Heritage Worldwide, Inc. ("Heritage" or the "Company") was originally incorporated in Louisiana in 1983 and changed its domicile to Delaware in the third quarter of 2001. Heritage entered into an Acquisition Agreement (the "Agreement") dated February 28, 2003 with Milo Finance, S.A. ("Milo"), a Luxembourg limited liability entity. Milo was the principal shareholder of Poly Implants Protheses, S.A. ("PIP"), a French limited liability entity formed in 1991 that manufactures and internationally distributes breast implants, body support products and other implants. The transactions contemplated by the Agreement closed on March 1, 2003. Under the terms of the Agreement, the Company acquired 225,504 shares of the capital stock of PIP from Milo, which represented approximately 99.3% of PIP’s outstanding capital stock. As of June 30, 2007, our ownership of PIP amounts to 93.27%, following a financing in October 2004 in which Milo increased its ownership of PIP. As consideration for the PIP capital stock, Heritage issued to Milo a total of 13,741,667 shares of its common stock. After the closing of the acquisition, Milo had direct and beneficial ownership and control of approximately 85% of the outstanding common stock of the Company. The common stock was issued to Milo in a private placement without registration under the Securities Act of 1933, as amended (the “Securities Act.”) .As one of the largest manufacturer of breast implants sold in the international market and manufacturer of body support products, the Company intends to develop and market other implants. The Company markets its products in approximately 65 countries worldwide. The Company previously sold certain breast implant products in the U.S. market until May 2000, when due to changes in FDA regulations, the Company withdrew its products
Our principal products are breast implants. We develop, manufacture, and market a diverse line of such implants, consisting of a variety of shapes, sizes, and textures. Our primary breast implants consist of a silicone shell filled with silicone gel. This shell may be produced with either a smooth or textured surface. Our breast implants are available in many variations to meet customers' preferences and needs. Our breast implants are sold for use in breast augmentation for cosmetic reasons and for reconstructive surgery following a mastectomy.
In 1993, we marketed the first saline pre-filled breast implants. Unlike inflatable implants, they do not require additional manipulations during surgery. Such manipulation can be a source of complications, such as infection, leakage and deflation. Our saline pre-filled breast implants were successfully sold in the U.S. market until May 15, 2000, when, due to a change in certain FDA regulations, we withdrew from the U.S. market.
We were the first company to market hydrogel breast implants, which were developed in response to claimed problems with silicone implants. We have not yet distributed or sold hydrogel breast implants in the U.S. market. In 2002, we produced the first asymmetric prostheses. Asymmetric protheses consist of a set of two implants, each of which is designed for one side of the chest, and is specially fitted to conform to the shape of the thorax. This design alleviates the risks of rotation that exists in the case of so-called anatomical prostheses.
In March 2003, we entered into an agreement with GFE Medizintechnik GmbH (" GFE ") located in Nuremberg Germany, a manufacturer of titanium-based coating for medical devices. Under the terms of the agreement, we have obtained for six years (a) the exclusive right to manufacture breast implants using the titanium-based coating developed by GFE and (b) except for GFE, the worldwide exclusive right to distribute such implants.
The GFE process allows the coating of the silicone based shell of a breast implant with a titanium/silicone compound produced by a chemical reaction based on nano-technology. The silicone shell of the breast implant is coated inside and outside by 20 layers of the silicon/titanium compound, followed by another 30 layers of pure titanium. This process is also applied to the closing patch of the implant. Using this technology, only the titanium coating of the new implants will be in contact with the body of the recipient. Based on numerous studies in the field of biology and dentistry, titanium is known for being one of the most biocompatible materials available and reduces the risk associated with rejection of implants.
In December 2003, we received CE Mark approval from the European Union certifying that our titanium-coated breast implants met the applicable health, safety, and environmental requirements.
In August 2004, this CE mark was suspended because no clinical study was available for this product.
November 2006, we started a clinical study in Australia with our Australian distributor.
In August 2008, an intermediary has been sent to the TGA and accepted.
We expect to obtain the CE mark when the study ends in 2010.
In March 2004, concurrent with an amended distribution agreement, we issued to Medicor Ltd., a distributor of the Company’s products, a revolving promissory note for certain sums to come due to Medicor Ltd. based on Medicor Ltd.’s and our affiliate manufacturer’s administration of product replacement claims. The principal amount under the note as of June 30, 2008 was $0. Medicor Ltd. is presently in Chapter 11 bankruptcy proceedings. During August 2007, Medicor Ltd. claimed that we owe $4.8 million under the promissory note. We dispute that we presently owe the distributor the $4.8 million claimed to be due under the amended distribution agreement and have sought substantiation for such amount by requesting information from Medicor Ltd. To date, Medicor Ltd. has not provided the information requested. We have notified Medicor Ltd. that it is in default under the amended distribution agreement, and we terminated such agreement in May 2007.
COMPETITION AND MARKET
Our major international competitors are two U.S. based public companies, Mentor Corp. and Allergan, Inc. Based on publicly available sales figures, these two companies rank first and second, respectively, in global sales of breast implants. Mentor and Allergan currently control the U.S. market, which represents the majority of the global market. We are currently ranked first in implant sales in Colombia, second in Spain, Great Britain and Venezuela, and third in France. We also compete internationally with Silimed, Eurosilicone, Nagor, Laboratories Sebbin and LPI. To our knowledge, these companies tend to focus their sales efforts on their own respective regional or local markets, rather than national or international markets. We presently do not market our products in the United States. Our products are subject to regulation in the countries in which we currently market those products and are likely to be subject to regulation in other countries in which we may market them in the future. Products marketed in the European Community must comply with the requirements of the European Medical Device Directive, or MDD, and be CE-marked to show their acceptability in that region.
We have received CE approval for velvet microtexturized breast implants and for silicon-gel free testicular prosthesis in December 2003.
Medical device laws and regulations similar to those described above are also in effect in some of the other countries in which our products are sold. These range from comprehensive device approval requirements for some or all of such medical device products, to requests for product data or certifications. Failure to comply with these regulatory standards and requirements in any jurisdiction could significantly adversely affect our ability to market and sell our products in those jurisdictions.
RESEARCH AND DEVELOPMENT
The Company focuses its research and development efforts on developing new products and core technologies for its markets and further enhancing the reliability, design, and consistency of its existing products. The Company solicits extensive input concerning product development from surgeons, distributors, and consumers. During fiscal years 2008 and 2007, the Company incurred research and development expenses of approximately $1.1 million and $1.3 million, respectively. We own three patents. We hold one patent in France for certain of our manufacturing processes associated with the gel-filled implants, as well as one European Community patent, and one U.S. patent for breast implants design. The French and European patents are valid for 20 years while the U.S. patent is valid for 15 years.
HERITAGE WORLDWIDE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2008 and 2007
MAS JEAN CLAUDE CIK#: 0001221646 (see all company filings)
HERITAGE WORLDWIDE INC CIK#: 0001034682 (see all company filings)
Nancy Ewert et al v. PIP
In February of 2008, PIP was served with a Complaint filed in federal court in Houston, Texas by seven women alleging product liability related claims. The lead plaintiff is named Nancy Ewert. PIP has responded to the complaint and asserted defenses. No trial has been set and discovery is active and ongoing.
Though it is not yet possible to predict the outcome of any of the cases described above, the Company and its subsidiaries, as applicable, have denied plaintiffs' allegations and are vigorously defending themselves upon the merits of each lawsuit and against certification of any class in the Illinois Schnebel lawsuit, which is the only remaining putative class action.
The wife of Jean-Claude Mas, the other brain PIP case
Exclusive: The troubled history of PIP's implants man in America
When the French firm at the center of a breast implant scandal sought to expand its U.S. business a decade ago, it turned to Donald McGhan, a pioneer in the implant industry with a history of legal troubles.McGhan's MediCor signed on to distribute the products in 1999, but a year later the Food and Drug Administration (FDA) conducted a new review of the devices and decided there wasn't enough data to show they were safe.Despite that, MediCor continued to book sales of the implants until 2002, according to a MediCor prospectus for a sale of its stock. Reuters interviews with three surgeons and two patients found cases in which women received implants after the 2000 rejection Read more