KBLB 10-K & 10-Q changes, risk factors and insider trading

As the Company is a smaller reporting company, this item is not applicable.applicable; however, we encourage you to review the risk factors included in our other publicly filed reports.

We are using genetic engineering technologies to develop fibers with greater strength, resiliency, and flexibility for use in our target markets, including the specialty fiber and technical textile industries .industries. We believe that the genetically engineered protein-based fibers fibers we seek to produce have properties that are in some ways superior to the materials currently available in the marketplace. Production of our product in commercial quantities holds what we believe to be potential life-saving ballistic resistant material, which we believe is lighter, thinner, more flexible, and tougher than steel. Other potential applications for spider silk based recombinant fibers include use as structural material and for any application in which light weight and high strength are required. We believe that fibers made with recombinant protein-based polymers will make significant inroads into the specialty fiber and technical textile markets.

We have not previously demonstrated that we will be able to expand our business through an increased investment in our research and development efforts. We cannot guarantee that the research and development efforts described in this filing will be successful. Our business is subject to risks inherent in growing an enterprise, including limited capital resources, risks inherent in the research and development processprocess, risks inherent in working with living organisms, political and legal risks associated with transgenics, and possible rejection of our products in development.

The Company shall pay the Investor a structuring fee in an amount of $25,000, of which $10,000 has been paid, and $15,000 shall be paid on the earlier of (a) the Closing of the first Advance, or (b) the termination of the SEPA. The Company paid the remaining balance of $15,000 structuring fee on January 21, 2025. Additionally, within three days of signing the SEPA (the “Effective Date”), the Company shall pay a commitment fee in an amount equal to 1.00% of the Commitment Amount (the “Commitment Fee”) consisting of such number of Common Shares that is equal to the Commitment Fee divided by the average of the daily VWAPs of the Common Shares during the 3 Trading Days immediately prior to the Effective Date (the “Commitment Shares”). The Commitment Shares issuable hereunder shall be included on the initial Registration Statement.

Research and development expenses: During the year ended December 31, 2024,2025, we incurred $164,374$165,758 of research and development expenses, aan increase decrease of $73,497$164,374 or30.90%or 0.84% compared with the same period in 2023.2024. The research and development expenses are attributable to the research and development with the Notre Dame University; the increase was due to the timing of research related activity and costs by insources the Company’s research operations.

Professional Fees: During year ended December 31, 2024,2025, we incurred $290,313$379,218 professional expenses, which increased by $165,091$88,905 or 131.84%30.62% from $125,222$290,313 for year ended December 31, 2023.2024. The increase in professional fees expense was attributable to increased expenses related to investor relations and legal services during year ended December 31, 2024.2025.

Officers Salary: During year ended December 31, 2024,2025, officers’ salary expenses increaseddecreased to $872,289$871,049 or 9.39%0.14% compared to $797,406$872,289 for year ended December 31, 2023.2024. The increasedecrease is due an increase in officer’s to contractual terms of employment.employment with a slight offset in COO and Directors salary. In order to conserve Company resources, the CEO agreed to accrue and not collect a majority of his salary for 2024.2025.

Net Change in Unrealized Depreciation on Investment in Gold Bullion: Net change in unrealized appreciation on investment in gold bullion increaseddecreased by $77,844$23,631 to $110,198 for the year ended December 31, 2025, from $133,829 for the year ended December 31, 2024, from $55,985 for the year ended December 31, 2023.2024. The increasedecrease was primarily due to a net change in unrealized depreciation on investment in gold bullion.

Net Loss: Net loss increased by $369,159,$224,414, or 12.18%,6.60%, to a net loss of $3,623,353 for the year ended December 31, 2025, from a net loss of $3,398,939 for the year ended December 31, 2024, from a net loss of $3,029,780 for the year ended December 31, 2023.2024. This increase in net loss was driven primarily by aan increase in warrant compensation, professional fees, officer’sresearch salaryand development and slightly offset by a decrease in researchofficer’s and administration expense and impairmentsalary expense.

Management anticipates that significant additional expenditures will be necessary to develop and expand our business before significant positive positive operating cash flows can be achieved. Our ability to continue as a going concern is dependent upon our ability to raise additional capital and to ultimately achieve sustainable revenues and profitable operations. At December 31, 2024,2025, we had $673,264 $1,790,236 of cash and cash equivalents on hand. These funds are insufficient to complete our business plan and as a consequence, we will need to seek additional funds, primarily through the issuance of debt or equity securities for cash to operate our business. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to us. Even if we are able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stockholders, in the case of equity financing.

Our financing activities resulted in a cash inflow of $60,000$2,467,900 for the year ended December 31, 2023,2025, which is represented by $60,000$2,602,900 proceeds loan repayment.from the sale of stock, $10,000 payment in debt offering costs and $125,000 in principal repayment of debt to a related party.

On January 21, 2025, we entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, LTD., a Cayman Islands exempt limited company (the “Investor”). Capitalized terms used herein, but not otherwise defined, have the meaning ascribed to such terms in the SEPA, a copy of which is filed herewith as Exhibit 10.10. As of MarchJune 31,30, 2026, the Company issued a total of 45,384,19454,166,681 shares of Common Stock in exchange for $4,118,654$5,246,613 under the SEPA.

Three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025

Our revenue, operating expenses, and net loss from operations for the three month period ended MarchJune 31,30, 2026, as compared to the three month period ended MarchJune 31,30, 2025, were as follows - some balances on the prior period’s combined financial statements have been reclassified to conform to the current period presentation:

Net Revenues: During the three months ended MarchJune 31,30, 2026, we realized $0 of revenues from our business. During the three months ended MarchJune 31,30, 2025, we realized $0 of revenues from our business. The change in revenues between the quarter ended MarchJune 31,30, 2026, and MarchJune 31,30, 2025, was $0 or 0%.

Cost of Revenues: Costs of revenues for the three months ended MarchJune 31,30, 2026, were $0, as compared to $0 for the three months ended MarchJune 31,30, 2025, a change of $0 or 0%.

Gross Profit: During the three months ended MarchJune 31,30, 2026, we realized a gross profit of $0, as compared to $0 for the three months ended MarchJune 31,30, 2025, a change of $0 or 0%.

Research and development expenses: During the three months ended MarchJune 31,30, 2026, we incurred $66,701$64,369 of research and development expenses. During the three months ended MarchJune 31,30, 2025, we incurred $23,876$63,888 of research and development expenses. This was an increase of $42,825 $481 or 179.36%0.75% in 2026 compared with the same period in 2025. This increase was due to an increase in research spending.

Professional Fees: During the three months ended MarchJune 31,30, 2026, we incurred $70,835$69,862 of professional expenses, which increased by $7,800$26,237 or 12.37%60.14% from $63,035$43,625 for the three months ended MarchJune 31,30, 2025. This increase was primarily due to an increase in professional fees and in investor relations services.

Officers Salary: During the three months ended MarchJune 31,30, 2026, officers’ salary expenses increased to $192,398$194,821 or 4.15%4.63% from $184,730$186,197 for the three months ended MarchJune 31,30, 2025. This change was primarily due to 6% annual increase for the Company’s CEO.

InterestGeneral and Administrative Expense: InterestGeneral expenseand administrative expenses increased by $8,085$30,346 or 8.82% to $148,433$374,381 for the three month periodmonths ended June March 31,30, 2026, from $140,348$344,035 for the three month periodmonths ended MarchJune 31,30, 2025. The increase was primarily due to interest on certain Company loans.

InterestNet IncomeChange in Unrealized Appreciation and Depreciation on Investment in Gold Bullion: InterestNet incomechange increasedin unrealized appreciation on investment in gold bullion decreased by $4,459$64,004 to $10,805$74,015 for the three month period ended MarchJune 31,30, 2026, from $3,319depreciation of $10,011 for the three three month period ended MarchJune 31,30, 2025. The increase was primarily due to ana increasenet change in interestunrealized appreciation on moneyinvestment marketin fund.gold bullion.

NetInterest LossExpense: NetInterest lossexpense increased by $400,980, or 66.83%,$9,413 to a net loss of $1,001,013$151,399 for the three month period ended MarchJune 31,30, 20262026, from a net loss of $600,033$141,986 for the three month period endingended MarchJune 31,30, 2025. ThisThe increase in net loss was primarily attributabledue to increases ininterest generalon andcertain administrativeCompany expenses, professional fees, officers’ salary, and in research and development fees.loans.

Our financial statements have been presented on the basis that we have a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As presented in the unaudited condensed financial statements, we incurred a net loss of $1,001,013$1,852,255 during the threesix months ended MarchJune 31,30, 2026, and losses are expected to continue in the near term. The accumulated deficit is $57,710,085$58,561,327 at MarchJune 31,30, 2026. Refer to Note 2 for our discussion of stockholder deficit. We have been funding our operations through private loans and the sale of common stock in private placement transactions. Our cash resources are insufficient to meet our planned business objectives without additional financing. These and other factors raise substantial doubt about our ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of our company to continue as a going concern.

Management anticipates that significant additional expenditures will be necessary to develop and expand our business before significant positive operating cash flows can be achieved. Our ability to continue as a going concern is dependent upon our ability to raise additional capital and to ultimately achieve sustainable revenues and profitable operations. At MarchJune 31,30, 2026, we had $2,890,990$3,391,646 of cash on hand. These funds are insufficient to complete our business plan and as a consequence, we will need to seek additional funds, primarily through the issuance of debt or equity securities for cash to operate our business. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to us. Even if we are able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stockholders, in the case of equity financing.

Cash and cash equivalents, total current assets, total assets, total current liabilities, and total liabilities as of MarchJune 31,30, 2026, as compared to December 31, 2025, were as follows:

At March 31,June 30, 2026, we had a working capital deficit of $7,666,616,$7,326,899, compared to a working capital deficit of $8,576,604 at December 31, 2025. Current liabilities increased to $10,783,506$10,901,744 at MarchJune 31,30, 2026, from $10,564,498 $10,445,245 at December 31, 2025, primarily as a result of accounts payable - related party.

For the threesix months ended MarchJune 31,30, 2026, net cash used in operations of $529,718 $1,128,413 was the result of a net loss of $942,720$1,852,255 offset by depreciation expense of $6,222,$13,324, net change in unrealized depreciation in gold bullions of $20,408,$53,607, warrants issuance of $206,864,$270,446, options issued for services of $10,157,$20,314, imputed interest on related party loans of $18,395,$36,790, an a decreaseincrease in prepaid expenses of $4,176,$2,531, an increase in inventory of $45,240,$105,075, a decrease in operating lease right of use of $13,828, $33,749, an increase of accrued expenses and other payables-related party of $217,158,$436,069, increase in accounts payable of $14,977$504 and a decrease in operating lease liabilities of $13,127.$32,347.

For the threesix months ended MarchJune 31,30, 2025, net cash used in operations of $434,499$902,624 was the result of a net loss of $600,033$1,326,166 offset by depreciation expense of $5,683,$11,520, net change in unrealized appreciation in gold bullions of $117,488,$107,477, gain on sale of gold bullions of $62,469, warrants issuance of $98,069, options issuance of $34,487,$8,394, imputed interest on related party loans of $19,936,$40,093, a decrease in prepaid expenses of $11,308, $13,508, a decrease in operating lease right of use of $13,520,$27,662, an increase of accrued expenses and other payables-related party of $195,647, decrease$413,426, increase in accounts payable of $12,450$34,514 and a decrease in operating lease liabilities of $14,206.$28,698.

Net cash used in our investing activities were $14,116$42,724 and $0$143,455 for the threesix months ended MarchJune 31,30, 2026, and MarchJune 31,30, 2025, respectively. respectively. During the threesix months ended MarchJune 31,30, 2026,2026 the Company had purchase of fixed assets of $14,116.$42,724. During the six months ended June 30, 2025, the Company had net proceeds from the sale investment in gold of $147,238 and purchase of fixed assets of $3,783.

Our financing activities resulted in a cash inflow of $1,644,588$2,772,547 for the threesix months ended MarchJune 31,30, 2026, which is represented by $1,644,588$2,772,547 proceeds from the sale of stock.

Our financing activities resulted in a cash inflow of $158,237$881,367 for the threesix months ended MarchJune 31,30, 2025, which is represented by $168,237$881,367 proceeds proceeds from the sale of stock and $10,000$0 payment in debt offering costs.