
                            )Other
      Income/(Expenses)Other
      income
                            
                            
                            -
                            
                            
                            
                            2,781
                            
                            
                            
                            2,781Interest
      expense
                            
                            
                            (7,944
                            )
                            
                            
                            -
                            
                            
                            
                            (15,958
                            )Other
      expense
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -Total
      Other Income/(Expenses)
                            
                            
                            (7,944
                            )
                            
                            
                            2,781
                            
                            
                            
                            (13,177
                            )Net
      Loss before Provision for Income Taxes
                            
                            
                            (87,435
                            )
                            
                            
                            (109,605
                            )
                            
                            
                            (1,450,846
                            )Provision
      for Income  Taxes
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -Net
      Loss
                            
                            $
                            (87,435
                            )
                            
                            $
                            (109,605
                            )
                            
                            $
                            (1,450,846
                            )Net
      Loss Per Share  - Basic and Diluted
                            
                            $
                            (0.00
                            )
                            
                            $
                            (0.00
                            )Weighted
      average number of shares outstandingduring
      the year/period - Basic and Diluted
                            
                            
                            499,748,500
                            
                            
                            
                            499,669,379
   See
accompanying notes to condensed unaudited financial statements
 -2-
  Kraig
      Biocraft Laboratories, Inc.(A
      Development Stage Company)Statement
      of Changes in Stockholders DeficitFor
      the period from April 25, 2006 (inception) to March 31,
      2009(Unaudited)Common
      Stock -
                                          
                                          
                                          
                                          
                                          
                                          DeficitAccumulatedCommon
      Stock
                                          
                                          
                                          Common
      Stock
                                          
                                          
                                          Class
      A Shares
                                          
                                          
                                          
                                          
                                          
                                          duringPreferred
      Stock
                                          
                                          
                                          Class
      A
                                          
                                          
                                          Class
      B
                                          
                                          
                                          To
      be issued
                                          
                                          
                                          
                                          
                                          
                                          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 c ash ($.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 in connection with stock dividend
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          8,245,850
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (8,245,850
                                          )
                                          
                                          
                                          -Net
      loss for the period ended March 31, 2009
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (87,435
                                          )
                                          
                                          
                                          (87,435
                                          )Balance,
      for the period ended March 31, 2009
                                          
                                          
                                          -
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          
                                          499,348,500
                                          
                                          
                                          $
                                          9,024,900
                                          
                                          
                                          
                                          -
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          
                                          400,000
                                          
                                          
                                          $
                                          4,000
                                          
                                          
                                          $
                                          42,060
                                          
                                          
                                          $
                                          (9,696,696
                                          )
                                          
                                          $
                                          (625,736
                                          )
   See
accompanying notes to condensed unaudited financial statements
 -3-
  Kraig
      Biocraft Laboratories, Inc.(A
      Development Stage Company)Statements of Cash Flows(Unaudited)For
      the Three Months Ended March 31,
                                          
                                          
                                          For
      the Period from April 25, 2006(Inception)
      to2009
                                          
                                          
                                          2008
                                          
                                          
                                          March
      31, 2009Cash
      Flows From Operating Activities:Net
      Loss
                                          
                                          $
                                          (87,435
                                          )
                                          
                                          $
                                          (109,605
                                          )
                                          
                                          $
                                          (1,450,846
                                          )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:(Increase)Decrease
      in prepaid expenses
                                          
                                          
                                          2,520
                                          
                                          
                                          
                                          12,050
                                          
                                          
                                          
                                          (603
                                          )Increase
      in accrued expenses and other payables
                                          
                                          
                                          67,244
                                          
                                          
                                          
                                          46,189
                                          
                                          
                                          
                                          432,455Increase
      in royality agreement payable - related party
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          120,000Increase
      in accounts payable
                                          
                                          
                                          9,521
                                          
                                          
                                          
                                          10,050
                                          
                                          
                                          
                                          75,271Net
      Cash Used In Operating Activities
                                          
                                          
                                          (8,150
                                          )
                                          
                                          
                                          (37,316
                                          )
                                          
                                          
                                          (525,508
                                          )Cash
      Flows From Financing Activities:Proceeds
      from Notes Payable - Stockholder
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          10,000Repayments
      of Notes Payable - Stockholder
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (10,000
                                          )Proceeds
      from issuance of common stock
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          526,895Net
      Cash Provided by Financing Activities
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          526,895Net
      Increase (Decrease) in Cash
                                          
                                          
                                          (8,150
                                          )
                                          
                                          
                                          (37,316
                                          )
                                          
                                          
                                          1,387Cash
      at Beginning of Period/Year
                                          
                                          
                                          9,537
                                          
                                          
                                          
                                          105,818
                                          
                                          
                                          
                                          -Cash
      at End of Period/Year
                                          
                                          $
                                          1,387
                                          
                                          
                                          $
                                          68,502
                                          
                                          
                                          $
                                          1,387Supplemental 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 ITEMSDuring
      the period ended December 31, 2006, the principal stockholder contributed
      11,666,500shares
      of common stock to the Company as an in kind contribution of
      stock.  The shares wereretired
      by the Company.In
      accordance with the May 2007 stock purchase agreement which contains an
      anti-dilution clause which requires the Company to issue additional common
      shares under the stock purchase agreement for any subsequent issuance at a
      price below $.08 per share for a period of 12 months. The Company has
      issued 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
OF MARCH 31, 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.”  The assumed conversion of debt to common stock
of 21,583,950 shares as of March 31, 2009 is not included in the computation of
diluted loss per share, as the effect is anti-dilutive. The Company did not have
convertible debt outstanding at March 31, 2008.
   -5-
 KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 AS
OF MARCH 31, 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
OF MARCH 31, 2009
 
 (I) Recent Accounting
Pronouncements
 
 In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.” SFAS No. 162 identifies the sources of accounting
principles and provides entities with a framework for selecting the principles
used in preparation of financial statements that are presented in conformity
with GAAP. The current GAAP hierarchy has been criticized because it is directed
to the auditor rather than the entity, it is complex, and it ranks FASB
Statements of Financial Accounting Concepts, which are subject to the same level
of due process as FASB Statements of Financial Accounting Standards, below
industry practices that are widely recognized as generally accepted but that are
not subject to due process. The Board believes the GAAP hierarchy should be
directed to entities because it is the entity (not its auditors) that is
responsible for selecting accounting principles for financial statements that
are presented in conformity with GAAP. The adoption of FASB 162 is not expected
to have a material impact on the Company’s financial position.
 
 (J)
Reclassification
 
 The 2008
financial statements have been reclassified to conform to the 2009
presentation.
 
 NOTE
2     GOING
CONCERN
 
 As
reflected in the accompanying unaudited financial statements, the Company is in
the development stage, has a working capital deficiency and stockholders
deficiency of $625,736 and used $525,508 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
3 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).
   -7-
 KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 AS
OF MARCH 31, 2009
 
 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).
 
 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.
 
 (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.
  -8-
  KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 AS
OF MARCH 31, 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 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 March 31, 2009 the
value of the stock was $.03 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 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.
   -9-
 KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 AS
OF MARCH 31, 2009
 (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
(See Note 6(A)):
 
 ·
                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
 
 (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 dividend will be distributed to all 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
4     COMMITMENTS AND
CONTINGENCIES
 
 (A) Employment
Agreement
 
 On April
26, 2006, the Company entered into a five-year employment agreement with the
Company’s Chairman and Chief Executive Officer. The agreement renews annually so
that at all times, the term of the agreement is five years.  Pursuant
to this agreement, the Company will pay an annual base salary of $185,000 for
the period May 1, 2006 through December 31, 2006.  Base pay will be
increased each January 1st, for
the subsequent twelve month periods by six percent.  The officer will
also be entitled to life, disability, health and dental
insurance.   In addition, the officer received 700,000 five year
warrants at an exercise price of $.21 per share, 1,500,000 eight year warrants
at an exercise price of $ .33 per share and 2,000,000 nine year warrants at an
exercise price of $ .40 per share (See Note 3(E)).  The warrants fully
vested on the date of grant.  The agreement also calls for the
issuance of warrants and increase in the officer’s base compensation upon the
Company reaching certain milestones:
 
 1.
                Upon
      the Company’s successful laboratory development of a new silk fiber
      composed of one or more proteins that are exogenous to a host, the Company
      will issue 500,000 eight year warrants at an exercise price of $.20 per
      share and raise executive’s base salary by
14%.
 
 2.
                Upon
      the Company’s successful laboratory development of a new silk fiber
      composed of two or more proteins that are exogenous to a host, the Company
      will issue 600,000 eight year warrants at an exercise price of $.18 per
      share and raise executive’s base salary by
15%.
   -10-
 KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 AS
OF MARCH 31, 2009
 
 3.
                Upon
      the Company’s successful laboratory development of a new silk fiber
      composed of at least in part of one or more synthetic proteins, the
      Company will issue 900,000 eight year warrants at an exercise price of
      $.18 per share and raise executive’s base salary by
  18%.
 
 4.
                Upon
      the Company’s successful laboratory development of a new silk fiber
      composed of at least in part of one or more proteins that are genetic
      modifications or induced mutations of a host silk protein, the Company
      will raise the executive’s base salary 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.
   -11-
  KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 AS
OF MARCH 31, 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 March 31, 2009, the Company recorded interest expense and
related accrued interest payable of $11,224.  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
$0.02.  As of March 31, 2009, no accrued salary has been converted to
Class “A” Common Stock.  As of March 31, 2009 the Company owes
$395,348 in accrued salary (See Note 5).
   -12-
 KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 AS
OF MARCH 31, 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 March 31, 2009, the Company has not made the
required payments and has accrued $28,752 under the
agreement   (See Note 3(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 March 31, 2009 the
Company accrued $11,000 of accounts payable for the services
provided.
 
 On
December 26, 2006, the Company entered into an addendum to the intellectual
property transfer agreement with an officer.  In consideration of the
Company issuing either 200,000 preferred shares with the following preferences;
no dividends and voting rights equal to 100 common shares per share of preferred
stock or the payment of $120,000, the officer agreed to terminate the royalty
payments due under the agreement and give title to the exclusive license for the
non protective apparel use of the intellectual property to the
Company.  On the date of the agreement, the Company did not have any
preferred stock authorized with the required preferences.  In
accordance with SFAS 150, the Company determined that the present value of the
payment of $120,000 that was due on December 26, 2007, the one year anniversary
of the addendum, should be recorded as an accrued expense until such time as the
Company has the ability to assert that it has preferred shares
authorized.  As of March 31, 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 March 31, 2009, the Company
recorded interest expense and related accrued interest payable of
$3,958.
 
 On
February 1, 2007 the Company entered into a consulting agreement for research
and development for period of one year.  As of March 31, 2009, all payments
under the consulting agreement totaling $150,000 were fully paid and
expensed.  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.
   -13-
 KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 AS
OF MARCH 31, 2009
 On
February 26, 2007 the Company entered into a five year consulting agreement for
research and development. Pursuant to the terms of the agreement, the Company
paid 2,000,000 shares of common stock upon execution.  These shares
had a fair value of $16,000 ($0.01/share) based upon the recent cash offering
price. Additionally, the Company will be required to pay $1,000 per month, or at
the Company’s option, the consulting fee may be paid in the form of Company
common stock based upon the greater of $0.01 per share or the average of the
closing price of the Company’s shares over the five days preceding such stock
issuance.  As of March 31, 2009 the Company issued an additional
1,000,000 shares of common stock for consulting services rendered with a fair
value of $10,000 ($0.01/share).  The agreement also requires the
Company to issue up to 4,500,000 additional shares to the consultant upon the
consultant reaching certain milestone events.  As of March 31, 2009,
the consultant has not reached the milestone events and no additional shares are
earned.
  NOTE
5     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 March
31, 2009, the Company recorded interest expense and related accrued interest
payable of $776.   As of March 31, 2009, the loan principle was
repaid.
  On
December 26, 2006, the Company entered into an addendum to the
intellectualproperty transfer agreement with an officer.  In
consideration of the Company issuingeither 200,000 preferred shares with the
following preferences; no dividends and voting rights equal to 100 common shares
per share of preferred stock or the payment of $120,000, the officer agreed to
terminate the royalty payments due under the agreement and give title to the
exclusive license for the non protective apparel use of the intellectual
property to the Company.  On the date of the agreement, the Company
did not have any preferred stock authorized with the required
preferences.  In accordance with SFAS 150, the Company determined that
the present value of the payment of $120,000 that was due on December 26, 2007,
the one year anniversary of the addendum, should be recorded as an accrued
expense until such time as the Company has the ability to assert that it has
preferred shares authorized.  As of March 31, 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 March 31, 2009, the Company recorded interest expense
and related accrued interest payable of $3,958 (See Note 4 (C).
   -14-
 KRAIG
BIOCRAFT LABORATORIES, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 AS
OF MARCH 31, 2009
 
 As of
March 31, 2009 the Company owes $395,348 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 March 31, 2009, the Company recorded
interest expense and related accrued interest payable of $11,224.  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
$0.02.  As of March 31, 2009, no accrued salary has been converted to
Class “A” Common Stock (See Note 4(A)).
 
 NOTE
6     SUBSEQUENT
EVENT
 
 (A) Stock Issued for
Cash
 
 On April
24, 2009 the Company issued 2,000,000 shares of common stock for $20,000
($0.01/share).


-15-
  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.
   -16-
 
 Results
of Operations for the Quarter ended March 31, 2009.
  Revenue
for the quarter ended March 31, 2009 was $0.  This compares to $0 in
revenue for the preceding quarter ended March 31, 2008.  No sales are
anticipated during the next twelve months as the company will remain in the
development stage.
 
 Operating
expenses for the quarter ended March 31, 2009 were $79,491. This compares to
$112,386 in expenses during the quarter ended March 31,
2008.  Research and development expenses for the quarter ended March
31, 2009 were $5,945.  This compares to $15,925 spent on research and
development during the quarter ended March 31, 2008.  In addition, we
had the following expenses during the quarter ended March 31, 2009: general and
administrative-$11,247, professional fees-$3,000, officer’s salary-$55,085 and
payroll taxes-$4,214.  This compares to the same expenses during the
quarter ended March 31, 2008: general and administrative-$24,891, professional
fees-$15,628, officer’s salary-$51,967 and payroll taxes-$3,975.
  Capital
Resources and Liquidity
  As of
March 31, 2009 we had $1,387 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.
  Recent
Accounting Pronouncements
 In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.” SFAS No. 162 identifies the sources of accounting
principles and provides entities with a framework for selecting the principles
used in preparation of financial statements that are presented in conformity
with GAAP. The current GAAP hierarchy has been criticized because it is directed
to the auditor rather than the entity, it is complex, and it ranks FASB
Statements of Financial Accounting Concepts, which are subject to the same level
of due process as FASB Statements of Financial Accounting Standards, below
industry practices that are widely recognized as generally accepted but that are
not subject to due process. The Board believes the GAAP hierarchy should be
directed to entities because it is the entity (not its auditors) that is
responsible for selecting accounting principles for financial statements that
are presented in conformity with GAAP. The adoption of FASB 162 is not expected
to have a material impact on the Company’s financial position.
  -17-
  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.
 
  -18-
    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.
 
  -19-
 
  SIGNATURES
  Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
  KRAIG
      BIOCRAFT LABORATORIES, INC.Date:
      May 20, 2009
                  By:
                  /s/Kim
      ThompsonKim
      Thompson
                    Chief
      Executive Officer