SecProbe.io

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<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.txt
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                           Paula Winner Barnett, Esq.
                       17967 Boris Drive, Encino, CA 91316
                               tel (818) 776-9881
                               fax (818) 743-7491
                             pwbarnett@sbcglobal.net

                                  June 27, 2005

VIA EDGAR AND FACSIMILE

Russell Mancuso, Branch Chief
Tom Jones, Examiner
Division of Corporate Finance
Securities and Exchange Commission
450 Fifth Street, N.W., Mail Stop 6010
Washington, D.C. 20549-0306

      Re:   Calypte Biomedical Corporation
            Registration Statement on Form S-3
            Filed May 19, 2005
            File No. 333-125051 (the "Registration Statement")

Dear Messrs. Mancuso and Jones:

On behalf of Calypte Biomedical Corporation (the "Company"), the following are
the Company's responses to the corresponding numbered comments in the June 15,
2005 letter from the Securities and Exchange Commission (the "Commission"). The
Company has filed on the EDGAR system an amended Form 10-KSB, entitled Form
KSB/A (No. 2) for the fiscal year ended December 31, 2004 (the "Amended Form
10-KSB/A (No. 2)"), an amended Form 10-QSB for the quarter ended March 31, 2005,
entitled Form 10-QSB/A (No.1) (the "Amended Form 10-QSB/A (No. 1)"), and an
amended Registration Statement, entitled Amendment No. 1 to Form S-3, File No.
333-125051 (the "Amended Registration Statement"), to conform the Amended Form
10-KSB/A (No. 2), Amended Form 10-QSB/A (No. 1) and Amended Registration
Statement to the Commission's comments in its above-referenced letter. Marked
copies of the relevant pages of the Amended Form 10-KSB/A (No. 2), Amended Form
10-QSB/A (No. 1) and Amended Registration Statement have been sent by facsimile
to your attention.

Incorporation by Reference, page 24

Form 10-KSB/A (No.1) for the year ended December 31, 2004

Note 2. Significant Accounting Policies, page F-10

Principles of Consolidation, Page F-10

      1.    We note that you have a 51% ownership interest in the joint venture
            Beijing Calypte Biomedical Technology Ltd. Please tell us more about
            the nature of the arrangement and provide us with your analysis of
            why the joint venture is not a variable interest entity under FIN
            46(R) and why you are not consolidating your interest.

<PAGE>

Mr. Russell Mancuso, Branch Chief                                         Page 2
Securities and Exchange Commission
June 27, 2005

      Response

            Beijing Calypte Biomedical Technology Ltd ("Beijing Calypte") was
            originally created as a non-operating entity to facilitate start up
            activities associated with the proposed manufacturing and marketing
            of the Company's products in China. During 2003 and 2004, Beijing
            Calypte's total capitalization was $300,000 and its activities
            generated no revenues and resulted in expenses totaling
            approximately $125,000, primarily legal expenses. The Company
            believes that its 51% contractual share of this loss is not material
            with respect to its results of operations or balance sheet
            classification and has elected not to consolidate the joint
            venture's operations at this time. To date, each of the joint
            venture partners has been responsible for its own direct selling,
            general and administrative expenses incurred in connection with
            initiating operations in China, as discussed on page 39 of the
            Company's MD&A. The joint venture partners are currently
            re-evaluating the status of Beijing Calypte in anticipation of
            commencement of manufacturing operations and will either
            re-establish that entity as an appropriately capitalized operating
            entity or establish a new operating entity. The Company anticipates
            that any such operating joint venture will be classified as a
            variable interest entity requiring consolidation as described by FIN
            46(R).

Segment and Geographic Information, page F-13

      2.    We note in your MD&A on page 36 that you discuss the different types
            of products that you have and how these products affect your
            operations. Please revise future filings to provide all disclosures
            as required by paragraph 37 of SFAS 131, as those disclosures apply
            to all companies, even those that have a single reportable segment
            or tell us why these disclosures are not applicable.

      Response

            The Company has revised its disclosure contained in its Amended Form
            10-KSB/A (No. 2) to include revenue information by product as
            required by paragraph 37 of SFAS 131. For the Commission's
            convenience the disclosure is noted here. Figures are reported in
            $000.

                                                                  2004     2003
                                                                 ------   ------
            Urine EIA screening test                             $1,481   $2,167
            Urine Western Blot supplemental test                     69      154
            Serum Western Blot supplemental test                  1,134    1,105
            BED Incidence test                                       31       --
            All other                                                82       41
                                                                 ------   ------

            Revenue from product sales                           $2,797   $3,467
                                                                 ======   ======
<PAGE>

Mr. Russell Mancuso, Branch Chief                                         Page 3
Securities and Exchange Commission
June 27, 2005

Note 6. Accounts Payable, Accrued Expenses and Deferred Revenue, page F-15

      3.    We note on page F-14 in Note 4 that you have closed a plant in
            Alameda, California and on page 38 you accrued $300,000 of
            severance-related costs attributable to the shut-down. We also note
            that you disclose additional liabilities related to employee
            severance and accrued restructuring expense in Note 6. Additionally,
            we note on page 38 that you have eliminated your direct sales and
            marketing force. To the extent that these costs were incurred as
            part of a formal restructuring plan accounted for pursuant to SFAS
            146, please revise future filings, if significant to provide the
            MD&A disclosures required by SAB Topic 5-P as well as the financial
            statement disclosures required by paragraph 20 of the Statement.

      Response

            The four references mentioned in the Commission's letter relate to
            three distinct events and are not part of a formal restructuring
            plan under SFAS 146: the termination of the marketing and sales
            personnel in the third quarter of 2003, the relocation of the
            Company's EIA business from its Alameda, California to its
            Rockville, Maryland facility during 2004 and the settlement of its
            former Executive Chairman's employment contract in connection with
            his resignation from the Company in the fourth quarter of 2004.
            Moreover, the costs associated with the elimination of the sales and
            marketing force and the relocation of the EIA manufacturing
            operations to Rockville, Maryland, were insignificant with respect
            to the Company's total operating loss. The significant cost reported
            in Note 6 relates to settlement of the Company's liability to its
            former Chairman under his employment contract upon his resignation.

Note 7. Notes and Debentures Payable, page F-16

      4.    Disclose the effective interest rate for each borrowing. Refer to
            APB 21.

      Response

            The Company has revised its disclosure contained in its Amended Form
            10-KSB/A (No. 2) to include the effective interest rate on the
            aggregation of similar borrowings. The calculated effective rate is
            based on the carrying value of the notes or debentures and the
            stated interest rate plus amounts related to the amortization of any
            beneficial conversion feature and/or deferred offering costs.

      5.    We note that you determined that each of the 10% convertible
            debentures and the 12% convertible debentures were issued with a
            beneficial conversion feature and that the intrinsic value was
            calculated based on the date of issue. Please clarify how you
            accounted for an adjustment of the beneficial conversion feature
            with each extension of the maturity of the debentures, if you did
            not make an adjustment please tell us why. In your response please
            refer to EITF 98-5 and EITF 00-27.

<PAGE>

Mr. Russell Mancuso, Branch Chief                                         Page 4
Securities and Exchange Commission
June 27, 2005

      Response

            At the time of issue, the Company calculated the intrinsic value of
            the beneficial conversion feature attributable to each of the four
            subject debentures as noted. In accordance with EITF 98-5, as
            modified by EITF 00-27, the Company accreted such discount as a
            charge to interest expense from the date of issuance to the stated
            (original) maturity date of the convertible debentures. Upon
            conversion of a portion of a debenture, the Company immediately
            recognized the proportional share of the unamortized discount as
            interest expense and continued the accretion of the remaining
            proportion of the discount attributable to the outstanding
            debenture. At January 14, 2004, the date on which the maturity of
            the four subject debentures was extended until July 14, 2004, the
            unamortized discount attributable to the debentures aggregated
            approximately $28,000. The additional beneficial conversion feature
            calculated at January 14, 2004 aggregated approximately $256,000 for
            three of the debentures for which the initial calculation of the
            beneficial conversion feature had not reduced the carrying value of
            the debentures to zero. The Company deemed such amount to be
            immaterial since it represented less than 1.5% of the Company's 2004
            net loss, was non-cash interest (classified below the operating loss
            line), and had no net impact on stockholders' equity (accumulated
            deficit) as the amortization of the discount was offset by the
            additional paid-in capital during 2004. Accordingly, the Company
            continued its accretion of the initial discount over the original
            term of each debenture.

8% Convertible Notes, page F-16

      6.    We note that you recognized approximately $768,000 as liquidated
            damages attributable to your two 8% convertible notes totaling
            $3,232,000. We also note that you overestimated the liquidated
            damages by approximately $205,000; however you did not reverse the
            accrual until fiscal year 2004. Please tell us why you did not
            reverse the over accrual related to the liquidated damages in 2003
            rather than in 2004, as we note that the conversion of the note and
            the calculation of the liquidated damages was completed in 2003.

      Response

            The $768,000 in liquidated damages was attributable to an
            aggregation of fourteen 8% Convertible Notes issued between May 2002
            and May 2003 and having an aggregate face amount of $3,232,000. The
            Company estimated the amount of liquidated damages attributable to
            each note. Although most of the notes were converted during the
            third quarter of 2003, four of the note holders did not immediately
            request liquidated damages. The Company adjusted its liquidated
            damage accrual based on amounts ultimately settled with each note
            holder. For the four note holders who did not immediately request
            payment for liquidated damages, the Company maintained its accruals
            for approximately six months following the final note conversion
            transaction with each of those note holders. The Company then
            adjusted the accruals attributable to liquidated damages for the
            four notes, aggregating $205,000, and credited the reversal to
            interest expense as an adjustment of an estimate.

10% Convertible Note, page F-17

      7.    We note that you disclose that no accounting adjustments were
            required as a result of the extension of the note's maturity or the
            amendment of the conversion price. We also note that with each
            extension of the note's maturity and amendment of the conversion
            there was a difference in the intrinsic value, which would cause an
            accounting adjustment relating to the recognition of the beneficial
            conversion feature. Please tell us why you did not account for the
            adjustment of the beneficial conversion feature and additionally
            tell us how you considered EITF 98-5 and EITF 00-27.

<PAGE>

Mr. Russell Mancuso, Branch Chief                                         Page 5
Securities and Exchange Commission
June 27, 2005

      Response

            The Company determined the intrinsic value of the beneficial
            conversion feature at the date of issuance of the note and
            determined that the resulting discount reduced the carrying value of
            the note to zero. In accordance with EITF 98-5, as modified by EITF
            00-27, the Company accreted the discount resulting from the
            beneficial conversion feature over the period from the date of
            issuance to the stated maturity date of the note, two months after
            issuance. The Company accreted the entire amount of the discount as
            a charge to interest expense over that period. Since the first
            extension of the note's maturity was made as of the original
            maturity date and there was no remaining discount to accrete, the
            Company made no accounting adjustments as a result of any subsequent
            extensions or modifications of the note.

12% Convertible Debenture - Mercator Momentum Fund (MMF), page F-21

      8.    Please tell us why you classified the non-cash gain of $128,000 from
            the repurchase of the beneficial conversion feature upon the
            repayment of the debenture, as other income rather than classifying
            the amount as interest expense.

      Response

            The Company believes that in accordance with the provisions of SFAS
            145, the gain recognized as a result of the repurchase of the
            beneficial conversion feature upon early extinguishment of
            convertible debt is to be treated as ordinary income, rather than as
            an extraordinary gain. Accordingly, the Company classified the gain
            as other income. Prior to its adoption of SFAS 145 in 2003, the
            Company had treated similar occurrences as extraordinary gains.
            Although the Company believes that the amount is not material with
            respect to its results of operations, it believes that classifying
            the gain on r