MILLENNIUM BIOTECHNOLOGIES GROUP, INC
665 MARTINSVILLE ROAD, SUITE 219
BASKING RIDGE, NJ 07920]
January 3, 2007
Jeffrey P. Riedler
Assistant Director
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Mail Stop 6010
Re: Millennium Biotechnologies Group, Inc.
Preliminary Proxy Statement on Schedule 14A,
Filed December 8, 2006. File No. 0-03338
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Dear Mr. Riedler:
Millennium Biotechnologies Group, Inc. (the "Company") hereby responds to the
comments contained in your December 14, 2006 comment letter. Response numbers
correspond to the comment numbers in your letter. Please be advised that the
Company is not filing an amended proxy statement with this response, but will
file such an amendment after the Commission has reviewed this response letter.
Schedule 14A
Proposal 1: The Asset Sale, page 11
Comment No. 1 Pursuant to Item l4(c)(1) to Schedule 14A, it appears that certain
information, including a business description meeting the requirements of Item
101 of Regulation S-K and financial statements meeting the requirements of
Regulation S-X are required for RAC Corporation. Please provide the items
required by Item 14(c)(1) in your next amendment or provide us with a detailed
explanation why that item does not apply to you.
Response. The Company will add the following disclosure at the end of the "ASSET
SALE" subsection of the Proposal 1 section and just before the "PRIVATE
PLACEMENT" subsection (page 28 of the preliminary proxy as filed):
"Business and Plan of Operation of RAC Nutritional Corporation
RAC Corp. will have had no substantive business activities prior to the
closing of the Asset Sale. Its sole activities will have consisted of
organizing, raising funds and entering into the Asset Purchase Agreement.
Following the closing of the Asset Sale, RAC Corp. plans to operate the
nutraceuticals business previously conducted by the Company. Its new
management plans to develop and effectuate a business plan to expand the
marketing and distribution of the Resurgex(R) line of products. As
discussed above in "RAC Nutrition Corporation," it is anticipated that RAC
Corp. will be funded with $15,000,000 of working capital under the terms
of the Series A Preferred Stock Purchase Agreement. It is RAC Corp.
management's belief that this capital will be sufficient to sustain
operations for the next twelve months and, possibly, to a point where RAC
Corp. will generate positive cash flow. In the event that additional funds
are needed, the Series A Preferred Stock Purchase Agreement provides for
the sale of up to an additional $12.000,000 through the issuance of
additional Series A Preferred Stock. No assurance can be given that RAC
Corp. will not need in excess of this additional $12,000,000.
RAC NUTRITION CORP. PRO FORMA
BALANCE SHEET
(Unaudited)
------------------------------------------------
Beginning Adjustments Closing
-------------- -------------- --------------
Assets
Current Assets
Cash ............................................. $ -- $ 15,000,000 $ 15,000,000
Accounts receivable net of allowance for
doubtful accounts of $20,000 ................... -- 186,690 186,690
Inventories ...................................... -- 553,025 553,025
Prepaid expenses ................................. -- 83,462 83,462
Miscellaneous receivables ........................ -- 105,131 105,131
-------------- -------------- --------------
Total Current Assets ................................... -- 15,928,308 15,928,308
Property and equipment, net of accumulated
depreciation of $116,656 ............................. -- 13,672 13,672
Other Intangibles ...................................... -- 9,339,668 9,339,668
Deposits ............................................... -- 18,352 18,352
-------------- -------------- --------------
Total Assets ................................................. -- 25,300,000 25,300,000
============== ============== ==============
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses ............ -- 300,000 300,000
Short term debt .................................. -- -- --
Current maturities of long term debt ............. -- -- --
-------------- -------------- --------------
Total Current Liabilities .............................. -- 300,000 300,000
Accrued royalties, long-term portion ................... -- -- --
-------------- -------------- --------------
Total Liabilities ...................................... -- 300,000 300,000
Stockholders' Equity
Preferred stock, $.001 par value, $1 stated value,
(15,000,000 shares authorized, issued and outstanding) -- 15,000 15,000
Common stock, $0.001 par value, (10,000,000 shares
authorized, issued and outstanding) .................. -- 10,000 10,000
Additional paid-in capital ............................. -- 24,975,000 24,975,000
-------------- -------------- --------------
Total Stockholders' Equity ................................... -- 25,000,000 25,000,000
-------------- -------------- --------------
Total Liablities and Stockholders' Equity ............... $ -- $ 25,300,000 $ 25,300,000
============== ============== ==============
Conduct of Business Following the Asset Sale, page 18
Comment No. 2 You indicate that in the Summary section as well as in this
section that you will need to comply with the Investment Company Act of 1940.
Please expand your discussion to discuss the reasons why the Act applies to you
and the specific consequences of being subject to the Act and the impact it will
have on you and your shareholders.
Response. The Company will revise the last paragraph under "Conduct of Business
Following the Asset Sale" on page 18 of the preliminary proxy statement to read
as follows:
"If the Company is unable to acquire and/or commence substantive business
operations other than its investment in RAC Corp. within one year of the
closing of the Asset Sale, it most likely will be deemed to be an
investment company under the Investment Company Act of 1940. Upon the sale
of the Assets, the value of the securities of RAC Corp. to be owned by the
Company will exceed 40% of the value of the Company's total assets. Under
the Investment Company Act, an issuer, such as the Company, that owns
investment securities with a value in excess of 40% of its total assets,
is an Investment Company, unless it has a bona fide intent to be engaged
primarily, as soon as is reasonably possible (in any event within one
year), in a business other than that of investing, reinvesting, owning,
holding or trading in securities. As noted above, the Company will explore
business acquisition opportunities following the closing of the Asset
Sale. However, if the Company is deemed to be an investment company, it
would be subject to costly and burdensome compliance requirements,
including registration under that Act and compliance with reporting,
record keeping, voting, proxy and disclosure requirements and other rules
and regulations. In addition, its activities, including consummation of
any business acquisition, issuance of securities and types of investments,
would be restricted."
The Company acknowledges that: (i) it is responsible for the adequacy and
accuracy of the disclosure in the filing; (ii) staff comments or changes to
disclosure in response to staff comments do not foreclose the Commission from
taking any action with respect to the filing; and (iii) the Company may not
assert staff comments as a defense in any proceeding initiated by the Commission
or any person under the federal securities laws of the United States.
Very truly yours,
/s/ Frank Guarino
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Frank Guarino,
Chief Financial Officer