Paula Winner Barnett, Esq. 17967 Boris Drive, Encino, CA 91316 tel (818) 776-9881 fax (818) 743-7491 pwbarnett@sbcglobal.net May 8, 2005 VIA FACSIMILE Tom Jones, Esq. Division of Corporate Finance Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549-0306 Re: Calypte Biomedical Corporation ("Calypte"); Amendment No. 3 to Form SB-2 on Form S-3; Registration No. 333-124344 Dear Mr. Jones: Pursuant to our telephone conversation on Thursday, May 5, 2005, following is the numerical calculation of the anti-dilution formula for the common stock purchase warrants ("Warrant Shares") issued in the 2004 PIPEs demonstrating how the exercise price was adjusted from $0.50 to $0.45 as a result of the April 4, 2005 note financing ("2005 Financing"). The exercise price of the Warrant Shares is calculated on a full-diluted basis using the number of shares that would be outstanding if the 2005 Financing were priced at $0.50 per share instead of the actual $0.30 per share for the shares underlying the convertible notes (the "Notes"), $0.325 per share for the shares issuable upon exercise of the Series A Warrants and $0.325 per share for the shares issuable upon exercise of the Series B Warrants. 1. Actual total outstanding shares on a fully-diluted basis include: i) 171.21 million ii) from the conversion of the $8 million in Notes and $97,500 in Notes issued as a fee to the placement agent at $0.30 per share, 26.99 million shares = $8,097,500/$0.30 iii) from the exercise of the Series A Warrants of 26.99 million (based on 100% coverage for each share underlying the Notes) iv) from the exercise of the Series B warrants of 12.15 million (based on 45% coverage for each share underlying the Notes) v) from 1.86 million in warrants issued as fees to placement agents Total outstanding = 171.21 + 26.99 + 26.99 +12.15 + 1.86 = 239.20 million. Tom Jones, Esq. May 8, 2005 Page 2 2. Total outstanding on a fully-diluted basis, assuming the 2005 Financing were priced at $0.50 per share, would be 213.89 million shares: (i) $8.0975 million in Notes/.5 = 16.19 million shares (ii) 16.19 million shares * 145% warrant coverage = 25.45 million shares (iii) Fee warrants would become 1.05 million shares 171.21 + 16.19 + 25.44 + 1.05 = 213.89 million shares 3. The dilution factor is 89.4% = 213.89/239.20. 4. The new price is $0.50 * dilution factor of 89.4% = $0.45 (rounded to the penny) 5. The investors in the 2004 PIPEs are entitled to invest the same amount of money using the new exercise price as they would have at $0.50 per share exercise price. They have the right to purchase 10,741,500 Warrants Shares. At $0.50 per share this is an investment of $5,370,750. 6. At $0.45 per share, the investment of $5,370,750 would buy a total of 11,935,000 shares, or an additional 1,193,500 shares (11,935,000 - 10,741,500) - 1.193,501 (rounded) by individual investor. 7. These 1,193,501 shares carry the new exercise price of $0.45. Richard Brounstein, the Chief Financial Officer, and I will call you to discuss the calculation and answer any further questions you may have. Very truly yours, /s/ Paula Winner Barnett Paula Winner Barnett cc: Mr. J. Richard George Mr. Richard Brounstein