SecProbe.io

CORRESP
1
filename1.htm

      Arbios
        Systems, Inc.

      8797
        Beverly Boulevard

      Suite
        206

      Los
        Angeles, CA 90048

      June
        30,
        2005

      Via
        EDGAR

      Securities
        and Exchange Commission

      Division
        of Corporate Finance

      Office
        of
        Small Business Review

      450
        Fifth
        Street, N.W.

      Washington,
        D.C. 20549

      Attn:
        Gary Todd—Reviewing Accountant

      Re:
        Arbios
        Systems, Inc. File 000-32603

      Dear
        Mr.
        Todd:

      By
        letter
        dated June 16, 2005, the staff of the Securities and Exchange Commission
        (the
“Staff”) provided this Company, Arbios Systems, Inc., with comments to this
        Company’s Quarterly Report on Form 10-QSB for the period ended March 31, 2005.
        This letter contains the responses of Arbios Systems, Inc. to the Staff’s
        comments. The numbers of the responses and the headings set forth below
        correspond to the numbered comments and headings in the June 16 letter from
        the
        Staff.

      Form
        10-QSB for the period ended March 31, 2005

      Financial
        Statements

      Note
        2. Stock-Based Compensation, page 6

            1.

              The
                significant assumptions used in applying the Black Scholes option-pricing
                model for any stock-based compensation paid to non-employees during
                the
                first quarter of 2005 were the following: dividend yield 0%, volatility
                0.83, risk free interest rate of 3.77% to 4.17% and an expected life
                of 5
                years. We will disclose these assumptions for stock-based compensation
                paid to non-employees in future filings.

      Item
        2. Management’s Discussion and Analysis of Financial Condition and Results of
        Operations, page 8

      Critical
        Accounting Policies

      Patents,
        page 9

              2.

                We
                  propose to include in future filings the following
                  disclosure:

      “The
        licensed capitalized patents costs were recorded based on the estimated value
        of
        the equity security issued by the Company to the licensor. The value ascribed
        to
        the equity security took into account, among other factors, the Company’s stage
        of development and the value of other companies developing extracorporeal
        bioartificial liver assist devices.”

      Please
        direct questions regarding this letter to the undersigned at (310)
        657-4879.

      Very
        truly yours,

      Scott
        Hayashi

      Chief
        Financial Officer