10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

OR

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from  to  

Commission file number:   000-20985

CALYPTE BIOMEDICAL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	06-1226727
(State or other jurisdiction of incorporation	(I.R.S. Employer
or organization)	Identification Number)

15875 SW 72nd Ave,

Portland, Oregon  97224

(Address of principal executive offices)      (Zip Code)

 (503) 726-2227

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x Yes o No   

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   x Yes  o No

Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).

Large accelerated filer   o		Accelerated Filer   o
Non-accelerated filer     o	(Do not check if a smaller reporting company)	Smaller reporting company  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 

o Yes  x No

The registrant had 700,168,157 shares of common stock outstanding as of December 31, 2012.

1

CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARIES

FORM 10-Q

INDEX

			Page No.
PART I.	Financial Information
	Item 1.	Consolidated Financial Statements (unaudited):
		Condensed Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011	3
		Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2012 and 2011	4
		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2012 and 2011	5
		Notes to Condensed Consolidated Financial Statements	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
	Item 4.	Controls and Procedures	16
PART II.	Other Information
	Item 1A.	Risk Factors	16
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17
	Item 6.	Exhibits	17
SIGNATURES			18

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PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 (in thousands, except share data)

	September 30, 2012			December 31, 2011
	(Unaudited)			(Note 1)
ASSETS
Current assets:
Cash	$	5		$	10
Accounts receivable		1			8
Inventories, net of allowance of $2 and $0 at September 30, 2012 and December 31, 2011, respectively		189			186
Prepaid expenses		16			23
Total current assets		211			227
Property and equipment, net of accumulated depreciation of $395 and $375 at September 30, 2012 and December 31, 2011, respectively		24			44
Intangible assets, net of accumulated amortization of $964 and $857 at September 30, 2012 and December 31, 2011, respectively		1,567			1,674
Other assets		14			17
Total assets	$	1,816		$	1,962
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued expenses	$	2,010		$	1,998
Advances from shareholder		957			397
Liability with related party		-			914
4% Note payable, including accrued interest of $8 and $6 at September 30, 2012 and December 31, 2011, respectively		26			45
12% Convertible debentures payable		60			60
Total current liabilities		3,053			3,414
Mandatorily redeemable Series A preferred stock, $0.001 par value; no shares authorized at September 30, 2012 and December 31, 2011; 100,000 shares issued and outstanding at September 30, 2012 and December 31, 2011; aggregate redemption and liquidation value of $1,000 plus cumulative dividends		3,746			3,656
Total liabilities		6,799			7,070
Commitments and contingencies
Stockholders’ deficit:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued or outstanding		-			-
Common stock, $0.03 par value; 800,000,000 shares authorized at September 30, 2012 and December 31, 2011; 700,168,157 and 547,826,416 shares issued and outstanding as of September 30, 2012 and December 31, 2011, respectively		16,163			15,249
Additional paid–in capital		159,747			159,747
Accumulated deficit		(180,893	)		(180,104	)
Total stockholders’ deficit		(4,983	)		(5,108	)
Total liabilities and stockholders’ deficit	$	1,816		$	1,962

See accompanying notes to condensed consolidated financial statements.

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 CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARIES

 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 (in thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Revenues:
Product sales	$	33		$	107		$	167		$	505
Operating costs and expenses:
Cost of product sales		35			27			124			355
Research and development expenses		62			85			204			226
Selling, general and administrative expenses		169			213			535			667
Total operating expenses		266			325			863			1,248
Loss from operations		(233	)		(218	)		(696	)		(743	)
Interest expense		(31	)		(30	)		(92	)		(91	)
Other income, net		1			6			-			219
Net loss before income taxes		(263	)		(242	)		(788	)		(615	)
Benefit for income taxes		2			-			-			178
Net loss	$	(261	)	$	(242	)	$	(788	)	$	(437	)
Net loss per share (basic and diluted)		(0.000	)		(0.000	)		(0.001	)		(0.001	)
Weighted average shares used to compute net loss per share (basic and diluted)		700,168			547,826			655,689			545,189

See accompanying notes to condensed consolidated financial statements.

4

 CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARIES

 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

 (in thousands)

	Nine months ended September 30,
	2012			2011
Cash flows from operating activities:
Net loss income from operations	$	(788	)	$	(437	)
Adjustments to reconcile net loss to operating activities:
Depreciation and amortization		126			156
Non-cash interest expense attributable to:
Dividends on mandatorily redeemable Series A preferred stock		90			90
Stock-based employee compensation expense		-			(2	)
Changes in operating assets and liabilities:
Accounts receivable		7			19
Inventories		(3	)		96
Prepaid expenses and other current assets		10			(41	)
Accounts payable, accrued expenses and other current liabilities		14			(124	)
Net cash used in operating activities		(544	)		(243	)
Cash flows from financing activities:
Principal payments on notes payable		(21	)		(15	)
Proceeds from shareholder advances		560			252
Net cash provided by financing activities		539			237
Net decrease in cash		(5	)		(6	)
Cash at beginning of period		10			79
Cash at end of period	$	5		$	73

	Nine months ended
	September 30,
	2012		2011
Conversion of advances from related party into common stock	$	-	$	680
Conversion of related party liability into common stock	$	914	$	-

 See accompanying notes to condensed consolidated financial statements.

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CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)        The Company

Calypte Biomedical Corporation (the “Company”) develops, manufactures, and distributes in vitro diagnostic tests, primarily for the diagnosis of Human Immunodeficiency Virus (“HIV”) infection. Until late 2005, we manufactured and marketed urine-based HIV-1 diagnostic screening tests and urine and blood-based Western Blot supplemental (sometimes called “confirmatory”) tests for use in high-volume laboratories, which we call our “Legacy Business.” In November 2005, we sold our Legacy Business and began to concentrate primarily on our rapid test platform products which we had begun developing in 2003. Our emphasis has been on the development and commercialization of our AwareTM HIV-1/2 rapid tests. We have completed field trials and product evaluations of our AwareTM HIV-1/2 OMT (oral fluid) rapid test covering an aggregate of over 9,000 samples in China, India, South Africa and elsewhere and believe that the results of these studies and evaluations have validated the test. In our studies, AwareTM HIV-1/2 OMT averaged 99.7% accuracy. We have obtained regulatory approvals in Russia, India and China as well as a number of key countries in Africa, Southeast Asia and the Middle East. Sales of our rapid test products have so far been primarily through the efforts of our distributors in South Africa and the United Arab Emirates (“U.A.E”).

We manufacture and sell HIV-1 BED Incidence EIA test, our AwareTM BED Incidence Test, through an arrangement with the U.S. Centers for Disease Control and Prevention (the “CDC”).

In the first quarter of 2008, we introduced Aware MessengerTM, our oral fluid sample collection device. Although we do not currently have approval to sell this device for diagnostic purposes, we can sell it for “research use only” in situations where assay developers and test laboratories can qualify the product for use with their own assays.

In March 2011, we successfully completed internal trials of our new AwareTM 2 HIV-1/2 oral fluid rapid test, which showed an accuracy of 100%. Based on these results, we have contacted the Food and Drug Administration (FDA) and started the process to conduct clinical trials and apply for Premarket Approval.

In October 2011, we entered into a memorandum of understanding (“MoU”) with a private investor to secure funding needed to initiate the FDA approval procedures for the new AwareTM 2 product. The MoU contemplates an initial investment of at least $1,000,000 through 2012, contingent upon the Company following an agreed upon budget plan, and potentially up to $4,000,000 from additional investors. To date, the parties have not entered into a definitive agreement or agreed upon a budget plan as contemplated by the MoU; however, as of September 30, 2012 the Company had received $705,000 in investments pursuant to the MoU. Although the MoU expresses the expectation of the parties that the investor will assist us in raising an additional $4 million from other investors, no party is under a contractual obligation to invest any funds beyond the $1 million to be invested pursuant to the MoU, and there can be no assurance that we will be able to raise the additional funds. Based on our revised revenue and expense forecasts, we anticipate that we will be required to raise additional financing beyond the initial $1 million from the MOU in order to fully fund our efforts to obtain FDA approval of our AwareTM 2 product.

At September 30, 2012, we had a working capital deficit of $2.8 million and our stockholders’ deficit was $5.0 million.  Our cash balance at September 30, 2012 was $5,000, which we do not believe is sufficient to enable us to fund our operations through the remainder of 2012 unless we continue to receive financing as provided in the MoU.

We currently have 800,000,000 shares of common stock authorized, of which approximately 786,095,129 shares are issued and outstanding or reserved for issuance under current financing arrangements and our incentive plans. At the current market price of our common stock, we do not have sufficient authorized common stock to raise the capital necessary to execute our long-term business plan and achieve self-sustaining cash flow.  The condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

We have prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and they reflect all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary for a fair presentation of our consolidated financial position as of September 30, 2012 and the consolidated results of our operations and our consolidated cash flows for the three and nine month period ended September 30, 2012.  The accompanying condensed consolidated balance sheet at December 31, 2011 has been derived from our audited financial statements at that date.  Interim results are not necessarily indicative of the results to be expected for the full year or any future interim period.  This information should be read in conjunction with our audited consolidated financial statements for each of the years in the two year period ended December 31, 2011 included in our Form 10-K filed with the SEC on March 22, 2012.

Certain information in footnote disclosures normally included in the financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) has been condensed or omitted pursuant to the rules and regulations of the SEC.  The data disclosed in these condensed consolidated financial statements and in the related notes is unaudited.

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(2)        Significant Accounting Policies

Impairment of Long-Lived Assets

Long-lived assets are comprised of property and equipment and intangible assets.  We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.  We compare an estimate of undiscounted future cash flows produced by the asset, or by the appropriate grouping of assets, to the carrying value to determine whether impairment exists.  If an asset is determined to be impaired, we measure the loss based on quoted market prices in active markets, if available.  If quoted market prices are not available, we estimate the fair value based on various valuation techniques, including a discounted value of estimated future cash flow and fundamental analysis.  We report an asset to be disposed of at the lower of its carrying value or its estimated net realizable value.

Revenue Recognition

We record revenues only upon the occurrence of all of the following conditions:

• We have received a binding purchase order or similar commitment from the customer or distributor authorized by a representative empowered to commit the purchaser (evidence of a sale).

• The purchase price has been fixed, based on the terms of the purchase order.

• We have delivered the product from our manufacturing plant to a common carrier acceptable to the purchaser.  Our customary shipping terms are FOB shipping point. Because of the need for controlled conditions during shipment, we suggest, but leave to the purchaser’s discretion, acquiring insurance for the value of the shipment.  If the purchaser elects to insure the shipment, the insurance is at the purchaser’s expense.

• We deem the collection of the amount invoiced probable.  To eliminate the credit risk associated with international distributors with whom we have had little or no experience, we require prepayment of all or a substantial portion of the order or a letter of credit before shipment.

Except in the event of verified product defect, we do not permit product returns.  Our products must be maintained under rigidly controlled conditions that we cannot control after the product has been shipped to the customer.

We provide no price protection.  Subject to the conditions noted above, we recognize revenue upon shipment of product.

Royalty Revenue

Royalty Revenue is recognized upon receipt of the semi-annual royalty data from the licensee, as designated in the royalty agreement, and when collectability is assured.

Segment and Geographic Information

Our operations are currently focused on the development and sale of HIV diagnostics.  The following table summarizes our product sales revenues by product for the three and nine months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2012		2011			2012		2011
AwareTM BEDTM HIV-1 Incidence Test	$	31	$	(2	)	$	121	$	238
AwareTM Rapid HIV diagnostic tests		1		41			8		94
All other		1		12			14		39
Revenue from product sales	$	33	$	51		$	143	$	371
Revenue from raw material sourcing	$	-	$	56		$	24	$	134
Total Revenue	$	33	$	107		$	167	$	505

Sales to international customers accounted for approximately 98% and 93% of our revenues in the third quarter of 2012 and 2011, respectively.  One customer accounted for approximately 68% of our third quarter 2012 revenue.  Three customers accounted for approximately 99% of our third quarter 2011 revenue.

International sales accounted for approximately 90% and 82% of our revenues in the nine months ended September 30, 2012 and 2011, respectively.  Five customers accounted for approximately 60% of our revenue for the nine months ended September 30, 2012.  Four customers accounted for approximately 66% of our revenue for the nine months ended September 30, 2011.

7

Net Loss Per Share

We compute basic net loss per share by dividing net loss by the weighted average number of shares of common stock outstanding during the periods presented.  The computation of diluted loss per common share is similar to the computation of basic net loss per share, except that the denominator is increased for the assumed conversion of convertible securities and the exercise of options and warrants, to the extent they are dilutive, using the treasury stock method.  The weighted average number of shares used in computing basic and diluted net loss per share are the same for the periods presented in these unaudited condensed consolidated financial statements.  Outstanding options and warrants of 3,050,000 shares and 6,175,001 shares were excluded from the computation of net loss per share for the three and nine month periods ended September 30, 2012 and 2011, respectively, as their effect is anti-dilutive.
 

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

We made certain reclassifications to prior-period amounts to conform with the quarter ended September 30, 2012 presentation.

Stock-Based Compensation Expense

We measure stock-based compensation at the grant date based on the award’s fair value and recognize the expense ratably over the requisite vesting period, net of estimated forfeitures, for all stock-based awards granted after January 1, 2006 and all stock based awards granted prior to, but not vested as of, January 1, 2006.

We have elected to calculate the fair value of option awards based on the Black-Scholes option-pricing model. The Black-Scholes model requires various assumptions, including expected option life and volatility.  If we significantly change any of the assumptions used in the Black-Scholes model or the estimated forfeiture rate, stock-based compensation expense may differ materially in the future from that recorded in the current period.

Recent Accounting Pronouncements

There have been no recent accounting pronouncements or changes in accounting pronouncements during the nine months ended September 30, 2012, as compared to the recent accounting pronouncements described in our 2011 Form 10-K, that are of significance, or potential significance to us.

(3)         Inventory

Inventory as of September 30, 2012 and December 31, 2011 consisted of the following (in thousands):

	September 30, 2012		December 31, 2011
Raw materials	$	134	$	132
Work-in-process		4		5
Finished goods		51		49
Total inventories	$	189	$	186

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(4)        Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses as September 30, 2012 and December 31, 2011 consisted of the following (in thousands):

	September 30, 2012		December 31, 2011
Trade accounts payable	$	1,359	$	1,301
Accrued royalties		236		217
Accrued salary and vacation pay		38		44
Accrued interest		16		16
Accrued audit, legal and consulting expenses		94		158
Accrued liabilities of legacy business		190		190
Other		77		72
Total accounts payable and accrued expenses	$	2,010	$	1,998

(5)        Notes and Debentures Payable

The following table summarizes note and debenture activity for the nine months ended September 30, 2012 (in thousands):

	Balance 12/31/11		Additions		Conversion to Equity		Repayments			Balance 9/30/12
Current Notes and Debentures
12% Convertible Debentures –
Mercator assignees	$	60	$	-	$	-	$	-		$	60
4% Note Payable –
Morningtown	$	39	$	-	$	-	$	(21	)	$	18

(6)        Stockholders’ Deficit

2011-2012 Private Placements

On January 28, 2011, we entered into a subscription agreement with David Khidasheli pursuant to which Mr. Khidasheli agreed to purchase 16,666,666 shares of our common stock at a purchase price of $0.03 per share, for a total purchase price of $500,000, which Mr. Khidasheli had advanced to us in 2010.  On February 15, 2011, we entered into a subscription agreement with Carolina Lupascu pursuant to which Ms. Lupascu agreed to purchase 6,000,000 shares of our common stock at a purchase price of $0.03 per share, for a total purchase price of $180,000, which Ms. Lupascu had advanced to us in 2010. These shares were issued pursuant to Regulation S under the Securities Act. The subscription agreements contain customary representations and warranties by Mr. Khidasheli and Ms. Lupascu regarding their status as non-U.S. persons, their investment intent and restrictions on transfer. Mr. Khidasheli and Ms. Lupascu was granted certain piggy-back registration rights which require us to use our best efforts to register all or a portion of their shares on the next registration statement we file with the Securities and Exchange Commission under the Securities Act. We used the proceeds of the private placement for general working capital purposes.

During 2011, Mr. Khidasheli made several advances totaling $397,000 (including $145,000 pursuant to the MoU), and in 2012 has made advances totaling $560,000 (all pursuant to the MoU), in anticipation of entering into future subscription agreements or stock purchase agreements. We are using the proceeds of these investments for general working capital purposes.

(7)        Share Based Payments

We maintain stock compensation plans for our employees and directors, which are described in Note 11, Share Based Payments, in the Notes to Consolidated Financial Statements in our 2011 Annual Report on Form 10-K filed with the SEC on March 22, 2012.  The Company follows FASB ASC topic 718, Compensation — Stock Compensation (“ASC 718”).  ASC 718 requires the recognition of the fair value of stock compensation, including stock options, in net income (loss).  We recognize the stock compensation expense over the requisite service period of the individual grantees, which is generally the same as the vesting period of the grant.  All of our stock compensation is accounted for as an equity instrument.

9

We did not grant any options to employees or members of our Board of Directors during the first nine months of 2012 or 2011.  The following table summarizes option activity for all of our stock option plans from December 31, 2011 through September 30, 2012:

	Options		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value at Date Indicated
Options outstanding at December 31, 2011		3,050,000	$	0.112		5.87	$	0
Options granted		-		-
Options exercised		-		-
Options forfeited		-		-
Options expired		-		-
Options outstanding at September 30, 2012		3,050,000	$	0.112		5.12	$	0
Options vested and exercisable at December 31, 2011		3,050,000	$	0.112		5.87	$	0
Options vested and exercisable at September 30, 2012		3,050,000	$	0.112		5.12	$	0

The aggregate intrinsic value is the sum of the amounts by which the quoted market price of our common stock at the date indicated exceeded the exercise price of the options (“in-the-money-options”).  At September 30, 2012, the market price of our stock was $0.01 per share, and none of our options were in-the-money.  No options were exercised in the nine months period ending September 30, 2012.

The following table summarizes information about stock options outstanding under all of our option plans at September 30, 2012:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Years to Expiration		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$0.11		3,000,000		5.16	$	0.110		3,000,000	$	0.110
$0.23		50,000		2.57	$	0.230		50,000	$	0.230
		3,050,000		5.12	$	0.112		3,050,000	$	0.112

We did not record any income tax benefits for stock-based compensation arrangements for the nine month periods ended September 30, 2012 and 2011, as we have cumulative operating losses and have established full valuation allowances for our income tax benefits.

(8)        Related Party Transactions

Until July 2010, we were the 51% owner of each of two joint ventures in China, Beijing Calypte Biomedical Technology Ltd. (“Beijing Calypte”) and Beijing Marr Bio-Pharmaceuticals Co., Ltd. (“Beijing Marr”). In July 2010 we entered into a series of agreements providing for (i) the restructuring of our outstanding indebtedness to Marr and SF Capital (the “Debt Agreement”) and (ii) the transfer of our interests in the two Chinese joint ventures, Beijing Marr and Beijing Calypte, to Kangplus (the “Equity Agreement”). Under the Debt Agreement, the parties agreed to convert $6,393,353 in outstanding indebtedness to 152,341,741 shares of our common stock, and our remaining indebtedness to Marr, totaling $3,000,000 was cancelled. In consideration for such debt restructuring, we transferred our equity interests in Beijing Marr to Kangplus pursuant to the Equity Transfer Agreement and transferred certain related technology to Beijing Marr. We also agreed to transfer our equity interests in Beijing Calypte to Marr or a designate of its choosing. The transactions contemplated by the Debt Agreement and the Equity Transfer Agreement were subject to Chinese government registration of the transfer of the equity interests; this registration has now been approved, and the shares were issued in March 2012. Under the debt agreement with SF Capital, $2,008,259 in outstanding indebtedness was converted to 47,815,698 shares of our common stock.

In the agreement with Beijing Marr, we agreed to continue to buy raw materials for them and provide them with technical support. We purchased raw materials for Beijing Marr in the first nine months of 2012 and 2011, and recorded $24,000 and $134,000 of revenue from raw material sourcing, respectively.  During the first quarter of 2011, we provided telephone support and sent one person to Beijing Marr for three weeks, and we recognized $16,716 in revenue related to this technical support.

10

During the first nine months of 2012, one investor has advanced a total of $560,000 to the Company. Through December 31, 2012, this investor has further advanced us $135,000. These advances are intended for future subscription agreements.

(9)        Subsequent Events

Subsequent to September 30, 2012, we have received an aggregate of $135,000 in advances from David Khidasheli (pursuant to the MoU) in anticipation of entering into a subscription or stock purchase agreement. We are using the proceeds of these investments for general working capital purposes.

We have evaluated all other subsequent events through the date of this filing, and determined there are no other material recognized or unrecognized subsequent events.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Management’s Discussion and Analysis contains forward-looking statements regarding our future plans, regulatory reviews and approvals, timing, strategies, expectations, anticipated expense levels, projected profitability, business prospects and positioning with respect to market, demographic and pricing trends, business outlook and various other matters (including contingent liabilities and obligations and changes in accounting policies, standards and interpretations) and expresses our current intentions, beliefs, expectations, strategies or predictions.  These forward-looking statements are based on a number of assumptions and currently available information and are subject to a number of risks and uncertainties.

Forward-looking statements are generally identifiable by the use of terms such as “anticipate,” “will,” “expect,” “believe,” “should” or similar expressions. Although we believe that the bases of the assumptions on which the forward-looking statements contained herein are reasonable, any of those assumptions could prove to be inaccurate given the inherent uncertainties as to the occurrence or nonoccurrence of future events. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict.  Therefore, actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including the potential risks and uncertainties set forth in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2011 and Item 1A of Part II below and relate to our business plan, our business strategy, development of our proprietary technology and our products, timing of such development, timing of FDA and international regulatory reviews, market acceptance of our products by governmental and other public health agencies, health care providers and consumers, characteristics and growth of our market and customers, protection of our intellectual property, implementation of our strategic, operating and human resources initiatives, benefits to be derived from key personnel and directors, our ability to commercialize our products, our ability to obtain an increased market share in the diagnostic test market, our assumptions regarding cash flow from operations and cash on-hand, the amount and timing of operating costs and capital expenditures relating to the expansion of our business, operations and infrastructure, implementation of marketing and distribution channels, our distribution agreements and strategic alliances, our liquidity and capital resources, our ability to obtain additional capital as, and when, needed, and on acceptable terms, changes in health care policy in the United States or abroad and general economic conditions specific to our industry, any of which could impact sales, costs and expenses and/or planned strategies and timing.  If we are not able to generate sufficient liquidity from operations and current potential resources or are unable to raise sufficient additional capital, this could have a material adverse affect on our business, results of operations, liquidity and financial condition, and we may be required to discontinue operations altogether. We assume no obligation to, and do not currently intend to, update these forward-looking statements.

Overview

During the third quarter of 2012, we continued to focus on our research and development operations, and building upon the promising results of the completed internal trials of our new AwareTM 2 HIV-1/2 oral fluid rapid test, which showed an accuracy of 100%.  We have contacted the FDA and started the process to conduct clinical trials.

Our ability to obtain a small stream of funding through private placements of common stock has enabled us to continue our operations. On October 10, 2011, we entered into a memorandum of understanding (“MoU”) with a private investor to secure funding needed to initiate the FDA approval procedures for our new AwareTM 2 product. The MoU contemplates an initial investment of at least $1,000,000 through 2012, contingent upon the Company following an agreed upon budget plan, and potentially up to $4,000,000 from additional investors. To date, the parties have not entered into a definitive agreement or agreed upon a budget plan as contemplated by the MoU; however, as of September 30, 2012 the Company had received $705,000 in advances pursuant to the MoU. Although the MoU expresses the expectation of the parties that the investor will assist us in raising an additional $4 million from other investors, no party is under a contractual obligation to invest any funds beyond the $1 million to be invested pursuant to the MoU, and there can be no assurance that we will be able to raise the additional funds. Based on our revised revenue and expense forecasts, we anticipate that we will be required to raise additional financing beyond the initial $1 million from the MOU in order to fully fund our efforts to obtain FDA approval of our AwareTM 2 product.

Revenue for the third quarter of 2012 decreased 69% from the third quarter of 2011. This is primarily due to increased competition from another BED producer that entered the market in 2011. In addition, our product sales tend to be irregular from quarter-to-quarter, particularly with our BED product, as public health and research institutions begin or conclude various studies to monitor the incidence of HIV infection within their subject populations. We remain focused on our strategy of increasing marketing and sales in a subset of countries where our products are registered, seeking additional product registrations in countries where we have a high likelihood of making sales, developing new products for the western markets and keeping our operating costs low.

We continued to make our AwareTM BED Incidence tests during the quarter and expect to begin making sales of that product in Russia and several African countries, subject to regulatory approvals. Our plans for future revenue growth are based on the expectation that we will be able to bring our next-generation rapid test, AwareTM 2, to market in the U.S. We have applied for FDA approval to sell AwareTM 2 in the U.S. We do not currently have sufficient cash resources to complete the regulatory approval process and bring the product to market in the U.S.; doing so will require additional financing. There can be no assurance that such financing will be available upon acceptable terms or at all.

12

Business Environment

Although we have received regulatory approval in a number of countries, there is a long lag time between regulatory approval and sales.  In our target markets, government ministries of health or similar government and nongovernmental agencies are the primary purchasers of our products, typically through a “lowest-cost” tender process. These purchasers have historically purchased blood-based HIV tests. We have had to overcome the obstacle of changing these purchasers’ mindsets from preferring tests that use the current blood standard of care. We have expended much time, money and effort to try to convince government bodies and non-governmental organizations to try our oral fluid tests, both for its ease of use, efficiency and lower-cost benefits.

We consider these efforts to be part of a strategy in which the “standard of care” for HIV diagnosis evolves from the exclusive use of blood tests to more widespread use of non-invasive oral fluid-based tests. If we can successfully change the standard of care, we expect to reach a point at which our revenue will increase significantly. We cannot forecast whether or when this point will occur, as it is largely governed by factors beyond our control.

Outlook

We believe the demand for fast, easy-to-use HIV tests is strong and growing. By many accounts, governments are requiring more testing for HIV and allocating more funds to such testing, and non-governmental organizations and charities have increased their funding for HIV testing too. Although we believe that we will be able to increase market acceptance of our products and our market position, there are external factors that could adversely affect demand for our products, including global economic conditions that affect funding for HIV testing and national policies regarding HIV testing adopted by foreign governments.

In order to accomplish our business plan and meet our financial obligations, we must:

· Reduce accounts payable and other debt and associated fixed costs.

· Increase marketing and sales of our current products through our distribution network.

· Conduct a successful clinical trial for our AwareTM 2 product.

· Raise sufficient capital to fund the foregoing marketing and sales activities and clinical trials.

In 2012, we remain focused on our strategy of increasing marketing and sales in the countries where our products are registered, seeking additional product registrations in countries where we have a high likelihood of making sales, planning for the clinical trials of AwareTM 2 and keeping our operating costs low.

Financial Considerations

Our net cash used in operating activities in the first nine months of 2012 was approximately $544,000, compared to $243,000 in the first nine months of 2011. A primary factor in our lower cash burn during the first nine months of 2011 was the $171,147 grant received under the U.S. government’s Qualifying Therapeutic Discovery Project (QTDP) program. In both periods, the cash used in operations was primarily for development and commercialization of our rapid tests, as well as for our selling, general and administrative expenses.

During the first nine months of 2012, we had a net loss of $0.8 million.  At September 30, 2012, we had a working capital deficit of $2.8 million.  Our cash balance at September 30, 2012 was $5,000. We received $135,000 in additional advances from investors after September 30, 2012 and our cash balance as of December 31, 2012 was $4,869. We do not believe this cash balance is sufficient to enable us to fund our operations into 2013 unless we continue to receive financing as provided in the MoU.

We currently have 800,000,000 shares of common stock authorized, of which 786,095,129 shares are issued and outstanding or reserved for issuance under current financing arrangements and our incentive plans. If additional financing is available to us, it will likely be in the form of one or more equity or convertible debt transactions. At the current market price of our common stock, we do not have sufficient authorized common stock to raise the capital necessary to execute our business plan and achieve self-sustaining cash flow. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Critical Accounting Policies and Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S generally accepted accounting principles (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates and judgments, including those related to bad debts, inventories, impairment of long-lived assets, intangible assets, income taxes, restructuring costs, derivative and anti-dilution liabilities and contingencies and litigation. We base our estimates on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

13

Consistent with our policy on impairment of long-lived assets, given the September 30, 2012 operating loss, the carrying values of Calypte long-lived assets were compared against the undiscounted cash flows of the entity over the remaining useful life of the primary assets. Cash flow projections were based on a combination of historical run-rates and future projections, depending on the markets where the products were registered and the related distribution channels, as well as product in the development phase. We concluded that no impairment was required.

The critical accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2011 have not changed materially since year-end.

Results of Operations

The following represents selected financial data (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Total revenues	$	33		$	107		$	167		$	505
Cost of product sales		35			27			124			355
Gross Margin		(2	)		80			43			150
Operating expenses:
Research and development		62			85			204			226
Selling, general and administrative		169			213			535			667
Total operating expenses		231			298			739			893
Loss from operations		(233	)		(218	)		(696	)		(743	)
Interest expense, net		(31	)		(30	)		(92	)		(91	)
Other income, net		1			6			-			219
Benefit for income taxes		2			-			-			178
Net loss	$	(261	)	$	(242	)	$	(788	)	$	(437	)

Quarters ended September 30, 2012 and 2011

Our revenue for the third quarter of 2012 totaled $33,000 compared with $107,000 for the third quarter of 2011, a decrease of $74,000 or 69%.  Sales of our BED Incidence Test accounted for 94% of our sales in the third quarter of 2012, compared with (2%) in the third quarter of 2011. The decrease in BED sales is primarily due to increased competition from another BED producer that entered the market in 2011. In addition, such sales tend to be irregular as public health and research institutions begin or conclude various studies to monitor the incidence of HIV infection within their subject populations.  Sales of our AwareTM HIV-1/2 rapid tests accounted for 3% and 38% of our sales in the third quarter of 2012 and 2011, respectively.  Because of the nature of the product and the fact that we are still commercializing it, sales tend to be irregular as we gain approvals for and begin distribution of those tests in various parts of the world.  Third quarter 2012 revenues from the raw material sourcing for Beijing Marr were $0, compared to $56,000 in the third quarter of 2011.  Although we expect these sales to continue indefinitely, we do not consider them to be part of our core business and cannot predict the extent or timing of such revenues in the future.

We reported gross margins of (2%) and 75% of sales in the third quarter of 2012 and 2011, respectively. The margins we reported in both 2012 and 2011, however, are not typical of our expected future results because of the relatively nominal amounts of revenues and product quantities over which certain fixed expenses, like annual royalty minimum payments, have been allocated.  Product costs in both periods are also not reflective of steady production costs.  In addition, our cost of sales for the quarter ended September 30, 2012 included a $2,000 inventory reserve adjustment and a $2,000 physical inventory adjustment, both of which helped contribute to the negative gross margin for that quarter.

During the third quarter of 2012, we had a net loss of $0.3 million, compared to a net loss of $0.2 million during the third quarter of 2011.  At September 30, 2012, we had a working capital deficit of $2.8 million.

Research and development costs decreased by $23,000, or 27%, from $85,000 in the third quarter of 2011 to $62,000 in the third quarter of 2012, due to reduced salary expense and clinical investigation expense.

14

Selling, general and administrative costs decreased by $44,000, or 21%, from $213,000 in the third quarter of 2011 to $169,000 in the third quarter of 2012.  The primary components of the net decrease include the following:

· a decrease of $13,000 in consulting expenses

· a decrease of $10,000 in legal and accounting expenses

· a decrease of $6,000 in insurance expenses

· a decrease of $5,000 in travel expenses

· a decrease of $5,000 in facility overhead

· a decrease of $4,000 in intangible asset amortization due to the expiration of a patent

Our loss from operations for the third quarter of 2012 of $233,000 reflects an increase of 7% compared with the loss of $218,000 reported for the third quarter of 2011.

We recorded net interest expense of $31,000 and $30,000 for the third quarters of 2012 and 2011, respectively.

Nine Months Ended September 30, 2012 and 2011

Our revenue from operations for the nine month period ended September 30, 2012 totaled $167,000 compared with $505,000 for the nine month period ended September 30, 2011, a decrease of $338,000, or 67%. Sales of our BED Incidence Test accounted for 72% of our sales in the first nine months of 2012, compared with 47% in the first nine months of 2011. Revenue from sales of the BED Incidence Test decreased by 49% in the first nine months of 2012 compared with 2011, due to increased competition from another BED producer that entered the market in 2011. Also, such sales tend to be irregular as public health and research institutions begin or conclude various studies to monitor the incidence of HIV infection within their subject populations.  Sales of our AwareTM HIV-1/2 rapid tests accounted for 5% and 19% of our sales in the first nine months of 2012 and 2011, respectively.  Revenues from the sale of our rapid tests during the first nine months of 2012 decreased by 91% compared with rapid test revenues in the first nine months of 2011.  Because of the nature of the product and the fact that we are still commercializing it, sales tend to be irregular as we gain approvals for and begin distribution of those tests in various parts of the world. Our plans for future revenue growth are based on the expectation that we will be able to bring our next-generation rapid test, AwareTM 2, to market in the U.S. We have applied for FDA approval to sell AwareTM 2 in the U.S. We do not currently have sufficient cash resources to complete the regulatory approval process and bring the product to market in the U.S.; doing so will require additional financing. There can be no assurance that such financing will be available upon acceptable terms or at all.

We had gross margins of 26% and 30% of sales in the nine month periods ended September 30, 2012 and 2011, respectively. The margins we reported in both 2012 and 2011, however, are not typical of our expected future results because of the relatively small amounts of revenues and product quantities over which certain fixed expenses, like annual royalty minimum payments, have been allocated.  Product costs in both periods are also not reflective of steady production costs.  In the first nine months of 2011, we recorded $58,000 in inventory allowances, compared to $2,000 of inventory allowances in the first nine months of 2012.

Research and development costs were relatively unchanged at $204,000 in the first nine months 2012, compared to $226,000 in the first nine months of 2011, as salaries and clinical investigation costs were only slightly lower in 2012, compared to 2011.

Selling, general and administrative costs decreased by $132,000, or 20%, from $667,000 in the first nine months of 2011 to $535,000 in the first nine months of 2012. The primary components of the net decrease include the following:

· a decrease of $81,000 in consulting and other outside service expenses

· a decrease of $26,000 in intangible asset amortization due to the expiration of a patent

· a decrease of $19,000 in legal and accounting expenses

· a decrease of $6,000 in insurance expenses

· a decrease of $5,000 in travel expense

We recorded net interest expense of $92,000 for the nine month period ended September 30, 2012 compared with $91,000 of net interest expense in the nine month period ended September 30, 2011.

We recorded other income of $0 for the nine month period ended September 30, 2012 compared with $219,000 of other income in the nine month period ended September 30, 2011.  This decrease was primarily due to a grant awarded the Company under the QTDP program, of which the final $171,147 was received in February 2011.

The $178,000 tax benefit for the first nine months of 2011 reflects an adjustment to our fiscal year 2010 income tax liability.

Our loss from operations of $788,000 for the nine month period ended September 30, 2012 represents an increase of 80% compared with the loss of $437,000 for the nine month period ended September 30, 2011.

15

Liquidity and Capital Resources

Our cash requirements depend on many factors, including the execution of our business plan.  We expect that we will need to continue to devote substantial capital resources to running our business, reduction or restructuring of our trade payables and implementing our business plan.  Based on our current forecasts and assumptions, we believe that our existing cash is insufficient to meet our anticipated cash needs for working capital and capital expenditures through the remainder of 2012 unless we continue to receive financing as provided in the MoU.  Given our present financial condition, we have not made any plans for capital expenditures related to manufacturing and operations.

Operating Activities

During the nine months ended September 30, 2012, cash used in our operating activities was $0.5 million.  This compares to $0.2 million of cash used in our operating activities during the same period of 2011, including a $0.2 million QTDP grant received.  In both 2012 and 2011, the cash was used primarily for our selling, general and administrative expenses.

Financing Activities

During the nine months ended September 30, 2012, we generated $539,000 from financing activities compared to $237,000 generated from financing activities during the nine months ended September 30, 2011. The funds generated from financing activities in the nine months ended September 30, 2012 and 2011 were the result of investor advances from private investors in anticipation of entering into future subscription agreements.

In October 2011, we entered into a memorandum of understanding (“MoU”) with a private investor to secure funding needed to initiate the FDA approval procedures for the new AwareTM 2 product. The MoU contemplates an initial investment of at least $1,000,000 through 2012, contingent upon the Company following an agreed upon budget plan, and potentially up to $4,000,000 from additional investors. To date, the parties have not entered into a definitive agreement or agreed upon a budget plan as contemplated by the MoU; however, as of September 30, 2012 the Company had received $705,000 in investments pursuant to the MoU. Although the MoU expresses the expectation of the parties that the investor will assist us in raising an additional $4 million from other investors, no party is under a contractual obligation to invest any funds beyond the $1 million to be invested pursuant to the MoU, and there can be no assurance that we will be able to raise the additional funds.
 

If we are unable to obtain additional financing, we will be unable to continue as a going concern.  Moreover, any financing we are able to secure could be on terms that are highly dilutive to our existing stockholders. In addition, the equity or debt securities that we issue may have rights, preferences or privileges senior to those of the holders of our common stock.  The condensed consolidated financial statements do not reflect any adjustments that might result from the outcome of these uncertainties.

Recent Accounting Pronouncements

There have been no recent accounting pronouncements or changes in accounting pronouncements during the nine months ended September 30, 2012, as compared to the recent accounting pronouncements described in our 2011 10-K, that are of significance, or potential significance to us.

Item 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of September 30, 2012, we carried out an evaluation, under the supervision and with the participation of our principal executive officer (our “CEO”) and principal financial officer (our “CFO”) of the design and operations of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended). Based on that evaluation, our CEO and CFO have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner, and (2) accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting during the quarter ended September 30, 2012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1A. Risk Factors

The risk factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 have not materially changed.

16

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

During the first nine months of 2012, one investor advanced a total of $560,000 to the Company.  These advances were made in anticipation of entering into future subscription agreements, pursuant to which the Company will issue Common Stock to the investor in reliance upon the exemption from registration provided under Regulation S.

Item 6.  Exhibits

  (a)   Exhibits  

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS** XBRL Instance

101.SCH** XBRL Taxonomy Extension Schema

101.CAL** XBRL Taxonomy Extension Calculation

101.DEF** XBRL Taxonomy Extension Definition

101.LAB**  XBRL Taxonomy Extension Labels

101.PRE** XBRL Taxonomy Extension Presentation

** XBRL    information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

17

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CALYPTE BIOMEDICAL CORPORATION (Registrant)
Date: December 31, 2012	By:	/s/ Adel Karas
		Adel Karas President and Chief Executive Officer
Date: December 31, 2012	By:	/s/ Kartlos Edilashvili
		Kartlos Edilashvili Vice President, Chief Financial Officer and Secretary

18

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Adel Karas, certify that:

1.           I have reviewed this quarterly report on Form 10-Q of Calypte Biomedical Corporation;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)           designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)           designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)           evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)           disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)           all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)           any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:  December 31, 2012

/s/ Adel Karas                                                       

Adel Karas

President and Chief Executive Officer (Principal Executive)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Kartlos Edilashvili, certify that:

1.           I have reviewed this quarterly report on Form 10-Q of Calypte Biomedical Corporation;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)           designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)           designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)           evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)           disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)           all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)           any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:  December 31, 2012

/s/ Kartlos Edilashvili                                                       

Kartlos Edilashvili

Vice President and Chief Financial Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certifies, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge, the Quarterly Report on Form 10-Q of Calypte Biomedical Corporation (the “Company”) for the quarter ended September 30, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

December 31, 2012

/s/ Adel Karas                                                                 

Adel Karas

President and Chief Executive Officer (Principal Executive)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certifies, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge, the Quarterly Report on Form 10-Q of Calypte Biomedical Corporation (the “Company”) for the quarter ended September 30, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

December 31, 2012

/s/ Kartlos Edilashvili                                                                 

Kartlos Edilashvili

Vice President and Chief Financial Officer (Principal Financial Officer)

XML

Note 4 - Accounts Payable and Accrued Expenses (Detail) - Accounts Payable and Accrued Expenses (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Trade accounts payable	$ 1,359	$ 1,301
Accrued royalties	236	217
Accrued salary and vacation pay	38	44
Accrued interest	16	16
Accrued audit, legal and consulting expenses	94	158
Accrued liabilities of legacy business	190	190
Other	77	72
Total accounts payable and accrued expenses	$ 2,010	$ 1,998

XML

Note 4 - Accounts Payable and Accrued Expenses

9 Months Ended

Sep. 30, 2012

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

(4)        Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses as September 30, 2012 and December 31, 2011 consisted of the following (in thousands):

	September 30, 2012		December 31, 2011
Trade accounts payable	$	1,359	$	1,301
Accrued royalties		236		217
Accrued salary and vacation pay		38		44
Accrued interest		16		16
Accrued audit, legal and consulting expenses		94		158
Accrued liabilities of legacy business		190		190
Other		77		72
Total accounts payable and accrued expenses	$	2,010	$	1,998

XML

Note 7 - Share Based Payments (Detail) - Summary of Option Activity (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
End of Prior Year [Member]
Options	3,050,000
Weighted Average Exercise Price Per Share (in Dollars per share)	$ 0.112
Weighted Average Remaining Contractual Term (years)	5 years 317 days
Aggregate Intrinsic Value at Date Indicated (in Dollars)	$ 0
Options	3,050,000
Weighted Average Exercise Price Per Share (in Dollars per share)	$ 0.112
Weighted Average Remaining Contractual Term (years)	5 years 317 days
Aggregate Intrinsic Value at Date Indicated (in Dollars)	0
Weighted Average Remaining Contractual Term (years)	5 years 317 days
End of Current Quarter [Member]
Weighted Average Exercise Price Per Share (in Dollars per share)	$ 0.112
Weighted Average Remaining Contractual Term (years)	5 years 43 days
Options	3,050,000
Weighted Average Exercise Price Per Share (in Dollars per share)	$ 0.112
Weighted Average Remaining Contractual Term (years)	5 years 43 days
Aggregate Intrinsic Value at Date Indicated (in Dollars)	0
Options	3,050,000
Weighted Average Remaining Contractual Term (years)	5 years 43 days
Aggregate Intrinsic Value at Date Indicated (in Dollars)	$ 0

XML

Note 7 - Share Based Payments (Detail) (USD $)	Sep. 30, 2012
Share Price	$ 0.01

XML

Note 7 - Share Based Payments (Detail) - Summary of Stock Options Outstanding (USD $)	9 Months Ended
	Sep. 30, 2012
$.11 [Member]
Number Outstanding	3,000,000
Weighted Average Remaining Years to Expiration	5 years 58 days
Weighted Average Exercise Price (in Dollars per share)	$ 0.110
Number Exercisable	3,000,000
Weighted Average Exercise Price (in Dollars per share)	$ 0.110
$.23 [Member]
Number Outstanding	50,000
Weighted Average Remaining Years to Expiration	2 years 208 days
Weighted Average Exercise Price (in Dollars per share)	$ 0.230
Number Exercisable	50,000
Weighted Average Exercise Price (in Dollars per share)	$ 0.230
Total [Member]
Number Outstanding	3,050,000
Weighted Average Remaining Years to Expiration	5 years 43 days
Weighted Average Exercise Price (in Dollars per share)	$ 0.112
Number Exercisable	3,050,000
Weighted Average Exercise Price (in Dollars per share)	$ 0.112

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Note 8 - Related Party Transactions (Detail) (USD $)	1 Months Ended			3 Months Ended		6 Months Ended	9 Months Ended	12 Months Ended	9 Months Ended		3 Months Ended
	Aug. 14, 2012	Mar. 31, 2012	Jul. 31, 2010	Sep. 30, 2012	Mar. 31, 2012	Jun. 30, 2012	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 Purchase of Raw Inventory [Member]	Sep. 30, 2011 Purchase of Raw Inventory [Member]	Mar. 31, 2011 Technical Support [Member]
Equity Method Investment, Ownership Percentage			51.00%
Debt Conversion, Original Debt, Amount			$ 6,393,353
Debt Conversion, Converted Instrument, Shares Issued (in Shares)		47,815,698	152,341,741
Extinguishment of Debt, Amount			3,000,000
Debt Conversion, Description		$2,008,259
Related Party Transaction, Expenses from Transactions with Related Party									24,000	134,000	16,716
Proceeds From Advances	$ 135,000			$ 135,000	$ 145,000	$ 560,000	$ 560,000	$ 397,000

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Note 3 - Inventory

9 Months Ended

Sep. 30, 2012

Inventory Disclosure [Text Block]

(3)         Inventory

Inventory as of September 30, 2012 and December 31, 2011 consisted of the following (in thousands):

	September 30, 2012		December 31, 2011
Raw materials	$	134	$	132
Work-in-process		4		5
Finished goods		51		49
Total inventories	$	189	$	186

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Note 9 - Subsequent Events (Detail) (USD $)	1 Months Ended	3 Months Ended		6 Months Ended	9 Months Ended	12 Months Ended
	Aug. 14, 2012	Sep. 30, 2012	Mar. 31, 2012	Jun. 30, 2012	Sep. 30, 2012	Dec. 31, 2011
Proceeds From Advances	$ 135,000	$ 135,000	$ 145,000	$ 560,000	$ 560,000	$ 397,000

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Condensed Consolidated Balance Sheets (USD $)	Sep. 30, 2012	Dec. 31, 2011
Current assets:
Cash	$ 5,000	$ 10,000
Accounts receivable	1,000	8,000
Inventories, net of allowance of $2 and $0 at September 30, 2012 and December 31, 2011, respectively	189,000	186,000
Prepaid expenses	16,000	23,000
Total current assets	211,000	227,000
Property and equipment, net of accumulated depreciation of $395 and $375 at September 30, 2012 and December 31, 2011, respectively	24,000	44,000
Intangible assets, net of accumulated amortization of $964 and $857 at September 30, 2012 and December 31, 2011, respectively	1,567,000	1,674,000
Other assets	14,000	17,000
Total assets	1,816,000	1,962,000
Current liabilities:
Accounts payable and accrued expenses	2,010,000	1,998,000
Advances from shareholder	957,000	397,000
Liability with related party		914,000
4% Note payable, including accrued interest of $8 and $6 at September 30, 2012 and December 31, 2011, respectively	26,000	45,000
12% Convertible debentures payable	60,000	60,000
Total current liabilities	3,053,000	3,414,000
Mandatorily redeemable Series A preferred stock, $0.001 par value; no shares authorized at September 30, 2012 and December 31, 2011; 100,000 shares issued and outstanding at September 30, 2012 and December 31, 2011; aggregate redemption and liquidation value of $1,000 plus cumulative dividends	3,746,000	3,656,000
Total liabilities	6,799,000	7,070,000
Commitments and contingencies
Stockholders’ deficit:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued or outstanding	0	0
Common stock, $0.03 par value; 800,000,000 shares authorized at September 30, 2012 and December 31, 2011; 700,168,157 and 547,826,416 shares issued and outstanding as of September 30, 2012 and December 31, 2011, respectively	16,163,000	15,249,000
Additional paid–in capital	159,747,000	159,747,000
Accumulated deficit	(180,893,000)	(180,104,000)
Total stockholders’ deficit	(4,983,000)	(5,108,000)
Total liabilities and stockholders’ deficit	1,816,000	1,962,000
4% Note Payable [Member]
Current liabilities:
4% Note payable, including accrued interest of $8 and $6 at September 30, 2012 and December 31, 2011, respectively	$ 18,000	$ 39,000

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Note 1 - The Company

9 Months Ended

Sep. 30, 2012

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

(1)        The Company

Calypte Biomedical Corporation (the “Company”) develops, manufactures, and distributes in vitro diagnostic tests, primarily for the diagnosis of Human Immunodeficiency Virus (“HIV”) infection. Until late 2005, we manufactured and marketed urine-based HIV-1 diagnostic screening tests and urine and blood-based Western Blot supplemental (sometimes called “confirmatory”) tests for use in high-volume laboratories, which we call our “Legacy Business.” In November 2005, we sold our Legacy Business and began to concentrate primarily on our rapid test platform products which we had begun developing in 2003. Our emphasis has been on the development and commercialization of our AwareTM HIV-1/2 rapid tests. We have completed field trials and product evaluations of our AwareTM HIV-1/2 OMT (oral fluid) rapid test covering an aggregate of over 9,000 samples in China, India, South Africa and elsewhere and believe that the results of these studies and evaluations have validated the test. In our studies, AwareTM HIV-1/2 OMT averaged 99.7% accuracy. We have obtained regulatory approvals in Russia, India and China as well as a number of key countries in Africa, Southeast Asia and the Middle East. Sales of our rapid test products have so far been primarily through the efforts of our distributors in South Africa and the United Arab Emirates (“U.A.E”).

We manufacture and sell HIV-1 BED Incidence EIA test, our AwareTM BED Incidence Test, through an arrangement with the U.S. Centers for Disease Control and Prevention (the “CDC”).

In the first quarter of 2008, we introduced Aware MessengerTM, our oral fluid sample collection device. Although we do not currently have approval to sell this device for diagnostic purposes, we can sell it for “research use only” in situations where assay developers and test laboratories can qualify the product for use with their own assays.

In March 2011, we successfully completed internal trials of our new AwareTM 2 HIV-1/2 oral fluid rapid test, which showed an accuracy of 100%. Based on these results, we have contacted the Food and Drug Administration (FDA) and started the process to conduct clinical trials and apply for Premarket Approval.

In October 2011, we entered into a memorandum of understanding (“MoU”) with a private investor to secure funding needed to initiate the FDA approval procedures for the new AwareTM 2 product. The MoU contemplates an initial investment of at least $1,000,000 through 2012, contingent upon the Company following an agreed upon budget plan, and potentially up to $4,000,000 from additional investors. To date, the parties have not entered into a definitive agreement or agreed upon a budget plan as contemplated by the MoU; however, as of September 30, 2012 the Company had received $705,000 in investments pursuant to the MoU. Although the MoU expresses the expectation of the parties that the investor will assist us in raising an additional $4 million from other investors, no party is under a contractual obligation to invest any funds beyond the $1 million to be invested pursuant to the MoU, and there can be no assurance that we will be able to raise the additional funds. Based on our revised revenue and expense forecasts, we anticipate that we will be required to raise additional financing beyond the initial $1 million from the MOU in order to fully fund our efforts to obtain FDA approval of our AwareTM 2 product.

At September 30, 2012, we had a working capital deficit of $2.8 million and our stockholders’ deficit was $5.0 million.  Our cash balance at September 30, 2012 was $5,000, which we do not believe is sufficient to enable us to fund our operations through the remainder of 2012 unless we continue to receive financing as provided in the MoU.

We currently have 800,000,000 shares of common stock authorized, of which approximately 786,095,129 shares are issued and outstanding or reserved for issuance under current financing arrangements and our incentive plans. At the current market price of our common stock, we do not have sufficient authorized common stock to raise the capital necessary to execute our long-term business plan and achieve self-sustaining cash flow.  The condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

We have prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and they reflect all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary for a fair presentation of our consolidated financial position as of September 30, 2012 and the consolidated results of our operations and our consolidated cash flows for the three and nine month period ended September 30, 2012.  The accompanying condensed consolidated balance sheet at December 31, 2011 has been derived from our audited financial statements at that date.  Interim results are not necessarily indicative of the results to be expected for the full year or any future interim period.  This information should be read in conjunction with our audited consolidated financial statements for each of the years in the two year period ended December 31, 2011 included in our Form 10-K filed with the SEC on March 22, 2012.

Certain information in footnote disclosures normally included in the financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) has been condensed or omitted pursuant to the rules and regulations of the SEC.  The data disclosed in these condensed consolidated financial statements and in the related notes is unaudited.

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Note 2 - Significant Accounting Policies (Detail)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Concentration Risk, Percentage			90.00%	82.00%
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in Shares)			3,050,000	6,175,001
Sales to International Customers [Member]
Concentration Risk, Percentage	98.00%	93.00%
Customer Concentration [Member]
Concentration Risk, Percentage	68.00%	99.00%	60.00%	66.00%
Number of Major Customers	1	3	5	4

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Note 3 - Inventory (Detail) - Inventory (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Raw materials	$ 134	$ 132
Work-in-process	4	5
Finished goods	51	49
Total inventories	$ 189	$ 186

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Note 2 - Significant Accounting Policies

9 Months Ended

Sep. 30, 2012

Significant Accounting Policies [Text Block]

(2)        Significant Accounting Policies

Impairment of Long-Lived Assets

Long-lived assets are comprised of property and equipment and intangible assets.  We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.  We compare an estimate of undiscounted future cash flows produced by the asset, or by the appropriate grouping of assets, to the carrying value to determine whether impairment exists.  If an asset is determined to be impaired, we measure the loss based on quoted market prices in active markets, if available.  If quoted market prices are not available, we estimate the fair value based on various valuation techniques, including a discounted value of estimated future cash flow and fundamental analysis.  We report an asset to be disposed of at the lower of its carrying value or its estimated net realizable value.

Revenue Recognition

We record revenues only upon the occurrence of all of the following conditions:

• We have received a binding purchase order or similar commitment from the customer or distributor authorized by a representative empowered to commit the purchaser (evidence of a sale).

• The purchase price has been fixed, based on the terms of the purchase order.

• We have delivered the product from our manufacturing plant to a common carrier acceptable to the purchaser.  Our customary shipping terms are FOB shipping point. Because of the need for controlled conditions during shipment, we suggest, but leave to the purchaser’s discretion, acquiring insurance for the value of the shipment.  If the purchaser elects to insure the shipment, the insurance is at the purchaser’s expense.

• We deem the collection of the amount invoiced probable.  To eliminate the credit risk associated with international distributors with whom we have had little or no experience, we require prepayment of all or a substantial portion of the order or a letter of credit before shipment.

Except in the event of verified product defect, we do not permit product returns.  Our products must be maintained under rigidly controlled conditions that we cannot control after the product has been shipped to the customer.

We provide no price protection.  Subject to the conditions noted above, we recognize revenue upon shipment of product.

Royalty Revenue

Royalty Revenue is recognized upon receipt of the semi-annual royalty data from the licensee, as designated in the royalty agreement, and when collectability is assured.

Segment and Geographic Information

Our operations are currently focused on the development and sale of HIV diagnostics.  The following table summarizes our product sales revenues by product for the three and nine months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2012		2011			2012		2011
AwareTM BEDTM HIV-1 Incidence Test	$	31	$	(2	)	$	121	$	238
AwareTM Rapid HIV diagnostic tests		1		41			8		94
All other		1		12			14		39
Revenue from product sales	$	33	$	51		$	143	$	371
Revenue from raw material sourcing	$	-	$	56		$	24	$	134
Total Revenue	$	33	$	107		$	167	$	505

Sales to international customers accounted for approximately 98% and 93% of our revenues in the third quarter of 2012 and 2011, respectively.  One customer accounted for approximately 68% of our third quarter 2012 revenue.  Three customers accounted for approximately 99% of our third quarter 2011 revenue.

International sales accounted for approximately 90% and 82% of our revenues in the nine months ended September 30, 2012 and 2011, respectively.  Five customers accounted for approximately 60% of our revenue for the nine months ended September 30, 2012.  Four customers accounted for approximately 66% of our revenue for the nine months ended September 30, 2011.

Net Loss Per Share

We compute basic net loss per share by dividing net loss by the weighted average number of shares of common stock outstanding during the periods presented.  The computation of diluted loss per common share is similar to the computation of basic net loss per share, except that the denominator is increased for the assumed conversion of convertible securities and the exercise of options and warrants, to the extent they are dilutive, using the treasury stock method.  The weighted average number of shares used in computing basic and diluted net loss per share are the same for the periods presented in these unaudited condensed consolidated financial statements.  Outstanding options and warrants of 3,050,000 shares and 6,175,001 shares were excluded from the computation of net loss per share for the three and nine month periods ended September 30, 2012 and 2011, respectively, as their effect is anti-dilutive.
 

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

We made certain reclassifications to prior-period amounts to conform with the quarter ended September 30, 2012 presentation.

Stock-Based Compensation Expense

We measure stock-based compensation at the grant date based on the award’s fair value and recognize the expense ratably over the requisite vesting period, net of estimated forfeitures, for all stock-based awards granted after January 1, 2006 and all stock based awards granted prior to, but not vested as of, January 1, 2006.

We have elected to calculate the fair value of option awards based on the Black-Scholes option-pricing model. The Black-Scholes model requires various assumptions, including expected option life and volatility.  If we significantly change any of the assumptions used in the Black-Scholes model or the estimated forfeiture rate, stock-based compensation expense may differ materially in the future from that recorded in the current period.

Recent Accounting Pronouncements

There have been no recent accounting pronouncements or changes in accounting pronouncements during the nine months ended September 30, 2012, as compared to the recent accounting pronouncements described in our 2011 Form 10-K, that are of significance, or potential significance to us.

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Condensed Consolidated Balance Sheets (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Inventories, allowance (in Dollars)	$ 2	$ 0
Property and equipment, net of accumulated depreciation (in Dollars)	395	375
Intangible assets, net of accumulated amortization (in Dollars)	964	857
4% Note payable, accrued interest (in Dollars)	16	16
Mandatorily redeemable Series A preferred stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Mandatorily redeemable Series A preferred stock, shares authorized (in Shares)	0	0
Mandatorily redeemable Series A preferred stock, shares issued (in Shares)	100,000	100,000
Mandatorily redeemable Series A preferred stock, shares outstanding (in Shares)	100,000	100,000
Mandatorily redeemable Series A preferred stock, aggregate redemption and liquidation value of plus cumulative dividends (in Dollars)	1,000	1,000
Preferred stock par value (in Dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in Shares)	5,000,000	5,000,000
Preferred stock, shares issued (in Shares)	0	0
Preferred stock, shares outstanding (in Shares)	0	0
Common stock, par value (in Dollars per share)	$ 0.03	$ 0.03
Common stock, shares authorized (in Shares)	800,000,000	800,000,000
Common stock, shares issued (in Shares)	700,168,157	547,826,416
Common stock, shares outstanding (in Shares)	700,168,157	547,826,416
4% Note Payable [Member]
4% Note payable, accrued interest (in Dollars)	$ 8	$ 6

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Note 3 - Inventory (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Inventory, Current [Table Text Block]

	September 30, 2012		December 31, 2011
Raw materials	$	134	$	132
Work-in-process		4		5
Finished goods		51		49
Total inventories	$	189	$	186

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Document And Entity Information	9 Months Ended
	Sep. 30, 2012	Dec. 31, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	CALYPTE BIOMEDICAL CORP
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		700,168,157
Amendment Flag	false
Entity Central Index Key	0000899426
Entity Current Reporting Status	No
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3

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Note 4 - Accounts Payable and Accrued Expenses (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Accounts Payable and Accrued Liabilities [Table Text Block]

	September 30, 2012		December 31, 2011
Trade accounts payable	$	1,359	$	1,301
Accrued royalties		236		217
Accrued salary and vacation pay		38		44
Accrued interest		16		16
Accrued audit, legal and consulting expenses		94		158
Accrued liabilities of legacy business		190		190
Other		77		72
Total accounts payable and accrued expenses	$	2,010	$	1,998

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Condensed Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Revenues:
Product sales	$ 33	$ 107	$ 167	$ 505
Operating costs and expenses:
Cost of product sales	35	27	124	355
Research and development expenses	62	85	204	226
Selling, general and administrative expenses	169	213	535	667
Total operating expenses	266	325	863	1,248
Loss from operations	(233)	(218)	(696)	(743)
Interest expense	(31)	(30)	(92)	(91)
Other income, net	1	6		219
Net loss before income taxes	(263)	(242)	(788)	(615)
Benefit for income taxes	2			178
Net loss	$ (261)	$ (242)	$ (788)	$ (437)
Net loss per share (basic and diluted) (in Dollars per share)	$ 0.000	$ 0.000	$ (0.001)	$ (0.001)
Weighted average shares used to compute net loss per share (basic and diluted) (in Shares)	700,168	547,826	655,689	545,189

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Note 7 - Share Based Payments

9 Months Ended

Sep. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

(7)        Share Based Payments

We maintain stock compensation plans for our employees and directors, which are described in Note 11, Share Based Payments, in the Notes to Consolidated Financial Statements in our 2011 Annual Report on Form 10-K filed with the SEC on March 22, 2012.  The Company follows FASB ASC topic 718, Compensation — Stock Compensation (“ASC 718”).  ASC 718 requires the recognition of the fair value of stock compensation, including stock options, in net income (loss).  We recognize the stock compensation expense over the requisite service period of the individual grantees, which is generally the same as the vesting period of the grant.  All of our stock compensation is accounted for as an equity instrument.

We did not grant any options to employees or members of our Board of Directors during the first nine months of 2012 or 2011.  The following table summarizes option activity for all of our stock option plans from December 31, 2011 through September 30, 2012:

	Options		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value at Date Indicated
Options outstanding at December 31, 2011		3,050,000	$	0.112		5.87	$	0
Options granted		-		-
Options exercised		-		-
Options forfeited		-		-
Options expired		-		-
Options outstanding at September 30, 2012		3,050,000	$	0.112		5.12	$	0
Options vested and exercisable at December 31, 2011		3,050,000	$	0.112		5.87	$	0
Options vested and exercisable at September 30, 2012		3,050,000	$	0.112		5.12	$	0

The aggregate intrinsic value is the sum of the amounts by which the quoted market price of our common stock at the date indicated exceeded the exercise price of the options (“in-the-money-options”).  At September 30, 2012, the market price of our stock was $0.01 per share, and none of our options were in-the-money.  No options were exercised in the nine months period ending September 30, 2012.

The following table summarizes information about stock options outstanding under all of our option plans at September 30, 2012:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Years to Expiration		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$0.11		3,000,000		5.16	$	0.110		3,000,000	$	0.110
$0.23		50,000		2.57	$	0.230		50,000	$	0.230
		3,050,000		5.12	$	0.112		3,050,000	$	0.112

We did not record any income tax benefits for stock-based compensation arrangements for the nine month periods ended September 30, 2012 and 2011, as we have cumulative operating losses and have established full valuation allowances for our income tax benefits.

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Note 6 - Stockholders' Deficit

9 Months Ended

Sep. 30, 2012

Stockholders' Equity Note Disclosure [Text Block]

(6)        Stockholders’ Deficit

2011-2012 Private Placements

On January 28, 2011, we entered into a subscription agreement with David Khidasheli pursuant to which Mr. Khidasheli agreed to purchase 16,666,666 shares of our common stock at a purchase price of $0.03 per share, for a total purchase price of $500,000, which Mr. Khidasheli had advanced to us in 2010.  On February 15, 2011, we entered into a subscription agreement with Carolina Lupascu pursuant to which Ms. Lupascu agreed to purchase 6,000,000 shares of our common stock at a purchase price of $0.03 per share, for a total purchase price of $180,000, which Ms. Lupascu had advanced to us in 2010. These shares were issued pursuant to Regulation S under the Securities Act. The subscription agreements contain customary representations and warranties by Mr. Khidasheli and Ms. Lupascu regarding their status as non-U.S. persons, their investment intent and restrictions on transfer. Mr. Khidasheli and Ms. Lupascu was granted certain piggy-back registration rights which require us to use our best efforts to register all or a portion of their shares on the next registration statement we file with the Securities and Exchange Commission under the Securities Act. We used the proceeds of the private placement for general working capital purposes.

During 2011, Mr. Khidasheli made several advances totaling $397,000 (including $145,000 pursuant to the MoU), and in 2012 has made advances totaling $560,000 (all pursuant to the MoU), in anticipation of entering into future subscription agreements or stock purchase agreements. We are using the proceeds of these investments for general working capital purposes.

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Note 2 - Significant Accounting Policies (Detail) - Summary of Product Sales Revenues by Product (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Product sales	$ 33	$ 107	$ 167	$ 505
Aware BED HIV -1 Incidence Test [Member]
Product sales	31	(2)	121	238
Aware Rapid HIV Diagnostic Tests [Member]
Product sales	1	41	8	94
All Other [Member]
Product sales	1	12	14	39
Revenue From Product Sales [Member]
Product sales	33	51	143	371
Revenue From Raw Material Sourcing [Member]
Product sales		$ 56	$ 24	$ 134

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Note 5 - Notes and Debentures Payable (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Debt [Table Text Block]

	Balance 12/31/11		Additions		Conversion to Equity		Repayments			Balance 9/30/12
Current Notes and Debentures
12% Convertible Debentures –
Mercator assignees	$	60	$	-	$	-	$	-		$	60
4% Note Payable –
Morningtown	$	39	$	-	$	-	$	(21	)	$	18

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Accounting Policies, by Policy (Policies)

9 Months Ended

Sep. 30, 2012

Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block]

Impairment of Long-Lived Assets

Long-lived assets are comprised of property and equipment and intangible assets.  We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.  We compare an estimate of undiscounted future cash flows produced by the asset, or by the appropriate grouping of assets, to the carrying value to determine whether impairment exists.  If an asset is determined to be impaired, we measure the loss based on quoted market prices in active markets, if available.  If quoted market prices are not available, we estimate the fair value based on various valuation techniques, including a discounted value of estimated future cash flow and fundamental analysis.  We report an asset to be disposed of at the lower of its carrying value or its estimated net realizable value.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

We record revenues only upon the occurrence of all of the following conditions:

• We have received a binding purchase order or similar commitment from the customer or distributor authorized by a representative empowered to commit the purchaser (evidence of a sale).

• The purchase price has been fixed, based on the terms of the purchase order.

• We have delivered the product from our manufacturing plant to a common carrier acceptable to the purchaser.  Our customary shipping terms are FOB shipping point. Because of the need for controlled conditions during shipment, we suggest, but leave to the purchaser’s discretion, acquiring insurance for the value of the shipment.  If the purchaser elects to insure the shipment, the insurance is at the purchaser’s expense.

• We deem the collection of the amount invoiced probable.  To eliminate the credit risk associated with international distributors with whom we have had little or no experience, we require prepayment of all or a substantial portion of the order or a letter of credit before shipment.

Except in the event of verified product defect, we do not permit product returns.  Our products must be maintained under rigidly controlled conditions that we cannot control after the product has been shipped to the customer.

We provide no price protection.  Subject to the conditions noted above, we recognize revenue upon shipment of product.

Revenue Recognition, Services, Royalty Fees [Policy Text Block]

Royalty Revenue

Royalty Revenue is recognized upon receipt of the semi-annual royalty data from the licensee, as designated in the royalty agreement, and when collectability is assured

Segment Reporting, Policy [Policy Text Block]

Segment and Geographic Information

Our operations are currently focused on the development and sale of HIV diagnostics.

Earnings Per Share, Policy [Policy Text Block]

Net Loss Per Share

We compute basic net loss per share by dividing net loss by the weighted average number of shares of common stock outstanding during the periods presented.  The computation of diluted loss per common share is similar to the computation of basic net loss per share, except that the denominator is increased for the assumed conversion of convertible securities and the exercise of options and warrants, to the extent they are dilutive, using the treasury stock method.  The weighted average number of shares used in computing basic and diluted net loss per share are the same for the periods presented in these unaudited condensed consolidated financial statements.  Outstanding options and warrants of 3,050,000 shares and 6,175,001 shares were excluded from the computation of net loss per share for the three and nine month periods ended September 30, 2012 and 2011, respectively, as their effect is anti-dilutive.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications [Text Block]

Reclassifications

We made certain reclassifications to prior-period amounts to conform with the quarter ended September 30, 2012 presentation.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-Based Compensation Expense

We measure stock-based compensation at the grant date based on the award’s fair value and recognize the expense ratably over the requisite vesting period, net of estimated forfeitures, for all stock-based awards granted after January 1, 2006 and all stock based awards granted prior to, but not vested as of, January 1, 2006.

We have elected to calculate the fair value of option awards based on the Black-Scholes option-pricing model. The Black-Scholes model requires various assumptions, including expected option life and volatility.  If we significantly change any of the assumptions used in the Black-Scholes model or the estimated forfeiture rate, stock-based compensation expense may differ materially in the future from that recorded in the current period.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

There have been no recent accounting pronouncements or changes in accounting pronouncements during the nine months ended September 30, 2012, as compared to the recent accounting pronouncements described in our 2011 Form 10-K, that are of significance, or potential significance to us.

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Note 8 - Related Party Transactions

9 Months Ended

Sep. 30, 2012

Related Party Transactions Disclosure [Text Block]

(8)        Related Party Transactions

Until July 2010, we were the 51% owner of each of two joint ventures in China, Beijing Calypte Biomedical Technology Ltd. (“Beijing Calypte”) and Beijing Marr Bio-Pharmaceuticals Co., Ltd. (“Beijing Marr”). In July 2010 we entered into a series of agreements providing for (i) the restructuring of our outstanding indebtedness to Marr and SF Capital (the “Debt Agreement”) and (ii) the transfer of our interests in the two Chinese joint ventures, Beijing Marr and Beijing Calypte, to Kangplus (the “Equity Agreement”). Under the Debt Agreement, the parties agreed to convert $6,393,353 in outstanding indebtedness to 152,341,741 shares of our common stock, and our remaining indebtedness to Marr, totaling $3,000,000 was cancelled. In consideration for such debt restructuring, we transferred our equity interests in Beijing Marr to Kangplus pursuant to the Equity Transfer Agreement and transferred certain related technology to Beijing Marr. We also agreed to transfer our equity interests in Beijing Calypte to Marr or a designate of its choosing. The transactions contemplated by the Debt Agreement and the Equity Transfer Agreement were subject to Chinese government registration of the transfer of the equity interests; this registration has now been approved, and the shares were issued in March 2012. Under the debt agreement with SF Capital, $2,008,259 in outstanding indebtedness was converted to 47,815,698 shares of our common stock.

In the agreement with Beijing Marr, we agreed to continue to buy raw materials for them and provide them with technical support. We purchased raw materials for Beijing Marr in the first nine months of 2012 and 2011, and recorded $24,000 and $134,000 of revenue from raw material sourcing, respectively.  During the first quarter of 2011, we provided telephone support and sent one person to Beijing Marr for three weeks, and we recognized $16,716 in revenue related to this technical support.

During the first nine months of 2012, one investor has advanced a total of $560,000 to the Company. Through December 31, 2012, this investor has further advanced us $135,000. These advances are intended for future subscription agreements.

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Note 9 - Subsequent Events

9 Months Ended

Sep. 30, 2012

Subsequent Events [Text Block]

(9)        Subsequent Events

Subsequent to September 30, 2012, we have received an aggregate of $135,000 in advances from David Khidasheli (pursuant to the MoU) in anticipation of entering into a subscription or stock purchase agreement. We are using the proceeds of these investments for general working capital purposes.

We have evaluated all other subsequent events through the date of this filing, and determined there are no other material recognized or unrecognized subsequent events.

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Note 2 - Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Revenue by Product Table Text Block

	Three Months Ended September 30,					Nine Months Ended September 30,
	2012		2011			2012		2011
AwareTM BEDTM HIV-1 Incidence Test	$	31	$	(2	)	$	121	$	238
AwareTM Rapid HIV diagnostic tests		1		41			8		94
All other		1		12			14		39
Revenue from product sales	$	33	$	51		$	143	$	371
Revenue from raw material sourcing	$	-	$	56		$	24	$	134
Total Revenue	$	33	$	107		$	167	$	505

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Note 1 - The Company (Detail) (USD $)	9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Dec. 31, 2010
Proceeds from Sale of Other Investments	$ 705,000
Working Capital Deficit	2,800,000
Stockholders' Equity Attributable to Parent	(4,983,000)	(5,108,000)
Cash and Cash Equivalents, at Carrying Value	5,000	10,000	73,000	79,000
Common Stock, Shares Authorized (in Shares)	800,000,000	800,000,000
Common Stock Issued, Outstanding, and Reserved for Issuance (in Shares)	786,095,129
Minimum [Member]
Initial Investment	1,000,000
Maximum [Member]
Initial Investment	$ 4,000,000

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Note 5 - Notes and Debentures Payable (Detail) - Summary of Note and Debenture Activity (USD $) In Thousands, unless otherwise specified					9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 12% Convertible Debentures [Member]	Dec. 31, 2011 12% Convertible Debentures [Member]	Sep. 30, 2012 4% Note Payable [Member]
12% Convertible Debentures –
Mercator assignees	$ 60	$ 60	$ 60	$ 60
Mercator assignees	60	60	60	60
4% Note Payable –
Morningtown	26	45			39
Morningtown					(21)
Morningtown	$ 26	$ 45			$ 18

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Condensed Consolidated Statement of Cash Flows (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash flows from operating activities:
Net loss income from operations	$ (788,000)	$ (437,000)
Adjustments to reconcile net loss to operating activities:
Depreciation and amortization	126,000	156,000
Non-cash interest expense attributable to:
Dividends on mandatorily redeemable Series A preferred stock	90,000	90,000
Stock-based employee compensation expense		(2,000)
Changes in operating assets and liabilities:
Accounts receivable	7,000	19,000
Inventories	(3,000)	96,000
Prepaid expenses and other current assets	10,000	(41,000)
Accounts payable, accrued expenses and other current liabilities	14,000	(124,000)
Net cash used in operating activities	(544,000)	(243,000)
Cash flows from financing activities:
Principal payments on notes payable	(21,000)	(15,000)
Proceeds from shareholder advances	560,000	252,000
Net cash provided by financing activities	539,000	237,000
Net decrease in cash	(5,000)	(6,000)
Cash at beginning of period	10,000	79,000
Cash at end of period	5,000	73,000
Conversion of advances from related party into common stock		680,000
Conversion of related party liability into common stock	$ 914,000

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Note 5 - Notes and Debentures Payable

9 Months Ended

Sep. 30, 2012

Debt Disclosure [Text Block]

(5)        Notes and Debentures Payable

The following table summarizes note and debenture activity for the nine months ended September 30, 2012 (in thousands):

	Balance 12/31/11		Additions		Conversion to Equity		Repayments			Balance 9/30/12
Current Notes and Debentures
12% Convertible Debentures –
Mercator assignees	$	60	$	-	$	-	$	-		$	60
4% Note Payable –
Morningtown	$	39	$	-	$	-	$	(21	)	$	18

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Note 6 - Stockholders' Deficit (Detail) (USD $)	1 Months Ended			3 Months Ended		6 Months Ended	9 Months Ended	12 Months Ended
	Feb. 28, 2011	Aug. 14, 2012	Jan. 31, 2011	Sep. 30, 2012	Mar. 31, 2012	Jun. 30, 2012	Sep. 30, 2012	Dec. 31, 2011	Feb. 15, 2011	Jan. 28, 2011
Stock Issued During Period, Shares, New Issues (in Shares)	6,000,000		16,666,666
Sale of Stock, Price Per Share (in Dollars per share)									$ 0.03	$ 0.03
Stock Issued During Period, Value, New Issues	$ 180,000		$ 500,000
Proceeds From Advances		$ 135,000		$ 135,000	$ 145,000	$ 560,000	$ 560,000	$ 397,000

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Note 7 - Share Based Payments (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	Options		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value at Date Indicated
Options outstanding at December 31, 2011		3,050,000	$	0.112		5.87	$	0
Options granted		-		-
Options exercised		-		-
Options forfeited		-		-
Options expired		-		-
Options outstanding at September 30, 2012		3,050,000	$	0.112		5.12	$	0
Options vested and exercisable at December 31, 2011		3,050,000	$	0.112		5.87	$	0
Options vested and exercisable at September 30, 2012		3,050,000	$	0.112		5.12	$	0

Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding [Table Text Block]

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Years to Expiration		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$0.11		3,000,000		5.16	$	0.110		3,000,000	$	0.110
$0.23		50,000		2.57	$	0.230		50,000	$	0.230
		3,050,000		5.12	$	0.112		3,050,000	$	0.112