Calypte Updates Guidance for Current Quarter and 2002; First Quarter Results To Be Released May 1st

Business Wire, March 28, 2002

Business Editors/Health & Medical Writers

ALAMEDA, Calif.--(BW HealthWire)--March 28, 2002

Calypte Biomedical Corporation (OTCBB:CALY), a public healthcare company dedicated to the development and commercialization of urine-based diagnostic products and services, today revised guidance for the first fiscal quarter of 2002 and updated information regarding its financial position. Based on information currently available, the Company announced that it expects revenues for the quarter ending March 31, 2002 will decline by 10% to 15% from revenues of $1,402,000 for the same period a year ago due largely to production difficulties in Calypte's Rockville, Maryland facility. Without the production backorder, revenues would have been 6% to 11% above revenues of $1,402,000 for the same period a year ago. The Company had previously expected first quarter revenues to be flat or slightly up from a year ago. However, the Company expects to report that its ongoing cost-cutting measures will result in a reduction of its operating expenses of approximately 30% from the corresponding period last year, resulting in an improved operating margin compared to first quarter 2001.

Nancy Katz, President and CEO of Calypte, explained that, even though the production difficulties have been resolved, the Company is still subject to a lot release procedure that requires testing of all lots by the Food and Drug Administration. "Although the FDA has been working closely with us to expedite the lot release process, shipments of approximately $300,000 in product that we had projected for the first quarter will now likely not ship until early to mid-April."

Ms. Katz pointed out that the production problems were exacerbated by Calypte's ongoing cash-flow difficulties. "Although the processes in our Rockville facility are tightly controlled, they do occasionally yield product that does not meet our strict specifications. We have recognized the need to build up a safety stock to prevent these normal production issues from affecting our product shipment schedules. However, due to our tight cash position, we have not had the capital we needed to acquire the raw materials necessary to produce this safety stock."

The temporary delay in shipping product will push revenues into the second quarter. Nonetheless, the company does expect sales of its urine-based HIV-1 screening tests to the life insurance industry to grow over 100% this quarter compared to a year ago, and to increase by more than 33% from the immediate preceding quarter which ended December 31, 2001, as previously expected. There has been no significant change with respect to Calypte's expectations of order flow and the Company views this as a one-time interruption in revenues.

Calypte also provided updates with respect to its ongoing financing activities. On November 28, 2001, the Company had announced its intention to offer up to $10 million of shares of its common stock to international investors pursuant to Regulation S of the Securities Act of 1933 in an offering conducted exclusively outside of the U.S. and open only to non-U.S. persons. The Company initially anticipated that the Regulation S offering would close during the first quarter of 2002, subject to market conditions. Calypte now expects to extend the offering beyond March 31, 2002 but the Company can offer no assurance that it will successfully place any portion of the offering or realize any funding from it.

In addition, on February 12, 2001, Calypte had announced that it had signed an agreement to place up to $850,000 in two secured convertible debentures with a private investment fund. Calypte also issued warrants to purchase shares of the Company's common stock and Calypte expected its aggregate net proceeds from the debentures and warrants to amount to approximately $2.1 million. Calypte issued the first convertible debenture for $425,000 upon execution of the agreement and the investment fund was obligated to fund the second debenture and exercise the warrants following effectiveness of the registration statement the Company filed with the Securities and Exchange Commission earlier this month for resale of the shares issuable upon conversion of the debentures and exercise of the warrants. All registration statements are subject to review at the discretion of the SEC and earlier this week, the SEC notified Calypte that the agency had decided review the registration statement. The SEC review process typically takes from 45 to 90 days and the Company will not receive additional proceeds from the issuance of the debentures and warrants until then. However, Calypte can offer no assurance with respect to when, or if, the Commission will declare the registration statement effective.

As a result of the delays in the Company's ability to realize funds from the Regulation S offering and the issuance of the debentures and warrants, the Company's sole current source of funding necessary for it to continue its operations is the equity line of credit that Calypte has been drawing on since November 2001. The amounts of funds that Calypte can draw down on its equity line are determined by formulas related to the trading volume and price of Calypte's common stock. If the above circumstances negatively affect either or both trading volume or price, the funding currently available to Calypte will also decline.