f424b32010_kraig.htm

Pursuant to Rule 424(b)(3)

File Number: 333-162316

PROSPECTUS

KRAIG BIOCRAFT LABORATORIES, INC.

63,600,000 shares of Class A Common Stock

This prospectus relates to the resale of up to 63,600,000 shares of the common stock of Kraig Biocraft Laboratories, Inc., a Wyoming corporation, which shares will be offered and sold by the selling shareholder, Calm Seas Capital, LLC, a Nevada limited liability company (“Calm Seas”), pursuant to a “put right” under a letter agreement for an Equity Line of Credit, that we entered into with Calm Seas on July 17, 2009 as amended on September 14, 2009 (the “Letter Agreement”). The Letter Agreement permits us to “put” up to an aggregate of one million dollars ($1,000,000) in shares of our Class A common stock to Calm Seas during a two year period ending on the second anniversary of the effective date of the registration statement in which this prospectus is contained. We will not receive any proceeds from the sale of these shares of our Class A common stock. However, we will receive proceeds from the sale of securities pursuant to our exercise of the put right offered by Clams Seas under the Letter Agreement. We will bear all costs associated with this registration.

Calm Seas is an “underwriter” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”) in connection with the resale of our Class A common stock sold to it by our exercise of the put right under the Letter Agreement. Each month we may put up to $75,000 of our Class A common stock to Calm Seas, which will purchase such shares at a price per share equal to 80% of the lowest closing bid price of our Class A common stock during the five consecutive trading days immediately following the date the notice of our election to put shares pursuant to the Letter Agreement is delivered to Clam Seas (the date of delivery of such notice is referred to as the “put date”). Notwithstanding the $75,000 ceiling for each monthly put, if both we and Calm Seas agree, we may submit one or more additional puts during any given month to the extent we need additional capital for our operations and/or our product development. We can only submit such additional put(s) if Calm Seas Capital agrees to it. Furthermore, the additional put is subject to the $1,000,000 limitation of this offering. The additional put allows us to obtain additional capital in the event that our product development proceeds quicker than we expect.

We will automatically withdraw our put notice to Calm Seas if the lowest closing bid price used to determine the purchase price of the put shares is not at least equal to seventy-five percent (75%) of the average closing “bid” price for our Class A common stock for the ten (10) trading days prior to the put date.

Our shares of Class A common stock are traded on the Over-the-Counter Bulletin Board (the “OTCBB”) under the symbol “KBLB”. On June 11, 2010, the closing sale price of our common stock was $0.011 per share.

This investment involves a high degree of risk. You should purchase shares only if you can afford a complete loss. See "Risk Factors" beginning on page 5.

Our principal executive offices are located at 120 N. Washington Square, Suite 805, Lansing, Michigan 48933. Our telephone number is (517) 336-0807.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The Date of This Prospectus Is: June 21, 2010

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TABLE OF CONTENTS

	PAGE
Prospectus Summary	2
Summary Financial Data	4
Risk Factors	6
Use of Proceeds	14
Selling Shareholders	16
Plan of Distribution	19
Description of Securities	20
Interests of Named Experts and Counsel	21
Description of Business	22
Description of Property	25
Legal Proceedings	25
Market For Common Equity and Related Stockholder Matters	26
Available Information	27
Financial Statements	F-1
Management Discussion and Analysis of Financial Condition and Results of Operations	28
Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	33
Directors, Executive Officers, Promoters and Control Persons	33
Executive Compensation	34
Security Ownership of Certain Beneficial Owners and Management	36
Certain Relationships and Related Transactions	36
Disclosure of Commission Position of Indemnification for Securities Act Liabilities	37

You should rely only on the information contained in this prospectus. We have not, and the selling security holder has not, authorized anyone to provide you with different information. If anyone provides you with different information, you should not rely on it. We are not, and the selling security holder is not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information contained in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date. In this prospectus, “Kraig”, “Kraig Biocraft” “KBLB”, “the Company”, “we”, “us” and “our” refer to Kraig Biocraft Laboratories, Inc., a Wyoming corporation, unless the context otherwise requires.

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PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements, before making an investment decision .

About Our Company

We are Kraig Biocraft Laboratories, Inc., a corporation organized under the laws of Wyoming on April 25, 2006. We were organized to develop high strength, protein-based fibers, using recombinant DNA technology, for commercial applications in both the specialty fiber and technical textile industries. Specialty fibers are engineered for specific uses that require exceptional strength, heat resistance and/or chemical resistance. The specialty fiber market is dominated by two synthetic fiber products: aramid fibers and ultra high molecular weight polyethylene fiber. Examples of these synthetic fibers include Kevlar® and Spectra®. The technical textile industry involves products for both industrial and consumer products, such as filtration fabrics, medical textiles (e.g., sutures and artificial ligaments), safety and protective clothing and fabrics used in military and aerospace applications (e.g., high-strength composite materials).

We have collaboration agreements with University of Notre Dame and the University of Wyoming that give us the exclusive use of certain intellectual property for developing transgenic silkworms to produce spider silk fibers in commercially viable quantities. We are using these genetic engineering technologies to develop fibers with greater strength, resiliency and flexibility for use in our target markets, namely the specialty fiber and technical textile industries. Our agreement with the University of Notre Dame has lapsed. However, we are finalizing the negotiation of a new agreement with Notre Dame which is on substantially the same terms as the agreement that has expired. This new agreement is currently going through the approval procedures at the University of Notre Dame. Based on the Emails from our contacts at Notre Dame and our past dealings with Notre Dame, we expect the new agreement with Notre Dame will be signed prior to January 31, 2010. If we were unable to renew our agreement with Notre Dame, we would work with a different university laboratory, such as the University of Wyoming. Michigan State University or the University of Michigan are also possible candidates. There would be some additional cost and loss of time if we had to restart our research with another university laboratory. We estimate that it would be an approximate six (6) month time loss and an additional research cost of $60,000 to $130,000 if we had to move the Notre Dame research operation to another university and use new laboratory personnel. Even if we do not renew our research agreement with the University of Notre Dame, we would be able to continue to license Notre Dame’s piggybac gene splicing technology under a separate, new licensing agreement at an estimated annual cost of $15,000. If we were unable to secure a license for Notre Dame’s gene splicing technology, we would have to switch to an alternative gene splicing technology, which would probably result in a loss of an additional 90 days. The cost of licensing such alternative gene splicing technology would be at a comparable cost as licensing Notre Dame’s piggybac gene splicing technology.

We are currently in the first stage of our development, which is to develop a transgenic silkworm that can produce a recombinant spider silk fiber by inserting genetic sequences into ordinary silkworms using patented genetic engineering technology under our license and collaboration agreements with the University of Norte Dame and the University of Wyoming. The proceeds from the offering, as described below, will be used to fund this first stage, which we expect to complete by October 1, 2011.

As of the date of this prospectus, we have not generated any revenues from our development activities. To date, we have generated an accumulated deficit of $ 4.15 million. As of December 31, 2009 we had $ 24,570 in cash (which are the remaining proceeds from a bridge financing that we closed prior to the initial filing of the registration statement in which this prospectus is contained). Our cash balance is not sufficient to advance our research and development obligations under our agreements with The Universities of Norte Dame and Wyoming. Both universities have indicated to us that they desire to continue their respective collaborative efforts with us, with the expectation that we will be able to raise capital under the Equity Line of Credit to fund our research and development efforts. We have also received a going concern opinion from our independent registered accounting firm in its audit report for our fiscal year ended December 31, 2009.

Approximately 95% of the proceeds from the equity line of credit will be used for expenses that are non-discretionary, such as employee salaries, the costs of our research and development obligations under the pending agreement with the University of Notre Dame, the costs related to our operation as a public company (primarily, legal and accounting fees) as well legal fees for securing our intellectual property, rent and telecommunications (phone, fax and Internet). Consequently, we believe that it is highly likely that we will use all $1,000,000 of the proceeds we expect to raise from the equity line of credit. We also expect to be able to raise the full $1,000,000 from the equity line of credit. We believe the results of our research and development efforts will help increase our stock price and, therefore, reduce the number of shares we will need to put to Calm Seas in order to raise the full $1,000,000 in gross proceeds we are seeking to raise under the equity line of credit. In the event that we do not have positive results from our research and development during the 24 month term of the equity line of credit, we believe it will be unlikely that we will raise the full $1,000,000 in gross proceeds under the equity line of credit. In the event that we raise substantially less than the maximum proceeds we expect to raise under the equity line of credit by the expiration of its 24 month term, we will seek to

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extend or renew the equity line of credit with Calm Seas Capital to raise the short-fall additional revenue on substantially the same terms as under the September 14, 2009 letter agreement. If Calm Seas Capital is unwilling or unable to enter into such an arrangement, we will be forced to raise additional capital from other investors. Alternatively, if our research yields some promising or positive results, we may seek a corporate partner in a joint venture or licensing arrangement in which we would seek to negotiation an upfront licensing fee and/or capital investment from such corporate partner. We have not yet identified any corporate partners for any such joint venture or licensing arrangement.

Recent Developments

On May 20, 2010, Kim Thompson, our President and Chief Executive Officer, concluded that our previously issued financial statements for the three month periods ended March 31, 2009, June 30, 2009, and September 30, 2009 and for the fiscal years ended December 31, 2008 and December 31, 2009 should no longer be relied upon because the Company did not (i) account for a derivative liability associated with the CEO’s employment agreement and/or (ii) reflect in its statement of operations and its cash flow statements any increase or decrease of the derivative liability associated with the CEO’s employment agreement from the prior period. Specifically, in October 2008 the CEO’s employment agreement was amended to give the CEO the option to convert his past due salary into shares of common stock at a variable rate based on the fair value of the stock. Our independent auditor, Webb & Company, P.A. was informed of the matters disclosed above. We filed a Current Report on Form 8-K to report this determination made by our President and Chief Executive Officer.

On May 28, 2010, we filed an Amendment No. 2 to our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2009, June 30, 2009 and September 30, 2009 and an Amendment No. 1 to our Annual Reports on Form 10-K for the years ended December 31, 2008 and 2009, in each case to restate the financials in such Quarterly and Annual Reports. In these amendments to our Quarterly and Annual Reports, we amended our financial statements and our Management’s Discussion and Analysis of Financial Condition to (i) account for a derivative liability associated with the CEO’s employment agreement and/or (ii) reflect in its statement of operations and its cash flow statements any increase or decrease of the derivative liability associated with the CEO’s employment agreement from the prior period.

Our operating expenses for the three months ended March 31, 2010 was $189,752. Such amount represented an increase of $110,261 from the same period in 2009. The increase in operating expenses was primarily the result of higher public relations fees and slightly higher research and development expense.

We had other income of $106,299 for the three months ended March 31, 2010 most of which was due to the decrease of $209,581 in the fair value of embedded derivative liability the convertible accrued salary owed to the CEO.

As of March 31, 2010 we had $3,620 in cash compared to $24,570 as of December 31, 2009.

Our operating expenses for the year ended December 31, 2009 was $497,307. Such amount represented an increase of $141,660 from the year ended December 31, 2008. The increase in operating expenses was primarily the result of higher public relations fees and higher research and development expense.

We had other expenses of $934,784 for the year ended December 31 , 2009 most of which was due to (i) interest expense of $41,814 and (ii) the recognition of the change in the fair value of embedded derivative liability of $861,227 for the convertible accrued salary owed to the CEO and embedded derivative liability on the convertible notes payable for the year ended December 31, 2009.

As of December 31, 2009 we had $ 24,570 in cash compared to $9,537 as of December 31, 2008.

On March 20, 2010, we renewed our agreement with the University of Notre Dame on substantially the same terms as the prior agreement. This renewed agreement has a term that ends February 28, 2011. For a description of the terms of our prior agreement with Notre Dame, see “Intellectual Property/Collaborative Research Agreement with Notre Dame University” on page 24.

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.

Where You Can Find Us

Our principal executive office location and mailing address is 120 N. Washington Square, Suite 805, Lansing, Michigan 48933. Our corporate telephone number is (517) 336-0807

The Offering

This prospectus relates to the resale of up to 63,600,000 shares of our Class A common stock that may be issued to Calm Seas pursuant to a “put right” under a letter agreement for an Equity Line of Credit, that we entered into with Calm Seas on July 17, 2009 as amended on September 14, 2009 (together, as amended, the “Letter Agreement”).

For the purpose of determining the number of shares of common stock to be offered by this prospectus, we have assumed that we will issue not more than 63,600,000 shares pursuant to the exercise of our put right under the Letter Agreement, although the number of shares that we will actually issue pursuant to that put right may be significantly less than 63,600,000, depending on the trading price of our Class A common stock.

The Letter Agreement with Calm Seas provides that over a 24 month period we may put to Calm Seas up to an aggregate of $1,000,000 in shares of our Class A common stock for a purchase price equal to 80% of the lowest closing “bid” price of our Class A common stock during the five consecutive trading days immediately following the date we deliver notice to Calm Seas of our election to put shares pursuant to the Letter Agreement. We may only put shares at the beginning of each calendar month, unless Calm Seas accepts an additional put (as described below). The dollar value that we will be permitted to put each month pursuant to the Letter Agreement will be the lesser of: (A) the product of (i) 200% of the average daily volume in the US market of our Class A common stock for the ten trading days prior to the date we deliver our put notice to Calm Seas multiplied by (ii) the average of the daily closing prices for the ten (10) trading days immediately preceding the date we deliver our put notice to Calm Seas, or (B) $75,000. We will automatically withdraw our put notice to Calm Seas if the lowest closing bid price used to determine the purchase price of the put shares is not at least equal to seventy-five percent (75%) of the average closing “bid” price for our Class A common stock for the ten (10) trading days prior to the date we deliver our put notice to Calm Seas.

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On the seventh business day after we deliver our put notice to it, Calm Seas will purchase the number of shares share set forth in the put notice at the dollar value set forth in the put notice by delivering such amount to us by wire transfer.

Notwithstanding the $75,000 ceiling for each monthly put, as described above, we may at any time request Calm Seas to purchase shares in excess of such ceiling, either as a part of a monthly put or as an additional put(s) during such month. If Calm Seas, in its sole discretion, accepts such request to purchase additional shares, then we may include the put for additional shares in our monthly put request or submit an additional put for such additional shares in accordance with the procedure set forth above.

Calm Seas has indicated that it will resell those shares in the open market, resell our shares to other investors through negotiated transactions, or hold our shares in its portfolio. This prospectus covers the resale of our stock by Calm Seas either in the open market or to other investors through negotiated transactions. Calm Seas’ obligations under the Letter Agreement are not transferrable and this registration statement does not cover sales of our common stock by transferees of Calm Seas.

Except as described above, there are no other conditions that must be met in order for Calm Seas to be obligated to purchase the shares set forth in the put notice.

The Letter Agreement will terminate when any of the following events occur:

·	Calm Seas has purchased an aggregate of $1,000,000 of our Class A common stock; or

·	The second anniversary of the effective date of the registration statement covering our equity line of credit with Calm Seas.

As we draw down on the Equity Line of Credit, shares of our Class A common stock will be sold into the market by Calm Seas. The sale of these additional shares could cause our stock price to decline. In turn, if the stock price declines and we issue more puts, more shares will come into the market, which could cause a further drop in the stock price. You should be aware that there is an inverse relationship between the market price of our Class A common stock and the number of shares to be issued under the Equity Line of Credit. If our stock price declines, we will be required to issue a greater number of shares under the Equity Line of Credit. We have no obligation to utilize the full amount available under the Equity Line of Credit.

Terms of the Offering

Class A common stock offered:	Up to 63,600,000 shares of Class A common stock, no par value, to be offered for resale by Calm Seas.

Class A common stock to be outstanding before this offering:	519,543,719 shares

Common stock to be outstanding after this offering:	583,143,719 shares

Use of proceeds:	We will not receive any proceeds from the sale of the shares of Class A common stock. However, we will receive proceeds from the Equity Line of Credit. See “Use of Proceeds”.

Risk factors:	An investment in our Class A common stock involves a high degree of risk. See “Risk Factors” beginning on page 5 of this prospectus.

OTC Bulletin Board symbol:	“KBLB”

SUMMARY FINANCIAL DATA

The following table provides summary financial statement data of Kraig Biocraft Laboratories, Inc. The financial data for the years ended December 31, 2009 and 2008 and the period of April 25, 2006 (date of inception) to December 31, 2009 have been derived from our audited financial statements. The financial data from the three month period ended March 31, 2010 has been derived from our unaudited financial statements. The data set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our financial statements and the related notes included in this prospectus

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		For the Three Months Ended March 31, 2010		For the Year Ended December 31, 2009			For the Year Ended December 31, 2008			From Inception through December 31, 2009
		(Unaudited)		(Audited)			(Audited)			(Audited)
				(Restated)				(Restated)		(Restated)
Net Sales	$	--		$	--		$	--		$	--

Total Operating Expenses	$	189,752		$	497,307		$	355,647		$	1,855,485

Loss from Operations	$	(189.752	)	$	(497,307	)		(355,647	)	$	(1,855,485	)

Net loss	$	(83,453	)	$	(1,432,091	)	$	(1,721,156	)	$	(4,156,554	)

Loss Per Share – Basic and Diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)

	As of March 31, 2010			As of December 31, 2009			As of December31, 2008
BALANCE SHEET DATA:	(Unaudited)			(Audited)			(Audited)
							(Restated)
Cash	$	3,620		$	24,570		$	9,537

Total assets	$	4,224		$	27,694		$	12,660

Total liabilities – related party	$	2,805,186		$	2,944,108		$	1,846,263

Total Current Liabilities	$	3,043,933		$	3,175,071		$	1,912,013

Total Liability	$	3,062,454		$	3,202,471		$	1,912,013

Stockholders’ Deficit	$	(3,058,230	)	$	(3,174,777	)	$	(1,899,353	)

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RISK FACTORS

An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus before investing in our common stock. If any of the following risks occur, our business, operating results and financial condition could be seriously harmed. Please note that throughout this prospectus, the words “we”, “our” or “us” refer to the Company and its subsidiary not to the selling stockholders.

Risk Related to Our Company

The report of the independent registered public accounting firm on our 2009 financial statements contains a going concern modification.

The report of the independent registered public accounting firm covering our financial statements for the years ended December 31, 2009 and December 31, 2008 stated that certain factors, including that we are a development stage company and we have a working capital and shareholder deficit, raise substantial doubt as to our ability to continue as a going concern.

We may be unable to maintain an effective system of internal controls and accurately report our financial results or prevent fraud, which may cause our current and potential stockholders to lose confidence in our financial reporting and adversely impact our business and our ability to raise additional funds in the future.

Effective internal controls are necessary for us to provide reliable financial statements and effectively prevent fraud. We have no internal accounting staff. As we noted in our annual report on Form 10-K for the year ended December 31, 2009, we reported that our internal control over financial reporting was not effective for the purposes for which it is intended because we had a material weaknesses: We did not have a system in place to ensure all of our consulting agreements are timely reconciled to the financial statements. Though we have taken some steps to we have taken steps to address our material weaknesses in our internal control over financial reporting, including education of management of disclosure requirements and financial reporting controls, we still have not eliminated the material weakness in our internal controls over financial reporting. If we cannot provide reliable financial statements or prevent fraud, our operating results and our reputation could be harmed as a result, causing stockholders and/or prospective investors to lose confidence in management and making it more difficult for us to raise additional capital in the future.

In our “Management's Annual Report on Internal Control Over Financial Reporting” that appeared in our annual report on Form 10-K for the year ended December 31, 2009, we reported that our internal control over financial reporting was not effective for the purposes for which it is intended based on the following material weaknesses:

-	We do not have a system in place to ensure all of our consulting agreements are timely reconciled to the financial statements.

We failed to properly account for the embedded derivative liability associated with the CEO’s employment agreement in our quarterly and annual reports. As reported in our most recent Annual Report we had taken the following remediation steps to help address our material weaknesses in our internal control over financial reporting:

	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;
	2.	We will increase management oversight of accounting and reporting functions in the future; and
	3.	We will hire personnel to handle our accounting and reporting functions.

We do not expect to remediate the weaknesses in our internal controls over financial reporting until January 2012, when we hope to commercialize a recombinant fiber (and, therefore, may have sufficient cash flow for hiring personnel to handle our accounting and reporting functions).

We currently do not have any patent rights in the products we are seeking to develop and we currently license the genetic sequences and genetic engineering technology we need to develop our products. If any third party challenges our claim to intellectual property rights in the fiber products we are seeking to develop or the intellectual property rights that we license, our business may be materially harmed

We have no patents or design patents on any of the fiber products we are seeking to develop. It is possible that the fiber products we are seeking to develop could be imitated or directly manufactured and sold by a competitor. In addition, some or all of our research, development ideas and proposed products may be covered by patent rights held by some other entity. In that event, we could incur devastating liability and be forced to cease operations.

We have entered into an intellectual property licensing agreement with Notre Dame and the University of Wyoming. Pursuant to these licensing agreements, we have obtained certain exclusive rights to use intellectual property and genetic sequences owned by these universities. However, we have no guarantee of the viability of these intellectual property rights or the rights that we have licensed do not infringe on the legal rights of third parties. The intellectual property rights that we have licensed could be challenged or voided or that the licensed intellectual property is worthless and without utility. We may also need to license

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additional intellectual property from persons or entities in order to successfully complete our research and development, and we cannot be certain that we would be able to enter into a license agreement with such persons or entities. In which event our operations will be adversely affected and our prospects negatively affected. Our agreement with the University of Notre Dame was renewed on March 20, 2010 on substantially the same terms as the prior agreement.

Existing stockholders could experience substantial dilution upon the issuance of Class A common stock pursuant to an equity line we have with Calm Seas Capital.

Under our the equity line of credit set forth in the Letter Agreement with Calm Seas Capital, we may put up to $75,000 of our Class A common stock to Calm Seas per month. Notwithstanding the $75,000 ceiling for each monthly put, if both we and Calm Seas agree, we may submit one or more additional puts during any given month to the extent we need additional capital for our operations and/or our product development. When we exercise our put Calm Seas will purchase such shares at a price per share equal to 80% of the lowest closing bid price of our Class A common stock during the five consecutive trading days immediately following the put date (as defined on page 2 of this prospectus). Our equity line with Calm Seas Capital contemplates our future possible issuance of up to an aggregate 63,600,000 shares of our Class A common stock as a result of this registration statement, subject to certain restrictions. Currently, we believe it is likely we will need to draw the full amount available under this equity line prior to the expiration of the equity line. If the terms and conditions of the equity line are satisfied, and we choose to exercise our put rights to the fullest extent permitted and sell all of the 63,600,000 shares of our common stock to Calm Seas Capital, the ownership by our existing non-affiliate stockholders will be diluted by approximately 33% based on 198,064,050 shares of Class A common stock held by non-affiliates on March 29, 2010. Additionally, if we are unable to raise $1,000,000 in proceeds from the sale of the entire 63,600,000 shares to Calm Seas Capital under the equity line of credit, we will seek to extend or renew the equity line of credit with Calm Seas Capital to raise the short-fall additional revenue on substantially the same terms as under the September 14, 2009 letter agreement. If Calm Seas Capital is unwilling or unable to enter into such an arrangement, we will be forced to raise additional capital from other investors. In either such cases, we expect that we would have to issue a significant number of additional shares that would further dilute existing shareholders.

We may not successfully manage any growth that we may experience.

Our future success will depend upon not only product development but also on the expansion of our operations and the effective management of any such growth, which will place a significant strain on our management and on our administrative, operational, and financial resources. To manage any such growth, we must expand our facilities, augment our operational, financial and management systems, and hire and train additional qualified personnel. If we are unable to manage our growth effectively, our business would be harmed as our growth could be adversely affected by such mismanagement.

Our initial development of recombinant silk fiber from the transgenic silkworm and other product development programs depend upon third-party researchers who are outside our control.

We depend upon independent researchers and collaborators, such as universities and their staff, to conduct our development of a transgenic silkworm and recombinant silk polymers, such as spider silk. Such researchers and collaborators perform services under agreements with us. Such agreements are often standard-form agreements typically not subject to extensive negotiation. These researchers or collaborators are not our employees, and in general we cannot control the amount or timing of resources that they devote to our product development programs. These researchers and collaborators may not assign as great a priority to our programs or pursue them as diligently as we would if we were undertaking such programs ourselves. If outside collaborators fail to devote sufficient time and resources to our transgenic silkworm development and our product development programs, or if their performance is substandard, our introduction of protein based fiber products will be delayed or may not result at all. These researchers and collaborators may also have relationships with other commercial entities, some of whom may compete with us.

If conflicts arise with our collaborators, they may act in their self-interests, which may be adverse to our interests.

Conflicts may arise in our collaborations we have entered into or may enter into due to one or more of the following:

·	disputes with respect to payments that we believe are due under a collaboration agreement;

·	disagreements with respect to ownership of intellectual property rights;

·	unwillingness on the part of a collaborator to keep us informed regarding the progress of its development and commercialization activities, or to permit public disclosure of these activities;

·	delay of a collaborator’s development or commercialization efforts with respect to our product development; or

·	termination or non-renewal of the collaboration.

In addition, in our collaborations, we may be required to agree not to conduct independently, or with any third party, any research that is competitive with the research conducted under our collaborations. Our collaborations may have the effect of limiting the areas of research that we may pursue, either alone or with others. Our collaborators, however, may be able to develop, either alone or with others, products in related fields that are competitive with the products or potential products that are the subject of these collaborations.

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If we lose the services of key management personnel, we may not be able to execute our business strategy effectively.

Our future success depends in a large part upon the continued service of our founder and sole officer and director, Kim Thompson. Mr. Thompson is critical to our overall management as well as the development of our technology, our culture and our strategic direction. We do not maintain a key-person life insurance policy on Mr. Thompson. The loss of Mr. Thompson would materially harm our business.

As our business grows, we will need to hire highly skilled personnel and, if we are unable to retain or motivate hire additional qualified personnel, we may not be able to grow effectively.

Our performance will be largely dependent on the talents and efforts of highly skilled individuals. Our future success depends on our continuing ability to identify, hire, develop, motivate, and retain highly skilled personnel for all areas of our company. Despite the current economic conditions, competition in our industry for qualified employees remains intense as the skills we require in our employees are highly specialized. We compete with companies in the biotechnology and pharmaceutical industries that seek to retain scientists with genetic engineering experience and expertise. Competition for qualified individuals remains intense despite the current economic conditions, which have somewhat softened demand for qualified personnel. However, we expect that over the longer term we will continue to face stiff competition and may not be able to successfully recruit or retain such personnel. Attracting and retaining qualified personnel will be critical to our success.

If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to sell and market any products we may develop, we may not be able to generate product revenue.

We do not currently have an organization for the sales, marketing and distribution of any fiber products that we expect to develop. In order to market any products that may be develop, we must build our sales, marketing, managerial and other non-technical capabilities or make arrangements with third parties to perform these services. In addition, we have no experience in developing, training or managing a sales force and will incur substantial additional expenses in doing so. The cost of establishing and maintaining a sales force may exceed its cost effectiveness. Furthermore, we will compete with many companies that currently have extensive and well-funded marketing and sales operations. Our marketing and sales efforts may be unable to compete successfully against these companies. If we are unable to establish adequate sales, marketing and distribution capabilities, whether independently or with third parties, we may not be able to generate product revenue and may not become profitable.

We are a development stage company, and we may be unable to generate significant revenues and may never become profitable.

We are a development stage company that has not generated any revenues to date. We expect to incur significant research and development costs for the foreseeable future. We may not be able to successfully achieve a transgenic silkworm and/or successfully market fiber products we produce in the future that will generate significant revenues. In addition, any revenues that we may generate may be insufficient for us to become profitable.

In particular, potential investors should be aware that we have not proven that we can:

·	raise sufficient additional capital in the public and/or private markets to continue the development of the transgenic silkworm, demonstrate the ability to produce commercial volumes of recombinant silk fibers or product effective polymer fibers using such recombinant silk fibers;

·	develop and manufacture specialty fibers achieve market acceptance;

·	develop and maintain relationships with key vendors that will be necessary to optimize the market value of the fibers we develop;

·	maintain relationships with strategic partners that will be necessary to manufacture the fibers we develop or develop relationships with potential strategic partners which may license or distribute fiber products that we develop;

·	respond effectively to competitive pressures; or

·	recruit and build a management team to accomplish our business plan.

If we are unable to accomplish these goals, our business is unlikely to succeed.

As a result of our limited operating history, we may not be able to correctly estimate our future operating expenses, which could lead to cash shortfalls.

We have a limited operating history from which to evaluate our business. We have not generated any revenues to date, and we have not produced a transgenic silkworm nor have we demonstrated the viability of our technology. Our failure to develop a transgenic silkworm would have a material adverse effect on our ability to continue operating. Accordingly, our prospects must be considered in light of the risks, expenses, and difficulties frequently encountered by companies in an early stage of development. We may not be successful in addressing such risks, and the failure to do so could have a material adverse effect on our business, operating results and financial condition.

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Because of this limited operating history and because of the emerging nature of our fiber product we are seeking to develop, our historical financial data is of limited value in estimating future operating expenses. Our budgeted expense levels are based in part on our expectations concerning future revenues. However, our ability to generate any revenues depends largely on our ability to (i) develop a transgenic silkworm and (ii) create polymer fibers from the silk created by such transgenic silkworms. Moreover, even if we successfully develop a transgenic silkworm and polymer fibers from recombinant silk fibers, the size of any future revenues depends on the market acceptance of such fibers we develop, which is difficult to forecast accurately.

Our operating results may fluctuate as a result of a number of factors, many of which are outside of our control. For these reasons, comparing our operating results on a period-to-period basis may not be meaningful, and you should not rely on our past results as any indication of our future performance. Our quarterly and annual expenses are likely to increase substantially over the next several years depending upon the level of fiber development activities. Our operating results in future quarters may fall below expectations. Any of these events could adversely impact our business prospects and make it more difficult to raise additional equity capital at an acceptable price per share.

We have limited intellectual property protection in overseas markets, which could affect our ability to grow our markets and increase our revenue.

The intellectual property that we licensed from Notre Dame and the University of Wyoming is covered by a series of US patents and US patent applications with limited or no international patent protection. Overseas competitors could be using the same technology that we have licensed, which would affect our ability to expand our markets beyond the United States. We are aware that laboratories and potential competitors overseas are using the “piggyback” gene splicing technology for the genetic modification of silkworm. Such limited overseas intellectual property could affect our ability to introduce fiber products in overseas markets or effectively compete in such markets.

The patents underlying our license agreements could expire prior to our commercializing our specialty fibers, which would result in the loss of our competitive edge and could negatively impact our revenues and results of operations.

The patent rights that we license could expire before we are ready to market or commercialize any fiber product, or while we are still in research and development of proposed products. In which event the patents would be worthless and would not protect us from potential competitors who would then have low barriers to entry and who would be in a position to compete more effectively with us.

Our license agreements restrict us from developing products for certain markets.

Some, but not all, of the gene sequences that we have licensed from Notre Dame and the University of Wyoming are covered by restrictions in the licensing agreement which preclude their use by us for sporting goods and medical applications.

We have not registered any trademark rights for products we are seeking to develop and we therefore have to rely on common law trademark protection until we register our trademark.

Our research, proposed products, product names, labels, signage and advertising material, are not protected by any registered trademark rights or may be subject to an expired trademark registration. We could be forced by litigation, or threat of litigation, to abandon our product names, labels, signage, advertising material, and even our research. In such event we could incur substantial material expense, and could lose the value of marketing and promotional work and our research performed up to that date. These losses would be in addition to the loss resulting from the payment of an award of damages to the party instituting or threatening litigation. Such additional expenses could have an adverse effect on the results of our operations, which could negatively affect our stock price.

Our management has no previous experience in developing, marketing or selling recombinant fiber which may have a negative effect on our ability to develop or sell our products.

We are recently formed corporation. Our current management has no previous experience in developing, marketing or selling recombinant fiber and the other products that we intend to develop and market. Additionally, our current management has no experience in the business of scientific research and development, which is critical to our success. The inexperience of our management may negatively affect our ability to succeed in developing, marketing and/or distributing our proposed products.

We are unprepared for technological changes in our industry, which could result in our products being obsolete or replaced by better technology.

The industry in which we participate is subject to rapid business and technological changes. The business, technology, marketing, legal and regulatory changes that could occur may have a material adverse impact on us. New inventions and product innovations may make our proposed products obsolete. Other researches may develop and patent technologies which make our line of research obsolete. We may not have the financial or technical ability to keep up with its competitors.

Our business is based on unproven scientific research and makes our business highly risky.

We are engaging in research and development of new recombinant silk fibers. Due to the speculative nature of this scientific research, our chances of success are speculative and we cannot be certain that we will succeed in developing new fibers or that our use of novel transgenic methods will be successful. An investment in us, therefore, is highly speculative and risky.

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The fibers we develop could expose us to product liability claims and government regulation, which could have a negative impact on our results of operations.

The fibers we are seeking to develop may subject us to product liability claims if widely used, including but not limited to design defect, environmental hazards, quality control, and durability of product. This potential liability is increased by virtue of the fact that our products in development may be used as protective and safety materials. There is tremendous potential liability to any person who is injured by, or while using, one of our products. As a manufacturer, we may be strictly liable for any damage caused by our products. This liability might not be covered by insurance, or may exceed any coverage that we may obtain.

Additionally, our products, if successfully developed, will be produced by means of genetic engineering. These transgenic methods may carry inherent environmental risks and the production of the products may therefore also be heavily regulated by the government. We may face changes in governmental regulation polices and practices which could have a significant adverse effect on us and our ability to develop, produce and market any products.

Our operations would be negatively affected by any dispute with our partner Universities or by labor unrest (such as disputes, strikes or lockouts) between such Universities and its academic staff.

We have signed intellectual property, sponsored research and collaborative research agreements with one or more universities. The continued cooperation of university(s), as well as the cooperation of other institutions and or universities is essential for our success of the Company. In the event of a material dispute with the university(s), such a dispute could create a cessation of operations for a period of time that could be detrimental to our operations and survival. Additionally, in the event of a material dispute between such universities and its employees could create a cessation of operations for period of time that could be detrimental to our product development.

Unforeseen circumstances may require us to use the proceeds from the Equity Line of Credit in a manner not set forth in the Use of Proceeds section of this prospectus.

We have disclosed an itemized Use of Proceeds, and thus, we have disclosed how our management intends to administer the proceeds from the equity line of credit. Management does intend to use the proceeds from this offering, in part, to pay off some of unpaid salary we owe to our Chief Executive Officer (which we have accounted for as an accrued expense and which amount bears interest at the rate of seven percent per annum and is due on demand by our Chief Executive Officer) and accounts payable, including contractual obligations associated with this offering. However, results of our research and development may not go as we hope and we may have to conduct further research and development that we currently do not expect that we will have to do. In such event,, the funds used for these purposes will require us to raise additional capital.

Our competitors are larger competitors with greater financial resources than we have and we may face increased competition due to the low barriers of entry to our industry.

We compete directly with numerous other companies with similar product lines and/or distribution that have extensive capital, resources, market share, and brand recognition. There are few barriers to entry on the industry in which we compete. This creates the strong possibility of new competitors emerging, and of others succeeding in developing the same or similar fibers that we are trying to develop. The effects of this increased competition may be materially adverse to us and our stockholders.

We may face various governmental regulation, which could increase our costs and lower our future profitability.

Governmental regulation regarding import/export, taxes, transgenic, scientific research and university based research, biological research; transgenic product manufacture and distribution, environmental regulation and packaging requirements may be adverse to our operations, research and development, revenues, and potential profit. We are especially at risk from governmental restriction and regulations related to the development of materials by use of transgenic organisms. Federal and state regulations impose strict regulation on the use, storage, and transportation of such transgenic organisms. Such rules impose severe penalties on us for any breach of regulations, for any spill, release, or contamination caused while the substances are under our direct or indirect ownership or control. We are not aware of any such breach of governmental regulation, or of any spill, release, or contamination. If such a release, or other regulatory breach does occur in the future, the resulting clean up costs, and/or fines and penalties, would cause a material negative effect on the Company and its financial future. In that event, investors could expect to lose their entire investment.

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Risks Related to Our Stock

We may need to raise additional capital by sales of our Class A common stock, which may adversely affect the market price of our Class A common stock and your rights in us may be reduced.

We expect to continue to incur product development and selling, general and administrative costs, and in order to satisfy our funding requirements, we will need to sell additional equity securities, in transactions similar in size and scope to our Equity Line of Credit covered by this prospectus. Such additional sales of equity securities may be subject to registration rights. The sale or the proposed sale of substantial amounts of our Class A common stock in the public markets may adversely affect the market price of our Class A common stock and our stock price may decline substantially. Our stockholders may experience substantial dilution and a reduction in the price that they are able to obtain upon sale of their shares. Also, new equity securities issued may have greater rights, preferences or privileges than our existing Class A common stock.

There is no assurance of an established public trading market.

A regular trading market for our Class A common stock may not be sustained in the future. FINRA has enacted changes that limit quotation on the OTCBB to securities of issuers that are current in their reports filed with the SEC. The OTCBB is an inter-dealer, over-the-counter market that provides significantly less liquidity than a listing on the Nasdaq Stock Markets or other national securities exchange. Quotes for stocks included on the OTCBB are not listed in the financial sections of newspapers as are those for the Nasdaq Stock Market. Therefore, prices for securities traded solely on the OTCBB may be difficult to obtain and holders of Class A common stock may be unable to resell their securities at or near their original offering price or at any price. Market prices for our Class A common stock will be influenced by a number of factors, including:

·	the issuance of new equity securities pursuant to a future offering;

·	competitive developments;

·	variations in quarterly operating results;

·	change in financial estimates by securities analysts;

·	the depth and liquidity of the market for our Class A common stock;

·	investor perceptions of our company and the technologies industries generally; and

·	general economic and other national conditions.

Our Class A common stock is considered “a penny stock” and, as a result, it may be difficult to trade a significant number of shares of our Class A common stock.

The Securities and Exchange Commission (“SEC”) has adopted regulations that generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. Since our Class A common stock has been eligible for quotation on the OTCBB, the market price of our Class A common stock has been less than $5.00 per share. As a result of our prior private placements, we will have increased the number of shares outstanding by almost ten-fold. Consequently, it is likely that the market price for our Class A common stock will remain less than $5.00 per share for the foreseeable future and therefore may be a “penny stock” according to SEC rules. This designation requires any broker or dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell our Class A common stock and may affect the ability of investors hereunder to sell their shares. In addition, because our Class A common stock is traded on the OTC Bulletin Board, investors may find it difficult to obtain accurate quotations of the stock and may experience a lack of buyers to purchase such stock or a lack of market makers to support the stock price.

We do not intend to pay dividends.

We have never declared or paid any dividends on our securities. We currently intend to retain our earnings for funding growth and, therefore, do not expect to pay any dividends in the foreseeable future.

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Risk Factors Related to the Equity Line of Credit and This Offering

We are registering an aggregate of 63,600,000 shares of Class A Common Stock to be issued under the Equity Line of Credit. The sale of such shares could depress the market price of our Class A common stock.

We are registering an aggregate of 63,600,000 shares of our Class A common stock under the registration statement of which this prospectus forms a part for issuance pursuant to the Equity Line of Credit. The sale of these shares into the public market by Calm Seas could depress the market price of our common stock. As of June 1, 2010 there were 519,543,719 shares of our common stock issued and outstanding.

We may not have access to the full amount under the Equity Line.

As of June 11, 2010 the closing market price of our common stock was $0.011. There is no assurance that the market price of our Class A common stock will increase substantially in the near future. The entire commitment under the Equity Line of Credit is $1,000,000. We would need to maintain the market price of our Class A common stock at approximately $0.0197 in order to have access to the full amount under the Equity Line of Credit. Since September 1, 2009, our Class A common stock has been trading at or below $0.018 per share. However, during such period we have not made any announcements regarding any developments in our business and we did not raise any capital to fund our research and development efforts. We expect that, initially, the resale by Calm Seas Capital of the shares of our Class A common stock that we will sell to them under our Equity Line of Credit. However, if we are able to report positive developments in our research and development efforts, we expect that such announcements will cause our stock price to increase sufficiently to a price per share above the price we need to allow us to obtain $1,000,000 gross proceeds under the Equity Line of Credit. The Equity Line of Credit is designed to raise $1,000,000 over a 24 month period. As described on page 26 of this prospectus, our goal is to have commercialization of a recombinant fiber by January 30, 2012 (approximately 24 months from the date of this prospectus). In the interim, we have other research and development goals – such as the laboratory production of recombinant fiber and high performance fiber. If we achieve such goals, we expect that the announcement of such achievements will have a significant positive impact on the price of our Class A common stock. Although we will be spending approximately $485,000 on our research and development efforts, technology research and development is very risky. We cannot be certain that we will achieve our research and development goals. Any set backs in our research and development activities may cause our stock price to drop, in which event we would probably not be able to raise $1,000,000 under our Equity Line of Credit. In the event that we raise substantially less than the maximum proceeds we expect to raise under the equity line of credit by the expiration of its 24 month term, we will seek to extend or renew the equity line of credit with Calm Seas Capital to raise the short-fall additional revenue on substantially the same terms as under the September 14, 2009 letter agreement. If Calm Seas Capital is unwilling or unable to enter into such an arrangement, we will be forced to raise additional capital from other investors. Alternatively, if our research yields some promising or positive results, we may seek a corporate partner in a joint venture or licensing arrangement in which we would seek to negotiation an upfront licensing fee and/or capital investment from such corporate partner. We have not yet identified any corporate partners for any such joint venture or licensing arrangement.

Calm Seas will pay less than the then-prevailing market price for our Class A common stock.

The Class A common stock to be issued to Calm Seas pursuant to the Letter Agreement will be purchased at a twenty percent discount to the lowest closing bid price of our Class A common stock during the five consecutive trading days immediately following the date we deliver to Calm Seas a notice of our election to put shares to it pursuant to the Letter Agreement. Calm Seas has a financial incentive to sell our Class A common stock immediately upon receiving the shares to realize the profit equal to the difference between the discounted price and the market price. If Calm Seas sells the shares, the price of our Class A common stock could decrease. If our stock price decreases, Calm Seas may have a further incentive to sell the shares of our Class A common stock that it holds. These sales may have a further impact on our stock price.

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There may not be sufficient trading volume in our Class A common stock to permit us to generate adequate funds from the exercise of our put.

The Letter Agreement provides that the dollar value that we will be permitted to put to Calm Seas will be the lesser of: (A) 200% of the average daily volume in the OTC Bulletin Board of the Class A common stock for the ten trading days prior to the date we deliver to Calm Seas a notice of our put, multiplied by the average of the ten daily closing prices immediately preceding the date we deliver a put notice to Calm Seas, or (B) $75,000. We will automatically withdraw our put notice to Calm Seas if the lowest closing bid price used to determine the purchase price of the put shares is not at least equal to seventy-five percent (75%) of the average closing “bid” price for our Class A common stock for the ten (10) trading days prior to the put date. If the average daily trading volume in our Class A common stock is too low, it is possible that we would exercise a put for less than $75, which may not provide adequate funding for our planned operations.

Our Class A common stock is thinly traded, so you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares.

Our common stock has historically been sporadically or “thinly-traded” on the OTCBB, meaning that the number of persons interested in purchasing our common stock at or near ask prices at any given time may be relatively small or nonexistent. This situation is attributable to a number of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable.

As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a mature issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. It is possible that a broader or more active public trading market for our common stock will not develop or be sustained, or that current trading levels will continue.

The selling shareholder may engage in hedging transactions, other than short sales, which may result in broker-dealers or other financial institutions engaging in short sales for their own account and not for the benefit of the selling security holder, which may cause a steep decline of our share price.

In connection with the distribution of the Class A common stock or otherwise, the selling shareholder may enter into hedging transactions, other than short sales, with broker-dealers or other financial institutions. In connection with such hedging transactions, broker-dealers or other financial institutions may, for their own account and not for the benefit of Calm Seas Capital, engage in short sales of shares in the course of hedging the positions they assume with the selling shareholder. If there are significant short sales of our stock by such broker-dealers or other financial institutions, the price decline that would result from this activity will cause our share price to decline which in turn may cause long holders of our stock to sell their shares thereby contributing to sales of stock in the market. If there is an imbalance on the sell side of the market our stock the price will decline. It is not possible to predict if the circumstances where by a short sales could materialize or to what our share price could drop. In some companies that have been subjected to short sales their stock price has dropped to near zero. We cannot provide any assurances that this situation will not happen to us.

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Shares eligible for future sale by our current shareholders may adversely affect our stock price.

To date, we have had a very limited trading volume in our Class A common stock. As long as this condition continues, the sale of a significant number of shares of Class A common stock at any particular time could be difficult to achieve at the market prices prevailing immediately before such shares are offered. In addition, sales of substantial amounts of Class A common stock, including shares issued upon the exercise of outstanding options and warrants, under Securities and Exchange Commission Rule 144 or otherwise could adversely affect the prevailing market price of our common stock and could impair our ability to raise capital at that time through the sale of our securities.

If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board, which would limit the ability of Broker-Dealers to sell our securities and the ability of shareholders to sell their securities in the secondary market.

Companies trading on the OTC Bulletin Board, such as Kraig Biocraft Laboratories, must be reporting issuers under Section 12 of the Exchange Act, and must be current in their reports under Section 13 of the Exchange Act, in order to maintain price quotation privileges on the OTC Bulletin Board. If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board. As a result, the market liquidity for our securities could be adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of shareholders to sell their securities in the secondary market.

USE OF PROCEEDS

We will not receive any proceeds from the sale of common stock offered by Calm Seas. However, we will receive proceeds from the sale of our common stock to Calm Seas pursuant to the put right under the Letter Agreement. The proceeds from our exercise of the put option pursuant to the Letter Agreement will be used as follows:

Month	Salaries(1)	Research & Development Expenses(2)	Professional Services(3)	Office Expense(4)	Reserve(5)
1	$13,217	$93,533	$19,667	$1,200	$2,500
2	13,217	93,533	2,000	$1,200	$2,500
3	13,217	58,833	2,000	$1,200	$2,500
4	13,217	2,433	2,000	$1,200	$2,500
5	13,217	2,433	11,668	$1,200	$2,500
6	13,217	2,433	2,667	$1,200	$2,500
7	13,217	2,433	2,667	$1,200	$2,500
8	13,217	2,433	8,667	$1,200	$2,500
9	13,217	2,433	2,667	$1,200	$2,500
10	13,217	2,433	2,667	$1,200	$2,500
11	13,217	2,433	2,667	$1,200	$2,500
12	13,217	2,433	7,663	$1,200	$2,500
13	13,217	48,133	2,000	$1,200	$2,500
14	13,217	48,133	2,000	$1,200	$2,000
15	13,217	48,133	2,000	$1,200	$2,000
16	13,217	48,133	2,000	$1,200	$2,000
17	13,217	3,133	7,000	$1,200	$2,000
18	13,217	3,133	2,667	$1,200	$2,500
19	13,217	3,133	2,667	$1,200	$2,500
20	13,217	3,133	7,000	$1,200	$1,500
21	13,217	3,133	10,600	$1,200	$1,250
22	13,217	3,133	2,000	$1,200	$1,250
23	13,217	3,133	2,000	$1,200	$1,250
24	13,217	3,133	7,666	$1,200	$1,250
TOTAL	$317,208	$485,392.00	$116,600.00	$28,800.00	$52,000.00

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(1) Consists of employee salaries, cost of benefits and payroll taxes. Also includes repayments of unpaid salary we owe to our Chief Executive Officer, which we have accounted for as an accrued expense and which amount bears interest at the rate of seven percent per annum and is due on demand by our Chief Executive Officer.

(2) Includes research and development expenses we are required to incur under our research collaboration agreement with the University of Notre Dame. Also includes (i) payments for a portion of the amount owed by the Company to its CEO for the transfer of intellectual property to the Company, which has been recorded in the financial statements as royalty payments due to a related party and (ii) auto and travel expenses (including the purchase of an automobile) that will be primarily related to investor relations matters.

(3) Includes legal, accounting, press release and EDGAR filing services and transfer agent expenses. Legal expenses will include not only SEC matters (such as periodic reporting and expenses related to this registration) but also intellectual property matters (such as patent filings).

(4) Office expenses include rent, telecommunications, postage/shipping, office equipment and office supplies.

(5) Approximately $2,500 will be set aside each month (up to 6% of gross proceeds) to cover expenses due to contingent events, such as equipment loss or replacement or increase in research and development expenses from unforeseen events.

Approximately 95% of the proceeds from the equity line of credit will be used for expenses that are non-discretionary, such as employee salaries, the costs of our research and development obligations under our soon-to-be renewed agreement with the University of Notre Dame, the costs related to our operation as a public company (primarily, legal and accounting fees) as well legal fees for securing our intellectual property, rent and telecommunications (phone, fax and Internet). Consequently, we believe that it is highly likely that we will use all $1,000,000 of the proceeds we expect to raise from the equity line of credit. We also expect to be able to raise the full $1,000,000 from the equity line of credit. We believe that positive results of our research and development efforts under our arrangement with the University of Notre Dame will help increase our stock price and, therefore, reduce the number of shares we will need to put to Calm Seas in order to raise the full $1,000,000 in gross proceeds we are seeking to raise under the equity line of credit.

In the event we are unable to raise the full $1,000,000 from the equity line of credit, we would use the proceeds in the following priority: (i) research and development expenses we are required to incur under our research collaboration agreement with the University of Notre Dame, (ii) employee salaries, cost of benefits and payroll taxes, (iii) rent and telecommunications, (iv) legal expenses (both SEC and intellectual property) and accounting expenses, press release and EDGAR filing services and transfer agent expenses, (v) postage/shipping, office equipment and office supplies, (vi) auto and travel expenses (including the purchase of an automobile) that will be primarily related to investor relations matters, (vii) payments for a portion of the amount owed by the Company to its CEO for the transfer of intellectual property to the Company, which has been recorded in the financial statements as royalty payments due to a related party and (viii) reserves to cover expenses due to contingent events.

In the event that we raise substantially less than the maximum proceeds we expect to raise under the equity line of credit by the expiration of its 24 month term, we will seek to extend or renew the equity line of credit with Calm Seas Capital to raise the short-fall additional revenue on substantially the same terms as under the September 14, 2009 letter agreement. If Calm Seas Capital is unwilling or unable to enter into such an arrangement, we will be forced to raise additional capital from other investors. Alternatively, if our research yields some promising or positive results, we may seek a corporate partner in a joint venture or licensing arrangement in which we would seek to negotiation an upfront licensing fee and/or capital investment from such corporate partner. We have not yet identified any corporate partners for any such joint venture or licensing arrangement.

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SELLING SHAREHOLDER

The following table sets forth the name of the selling shareholder, the number of shares of common stock owned, the number of shares of common stock registered by this prospectus and the number and percent of outstanding shares that the selling shareholder will own after the sale of the registered shares, assuming all of the shares are sold. The information provided in the table and discussions below has been obtained from the selling shareholder. As used in this prospectus, “selling shareholder” includes donees, pledges, transferees or other successors in interest selling shares of our common stock received from the named selling shareholder as a gift, pledge, distribution or other non sale-related transfer.

Beneficial ownership is determined in accordance with Rule 13d-3(d) promulgated by the Securities and Exchange Commission under the Exchange Act. Unless otherwise noted, each person or group identified possesses sole voting and investment power with respect to the shares, subject to community property laws where applicable. As of June 1, 2010, there were 519,543,719 shares of our common stock issued and outstanding.

On September 14, 2009, we entered into the Amended Letter Agreement with Calm Seas to raise up to $1,000,000 through an equity line of credit. Except as described above, to our knowledge Calm Seas has not had a material relationship with us during the last three years, other than as an owner of our common stock or other securities.

Beneficial Ownership of Class A Common Shares Prior to this Offering			Number of Shares to be Sold	Beneficial Ownership of Class A Common Shares after this Offering
Selling Shareholder	Number of Shares	Percent of Class	Under this Prospectus (1)	Number of Shares (2)	Percent of Class (3)
Calm Seas Capital, Ltd. (4) 377 S. Nevada St. Carson City, NV 89703	63,600,000	10.9%	63,600,000	0	--

Total	63,600,000	10.9%	63,600,000	0	--

(1)

The number of shares set forth in the table represents an estimate of the number of common shares to be offered by the selling shareholder. We have assumed the sale of all of the common shares offered under this prospectus will be sold. However, as the selling shareholder can offer all, some or none of its common stock, no definitive estimate can be given as to the number of shares that the selling shareholder will offer or sell under this prospectus.

(2)	These numbers assume the selling shareholder sells all of its shares after the completion of the offering.

(3)	Based on 583,143,719 shares of Class A common stock outstanding after the completion of the offering.

(4)	Calm Seas Capital, LLC is a Nevada limited liability company. Michael Andrew McCarthy is the managing member of Calm Seas with voting and investment power over the shares.

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Equity Line of Credit

The selling security holder is reselling shares of our Class A common stock sold to it by our exercise of the put right under the Letter Agreement. Each month we may put up to $75,000 of our Class A common stock to Calm Seas, which will purchase such shares at a price per share equal to 80% of the lowest closing bid price of our Class A common stock during the five consecutive trading days immediately following the date the notice of our election to put shares pursuant to the Letter Agreement is delivered to Clam Seas (the date of delivery of such notice is referred to as the “put date”). Notwithstanding the $75,000 ceiling for each monthly put, if both we and Calm Seas agree, we may submit one or more additional puts during any given month to the extent we need additional capital for our operations and/or our product development. We can only submit such additional put(s) if Calm Seas Capital agrees to it. Furthermore, the additional put is subject to the $1,000,000 limitation of this offering. The additional put allows us to obtain additional capital in the event that our product development proceeds quicker than we expect.

The selling shareholder will not receive any compensation, fees or commissions under the Equity Line Agreement.

We expect to be able to raise the full $1,000,000 from the equity line of credit. We believe that positive results of our research and development efforts under our arrangement with the University of Notre Dame will help increase our stock price and, therefore, reduce the number of shares we will need to put to Calm Seas in order to raise the full $1,000,000 in gross proceeds we are seeking to raise under the equity line of credit.

Our equity line with Calm Seas Capital contemplates our future possible issuance of up to an aggregate 63,600,000 shares of our Class A common stock as a result of this registration statement, subject to certain restrictions. Currently, we believe it is likely we will need to draw the full amount available under this equity line prior to the expiration of the equity line. If the terms and conditions of the equity line are satisfied, and we choose to exercise our put rights to the fullest extent permitted and sell all of the 63,600,000 shares of our common stock to Calm Seas Capital, the ownership by our existing non-affiliate stockholders will be diluted by approximately 33% based on 198,064,050 shares of Class A common stock held by non-affiliates on March 29, 2010. If we issue all of the shares under the equity line, we would have 582,289,550 shares issued and outstanding, of which 261,664,050 shares will be held by non-affiliates, resulting in a 33% increase in the public float. We expect that the initial issuance of the shares under the equity line and subsequent resale by Calm Seas Capital will probably cause our share price to decrease. However, we also expect that with a substantial amount of the proceeds form the equity line being spent on research and development activities we may be able to offset such downward pressure on our stock price with announcements of our ongoing research and development. If our research and development efforts are positive, we expect would expect the announcement of such result would cause our share price to increase. Conversely, if we announce any negative results of our research and development efforts, we would expect the announcement of such result would cause a significant decrease in our stock price.

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Bridge Investment

Pursuant to the Letter Agreement, Calm Seas Capital made a Bridge Investment in us in the aggregate amount of $120,000, of which $100,000 was paid promptly after the Letter Agreement was signed in July 2009 and the remaining $20,000 was paid in late September 2009. In this Bridge Investment, Calm Seas Capital purchased (i) twelve convertible debentures, each in the principal amount of $10,000 (the “Bridge Debentures”) and (ii) twelve warrants each exercisable for the purchase of 500,000 shares (the “Bridge Warrants”).

The Bridge Debentures, which mature on December 31, 2010, bear interest at the rate of 5% simple interest per annum, payable at maturity or convertible with the principal, and the principal and interest shall be convertible at the option of the holder at a fixed price of $.018 per share. The Company cannot use any of the proceeds of the Equity Line Agreement to repay the Bridge Debentures or any interest thereon. During any event of default, the Bridge Debentures will bear interest at the rate of 18% per annum or such lesser interest to the extent required under applicable usury law.

There will be an event of default under the Bridge Debentures if the Company

(i)	fails to pay the principal and interest when due and payable and such failure is not cured within 10 days of the due date,

(ii)	breaches any material term of the Bridge Debenture or Bridge and fails to cure such breach within 10 days of the Company’s receipt of notice of such breach from the holder,

(iii)

makes an assignment for the benefit of its creditors or has a receiver or trustee appointed,

(iv)	has a money judgment entered against it for more than $10,000 and such judgment is not vacated, bonded or stayed for 90 days,

(v)	enters bankruptcy.

After September 30, 2010, the Company may cause the Bridge Debentures to be converted into shares of its Class A common stock at the lower of (i) the conversion price then in effect and (ii) the average closing bid for the Company’s Class A common stock for the 20 trading days prior to the date the Company gives notice that it is converting the Bridge Debentures (but not less than $0.005 per share).

The conversion price of the Bridge Debentures will be proportionately adjusted in the event of merger, sale of assets, reclassification of the Company’s capital stock, stock split, reverse stock split or stock dividend. Additionally, the conversion price of the Bridge Debentures will be proportionately reduced if the Company sells shares of its Class A common stock for a price per share less than the conversion price of the Bridge Debentures, excluding the issuance of shares pursuant to (a) Bridge Debentures or Bridge Warrants, (b) the Equity Line of Credit or other existing obligation of the Company to issue shares, (c) equity compensation plans or (d) the acquisition or another business.

The Bridge Warrants expire on December 31, 2011. The Bridge Warrants are exercisable at an exercise price of $.02 per share, subject to customary adjustments for stock splits, stock dividends, distribution of non-cash assets by the Company to its shareholders, capital reorganization, reclassification of the capital stock of the Company, consolidation or merger of the Company with another corporation in which the Company is not the survivor, or sale, transfer or other disposition of all or substantially all of the Company’s assets to another corporation. Additionally, Calm Seas Capital may exercise the Bridge Warrants using a cashless exercise provision.

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PLAN OF DISTRIBUTION

The purpose of this prospectus is to permit the selling shareholder to offer and sell up to an aggregate of 63,600,000 shares at such times and at such places as it chooses. The decision to sell any shares is within the sole discretion of the holder thereof.

The distribution of the Class A common stock by the selling shareholder may be effected from time to time in one or more transactions. Any of the Class A common stock may be offered for sale, from time to time, by the selling shareholder, or by permitted transferees or successors of the selling shareholder, or otherwise, at prices and on terms then obtainable, at fixed prices, at prices then prevailing at the time of sale, at prices related to such prevailing prices, or in negotiated transactions at negotiated prices or otherwise. The Class A common stock may be sold by one or more of the following:

·	On the OTCBB or any other national common stock exchange or automated quotation system on which our Class A common stock is traded, which may involve transactions solely between a broker-dealer and its customers which are not traded across an open market and block trades.

·	Through one or more dealers or agents (which may include one or more underwriters), including, but not limited to:

·	Block trades in which the broker or dealer as principal and resale by such broker or dealer for its account pursuant to this prospectus.

·	Purchases by a broker or dealer as principal and resale by such broker or dealer for its account pursuant to this prospectus.

·	Ordinary brokerage transactions.

·	Directly to one or more purchasers.

·	A combination of these methods.

Calm Seas and any broker-dealers who act in connection with the sale of its shares are “underwriters” within the meaning of the Securities Act, and any discounts, concessions or commissions received by them and profit on any resale of the shares as principal may be deemed to be underwriting discounts, concessions and commissions under the Securities Act.

In connection with the distribution of the Class A common stock or otherwise, the selling shareholder may enter into hedging transactions with broker-dealers or other financial institutions. In connection with such transactions, broker-dealers or other financial institutions may, for their own account and not for the benefit of the selling shareholder, engage in short sales of shares in the course of hedging the positions they assume with the selling shareholder. Under the September 14 Amended Letter Agreement, the selling shareholder cannot sell shares short. The selling shareholder may enter into options or other transactions with broker-dealers or other financial institutions which require the delivery to such broker-dealers or other financial institutions of the Class A common stock, which shares such broker-dealers or financial institutions may resell pursuant to this prospectus, as supplemented or amended to reflect that transaction. The selling shareholder may also pledge the common stock registered hereunder to a broker-dealer or other financial institution and, upon a default, such broker-dealer or other financial institution may affect sales of the pledged shares pursuant to this prospectus, as supplemented or amended to reflect such transaction. In addition, any Class A common stock covered by this prospectus that qualifies for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than pursuant to this prospectus.

The selling shareholder or its underwriters, dealers or agents may sell the Class A common stock to or through underwriters, dealers or agents, and such underwriters, dealers or agents may receive compensation in the form of discounts or concessions allowed or reallowed. Underwriters, dealers, brokers or other agents engaged by the selling shareholder may arrange for other such persons to participate. Any fixed public offering price and any discounts and concessions may be changed from time to time. Underwriters, dealers and agents who participate in the distribution of the common stock may be deemed to be underwriters within the meaning of the Securities Act, and any discounts or commissions received by them or any profit on the resale of shares by them may be deemed to be underwriting discounts and commissions thereunder. The proposed amounts of the Class A common stock, if any, to be purchased by underwriters and the compensation, if any, of underwriters, dealers or agents will be set forth in a prospectus supplement.

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Unless granted an exemption by the Commission from Regulation M under the Exchange Act, or unless otherwise permitted under Regulation M, the selling shareholder will not engage in any stabilization activity in connection with our Class A common stock, will furnish each broker or dealer engaged by the selling shareholder and each other participating broker or dealer the number of copies of this prospectus required by such broker or dealer, and will not bid for or purchase any Class A common stock of our or attempt to induce any person to purchase any of the Class A common stock other than as permitted under the Exchange Act.

We will not receive any proceeds from the sale of these shares of Class A common stock offered by the selling shareholder. We shall use our best efforts to prepare and file with the Commission such amendments and supplements to the registration statement and this prospectus as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of the common stock covered by the registration statement for the period required to effect the distribution of such common stock.

We are paying certain expenses (other than commissions and discounts of underwriters, dealers or agents) incidental to the offering and sale of the common stock to the public, which are estimated to be approximately $17,081. If we are required to update this prospectus during such period, we may incur additional expenses in excess of the amount estimated above.

In order to comply with certain state securities laws, if applicable, the common stock will be sold in such jurisdictions only through registered or licensed brokers or dealers. In certain states the shares of common stock may not be sold unless they have been registered or qualify for sale in such state or an exemption from registration or qualification is available and is complied with.

DESCRIPTION OF SECURITIES

General

Our original articles of incorporation authorized 60,000,000 shares of Class A common stock, 25,000,000 shares of Class B common stock with no par value per share and 10,000,000 shares of preferred stock with no par value per share. On February 16, 2009, we amended our articles of incorporation to provide for unlimited authorized shares, no par value, of Class A common stock and Class B common stock. There are no provisions in our charter or by-laws that would delay, defer or prevent a change in our control.

Common Stock

As of June 1, 2010, 519,543,719 shares of common stock Class A were issued and outstanding and held by 28 shareholders of record, and we had no shares of Class B common issued and outstanding. Holders of our common stock are entitled to one vote for each share on all matters submitted to a stockholder vote.

Holders of Class A common stock and Class B common stock do not have cumulative voting rights.

Therefore, holders of a majority of the shares of both classes of common stock voting for the election of directors can elect all of the directors. Holders of both classes of our common stock representing a majority of the voting power of our capital stock issued and outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to our Articles of Incorporation.

Although there are no provisions in our charter or by-laws that may delay, defer or prevent a change in control, we are authorized, without shareholder approval, to issue shares of preferred stock that may contain rights or restrictions that could have this effect.

Holders of both classes of common stock are entitled to share in all dividends that the board of directors, in its discretion, declares from legally available funds. In the event of liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the common stock. Holders of both classes of our common stock have no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to our common stock.

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Preferred Stock

Our articles of incorporation also provide that we are authorized to issue up to 10,000,000 shares of preferred stock with no par value per share. As of the date of this prospectus, there are no shares of preferred stock issued and outstanding. Our Board of Directors has the authority, without further action by the shareholders, to issue from time to time the preferred stock in one or more series for such consideration and with such relative rights, privileges, preferences and restrictions that the Board may determine. The preferences, powers, rights and restrictions of different series of preferred stock may differ with respect to dividend rates, amounts payable on liquidation, voting rights, conversion rights, redemption provisions, sinking fund provisions and purchase funds and other matters. The issuance of preferred stock could adversely affect the voting power or other rights of the holders of common stock.

As further described in our financial statements, the company anticipates that it will issue 200,000 preferred shares to Kim Thompson pursuant an agreement between the company and Mr. Thompson. Such preferred shares will have no right to dividends or other distributions, but will have super voting rights such that each preferred share will have the voting power equivalent to one hundred common class “A” shares. We have not filed a certificate of designation to set the rights and preferences for these preferred shares to be issued to Mr. Thompson. The selling shareholder has not consented to such issuance of preferred stock to Mr. Thompson. We shall not be seeking to obtain the consent of the selling shareholder for such issuance as we are not required to do so under Wyoming corporate law.

Dividends

Since inception we have not paid any dividends on our Class A common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock, when issued pursuant to this offering. Although we intend to retain our earnings, if any, to finance the exploration and growth of our business, our Board of Directors will have the discretion to declare and pay dividends in the future. Payment of dividends in the future will depend upon our earnings, capital requirements, and other factors, which our Board of Directors may deem relevant.

INTERESTS OF NAMED EXPERTS AND COUNSEL

No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.

The financial statements for the years ended December 31, 2009 and 2008 included in this prospectus and the registration statement have been audited by Webb & Company, P.A. to the extent and for the periods set forth in their report appearing elsewhere herein and in the registration statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.

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DESCRIPTION OF BUSINESS

Overview

We have collaboration agreements with University of Notre Dame and the University of Wyoming that give us the exclusive use of certain intellectual property for fibers in commercially viable quantities. We will then use these technologies to develop fibers with greater strength, resiliency and flexibility for use in our target markets, namely the specialty fiber and technical textile industries.

We are currently in the first stage of our development, which is to develop a transgenic silkworm that can produce a natural spider silk fiber by inserting patented genetic sequences into ordinary silkworms using patented genetic engineering technology under our license and collaboration agreements with the University of Norte Dame and the University of Wyoming. The proceeds from the offering, as described below, will be used to fund this first stage, which we expect to complete by October 1, 2011.

The Market

We are focusing our work on the creation of high performance and technical fiber. The performance fiber market is currently dominated by two classes of product: aramid fibers, exemplified by Kevlar® (E.I. du Pont de Nemours and Company), and ultra high molecular weight polyethylene fiber, exemplified by Dyneema® (DSM NV) and Spectra® (Honeywell International Inc.). These products service the need for materials with high strength, resilience, and flexibility. Because these synthetic performance fibers are stronger and tougher than steel, they are used in a wide variety of military, industrial, and consumer applications.

Among the users of these materials are the military and police departments, which employ them for ballistic protection. The materials are also used for industrial applications requiring superior strength and toughness, i.e. critical cables and abrasion/impact resistant components. These fibers are also employed in safety equipment, high strength composite materials for the aero-space industry and for ballistic protection by the defense industry.

The global market for technical textiles is currently estimated at $92.88 billion. The demand for technical textiles is growing rapidly and is expected to reach $127 billion in 2010.

These are industrial materials which have become essential products for both industrial and consumer applications. The market for technical textiles can be defined as consisting of:

·	Medical textiles;

·	Geotextiles;

·	Textiles used in Defense and Military;

·	Safe and Protective Clothing;

·	Filtration Textiles;

·	Textiles used in Transportation;

·	Textiles used in Buildings;

·	Composites with Textile Structure;

·	Functional and Sportive Textiles.

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We believe that the superior mechanical characteristics of the next generation of protein-based polymers (in other words, genetically engineered silk fibers), will open up new applications for the technology and result in a significant increase in demand. The materials which we are working to produce are many times tougher and stronger than steel. These fibers are often referred to as “super fibers.”

The Product

Certain fibers produced in nature possess unique mechanical properties in terms of strength, resilience and flexibility. These protein based fibers, exemplified by spider silk, have been the subject of much interest to the U.S. military. The military’s interest in spider silks stems from the incredible toughness of the material, as illustrated in the table below.

Comparison of the Properties of Spider Silk, Kevlar® and Steel

	Material Toughness1	Tensile Strength2	Weight3
Dragline spider silk	120,000-160,000	1,100-2,900	1.18-1.36

Steel	2,000-6,000	300-2,000	7.84

1 Measured by the energy required to break a continuous filament, expressed in joules per kilogram (J/kg). A .357 caliber bullet has approximately 925 joules of kinetic energy at impact.

2 Tensile strength refers to the greatest longitudinal stress the fiber can bear, measured by force over area in units of newtons per square meter. The measurement here is in millions of pascals.

3 In grams per cubic centimeter of material.

This comparison table was the result of research performed by Randolph Lewis, Ph.D. at the University of Wyoming. Such work was summarized in an article entitled “Spider Silk: Ancient Ideas for New Biomaterials” which was published in Chemicals Review, volume 106, issue 9, pages 3672 – 3774. The measurements in joules in the table above are a conversion from Dr. Lewis’ measurements in newtons/meter squared.

We believe that the genetically engineered protein-based fibers we seek to produce have properties that are in some ways so superior to the materials currently available in the marketplace. For example, as noted above, the ability of spider fiber to absorb in excess of 100,000 joules of kinetic energy, which makes it the potentially ideal material for structural blast protection.

Production of this material in commercial quantities holds the promise of a life saving ballistic resistant material, which is lighter, thinner, more flexible, and tougher than steel. Other applications for spider silk based fibers include use as structural material and for any application in which light weight and high strength are required. We believe that polymer fibers made with recombinant protein-based fiber will make significant inroads into the specialty fiber and technical textile markets.

While the superior properties of spider silks are well known, there is presently no known way to produce these fibers in commercial quantity. The spiders are cannibalistic, and can not be raised in concentrated colonies. However, we envision that recombinant fiber, with its superior mechanical characteristics, will supplant the current generation of high performance fiber.

Our Technology

While scientists have been able to replicate the proteins that are the building blocks of spider silk, the technological barrier that has stymied production until now has been the inability to form these proteins into a fiber with the desired mechanical characteristics.

We have licensed the exclusive right to use the patented genetic sequences and genetic engineering technology developed at Notre Dame and the University of Wyoming, and in working collaboratively with those laboratories, we are developing fibers with the mechanical characteristics of spider silk. We are applying our proprietary genetic engineering technology to domesticated silkworms, which are already one of the most efficient commercial producers of silk.

Our technology builds upon the unique advantages of the domesticated silkworm for this application. The silkworm is ideally suited to produce recombinant protein fiber because it is already an efficient commercial and industrial producer of protein based polymers. Forty percent (40%) of the caterpillars’ weight is devoted to the silk glands. The silk glands produce large volumes of protein, called fibroin, which are then spun into a composite protein thread (silk).

We are working to use our genetic engineering technology to create recombinant silk polymers.

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A part of our intellectual property portfolio is the exclusive right to use the patented spider silk gene sequences in silkworm. Under the Exclusive License Agreement with The University of Wyoming, we have obtained certain exclusive rights to use numerous genetic sequences which are the subject of five US patents and two pending patent applications held by The University of Wyoming.

The introduction of the gene sequence, in the manner employed by us, results in a germline transformation and is therefore self perpetuating. This technology is in essence a protein expression platform which has other potential applications including diagnostics and pharmaceutical production.

The Company

Kraig Biocraft Laboratories, Inc. (Kraig) is a Wyoming corporation. Kraig is a reporting company under the Securities Exchange Act of 1934 which occurred as a result of its original SB 2 filing in late 2007. The Company is up to date with all necessary filings with the SEC.

Our shares are traded OTCBB under the ticker symbol: KBLB. There are 519,543,719 shares of common stock issued and outstanding as of June1, 2010. Kim Thompson, our founder and CEO, owns approximately 62.5% of the issued and outstanding shares.

The inventor of our technology, Kim Thompson, is the founder of Kraig Biocraft Laboratories, Inc. Our protein expression system is, in concept, scalable, cost effective, and capable of producing a wide range of proteins including pharmaceuticals and materials.

In order to reduce the technology to practice, we have entered into intellectual property and collaborative research agreements with two leading universities which are at the forefront in this field: the University of Wyoming and the University of Notre Dame. One of our major shareholders, the University of Wyoming Foundation, is a public university which has contributed significant intellectual property to the enterprise.

Certain patented genetic tools, methods, and proprietary gene sequences invented and discovered by researchers at these universities are pivotal in our work. We have negotiated and obtained certain exclusive proprietary rights to use Notre Dame’s and the University of Wyoming’s intellectual property for the product development and commercialization of our fiber products.

We entered into an intellectual property and collaborative research agreement with the University of Notre Dame in 2007. That agreement was subsequently extended and expanded to include research and development of certain platform technologies with potential applications for diagnostics and pharmaceutical production. On March 20, 2010, the Company extended its agreement with Notre Dame through February 28, 2011. Pursuant to these agreements the genetic work is being conducted primarily within Notre Dame’s laboratories.

We have also entered into an intellectual property and sponsored research agreement with the University of Wyoming.

Collaboration and Research Agreements/Intellectual Property

We have obtained certain exclusive rights to use a number of university created, and patented, spider silk proteins, gene sequences and methodologies held by the University of Wyoming and the University of Notre Dame. We have also acquired certain exclusive rights to patent pending protein based fibers and genetic technologies.

In 2008, the University of Notre Dame filed two provisional patent applications pursuant to our intellectual property and collaborative research agreement. In addition, we have filed a separate U.S. provisional patent application regarding certain methodologies, genetic sequences, organic polymers and composite silk fibers. We anticipate that our intellectual property portfolio will continue to grow in 2010.

We do not own any patents or trademarks.

Intellectual Property/Collaborative Research Agreement with Notre Dame University

Our collaborative research agreement with the University of Notre Dame requires the Company to provide cost reimbursement for scientific research performed within Notre Dame relating to recombinant silk development. The reimbursable costs to the Company are caped at $35,000 per calendar quarter, unless the Company provides prior authorization for exceeding that cap. Subject to the renewal of our research agreement with Norte Dame, our agreement with Notre Dame provides us with a right to an exclusive license to intellectual property developed pursuant to the collaborative research on terms to be negotiated on a case by case basis. The University of Notre Dame retains a right to a commercially reasonable royalty on all such technology. On March 20, 2010, we renewed our with the University of Notre Dame on substantially the same terms as the prior agreement. This renewed agreement has a term that ends February 28, 2011. Under our intellectual property/collaborative research agreement with The University of Notre Dame, we sponsor research by the University of Notre Dame regarding genetic engineering techniques patented by Notre Dame, which are called Piggybac transposon, for applications on silk worms. Any patents or other intellectual property developed as a result of this sponsored research will be the property of Notre Dame, however, we have a six-month period, commencing on the date that we notify Notre Dame, to negotiate a license agreement for the use of such intellectual property for the use of creating transgenic worms for the production of silk and fibers. Such license agreement would have terms consistent with a sample license agreement that is attached to the Notre Dame collaborative research agreement. Such license agreement would require us to make royalty payments to Notre Dame that would range from 1% to 6% of net sales of products using Notre Dame’s intellectual property. In addition, such license agreement would have a term of approximately 20 years.

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Exclusive License Agreement with University of Wyoming

In May 2006, we entered into a license agreement with the University of Wyoming, pursuant to which we have licensed the exclusive, worldwide right to develop and commercialize the production by silkworms of synthetic and natural spider silk proteins and the genetic sequencing for such spider silk proteins. These spider silk proteins and genetic sequencing are covered by patents held by the University of Wyoming. Our license allows us only to use silkworms to produce the licensed proteins and genetic sequencing. We have the right to sublicense the intellectual property that we license from the University of Wyoming. Our license agreement with the University of Wyoming requires that we pay licensing and research fees to the university in exchange for an exclusive license to in our field of use for certain university-developed intellectual property including patented spider silk gene sequences. Pursuant to the agreement, we issued 17,500,000 shares of our Class A common stock to the University Foundation. Of the shares of our Class A common stock we issued to the University Foundation, we have the right to call 7,000,000 of those shares at any time prior to May 8, 2011 at a purchase price of $150,000. Our license agreement with the University of Wyoming will continue in each country until the later of (i) expiration of the last-to-expire patent we license from the University of Wyoming under this license agreement in such country or (ii) ten years from the date of first commercial sale of a licensed product in such country. There are no royalties payable to the University of Wyoming under the terms our agreement with them.

We have not made any of the required payments pursuant to our license agreement with the University of Wyoming. We will continue to accrue required payments under the license agreement with the University of Wyoming, and we will pay such amounts as our finances allow. Our license agreement provides that the University of Wyoming must give us at least 90 days notice to cure the failure to make the required payments before the University can terminate the license agreement. If our license agreement with the University of Wyoming were terminated, however, it would result in a loss of six months of research time and it would cost us an additional $120,000 to create an alternative gene sequence.

Research and Development

Our current research and development is being conducted sequentially in two stages.

First stage: Reduction to practice

1) We will reduce to practice our technology for spider silk protein expression in the silk glands of the silkworm. The focus at this stage is spider silk analogs and the production of new silk fibers composed of recombinant proteins. We are hopeful that we can achieve this goal by December 31, 2010. We believe that our transgenic system is essentially “plug and play”, in that once the system is established the gene sequence for any compatible protein can be inserted for expression by the system.

Second stage: Commercialization

2) High Performance Fibers: Once we have achieved the production of recombinant fiber, we will turn the technology to the production of high performance polymers. We intend to will follow the accepted market structure in the industry: vertical integration for certain applications, and bulk sale of spun fiber directly to intermediate and end product manufacturers. There is also the possibility of licensing our product and technology.

Our goal is to reach the following achievements within the indicated time frame:

Achievement		Time horizon
Laboratory production of recombinant fiber.		December 31, 2010
Laboratory production of recombinant high performance fiber.		April 30, 2011
Commercialization of recombinant fiber.		January 30, 2012

During the fiscal years ended December 31, 2009, 2008 and 2007, we have spent approximately 7,360 hours, 1,820 hours and 3,420 hours, respectively, on research and development activities, which consisted of primarily of laboratory research on genetic engineering by our outside consultants pursuant to our collaborative research agreement with the University of Notre Dame.

Employees

We currently have no employees other than Kim Thompson, our sole officer and director. We plan to hire more persons on as-needed basis.

DESCRIPTION OF PROPERTY

We rent office space at 120 N. Washington Square, Suite 805, Lansing, Michigan 48950, which is our principal place of business. Our current lease is on a month to month basis. We pay an annual rent of $600 for office space, conference facilities, mail, fax and reception services located at our principal place of business.

LEGAL PROCEEDINGS

There are no legal proceedings pending or threatened against us or our officers and directors.

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MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

Our common stock has traded on the OTC Bulletin Board system under the symbol “KBLB” since February 20, 2008.

The following table sets forth the high and low trade information for our Class A common stock for each quarter since we began trading on February 20, 2008. The prices reflect inter-dealer quotations, do not include retail mark-ups, markdowns or commissions and do not necessarily reflect actual transactions. The prices below reflect a stock split in the form of a nine-for-one stock dividend which was declared by our board of directors on March 23, 2009. The stock split was distributed to shareholders of record as of April 27, 2009.

Quarter ended	Low Price		High Price
March 31, 2008	$	0.00	$	0.05
June 30, 2008	$	0.022	$	0.047
September 30, 2008	$	0.011	$	0.039
December 31, 2008	$	0.011	$	0.04
March 31, 2009	$	0.011	$	0.044
June 30, 2009	$	0.017	$	0.06
September 30, 2009	$	0.011	$	0.025
December 31, 2009	$	0.009	$	0.025

Holders

As of June 1, 2010 in accordance with our transfer agent records, we had 28 record holders of our Class A common stock.

Dividends

To date, we have not declared or paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock, when issued pursuant to this offering. Although we intend to retain our earnings, if any, to finance the exploration and growth of our business, our Board of Directors will have the discretion to declare and pay dividends in the future.

Payment of dividends in the future will depend upon our earnings, capital requirements, and other factors, which our Board of Directors may deem relevant.

Stock Option Grants; Warrants and Convertible Securities

To date, we have not granted any stock options. In 2006, our CEO, Kim Thompson, received substantial warrants on our stock pursuant to the employment agreement between Mr. Thompson and us. However, Mr. Thompson surrendered all such warrants and options to the corporation prior to the close of the 2006 calendar year. As of this date, we have no outstanding stock options.

The principal and interest of the Bridge Debentures, which mature on December 31, 2010, are principal and interest shall be convertible at the option of the holder at a fixed price of $.018 per share. After September 30, 2010, we may cause the Bridge Debentures to be converted into shares of our Class A common stock at the lower of (i) the conversion price then in effect and (ii) the average closing bid for the Company’s Class A common stock for the 20 trading days prior to the date the Company gives notice that it is converting the Bridge Debentures (but not less than $0.005 per share).

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Transfer Agent and Registrar

Our transfer agent is Registrar and Transfer Company, 10 Commerce Drive, Cranford, N.J. 07016 and its phone number is (908) 497-2300.

AVAILABLE INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the Class A common stock offered hereby. This prospectus, which constitutes part of the registration statement, does not contain all of the information set forth in the registration statement and the exhibits and schedule thereto, certain parts of which are omitted in accordance with the rules and regulations of the SEC. For further information regarding our Class A common stock and our company, please review the registration statement, including exhibits, schedules and reports filed as a part thereof. Statements in this prospectus as to the contents of any contract or other document filed as an exhibit to the registration statement, set forth the material terms of such contract or other document but are not necessarily complete, and in each instance reference is made to the copy of such document filed as an exhibit to the registration statement, each such statement being qualified in all respects by such reference.

We are also subject to the informational requirements of the Exchange Act which requires us to file reports, proxy statements and other information with the SEC. Such reports, proxy statements and other information along with the registration statement, including the exhibits and schedules thereto, may be inspected at public reference facilities of the SEC at 100 F Street N.E., Washington D.C. 20549. Copies of such material can be obtained from the Public Reference Section of the SEC at prescribed rates. You may call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room. Because we file documents electronically with the SEC, you may also obtain this information by visiting the SEC’s Internet website at http://www.sec.gov.

Table of Contents

FINANCIAL STATEMENTS

Kraig Biocraft Laboratories, Inc.

(A DEVELOPMENT STAGE COMPANY)

PAGE	CONTENTS
F-1	CONDENSED BALANCE SHEETS AS OF MARCH 31, 2010 (UNAUDITED) AND DECEMBER 31, 2009.

F-2	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).

F-3	CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT FOR THE PERIOD FROM APRIL 25, 2006 (INCEPTION) TO MARCH 31, 2010 (UNAUDITED).

F- 4	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).

F- 5 - F- 17	NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED).

F-18	REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.

F-19	BALANCE SHEETS AS OF DECEMBER 31, 2009 and 2008 (RESTATED).

F-20	STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2009 (RESTATED) AND 2008 (RESTATED) AND FOR THE PERIOD APRIL 25, 2006 (INCEPTION) TO DECEMBER 31, 2009 (RESTATED).

F-21	STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT FOR THE PERIOD FROM APRIL 25, 2006 (INCEPTION) TO DECEMBER 31, 2009 (RESTATED).

F- 22	STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2009 (RESTATED) AND 2008 (RESTATED) AND FOR THE PERIOD APRIL 25, 2006 (INCEPTION) TO DECEMBER 31, 2009 (RESTATED).

F- 24 - F- 36	NOTES TO FINANCIAL STATEMENTS AS RESTATED – NOTE 2.

Table of Contents

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

See accompanying notes to financial statements.

F-1

Table of Contents

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) to March 31, 2010
	March 31, 2010			March 31,
	March 31, 2010			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

See accompanying notes to financial statements.

F-2

Table of Contents

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		during Development
	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