----

----

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

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

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

----

----

----

| Item 1.  | Financial Statements                                                                        |   |   | 1  |   |
|----------|---------------------------------------------------------------------------------------------|--------|--------|----|--------|
| Item 2.  | Management’s Discussion and Analysis of Financial Condition and Results of Operations |   |   | 19 |   |
| Item 3   | Quantitative and Qualitative Disclosures About Market Risk                                  |   |   | 21 |   |
| Item 4T. | Control and Procedures                                                                      |   |   | 21 |   |

| Item 1  | Legal Proceedings                                           |   |   | 22 |   |
|---------|-------------------------------------------------------------|--------|--------|----|--------|
| Item 1A | Risk Factors                                                |   |   | 22 |   |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |   |   | 22 |   |
| Item 3. | Defaults Upon Senior Securities                             |   |   | 22 |   |
| Item 4. | Removed & Reserved                                      |   |   | 22 |   |
| Item 5. | Other Information                                           |   |   | 22 |   |
| Item 6. | Exhibits and Reports on Form 8-K                            |   |   | 22 |   |

----

| PAGE   | 2      | CONDENSED BALANCE SHEETS AS OF MARCH 31, 2010 (UNAUDITED) AND DECEMBER 31, 2009.                                                                                                        |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                    |
| PAGE   | 3      | CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (RESTATED) AND FOR THE PERIOD APRIL 25, 2006 (INCEPTION) TO MARCH 31, 2010 (UNAUDITED). |
|   |   |                                                                                                                                                                                    |
| PAGES  | 4      | CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT FOR THE PERIOD FROM APRIL 25, 2006 (INCEPTION) TO MARCH 31, 2010 (UNAUDITED)                                              |
|   |   |                                                                                                                                                                                    |
| PAGE   | 5      | CONDENSED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (RESTATED) AND FOR THE PERIOD APRIL 25, 2006 (INCEPTION) TO MARCH 31, 2010 (UNAUDITED)       |
|   |   |                                                                                                                                                                                    |
| PAGES  | 6 - 18 | NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)                                                                                                                                     |

----

| Kraig Biocraft Laboratories, Inc.                                                       |   |
|-----------------------------------------------------------------------------------------|--------|
| (A Development Stage Company)                                                           |   |
| Condensed Balance Sheets                                                                |   |
|                                                                                    |   |   |   |   |
|                                                                                    |   |   |   |   |
|                                                                                    |   |   |   |   |   |   |
| ASSETS                                                                                  |   |
|                                                                                    |   |   |   |   |   |   |
|                                                                                    |   | March 31, 2010 |   |   | December 31, 2009 |   |
|                                                                                    |   | (Unaudited) |   |   |   |   |
| Current Assets                                                                          |   |   |   |   |   |   |
|          Cash                                   |   | $ | 3,620 |   |   | $ | 24,570 |   |
|         Prepaid Expenses                             |   |   | 604 |   |   |   | 3,124 |   |
| Total Assets                                                                            |   | $ | 4,224 |   |   | $ | 27,694 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' DEFICIT                                                   |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| Current Liabilities                                                                     |   |   |   |   |   |   |   |   |
|     Accounts Payable                                                |   | $ | 109,885 |   |   | $ | 111,871 |   |
|     Loan Payable                                                    |   |   | 6,990 |   |   |   | - |   |
|     Royalty Agreement Payable - Related Party                       |   |   | 75,000 |   |   |   | 85,000 |   |
|     Accrued Expenses  - Related Party                     |   |   | 715,015 |   |   |   | 631,576 |   |
|     Derivative Liability – Related Party                      |   |   | 2,015,171 |   |   |   | 2,222,279 |   |
|     Derivative liability                                            |   |   | 121,872 |   |   |   | 124,345 |   |
| Total Current Liabilities                                                               |   |   | 3,043,933 |   |   |   | 3,175,071 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| Long Term Liabilities                                                                   |   |   |   |   |   |   |   |   |
|     Convertible Note Payable                                        |   |   | 18,521 |   |   |   | 27,400 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| Total Liabilities                                                                       |   |   | 3,062,454 |   |   |   | 3,202,471 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| Commitments and Contingencies                                                           |   |   |   |   |   |   |   |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| Stockholders' Deficit                                                                   |   |   |   |   |   |   |   |   |
|   Preferred stock, no par value; unlimited shares authorized,                 |   |   |   |   |   |   |   |   |
| none issued  and outstanding                                                  |   |   | - |   |   |   | - |   |
|   Common stock Class A,  no par value; unlimited shares authorized, |   |   |   |   |   |   |   |   |
| 518,689,550 and 502,495,099 shares issued and outstanding, respectively                 |   |   | 1,126,050 |   |   |   | 821,050 |   |
|   Common stock Class B,  no par value; unlimited shares authorized, |   |   |   |   |   |   |   |   |
| no shares issued and outstanding                                                        |   |   | - |   |   |   | - |   |
|   Common Stock Issuable, 1,122,311 and 11,122,311 shares, respectively        |   |   | 22,000 |   |   |   | 222,000 |   |
|   Additional paid-in capital                                                  |   |   | 42,060 |   |   |   | 42,060 |   |
|      Deferred Compensation                                     |   |   | (8,333) |   |   |   | (103,333) |   |
|   Deficit accumulated during the development stage                            |   |   | (4,240,007 | ) |   |   | (4,156,554 | ) |
|                                                                                    |   |   |   |   |   |   |   |   |
| Total Stockholders' Deficit                                                             |   |   | (3,058,230 | ) |   |   | (3,174,777 | ) |
|                                                                                    |   |   |   |   |   |   |   |   |
| Total Liabilities and Stockholders' Deficit                                             |   | $ | 4,224 |   |   | $ | 27,694 |   |

----

| Kraig Biocraft Laboratories, Inc.                     |   |
|-------------------------------------------------------|--------|
| (A Development Stage Company)                         |   |
| Condensed Statements of Operations                    |   |
| (Unaudited)                                           |   |
|                                                  |   |   |   |   |   |   |   |   |   |
|                                                  |   |   |   |   |   |   |   |   |   |
|                                                  |   |   |   |   |   |   |   |   |   |
|                                                  |   | For the Three Months Ended |   |   | For the Period from April 25, 2006(Inception) toMarch 31, 2010 |   |
|                                                  |   | March 31,2010 |   |   | March 31, |   |   |   |
|                                                  |   |   |   | 2009(Restated) |   |   |   |
|                                                  |   |   |   |   |   |   |   |   |   |
| Revenue                                               |   | $ | - |   |   | $ | - |   |   | $ | - |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating Expenses                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| General and Administrative                            |   |   | 18,143 |   |   |   | 15,461 |   |   |   | 200,390 |   |
| Public Relations                                      |   |   | 100,000 |   |   |   | - |   |   |   | 204,447 |   |
| Professional Fees                                     |   |   | 4,977 |   |   |   | 3,000 |   |   |   | 128,981 |   |
| Officer’s Salary                                |   |   | 58,390 |   |   |   | 55,085 |   |   |   | 951,226 |   |
| Contract Settlement                                   |   |   | - |   |   |   | - |   |   |   | 107,143 |   |
| Research and Development                              |   |   | 8,242 |   |   |   | 5,945 |   |   |   | 453,050 |   |
| Total Operating Expenses                              |   |   | 189,752 |   |   |   | 79,491 |   |   |   | 2,045,237 |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from Operations                                  |   |   | (189,752 | ) |   |   | (79,491 | ) |   |   | (2,045,237 | ) |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Income/(Expenses)                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income                                          |   |   | - |   |   |   | - |   |   |   | 2,781 |   |
| Amortization of Debt Discount                         |   |   | (91,121 | ) |   |   | - |   |   |   | (118,521 | ) |
| Change in fair value of embedded derivative liability |   |   | 209,581 |   |   |   | (4,141,712 | )  |   |   | (2,017,042 | )  |
| Interest expense                                      |   |   | (12,161 | ) |   |   | (7,944) |   |   |   | (61,988 | ) |
| Total Other Income/(Expenses)                         |   |   | 106,299 |   |   |   | (4,149,656 | )  |   |   | (2,194,770 | ) |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Loss before Provision for Income Taxes            |   |   | (83,453 | ) |   |   | (4,229,147 | ) |   |   | (4,240,007 | ) |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision for Income  Taxes                 |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Loss                                              |   | $ | (83,453 | ) |   | $ | (4,229,147 | ) |   | $ | (4,240,007 | ) |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Loss Per Share  - Basic and Diluted     |   | $ | (0.00 | ) |   | $ | (0.01 | ) |   |   |   |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of shares outstanding         |   |   |   |   |   |   |   |   |   |   |   |   |
|   during the period - Basic and Diluted     |   |   | 517,071,117 |   |   |   | 499,748,500 |   |   |   |   |   |

----

| Kraig Biocraft Laboratories, Inc.                                            |   |
|------------------------------------------------------------------------------|--------|
| (A Development Stage Company)                                                |   |
| Condensed Statement of Changes in Stockholders Deficit                       |   |
|   For the period from April 25, 2006 (inception) to March 31, 2010 |   |
| (Unaudited)                                                             |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Common Stock - |   |   |   |   |   |   |   |   | Deficit |   |   |   |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Class A Shares |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                                                                         |   | Preferred Stock |   |   | Common Stock - Class A |   |   | Common Stock - Class B |   |   | To be issued |   |   |   |   |   | Deffered |   |   | duringDevelopment   |   |   |   |   |
|                                                                         |   | Shares |   |   | Par |   |   | Shares |   |   | Par |   |   | Shares |   |   | Par |   |   | Shares |   |   | Par |   |   | APIC |   |   | Compensation |   |   | Stage |   |   | Total |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, April 25, 2006                                                      |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   | $ | - |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued to founder                                                      |   |   | - |   |   |   | - |   |   |   | 332,292,000 |   |   |   | 180 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 180 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for services ($.01/share)                                       |   |   | - |   |   |   | - |   |   |   | 17,500,000 |   |   |   | 140,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 140,000 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for services ($.01/share)                                       |   |   | - |   |   |   | - |   |   |   | 700,000 |   |   |   | 5,600 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5,600 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock contributed by shareholder                                             |   |   | - |   |   |   | - |   |   |   | (11,666,500 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for cash ($.05/share)                                           |   |   | - |   |   |   | - |   |   |   | 4,000 |   |   |   | 200 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 200 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for cash ($.05/share)                                           |   |   | - |   |   |   | - |   |   |   | 4,000 |   |   |   | 200 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 200 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair value of warrants issued                                                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 126,435 |   |   |   | - |   |   |   | - |   |   |   | 126,435 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Loss                                                                     |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (530,321 | ) |   |   | (530,321 | ) |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2006                                                   |   |   | - |   |   |   | - |   |   |   | 338,833,500 |   |   |   | 146,180 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 126,435 |   |   |   | - |   |   |   | (530,321 | ) |   |   | (257,706 | ) |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for cash ($.01/share)                                           |   |   | - |   |   |   | - |   |   |   | 1,750,000 |   |   |   | 15,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 15,000 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for cash ($.01/share)                                           |   |   | - |   |   |   | - |   |   |   | 12,000,000 |   |   |   | 103,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 103,000 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for cash ($.0003/share)                                         |   |   | - |   |   |   | - |   |   |   | 9,000,000 |   |   |   | 3,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,000 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for cash ($.01/share)                                           |   |   | - |   |   |   | - |   |   |   | 1,875,000 |   |   |   | 15,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 15,000 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for cash ($.01/share)                                           |   |   | - |   |   |   | - |   |   |   | 1,875,000 |   |   |   | 15,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 15,000 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| Stock issued for services ($.01/share)                                       |   |   | - |   |   |   | - |   |   |   | 2,000,000 |   |   |   | 16,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 16,000 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for cash ($.01/share)                                           |   |   | - |   |   |   | - |   |   |   | 13,125,000 |   |   |   | 105,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 105,000 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for cash ($.003/share)                                          |   |   | - |   |   |   | - |   |   |   | 80,495,000 |   |   |   | 241,485 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 241,485 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for cash ($.003/share)                                          |   |   | - |   |   |   | - |   |   |   | 200,000 |   |   |   | 600 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 600 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for cash ($.003/share)                                          |   |   | - |   |   |   | - |   |   |   | 8,300,000 |   |   |   | 24,900 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 24,900 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for cash ($.003/share)                                          |   |   | - |   |   |   | - |   |   |   | 25,000 |   |   |   | 75 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 75 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for cash ($.003/share)                                          |   |   | - |   |   |   | - |   |   |   | 120,000 |   |   |   | 360 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 360 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for cash ($.003/share)                                          |   |   | - |   |   |   | - |   |   |   | 1,025,000 |   |   |   | 3,075 |   |   |   |   |   |   |   | - |   |   |   |   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,075 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued in connection to cash offering                                  |   |   | - |   |   |   | - |   |   |   | 28,125,000 |   |   |   | 84,375 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (84,375 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for services ($.01/share)                                       |   |   | - |   |   |   | - |   |   |   | 600,000 |   |   |   | 6,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 6,000 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss, for the year ended December 31, 2007                               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (472,986 | ) |   |   | (472,986 | ) |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2007                                                   |   |   | - |   |   |   | - |   |   |   | 499,348,500 |   |   |   | 779,050 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 42,060 |   |   |   | - |   |   |   | (1,003,307 | ) |   |   | (182,197 | ) |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issuable for services ($.01/share)                                     |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 400,000 |   |   |   | 4,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4,000 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss, for the year ended December 31, 2008                               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,721,156 | ) |   |   | (1,721,156 | ) |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Balance, December 31, 2008 (Restated)                                  |   |   | - |   |   |   | - |   |   |   | 499,348,500 |   |   |   | 779,050 |   |   |   | - |   |   |   | - |   |   |   | 400,000 |   |   |   | 4,000 |   |   |   | 42,060 |   |   |   | - |   |   |   | (2,724,463 | ) |   |   | (1,899,353 | ) |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Stock issued for cash ($.01/share)                                     |   |   | - |   |   |   | - |   |   |   | 2,500,000 |   |   |   | 25,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 25,000 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Stock issued for cash ($.008/share)                                    |   |   | - |   |   |   | - |   |   |   | 366,599 |   |   |   | 3,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,000 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Stock issued for services                                              |   |   | - |   |   |   | - |   |   |   | 280,000 |   |   |   | 14,000 |   |   |   | - |   |   |   | - |   |   |   | 722,311 |   |   |   | 18,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 32,000 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Stock issued for services                                              |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 10,000,000 |   |   |   | 200,000 |   |   |   | - |   |   |   | (103,333 | ) |   |   | - |   |   |   | 96,667 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss for the year ended December 31, 2009                                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,432,091 | ) |   |   | (1,432,091 | ) |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2009 (Restated)                                        |   |   | - |   |   |   | - |   |   |   | 502,495,099 |   |   |   | 821,050 |   |   |   | - |   |   |   | - |   |   |   | 11,122,311 |   |   |   | 222,000 |   |   |   | 42,060 |   |   |   | (103,333 | ) |   |   | (4,156,554 | ) |   |   | (3,174,777 | ) |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for services                                                    |   |   | - |   |   |   | - |   |   |   | 500,000 |   |   |   | 5,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (5,000 | ) |   |   | - |   |   |   | - |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued in connection with convertible note conversion                  |   |   |   |   |   |   | - |   |   |   | 5,694,451 |   |   |   | 100,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 100,000 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued                                                                 |   |   |   |   |   |   |   |   |   |   | 10,000,000 |   |   |   | 200,000 |   |   |   | - |   |   |   | - |   |   |   | (10,000,000 | ) |   |   | (200,000 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deferred compensation realized                                               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 100,000 |   |   |   | - |   |   |   | 100,000 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss for the three months ended March 31, 2010                           |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (83,453 | ) |   |   | (83,453 | ) |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, March 31, 2010                                                      |   |   | - |   |   | $ | - |   |   |   | 518,689,550 |   |   | $ | 1,126,050 |   |   |   | - |   |   | $ | - |   |   |   | 1,122,311 |   |   | $ | 22,000 |   |   | $ | 42,060 |   |   | $ | (8,333 | ) |   | $ | (4,240,007 | ) |   | $ | (3,058,230 | ) |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Kraig Biocraft Laboratories, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                        |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| (A Development Stage Company)                                                                                                                                                                                                                                                                                                                                                                                                                            |   |
| Condensed Statements of Cash Flows                                                                                                                                                                                                                                                                                                                                                                                                                       |   |
| (Unaudited)                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | For the Three Months Ended March 31, |   |   | For the Period from April 25, 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   | (Inception) to |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 2010 |   |   | 2009 |   |   | March 31, 2010 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   | (Restated) |   |   |   |   |
| Cash Flows From Operating Activities:                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |
| Net Loss                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $ | (83,453 | ) |   | $ | (4,229,147 | ) |   | $ | (4,240,007 | ) |
|   Adjustments to reconcile net loss to net cash used in operations                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|       Stock issuable for services                                                                                                                                                                                                                                                                                                                                                                                          |   |   | - |   |   |   | - |   |   |   | 22,000 |   |
|       Change in Fair Value of Derivative Liability                                                                                                                                                                                                                                                                                                                                                                         |   |   | (209,581 | ) |   |   | 4,141,712 |   |   |   | 2,017,042 |   |
|       Stock issued for services                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 5,000 |   |   |   | - |   |   |   | 186,783 |   |
|       Amortization of debt discount                                                                                                                                                                                                                                                                                                                                                                                        |   |   | 91,121 |   |   |   | - |   |   |   | 118,520 |   |
|       Warrants issued to employees                                                                                                                                                                                                                                                                                                                                                                                         |   |   | - |   |   |   | - |   |   |   | 126,435 |   |
|       Deferred compensation realized                                                                                                                                                                                                                                                                                                                                                                                       |   |   | 95,000 |   |   |   | - |   |   |   | 191,666 |   |
|   Changes in operating assets and liabilities:                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|       (Increase)Decrease in prepaid expenses                                                                                                                                                                                                                                                                                                                                                                               |   |   | 2,520 |   |   |   | - |   |   |   | (604 | ) |
|       Increase in accrued expenses and other payables - related party                                                                                                                                                                                                                                                                                                                                                      |   |   | 73,421 |   |   |   | - |   |   |   | 704,997 |   |
|       (Decrease) Increase in royalty agreement payable - related party                                                                                                                                                                                                                                                                                                                                                     |   |   | (10,000 | ) |   |   | 67,244 |   |   |   | 75,000 |   |
|       Increase in accounts payable                                                                                                                                                                                                                                                                                                                                                                                         |   |   | 8,032 |   |   |   | 12,041 |   |   |   | 119,903 |   |
| Net Cash Used In Operating Activities                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   | (27,940 | ) |   |   | (8,150 | ) |   |   | (678,265 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash Flows From Financing Activities:                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from notes payable - Stockholder                                                                                                                                                                                                                                                                                                                                                                                                                |   |   | - |   |   |   | - |   |   |   | 10,000 |   |
| Repayments of notes payable - Stockholder                                                                                                                                                                                                                                                                                                                                                                                                                |   |   | - |   |   |   | - |   |   |   | (10,000 | ) |
| Proceeds from loan payable                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   | 6,990 |   |   |   | - |   |   |   | 6,990 |   |
| Proceeds from issuance of convertible note                                                                                                                                                                                                                                                                                                                                                                                                               |   |   | - |   |   |   | - |   |   |   | 120,000 |   |
| Proceeds from issuance of common stock                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   | - |   |   |   | - |   |   |   | 554,895 |   |
| Net Cash Provided by Financing Activities                                                                                                                                                                                                                                                                                                                                                                                                                |   |   | 6,990 |   |   |   | - |   |   |   | 681,885 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Increase (Decrease) in Cash                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   | (20,950 | ) |   |   | (8,150 | ) |   |   | 3,620 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash at Beginning of Period                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | 24,570 |   |   |   | 9,537 |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash at End of Period                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | $ | 3,620 |   |   | $ | 1,387 |   |   | $ | 3,620 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Supplemental 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 convertible note payable                                                                                                                                                                                                                                                                                                                                                                                                |   | $ | 100,000 |   |   | $ | - |   |   | $ | 100,000 |   |
| Beneficial conversion feature on convertible notes and related debt discount                                                                                                                                                                                                                                                                                                                                                                             |   | $ | 120,000 |   |   | $ | - |   |   | $ | 120,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURE OF NON CASH ITEMS                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| During the period ended December 31, 2006, the principal stockholder contributed 11,666,500 shares of common stock to the Company as an in kind contribution of stock. The shares were retired by the Company.                                                                                                                                                                                                                                      |   |
| In accordance with the May 2007 stock purchase agreement which contains an anti-dilution clause which requires the Company to issue additional common shares under the stock purchase agreement for any subsequent issuance at a price below $.08 per share for a period of 12 months. The Company has issued 28,125,000 additional shares through September 2007 as a result of the subsequent stock issuances in the amount of $84,375 ($0.003/share). |   |

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| NOTE 1 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION |
|--------|-------------------------------------------------------------|

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----

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

|                                                                          |   | Balance at March 31, 2010 |      |   | Quoted Prices in Active Markets for Identical Assets |   |   | Significant Other Observable Inputs |   |   | Significant Unobservable Inputs |   |
|-------------------------------------------------------------------------------|--------|---------------------------|-----------|--------|------------------------------------------------------|--------|--------|-------------------------------------|--------|--------|---------------------------------|--------|
| Liabilities                                                                   |   |                      |      |   | (Level 1)                                            |   |   | (Level 2)                           |   |   | (Level 3)                       |   |
|                                                                          |   |                      |      |   |                                                 |   |   |                                |   |   |                            |   |
| Fair value of liability for embedded conversion option derivative instruments |   | $                         | 2,137,043 |   |                                                 | $      |   |                                |   | $      |                            |   |   | $ | 2,137,043 |   |
|    Total Financial Liabilities                                 |   | $                         | 2,137,043 |   |                                                 | $      | -      |                                |   | $      | -                               |   |   | $ | 2,137,043 |   |

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

| NOTE 3 | CONVERTIBLE DEBT, DEBT DISCOUNT AND FAIR VALUE MEASUREMENT OF DERIVATIVE FINANCIAL INSTRUMENTS |
|--------|------------------------------------------------------------------------------------------------|

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| Table 1                 |   | Black Scholes Inputs for the Convertible Debt and Derivative Financial Instruments |    |
|-------------------------|--------|------------------------------------------------------------------------------------|---------|
| Warrants                |   |                                                                               |    |   |   |   |
|                    |   | As of December 31, 2009                                                       |    |   | As of March 31, 2010 |   |
| Expected Volatility     |   |                                                                               | 448.62% |   |   |   | 448.62% |   |
| Expected Term           |   | 2 years                                                                            |    |   | 1.75 years |   |
| Expected Dividends      |   |                                                                               | 0%      |   |   |   | 0% |   |
| Risk Free Interest Rate |   |                                                                               | 1.45%   |   |   |   | 1.02% |   |

|                        |   |                         |    |   |                           |   |
|-----------------------------|--------|------------------------------|---------|--------|--------------------------------|--------|
|                        |   | As of December 31, 2009 |    |   | As of March 31, 2010 |   |
| Embedded Conversion Options |   |                         |    |   |                           |   |   |   |
| Volatility                  |   |                         | 448.62% |   |                           |   | 448.62% |   |
| Expected Term               |   | 1 years                 |    |   | .75 years                      |   |
| Expected Dividends          |   |                         | 0%      |   |                           |   | 0% |   |
| Risk Free Interest Rate     |   |                         | 1.45%   |   |                           |   | 0.41% |   |

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|                                    |   | Conventional Debt |    |
|-----------------------------------------|--------|-------------------|---------|
| Conventional debt                       |   | $                 | 120,000 |   |
| Less: debt conversion                   |   | $                 | 100,000 |   |
| Less: debt discount                     |   | $                 | 1,479   |   |
| Conventional debt, net of debt discount |   | $                 | 18,521  |   |

| NOTE 4 | STOCKHOLDERS’ DEFICIT |
|--------|-----------------------------|

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| 2010 Warrants Outstanding |   |   | Options Exercisable                |   |
|---------------------------|--------|--------|------------------------------------|--------|
| Range of Exercise Price   |   |   | NumberOutstanding atMarch 31, 2010 |   |   | Weighted Average Remaining Contractual Life |   |   | Weighted Average Exercise Price |   |   | NumberExercisable atMarch 31, 2010 |   |   | Weighted Average Exercise Price |   |
| $                         | 0.02   |   |                               |   | 6,000,000 |   |   |   | 1.75 |   |   | $ | 0.02 |   |   |   | 6,000,000 |   |   | $ | 0.02 |   |
|                      |   |   |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| 2009 Warrants Outstanding |   |   | Options Exercisable                   |   |
|---------------------------|--------|--------|---------------------------------------|--------|
| Range of Exercise Price   |   |   | NumberOutstanding atDecember 31, 2009 |   |   | Weighted Average Remaining Contractual Life |   |   | Weighted Average Exercise Price |   |   | NumberExercisable atDecember 31, 2009 |   |   | Weighted Average Exercise Price |   |
| $                         | 0.02   |   |                                  |   | 6,000,000 |   |   |   | 2.00 |   |   | $ | 0.02 |   |   |   | 6,000,000 |   |   | $ | 0.02 |   |
|                      |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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

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

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

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| NOTE 5 | COMMITMENTS AND CONTINGENCIES |
|--------|-------------------------------|

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

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

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

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

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

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

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

----

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

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

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| Date                                            |   | Accrued Salary |    |      | Conversion Rate |   |   | Derivative Liability |   |
|-------------------------------------------------|--------|----------------|---------|-----------|-----------------|--------|--------|----------------------|--------|
|                                            |   |           |    |      |            |   |   |                 |   |
| 3/1/2009                                        |   | $              | 388,718 |      |            | $      | 0.002  |                 |   | $ | 1,846,411 |   |
|                                            |   |           |    |      |            |   |   |                 |   |   |   |   |
| 3/1/09-3/31/10                                  |   | $              | 271,317 |      |            | $      | 0.007  |                 |   | $ | 168,760 |   |
|                                            |   |           |    |      |            |   |   |                 |   |   |   |   |
|                                            |   |           |    |      |            |   |   |                 |   |   |   |   |
| Total Derivative Liability Less Accrued Salary: |   |           | $       | 2,015,171 |            |

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

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----

| NOTE 6 | RELATED PARTY TRANSACTIONS |
|--------|----------------------------|

| NOTE 7 | SUBSEQUENT EVENTS |
|--------|-------------------|

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| » | We expect to spend up to $35,000 per quarter through March 2011 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.                                                                                               |

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----

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

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|               | KRAIG BIOCRAFT LABORATORIES, INC. |
|--------------------|-----------------------------------|
|               |                              |
| Date: May 24, 2010 | By:                     | /s/ Kim Thompson |
|               |                              | Kim ThompsonChief Executive Officer |