UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C.  20549




FORM
      10-QSB




QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
      ACT OF 1934





For
      the
      period ended December 31, 2006







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 001-07894





MATRIXX
      RESOURCE HOLDINGS, INC.


(Exact
      name of registrant as specified in its charter)




Delaware
            
            95-2312900(State
                or Other Jurisdiction
              of
                Incorporation or Organization)
            
            (I.R.S.
                Employer Identification No.)





11601
                Wilshire Blvd., Ste. 500, Los Angeles, CA
            
            90025(Address
                of principal executive offices)
            
            (Zip
                Code)




(310)
      235-1479


(Registrant’s
      Telephone Number, Including Area Code)




Check
      whether the issuer: (1) filed all the reports required to be filed by Section
      13
      or 15(d) of the Exchange Act during the past 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.  Yes
      _X_    No __





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act)  Yes
      _X_    No __




The
        number of outstanding shares of the issuer's common stock, $0.001 par value,
        as
        of February 13, 2007 was 216,902,568





Transitional
      Small Business Disclosure Format (Check one):    Yes __
      No    _X_





MATRIXX
      RESOURCE HOLDINGS, INC.





INDEX






PART
                I       -
            FINANCIAL
                INFORMATION
            F-1ITEM
                1.
            FINANCIAL
                STATEMENTS
            F-1ITEM
                2.
            MANAGEMENT'S
                DISCUSSION AND ANALYSIS OR
              PLAN
                OF OPERATION
            1ITEM
                3.
            CONTROLS
                AND PROCEDURES
            15PART
                II     -
            OTHER
                INFORMATION




ITEM
                1.
            LEGAL
                PROCEEDINGS
            15ITEM
                2.
            UNREGISTERED
                SALES OF EQUITY SECURITIES AND
              USE
                OF PROCEEDS
            15ITEM
                3.
            DEFAULTS
                UPON SENIOR SECURITIES
            16ITEM
                4.
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITYHOLDERS
            16ITEM
                5.
            OTHER
                INFORMATION
            16ITEM
                6.
            EXHIBITS
            16SIGNATURES
            
            17CERTIFICATIONS






PART
                I      -
            FINANCIAL
                INFORMATIONITEM
                1.
            FINANCIAL
                STATEMENTS(a)
            Financial
                Statements
            Page---Balance
                Sheets as of June 30 and December 31, 2006, (Unaudited)
            F-1Statements
                  of Operations (Unaudited) For the Three and Six Months Ended December
                  31,
                  2005 and 2006, and from Inception (July 1, 2001) to December 31,
                  2006
            F-3




Statements
                    of Cash Flows (Unaudited) For the Six Months Ended December 31, 2005
                    and 2006, and from Inception (July 1, 2001) to December 31,
                    2006
            F-4Notes
                to Financial Statements
            F-6







Matrixx
      Resource Holdings, Inc.


(A
      Development Stage Company)


Balance
      Sheets


December
                  31,
              
              June
                  30,2006
              
              2006(Unaudited)ASSETSCURRENT
                  ASSETSCash
              
              $
              3,587
              
              $
              72Prepaid
                  expenses
              
              
              12,500
              
              
              12,500Stock
                  subscription receivable
              
              
              -
              
              
              146,190Other
                  assets
              
              
              967
              
              
              450Deferred
                  cost of acquisition, net
              
              
              -
              
              
              1,292,000Total
                  Current Assets
              
              
              17,054
              
              
              1,451,212Mineral
                  Properties
              
              
              397,000
              
              
              -Oil
                  and Natural Gas Properties, full cost accounting methodProved
                  property, net of amortization
              
              
              246,343Oil
                  and Natural Gas Properties, full cost accounting methodUnproved
                  property, not currently amortized
              
              
              1,492,350
              
              
              -TOTAL
                  ASSETS
              
              $
              2,152,747
              
              $
              1,451,212
  LIABILITIES
                    AND STOCKHOLDERS' EQUITY /
                    (DEFICIT)
  CURRENT
                        LIABILITIESAccounts
                        payable and accrued liabilities
                    
                    $
                    526,516
                    
                    $
                    384,420Accrued
                        liabilities - related parties
                    
                    
                    75,892
                    
                    
                    75,384Note
                        payable with accrued interest - IICG
                    
                    
                    172,800
                    
                    
                    172,800Current
                        portion of Note payable with accrued interest -
                        Overseas
                    
                    
                    33,026
                    
                    
                    56,842Short-term
                        Loan with accrued interest - M. Avatar
                    
                    
                    15,208
                    
                    
                    14,200Total
                        Current Liabilities
                    
                    
                    823,442
                    
                    
                    703,646LONG
                        TERM LIABILITIESNote
                        payable with accrued interest - Overseas
                    
                    
                    80,764
                    
                    
                    78,713Loan
                        - Kuma Capital
                    
                    
                    516,392
                    
                    
                    -Total
                        Long Term Liabilities
                    
                    
                    597,156
                    
                    
                    78,713TOTAL
                        LIABILITIES
                    
                    
                    1,420,598
                    
                    
                    782,359


The
                accompanying notes are an integral part of these financial
                statements.




F1







Matrixx
                Resource Holdings, Inc.(A
                Development Stage Company)
              Balance
                  Sheets




Continued
                from F-1December
                31,
            
            June
                30,2006
            
            2006(Unaudited)STOCKHOLDERS'
                EQUITYPreferred
                stock, $0.001 par value, 10,000,000 shares
                authorizedSeries
                A Preferred stock, nil and 100 shares, respectively, issued and
                outstanding
            
            
            -
            
            
            -Series
                B Preferred stock, nil and 100 shares, respectively, issued and
                outstanding
            
            
            -
            
            
            -Common
                stock, $0.001 par value, 400,000,000 authorized199,944,235
                and 128,278,678 shares issued and outstanding, respectively
            
            
            199,945
            
            
            128,279Additional
                paid-in capital
            
            
            19,896,665
            
            
            21,575,933Prepaid
                expenses - expenses prepaid with common stock
            
            
            (51,488
            )
            
            (313,268
            )Escrowed
                shares
            
            
            -
            
            
            (3,400,000
            )Treasury
                stock, 1,620 shares
            
            
            (810
            )
            
            (810
            )Accumulated
                deficit in the development stage
            
            
            (19,312,163
            )
            
            (17,321,281
            )Total
                Stockholders' Equity
            
            
            732,149
            
            
            668,853TOTAL
                LIABILITIES AND STOCKHOLDERS' EQUITY
            
            $
            2,152,747
            
            $
            1,451,212The
                accompanying notes are an integral part of these financial
                statements.F-2







Matrixx
                Resource Holdings, Inc.(A
                Development Stage Company)Statements
                of Operations




From
                Inception(July
                1, 2001)For
                the Three Months Ended
            
            For
                the Six Months Ended
            
            toDecember
                31,
            
            December
                31,
            
            December
                31,2006
            
            2005
            
            2006
            
            2005
            
            2006(Unaudited)
            
            
            (Unaudited)
            
            
            (Unaudited)
            
            
            (Unaudited)
            
            
            (Unaudited)Oil
                and Gas Revenues
            
            $
            3,846
            
            $
            -
            
            $
            3,846
            
            $
            -
            
            $
            3,846General
                and administrative expenses
            
            
            818,011
            
            
            752,563
            
            
            1,976,664
            
            
            1,433,718
            
            $
            18,602,093Production
                Expenses
            
            
            352
            
            
            -
            
            
            352
            
            
            -
            
            
            352Depreciation,
                Depletion, & Amortization
            
            
            222
            
            
            -
            
            
            222
            
            
            -
            
            
            222Loss
                from continuing operations
            
            
            (814,738
            )
            
            (752,563
            )
            
            (1,973,392
            )
            
            (1,433,718
            )
            
            (18,598,821
            )Other
                income and expensesGain
                from extinguishment of debt
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            110,468Gain
                from settlement of lawsuit
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            90,415Impairment
                of asset in deferred cost of acquisition
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (600,000
            )Interest
                expense
            
            
            (12,018
            )
            
            (1,896
            )
            
            (17,490
            )
            
            (1,896
            )
            
            (41,200
            )Net
                Loss from continuing operations after other income and
                expenses
            
            
            (826,757
            )
            
            (754,459
            )
            
            (1,990,882
            )
            
            (1,435,614
            )
            
            (19,039,138
            )Discontinued
                operationsLoss
                on disposal of Visual Interviews, Inc.,less
                applicable income taxes
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (73,025
            )(826,757
            )
            
            (754,459
            )
            
            (1,990,882
            )
            
            (1,435,614
            )
            
            (19,112,163
            )Provision
                for loss on related parties notes receivable
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (200,000
            )Net
                loss
            
            $
            (826,757
            )
            $
            (754,459
            )
            $
            (1,990,882
            )
            $
            (1,435,614
            )
            $
            (19,312,163
            )Basic
                weighted average number ofcommon
                shares outstanding
            
            
            198,490,467
            
            
            48,969,643
            
            
            172,348,766
            
            
            40,557,484Net
                loss per common shareBasic
            
            $
            (0.00
            )
            $
            (0.02
            )
            $
            (0.01
            )
            $
            (0.04
            )The
                accompanying notes are an integral part of these financial
                statements.F-3







Matrixx
                Resource Holdings, Inc.(A
                Development Stage Company)Statements
                of Cashflows




From
                Inception(July
                1, 2001)For
                the Six Months Ended
            
            toDecember
                31,
            
            December
                31,2006
            
            2005
            
            2006(Unaudited)
            
            
            (Unaudited)
            
            
            (Unaudited)CASH
                FLOWS FROM OPERATING ACTIVITIESNet
                loss
            
            $
            (1,990,882
            )
            $
            (1,435,614
            )
            $
            (19,312,163
            )Adjustments
                to reconcile net loss to net provided byoperating
                activitiesNon-cash
                adjustments:Effect
                of Merger
            
            
            -
            
            
            -
            
            
            (27,717
            )Provision
                for loss on receivable received in merger
            
            
            -
            
            
            -
            
            
            200,000Issuance
                of stock for services
            
            
            1,371,992
            
            
            1,277,750
            
            
            11,666,325Gain
                from extinguishment of debt
            
            
            -
            
            
            -
            
            
            (110,468
            )Gain
                from settlement of lawsuit
            
            
            -
            
            
            -
            
            
            (90,415
            )Issuance
                of stock for Accrued liabilities - related parties
            
            
            -
            
            
            -
            
            
            175,034Issuance
                of stock for Note payable with accrued interest
            
            
            -
            
            
            -
            
            
            42,371Issuance
                of stock for Subscription receivable
            
            
            420,405
            
            
            -
            
            
            433,589Issuance
                of stock for Cost of Inducement
            
            
            -
            
            
            -
            
            
            5,515,613Impairment
                of Hazard Property
            
            
            -
            
            
            -
            
            
            600,000Changes
                in:Other
                Assets
            
            
            (516
            )
            
            -
            
            
            (968
            )Prepaid
                expenses
            
            
            261,780
            
            
            92,815
            
            
            16,012Deferred
                cost of acquisition
            
            
            -
            
            
            (212,000
            )
            
            -Accounts
                payable and accrued liabilities
            
            
            (180,104
            )
            
            (6,724
            )
            
            208,209Accrued
                liabilities - related parties
            
            
            508
            
            
            1,502
            
            
            103,359Accrued
                interest
            
            
            17,490
            
            
            1,896
            
            
            33,654NET
                CASH USED BY OPERATING ACTIVITIES
            
            
            (99,325
            )
            
            (280,374
            )
            
            (547,563
            )CASH
                FLOWS FROM INVESTING ACTIVITIESCash
                paid in advance of acquisitions
            
            
            95,000
            
            
            -
            
            
            (67,000
            )Investments
                in Mineral Properties
            
            
            -
            
            
            -
            
            
            -Investments
                in Oil & Natural Gas Properties, Proven, net of
                DD&A
            
            
            (216,343
            )
            
            -
            
            
            (216,343
            )Investments
                in Oil & Natural Gas Properties, Unproven
            
            
            (400,149
            )
            
            -
            
            
            (400,149
            )NET
                CASH USED BY INVESTING ACTIVITIES
            
            
            (521,493
            )
            
            -
            
            
            (683,493
            )CASH
                FLOWS FROM FINANCING ACTIVITIESBank
                overdraft
            
            
            -
            
            
            2,741
            
            
            -Payment
                received on subscription receivable
            
            
            146,190
            
            
            135,095
            
            
            579,102Offering
                costs
            
            
            -
            
            
            -
            
            
            (3,102
            )Proceeds
                from Notes payable
            
            
            503,143
            
            
            142,500
            
            
            714,868Payments
                on Notes payable
            
            
            (25,000
            )
            
            -
            
            
            (181,225
            )Proceeds
                from sale of common stock
            
            
            -
            
            
            -
            
            
            125,000NET
                CASH PROVIDED BY FINANCING ACTIVITIES
            
            
            624,333
            
            
            280,336
            
            
            1,234,643NET
                CHANGE IN CASH
            
            
            3,515
            
            
            (38
            )
            
            3,587CASH,
                beginning of period
            
            
            72
            
            
            38
            
            
            -CASH,
                end of period
            
            $
            3,587
            
            $
            -
            
            $
            3,587




Continued
                on F-4The
                accompanying notes are an integral part of these financial
                statements.F-4







Matrixx
                Resource Holdings, Inc.(A
                Development Stage Company)Statements
                of CashflowsContinued
                from F-4SUPPLEMENTAL
                SCHEDULE OF NON-CASH INVESTINGACTIVITIES:




For
                the Six Months EndedDecember
                31,2006
            
            2005(Unaudited)
            
            (Unaudited)Issuance
                of common stock for services
            
            $
            1,320,504
            
            $
            1,187,065Issuance
                of common stock for prepaid services
            
            $
            51,488
            
            $
            90,685Issuance
                of common stock for subscription receivable
            
            $
            420,405
            
            $
            -Escrowed
                shares returned pursuant to GCCC Agreement
            
            $
            3,400,000Escrowed
                shares used for deferred acquisition cost
            
            $
            -
            
            $
            800,000




The
                accompanying notes are an integral part of these financial
                statements.F-5







Matrixx
          Resource Holdings, Inc.
 (A
          Development Stage Company)
 Notes
          to
          Financial Statements
 
 
 1.
          NATURE
          OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Organization
          and Business
 -------------------------
 
 Matrixx
          Resource Holdings, Inc., (“Matrixx” or "Company"), a Delaware corporation, is in
          the development stage, as defined in Financial Accounting Standards Board
          Statement No. 7. The Company's year end is June 30.
  The
          Company has focused efforts on identifying and evaluating business opportunities
          for acquisition or merger to provide long-term growth for its shareholders
          and
          to meet its objective of attaining a listing on a national exchange . The
          Company’s strategy is to target acquisition and investment opportunities in the
          oil and gas and natural resource exploration industries. The Company’s entry
          into the oil and gas and natural resource exploration business began on
          July 14,
          2006, with the final approval and closing of the Company’s purchase of a 98%
          interest in the Hazard Lake Property, a 355-hectare gold mining property
          in the
          Red Lake District in Ontario, Canada and its purchase of a five percent
          interest
          in the Clovelly Prospect, an oil and gas property in the Lafourche Parish,
          Louisiana.
 
 On
          July
          14, 2006, the stockholders holding an aggregate of 58,295,528 shares of
          Common
          Stock, or 55.6% of the votes entitled to be cast at a meeting of the Company's
          stockholders, consented in writing i) to change the Company’s name to “Matrixx
          Resource Holdings, Inc.; ii) to approve of that certain Purchase Agreement
          by
          and between the Company and Overseas Investment Banking Alliance, S.A.
          dated
          October 13, 2005, to purchase the Hazard Lake Property; and iii) to approve
          of
          that certain Purchase Agreement by and between the Company and Sterling
          Grant
          Capital, Inc. dated November 15, 2005, to purchase a five percent interest
          in
          the Clovelly Prospect. The sole holder of all shares of Series A Convertible
          Preferred Stock and Series B Preferred Stock also consented in writing
          to the
          three proposals.
 
 There
          can
          be no assurance that the above acquisitions will be successful or that
          additional acquisitions or investments will be available to the Company
          at terms
          acceptable to the Company. Further, the exploration of oil and gas and
          natural
          resources is a highly risky endeavor and there can be no assurance that
          any of
          the Company’s investments will prove to be successful or profitable.
  2.
          BASIS
          OF PRESENTATION
 
 The
          accompanying unaudited financial statements have been derived from the
          accounts
          of Matrixx Resource Holdings, Inc. The financial statements have been prepared
          in accordance with generally accepted accounting principles for interim
          financial information and in accordance with the instructions for Form
          10-QSB.
          Accordingly, they do not include all of the information and footnotes required
          by accounting principles generally accepted in the United States.
 
 In
          the
          opinion of management, the unaudited interim financial statements for
          the three and six months ended December 31, 2006, are presented on a basis
          consistent with the audited financial statements and reflect all adjustments,
          consisting only of normal recurring accruals, necessary for fair presentation
          of
          the results of such period. The results for the three and six months ended
          December 31, 2006 are not necessarily indicative of the results of operations
          for the full year ending June 30, 2007. These unaudited financial statements
          should be read in conjunction with the audited financial statements and
          notes
          thereto included in the Company's Annual Report on Form 10-KSB for the
          year
          ended June 30, 2006.
  F-6
 Matrixx
          Resource Holdings, Inc.
 (A
          Development Stage Company)
 Notes
          to
          Financial Statements
 
 
 2.
          BASIS
          OF PRESENTATION
 
 The
          preparation of the financial statements in conformity with accounting principles
          generally accepted in the United States requires management to make estimates
          and assumptions that affect the amounts reported in the financial statements.
          Actual results may differ from those estimates.
  3.
          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Use
          of
          Estimates in Preparation of Financial Statements
 ----------------------------------------------------------------------------
 
 Management
          of the Company has made a number of estimates and assumptions relating
          to the
          reporting of assets, liabilities, revenue, expenses and disclosure of contingent
          assets and liabilities to prepare these financial
          statements in accordance with accounting principles generally accepted
          in the
          United States of America. Accordingly, actual results may differ from those
          estimates.
 
 Oil
          and
          Natural Gas Properties
 --------------------------------------------
 
 The
          Company accounts for its oil and gas producing activities using the full
          cost
          method of accounting as prescribed by the United States Securities and
          Exchange
          Commission (“SEC”). Accordingly, all costs associated with the acquisition of
          properties and exploration with the intent of finding proved oil and gas
          reserves contribute to the discovery of proved reserves, including the
          costs of
          abandoned properties, dry holes, geophysical costs, and annual lease rentals,
          are capitalized. All general corporate costs are expensed as incurred.
 
 Amortization
          of evaluated oil and gas properties is computed on the units of production
          method based on all proved reserves on a country-by-country basis. Unevaluated
          oil and gas properties are to be assessed at least annually for impairment
          either individually or on an aggregate basis. The net capitalized costs
          of oil
          and gas properties (full cost ceiling limitation) are not to exceed the
          sum of
          the related estimated future net revenues from proved reserves discounted
          at
          10%, the lower of cost or estimated fair value of unproved properties included
          in the costs being amortized, if any, and the cost of unevaluated and unproved
          properties not being amortized, if any, net of tax considerations. These
          properties are included in the amortization pool immediately upon the
          determination that the well is dry. Unproved properties consist of lease
          acquisition costs and costs on well currently being drilled on the properties.
          The recorded costs of the investment in unproved properties are not amortized
          until proved reserves associated with the projects can be determined or
          until
          they are impaired.
 
 The
          Company’s entry into the oil and gas and natural resource exploration business
          began on July 14, 2006. As of December 31, 2006, the Company has recognized
          amortization expense of $222.
 
 Revenue
          Recognition and Gas Balancing
 *--------------------------------------------------------*
 
 We
          recognize oil and gas revenues from our interests in producing wells as
          oil and
          gas is produced and sold from these wells. We use the sales method of accounting
          for gas balancing of gas production and would
 
 F-7
 Matrixx
          Resource Holdings, Inc.
 (A
          Development Stage Company)
 Notes
          to
          Financial Statements
 
 
 3.
          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued from F-7)
 
 Revenue
          Recognition and Gas Balancing
 *----------------------------------------------------*
 
 recognize
          a liability if the existing proven reserves were not adequate to cover
          the
          current imbalance situation. As of December 31, 2006, our gas production
          was in
          balance, i.e., our cumulative portion of gas production taken and sold
          from
          wells in which we have an interest equaled our entitled interest in gas
          production from those wells.
  4.
          MINERAL PROPERTIES
 
 Hazard
          Lake Property .
          On
          October 10, 2005, the Company executed a Purchase Agreement (the "Hazard
          Agreement") with Overseas Investment Banking Alliance, S.A., a Panamanian
          corporation ("Overseas"), for the purchase of Overseas’ 98% interest in the
          Hazard Lake Property in Ontario, Canada. The Hazard Agreement called for
          an
          aggregate purchase price of $397,000, of which $197,000 is to be paid in
          cash
          (of which $67,000 has been prepaid), with the balance represented by a
          note for
          $130,000. *(See
          Note 9. Note*  *Payable
          - Overseas).* The
          Company has also issued 2,000,000 shares of Common Stock to Overseas. These
          shares were delivered from the 12,500,000 shares issued to GCCC pursuant
          to the
          terms of the GCCC Agreement.
 
 The
          Hazard Agreement valued the shares at $200,000, or $0.10 per share, based
          on the
          current market price on the date of the Hazard Agreement. However, the
          12,500,000 escrowed shares were valued at $0.40 per share when issued to
          GCCC
          and, therefore, the Company was initially required to value the 2,000,000
          shares
          transferred to Overseas at $0.40 per share for an aggregate value of $800,000,
          thus making the total purchase price to Matrixx $997,000. As a result of
          the
          Company’s recently focused attention on acquiring oil and gas properties, it was
          determined that value of the Hazard Lake Property in deferred acquisition
          cost
          was impaired. At June 30, 2006, the Company recognized a $600,000 impairment
          in
          the value of the Hazard Property. The remaining balance of $397,000 was
          transferred from Deferred Cost of Acquisition to Mineral Properties on
          July 14,
          2006, the date of final approval and closing of the transaction. No additional
          investments or expenses have been incurred for the Hazard Property during
          the
          quarter ended December 31, 2006.
  5.
          OIL
& NATURAL GAS PROPERTIES
 
 As
          described in Note 3 above, the Company utilizes the full cost accounting
          method
          for its oil and natural gas properties. As of December 31, 2006, the Company
          has
          acquired interests in several prospects. Below is a summary of proven and
          unproven wells at December 31, 2006.
 
 **Proven
                    Wells**
                
                **Capitalized**
                  **Costs**Buck
                    Snag - Schiurring #1 well
                
                $
                246,565Less:
                    Amortization
                
                
                (222
                )Total,
                    Proven wells, net of amortization
                
                $
                246,343
  Buck
          Snag Field - Schiurring #1 well. On
          August 28, 2006, the Company entered into an Acquisition and
  F-8
 Matrixx
          Resource Holdings, Inc.
 (A
          Development Stage Company)
 Notes
          to
          Financial Statements
 
 
 5.
          OIL
& NATURAL GAS PROPERTIES (Continued from F-8)
 
 Participation
          Agreement (“Buck Snag Agreement”) for the acquisition of a 42.5% working
          interest in the Buck
          Snag
          Field (“Buck Snag”) from Texahoma Energy, Inc. (Pink Sheets: TXHE), a Nevada
          corporation (“Texhoma”).  The
          Company’s payment of $150,000 to Texhoma was for an initial 57.5% participation
          in Buck Snag but subsequently the Company agreed to convey 15% of its
          participation as partial payment for a 10% participation in the Sandy Point
          Prospect.
 
 The
          Company has paid $103,011 toward drilling and completion costs for the
          Schiurring #1 well. At December 31, 2006, the Company owes a balance of
          $16,054
          for cost overages in completing the well. This amount is included in accruals
          payable and accrued liabilities at December 31, 2006. Additionally, the
          Company
          has received initial revenues from Schiurring #1 in the amount of $3,494.
          Due to
          mechanical problems encountered, it is anticipated that additional costs
          will be
          required to continue production at this well.
 
 
 **Unproven
                    Wells**
                
                
                **Capitalized
                    Costs**
  Buck
                    Snag - Schiurring #2 well
                
                $
                141,253Clovelly
                    - Allain - LeBreton #2 well
                
                
                1,095,168Manvel
                    - Miocene well
                
                
                63,000Manvel
                    - Oakville well
                
                
                112,500Sandy
                    Point - Fite #3 well
                
                
                80,429Total,
                    Unproven wells
                
                $
                1,492,350
  Buck
          Snag Field - Schiurring #2 well. Drilling
          of the Schiurring # 2 well at the Buck Snag prospect initiated on November
          30,
          2006. The well was drilled to a total depth of 4,406 feet and completed
          on
          December 18, 2006. As of December 31, 2006, the Company has paid an aggregate
          of
          $141,253 for drilling and completion costs representing its proportionate
          share
          of all cash calls for drilling and completion on the Schiurring #2 well.
          The
          Company owns a 42.5% working interest in the Buck Snag Field.
  Clovelly
          Prospect. On
          November 15, 2005, the Company executed a Letter Agreement (the “Letter
          Agreement”) with Sterling Grant Capital Inc. (formerly Sun Oil and Gas Corp.),
          (“Sterling”), to purchase a 5% minority interest in an oil prospect
          property. The property is the Clovelly Prospect (“Clovelly”) which is located in
          southeast Louisiana in the Lafourche Parish.
 
 The
          Letter Agreement called for a purchase price of $15,000 in cash and 2,000,000
          shares of common stock. The shares of common stock were issued on January
          30,
          2006 from the 12,500,000 shares issued to GCCC pursuant to the terms of
          the GCCC
          Agreement, leaving the balance of shares in escrow at 8,500,000. The Letter
          Agreement valued the shares at $100,000, or $0.05 per share, based on the
          current
 market
          price of the Company’s Common Stock on the date of the Letter Agreement.
          However, the 12,500,000
          escrowed shares were valued at $0.40 per share when issued to GCCC and,
          therefore the Company is required to value the 2,000,000 shares transferred
          to
          Sterling at $0.40 per share for an aggregate value of $800,000. It is possible
          that in the future the Company will be required to recognize an impairment
          in
          the value of its interest in the Clovelly investment.
  F-9
 Matrixx
          Resource Holdings, Inc.
 (A
          Development Stage Company)
 Notes
          to
          Financial Statements
 
 
 5.
          OIL
& NATURAL GAS PROPERTIES (Continued from F-9)
 
 Drilling
          of the Allain-LeBreton No. 2 well on the Clovelly Prospect commenced on
          June 19,
          2006. Cash calls for drilling and other direct costs have been made for
          an
          aggregate of $277,595. At December 31, 2006, the Company owes $102,718,
          which is
          included in accruals payable and accrued liabilities.
  Manvel
          Prospect - Miocene well. On
          October 5, 2006, the Company finalized an Acquisition and Participation
          Agreement with Texhoma for the acquisition of a majority working interest
          in two
          wells (“Miocene well” and the ”Oakville well”, collectively the “Manvel
          properties”) located in Brazoria County, Texas (the “Manvel Agreement”).
          Pursuant to the terms of the Manvel Agreement, the Company shall receive
          a 55%
          working interest in the Manvel 2,000 ft. Miocene Exploration prospect (“Miocene
          well”) for $20,000. Subsequently, on November 16, 2006, the Company conveyed
          10%
          of its working interest in the Miocene well valued at $2,000 as a partial
          payment towards the acquisition of a 10% participation in the Sandy Point
          Prospect.
 
 As
          of
          December 31, 2006, the Company has paid the $18,000 for its 45% participation
          in
          the Miocene well and $45,000 for its proportionate share of the cash calls
          for
          drilling.
 
 Manvel
          Prospect - Oakville well. Pursuant
          to the terms of the Manvel Agreement, the Company received a 55% working
          interest in the Manvel 4,500 ft. Oakville Development well (“Oakville well”) for
          $40,000. Subsequently, on November 16, 2006, the Company conveyed 10% of
          its
          working interest in the Oakville well, valued at $4,000, as a partial payment
          towards the acquisition of a 10% participation in the Sandy Point
          Prospect.
 
 As
          of
          December 31, 2006, the Company has paid the $36,000 for its 45% participation
          in
          the Oakville well. The Company owes a balance of $76,500 for its proportionate
          share of the cash calls for drilling. This amount is included in the accruals
          payable and accrued liabilities at December 31, 2006.
 
 Sandy
          Point Prospect - Fite #3. On
          November 16, 2006, the Company finalized the terms of agreement with Texhoma
          and
          Sunray to acquire a 10% working interest in the Sandy Point Prospect for
          an
          aggregate amount of $35,928. The participation fee is to be paid through
          a
          conveyance of 15% of the Company’s participation in Buck Snag, valued at
          $22,500; 10% participation in the Manvel properties valued at $6,000; and
          $7,428 in cash.
 
 As
          of
          December 31, 2006, the Company owes the cash balance of $7,428 for its
          10%
          participation and a balance of $44,500 for its proportionate share of the
          cash
          calls for drilling. The aggregate amount of $51,928 is included in the
          accruals
          payable and accrued liabilities at December 31, 2006.
 
 6.
          RELATED PARTY PAYABLES
  As
          of
          December 31, 2006, the Company owes a total of $75,892 to management and
          consultants as reimbursement for expenses incurred during the development
          phase
          of operations. Included in this amount is $5,000 owed to Isaac Simmons
          and
          Kathyrn A. Christmann, parents of Catherine Thompson, the Company's Chief
          Financial Officer, following a partial repayment of $5,000 on July 7, 2006.
          The
          amount of $10,000 was owed as a reimbursement for legal fees paid on behalf
          of
          the Company.  Additionally, the Company agreed to reimburse Ms.
          Thompson for out of pocket expenses incurred on behalf of the Company.
          Currently, the Company owes an aggregate of $70,892 for such
          expenses.
 
 F-10
 Matrixx
          Resource Holdings, Inc.
 (A
          Development Stage Company)
 Notes
          to
          Financial Statements
 
 
 7.
          NOTE
          PAYABLE - INTERACTIVE IDEAS CONSULTING GROUP
 
 On
          April
          1, 2004 the Company consummated the acquisition of 100% of RestauranTech
          from
          Interactive Ideas Consulting Group ("IICG"). Subsequent to the closing
          of the
          acquisition, certain differences in strategic direction for the organization
          and
          other issues arose which caused the Company and IICG to seek to
          rescind the transaction. On May 27, 2004, the parties mutually rescinded
          the
          Company's acquisition of RestauranTech.
 
 The
          rescission agreement with IICG requires the Company to clear certain outstanding
          balances and reimburse certain expenses of IICG incurred in connection
          with the
          acquisition. This obligation is evidenced by a Convertible Promissory Note
          in
          the principal amount of $160,000 (the "Note”). The Company believes that there
          is a sufficient basis on which to dispute the amounts of principal and
          interest
          of the Note. As such, the Company accrued interest through the maturity
          date,
          May 26, 2005, in the amount of $12,800; no amounts for interest have been
          accrued beyond that date. As of the date of this filing the Company has
          not
          converted the Note and IICG has not requested a conversion.
  8.
          SHORT-TERM LOAN - M. AVATAR (Related Party)
 
 On
          November 23, 2005, the Company executed a short-term Loan Agreement (“Loan”)
          with Michael Avatar, a Director of the Company, for $12,500. The Loan was
          payable on or before February 21, 2006, and bears interest of 16% per annum.
          There is a late payment penalty of $500 if the principal and interest are
          not
          paid by the due date. As of December 31, 2006, the Company has not paid
          any
          amounts owing on the loan. The balance due including principal, interest
          and
          penalty is $ 15,208.
 
 9.
          NOTE
          PAYABLE - OVERSEAS
 
 On
          October 10, 2005, the Company executed the Hazard Agreement with Overseas
          for
          the purchase of Overseas’ 98% interest in the Hazard Lake Property in Ontario,
          Canada. Pursuant to the terms of the Hazard Agreement the Company executed
          a
          note payable (“Note”) for $130,000, payable in annual installments as follows:
          $25,000 on March 15, 2006, $30,000 on March 15, 2007, $35,000 on March
          15, 2008,
          and $40,000 on March 15, 2009. The Note bears interest at 6% per annum.
          As the
          transaction had yet to be fully executed, Overseas extended the March 15,
          2006
          payment date to coincide with the closing of the acquisition. The installment
          for March 15, 2006 of $25,000 was paid on July 14, 2006. The current portion
          of
          the note with accrued interest is $33,026, and is included in current
          liabilities; the balance of $80,764 is included in long-term liabilities.
 
 10.
          LOAN
          AGREEMENT - KUMA
 
 On
          August
          1, 2006, the Company executed a Loan Agreement (“Kuma Loan”) with Kuma Holdings
          LTD, a Canadian corporation (“Kuma”). Pursuant to the terms of the Kuma Loan,
          the Company may borrow up to $500,000 to pay for acquisitions, cash calls,
          payables and public company expenses. ( *See
          Note 13.*  *Subsequent
          Events* ).
          The
          Kuma Loan matures in 30 months, on January 31, 2009, and bears interest
          at 10%
          per annum payable at maturity. As an incentive for the Kuma Loan, Kuma
          will
          receive a $50,000 bonus payable in restricted common stock and to be issued
          upon
          receipt of the aggregate $500,000 in principal.
 All
          shares will be issued as restricted within the meaning of Rule 144 under
          the
          Securities Act and must be held indefinitely unless subsequently registered
          or
          qualified for exemption.
  F-11
 Matrixx
          Resource Holdings, Inc.
 (A
          Development Stage Company)
 Notes
          to
          Financial Statements
 
 
 10.
          LOAN
          AGREEMENT - KUMA (Continued from F-11)
 
 
 As
          of
          December 31, 2006, the Company has received $503,143 in funding from the
          Kuma
          Loan, including the aggregate amount of $27,021 from July which was loaned
          in
          advance based on the agreement in principal as discussed and agreed to
          by
          Matrixx and Kuma. Aggregate principal and interest owing on the Kuma Loan
          at
          December 31, 2006, is $516,392. **** The
          shares have not yet been issued. **** *(See
          Note 13. Subsequent Events).*
 
 11.
          CONVERTIBLE PREFERRED STOCK
  The
          Company entered into an Agreement and Plan of Reorganization ("GCCC Agreement")
          with GCCC which was to facilitate the Company's acquisition plan. The GCCC
          Agreement provided that the Company would acquire from GCCC certain property
          and
          businesses and in consideration, GCCC would receive 12,500,000 shares of 
the Company’s Common Stock which will be used for the purposes of acquiring
          other businesses and assets as identified by GCCC and the Company. GCCC
          was to
          have two years to meet all of the obligations under the GCCC Agreement.
          Should
          GCCC fail to meet any or all of its commitments, then GCCC would be required
          to
          forfeit the pro-rata balance of the 12,500,000 shares of Common Stock issued
          by
          the Company. Additionally, GCCC was issued 100 shares of non-revocable,
          Series A
          Convertible Preferred Stock and 100 shares of non-revocable, Series B
          Convertible Preferred Stock.
 
 The
          Company has 10,000,000 authorized shares of $.001 par value Preferred Stock
          authorized. Pursuant to the GCCC Agreement, the Company issued 100 shares
          of
          non-revocable, Series A Convertible Preferred Stock ("Series A") and 100
          shares
          of non-revocable, Series B Convertible Preferred Stock  ("Series B") to
          GCCC as the cost of inducement for GCCC to sell certain assets and
          businesses to the Company. The Series A converts into 50.1% of Matrixx's
          Common
          Stock at time of conversion. Time of conversion shall be determined at
          the sole
          discretion of the shareholder of record. The Series A has one vote per
          share until said shares are retired at time of conversion. The Series B
          converts
          into Common Stock at a ratio of 1 for 1. Time of conversion shall be determined
          at the sole discretion of the shareholder of record. Each share of Series
          B is
          entitled to 1,000,000 votes until such shares are converted into Common
          Stock.
 
 As
          of the
          date of this filing, the two-year time period has elapsed. Pursuant to
          the GCCC
          Agreement, 4,000,000 shares were delivered from GCCC for the purchases
          of the
          Hazard Lake Property and the Clovelly Prospect. The remaining 8,500,000
          shares
          have been received by the Company and cancelled by the transfer agent
          ( *See
          Note 12. Escrowed Shares).*
  Both
          the
          Series A and Series B issuances are valued as if converted on the effective
          date
          of the GCCC Agreement, February 11, 2005. On that date the Company had
          17,405,000 shares of Common Stock issued and outstanding, with the current
          market value of  $5,493,563. Conversion of the Series A to equate to 50.1%
          of the total issued and outstanding Common Stock would require the issuance
          of
          17,474,760 shares for a total of 34,879,760 shares of Common Stock issued
          and
          outstanding. The value of the 17,464,760 shares at the average price per
          share
          of $0.32 on February 11, 2005, is $5,515,581. Similarly, the 100 shares
          of
          Series B converts 1 for 1 to 100 shares of Common Stock valued at $0.32.
          The par
          value of the Preferred
          Stock for each Series A and Series B is $.001 and, therefore, for 100 shares,
          the value is negligible for purposes of financial statement presentation.
          The
          balances of $5,515,581 and $32 are included in additional paid-in
          capital.
  F-12
 Matrixx
          Resource Holdings, Inc.
 (A
          Development Stage Company)
 Notes
          to
          Financial Statements
 
 
 12.
          ESCROWED SHARES
  At
          December 31, 2006 there was no balance in escrowed shares.  In accordance
          with the GCCC Agreement, the Company issued 12,500,000 shares of Common
          Stock in
          the name of GCCC for the purposes of acquiring businesses and assets as
          identified by GCCC and the Company. GCCC had two years to meet all of the
          obligations under the GCCC Agreement, however, only 4,000,000 of the shares
          were
          utilized for acquisitions during this time period. On October 3, 2005, GCCC
          utilized 2,000,000 shares valued in the aggregate at $800,000 for the
          acquisition of a 98% interest in the Hazard Lake Property.
 
 In
          addition, GCCC utilized another 2,000,000 shares for the execution of the
          purchase of the Clovelly Prospect as required in the Letter Agreement with
          Sterling. The shares were issued on January 30, 2006, from GCCC, to be
          registered at a later date, leaving the balance of shares in escrow at
          8,500,000 valued in aggregate at $3,400,000.
 
 The
          shares were not utilized for additional acquisitions within the two-year
          time
          period allowed pursuant the GCCC Agreement. GCCC has returned the 8,500,000
          escrowed shares to the Company, and those shares have been cancelled. The
          shares
          were valued at $0.40 per share based upon the price at issuance for an
          aggregate
          value of $3,400,000. Consequently, the Company’s balances in Common Stock and
          Additional-Paid-In Capital have been reduced by $8,500 and $3,391,500,
          respectively, at December 31, 2006.
 
 15.
          SUBSEQUENT EVENTS
 
 In
          the
          period from December 31, 2006 to February 13, 2007, the Company issued
          an
          aggregate of 16,958,333 shares of Common Stock to five consultants,
          including Catherine Thompson, for management and marketing consulting services.
  On
          January 3, 2007, the Kuma Loan was modified to increase the amount of funding
          available to the Company to $750,000 for additional consideration of $25,000,
          payable in restricted Common Stock.
 
 As
          of February 20, 2007, the Company owes principal and accrued interest of
          $584,405 on the Kuma Loan.
 
 On
          January 9, 2007, the Company borrowed a $17,150 on a short term loan from
          Cross
          Creek Consulting to pay for the balance due on the Buck Snag - Schiurring
          #2
          completion costs. In consideration for the loan, Cross Creek charged the
          Company
          a fee of $2,850 for a total repayment amount of $20,000. As of February 20,
          2007, the Company has repaid to Cross Creek the full amount of $20,000.
 
 As
          of February 20, 2007, the Company has paid an additional amount of $48,000
          to Sunray, the operator of the Buck Snag and Sandy Point prospects, to
          reduce
          balances currently owed.
  F-13
 ITEM
          2.
          MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
 
 THIS
          REPORT CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION
          21E OF
          THE SECURITIES EXCHANGE ACT OF 1934, INCLUDING, WITHOUT LIMITATION, STATEMENTS
          REGARDING THE COMPANY'S EXPECTATIONS, BELIEFS, INTENTIONS OR FUTURE STRATEGIES
          THAT ARE SIGNIFIED BY THE WORDS "EXPECTS", "ANTICIPATES", "INTENDS", "BELIEVES",
          OR SIMILAR LANGUAGE. THESE FORWARD-LOOKING STATEMENTS INVOLVE RISKS,
          UNCERTAINTIES AND OTHER FACTORS. ALL FORWARD- -LOOKING STATEMENTS INCLUDED
          IN
          THIS DOCUMENT ARE BASED ON INFORMATION AVAILABLE TO THE COMPANY ON THE
          DATE
          HEREOF AND SPEAK ONLY AS OF THE DATE HEREOF. THE FACTORS DISCUSSED BELOW
          UNDER
          "FORWARD-LOOKING STATEMENTS" AND ELSEWHERE IN THIS QUARTERLY REPORT ON
          FORM
          10-QSB AND IN THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED
          JUNE
          30, 2006, ARE AMONG THOSE FACTORS THAT IN SOME CASES HAVE AFFECTED THE
          COMPANY'S
          RESULTS AND COULD CAUSE THE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
          PROJECTED IN THE FORWARD-LOOKING STATEMENTS.
 
 The
          following discussion should be read in conjunction with the condensed financial
          statements and notes thereto.
 
 PLAN
          OF
          OPERATION
 
 BACKGROUND
 
 The
          Company emerged from bankruptcy in 1999 as Erly Industries, Inc. For the
          past
          seven years, the Company has been engaged in a series of transactions and
          restructurings designed to acquire assets or an existing business.
 
 The
          Company’s search for an operating business or assets for acquisition was
          facilitated in September 2004 by the consummation of a significant investment
          in
          the Company by a strategic partner. On September 14, 2004, the Company
          executed
          a Stock Purchase Agreement (the "SPA") with GarcyCo Capital Corp. ("GCCC").
          The
          SPA called for the issuance by the Company of an aggregate of 400,000 shares
          of
          Common Stock to GCCC in consideration of the payment of $500,000 in cash.
          The
          Company was to receive the funds in $50,000 increments each quarter, beginning
          October 15, 2004. As part of the consideration for the SPA, GCCC was given
          the
          right to elect one Board member and agreed to retain Catherine Thompson
          and
          Michael Avatar on the Board of Directors and as consultants through December
          31,
          2007. To date, GCCC has not elected a representative to the Board of Directors
          of Matrixx.
 
 As
          of
          July 18, 2006, GCCC completed its obligation to deliver an aggregate of
          $500,000
          in financing to the Company. The Company effected a 1 for 500 reverse stock
          split to all shareholders of record as of October 15, 2004. The reverse
          stock
          split was designed to facilitate the Company’s acquisition
          strategy.
 
 In
          December 2004, the Company entered into an Agreement and Plan of Reorganization
          (the "GCCC Agreement") with GCCC. The GCCC Agreement provided that the
          Company
          would acquire from GCCC certain property and businesses to be located by
          GCCC
          and in consideration, GCCC would receive 12,500,000 shares of the Company's
          Common Stock which was to be used for the purposes of acquiring other businesses
          and assets as identified by GCCC and the Company. GCCC had two years to
          meet all
          of the obligations under the GCCC Agreement. Should GCCC fail to meet any
          or all
          of its commitments, then GCCC would have been required to forfeit the pro-rata
          balance of the 12,500,000 shares. As of the date of this filing, the two
          year
          time period has lapsed and only 4,000,000 of the 12,500,000 shares were
          utilized
          for acquisitions. GCCC has returned the remaining 8,500,000 shares to the
          Company, and those shares have been cancelled.
  1
 The
          GCCC
          Agreement also required the Company to issue to GCCC 100 shares of the
          Company’s Series A Convertible Preferred Stock and 100 shares of Series B
          Convertible Preferred Stock. The Series A Convertible Preferred Stock is
          convertible into 50.1% of Matrixx's Common Stock at the time of conversion,
          which is determined at the sole discretion of GCCC. The Series A Convertible
          Preferred Stock has one vote per share. The Series B Convertible Preferred
          Stock
          is convertible into shares of Common Stock at a ratio of 1 for 1, and the
          time
          of conversion shall be determined at the sole discretion of GCCC. Each
          share of
          Series B Convertible Preferred Stock is entitled to 1,000,000 votes until
          such
          shares are converted into Common Stock.
  The
          Company’s current strategy is to target acquisition and investment opportunities
          in the oil and gas and natural resource exploration industries. The Company
          is
          developing a program for investments in the oil and gas industry which
          will
          allow the Company to grow responsibly by contributing to assets with
          diversification to help mitigate the industry-associated risk. The Company’s
          philosophy is to take small interests in relatively low risk opportunities.
          However, the Company may elect to accept a larger interest when the cost
          /
          benefit or cost/risk ratio is perceived to be very low. Management is not
          experienced in this industry and as such relies upon consultants and partners
          to
          bring proposals and to assist with investment decisions. The Company attempts
          to
          minimize risk by working with experienced and reputable partners and operators,
          considering factors such as success rates, experience with certain types
          of
          wells, and the cash flow sources of the Company’s partners . The Company must
          also evaluate deal structure for fit with the current portfolio demands
          and its
          ability to raise financing. Lastly, the Company also analyzes property
          specific
          details such as the type of well, the target depth to be drilled, the field
          location and proximity of other wells, and if reserves or fields are proven.
 
 The
          Company’s entry into the oil and gas and natural resource exploration business
          began on July 14, 2006 with the final approval and closing of the Company’s
          purchase of a 98% interest in the Hazard Lake Property, a 355-hectare gold
          mining property in the Red Lake District in Ontario, Canada and its purchase
          of
          a five percent interest in the Clovelly Prospect, an oil and gas property
          in the
          Lafourche Parish, Louisiana.
 
 Acquisitions
          and Investments
 
 Hazard
          Lake Property. On
          October 10, 2005, the Company executed a Purchase Agreement (the "Hazard
          Agreement") with Overseas Investment Banking Alliance, S.A., a Panamanian
          corporation ("Overseas"), for the purchase of Overseas’ 98% interest in the
          Hazard Lake Property in Ontario, Canada. The Hazard Lake Property is valued
          at
          $397,000, net of impairment costs of $600,000 recognized at June 30, 2006.
 
 The
          Hazard Lake Property lies within the Archean Birch-Uchi Greenstone Belt
          of the
          western Uchi Subprovince of NW Ontario, in an area known as the Red Lake
          Mining
          District. The property consists of three unpatented claims, all of which
          are in good standing, with an aggregate area of approximately 355 hectares.
          The
          Company and GCCC have reviewed a proposal for an exploration program; however,
          the Company’s recent focus in the oil and gas sector is expected to take
          precedence for the near term.
  Clovelly
          Prospect. On
          November 15, 2005, the Company executed a Letter Agreement (the “Letter
          Agreement”) with Sterling Grant Capital Inc. (formerly Sun Oil and Gas Corp.) to
          purchase a 5% minority interest in an oil prospect property. The property
          is the Clovelly Prospect which is located in southeast Louisiana in the
          Lafourche Parish.
 
 Drilling
          of the Allain-LeBreton No. 2 well on the Clovelly Prospect commenced on
          June 19,
          2006.
  2
 
 Due
          to
          difficulties encountered in drilling the No. 2 well, the operator will
          drill a
          twin hole. A twin hole is described as drilling a well adjacent to an existing
          well, such as the No. 2 well. The Company also plans to drill as soon as
          practicable, an additional well known as a PUD (Proven, Undeveloped Well)
          to a
          target depth of 12,500 feet.
 
 The
          No. 2
          well encountered a two foot gas discovery, but due to the location of the
          hole,
          the drilling may have incurred an offset, whereby an additional 28 feet
          of
          discovery may exist containing up to 5 BCFG. While the gas discovery might
          be
          considered as an added benefit, the intended cause of drilling the twin
          is
          primarily to target what is known as the "M" sand at or about 14,300 feet
          to
          14,500 feet with a prospective size of 10 to 11 million barrels of oil
          ("MMBO").
          The Clovelly field has produced over 30 MMBO, most of which occurred in
          the "M"
          sand.
  Drilling
          of the PUD well will likely occur prior to, or concurrently with, the drilling
          of the twin well and is expected to assist in offsetting cash outlays required
          for the new well. It is anticipated that this drilling will occur in the
          late
          first calendar quarter of 2007.
  Buck
          Snag Field. On
          August 28, 2006, the Company entered into an Acquisition and Participation
          Agreement (“Buck Snag Agreement”) for the acquisition of a 42.5% working
          interest in the Buck Snag Field (“Buck Snag”) from Texahoma Energy, Inc. (Pink
          Sheets: TXHE), a Nevada corporation (“Texhoma”) , for a purchase price of
          $150,000. The Company’s 42.5% working interest in the leases is subject to an
          existing overriding 28% royalty interest. Pursuant to the terms of the
          Buck Snag
          Agreement, Texhoma has the right to back-in for a 12.5% working interest
          after
          payout of the investment to the Company. Payout is defined as the receipt
          by the
          Company of the equivalent of the purchase price and the investment out
          of
          revenue distribution from the Operator. Sunray Operating Company, LLC,
          located
          in Sugarland, Texas, (“Sunray” or “Operator”), is the Operator for Buck Snag.
          Per the Buck Snag Agreement, Sunray is also entitled to a 12.5% working
          interest, proportionately reduced at payout. Both back-in working interest
          percentages to Texhoma and to Sunray are already factored into the Company’s
          42.5% working interest percentage. The Company’s payment of $150,000 to Texhoma
          was for an initial 57.5% participation in Buck Snag but subsequently the
          Company
          agreed to convey 15% of its participation as partial payment for a 10%
          participation in the Sandy Point Prospect.
  The
          Buck
          Snag Prospect covers approximately 280 acres of land in Colorado County,
          Texas.
          The Schiurring #1 well on Buck Snag commenced drilling on August 11, 2006
          at
          approximately 500 feet north of the Windsor #2 Schiurring well. On August
          18,
          2006, the target depth of 4,400 feet was reached. The Schiurring #1 well
          was
          completed in the 2,030 foot sand and placed into production  on
          August
          24, 2006. Initial flow rate commenced at 120 thousand cubic feet
          ("MCF") of gas per day, and after the water cleanup, well production was
          expected to increase to 300 MCF of gas per day. Subsequently, the Schiurring
          #1
          well developed mechanical problems allowing excess water into the well
          and
          rendering it difficult to maintain production. The Company has received
          initial
          revenues from the production of natural gas at Schiurring #1, however,
          it is
          anticipated that additional costs will be required to continue production
          for
          this well.
 
 The
          Company, its partners and the operator commenced drilling on the Schiurring
          #2
          well on the Buck Snag Prospect on November 30, 2006. The well reached a
          total
          depth of 4,406 feet and logged apparent gas pays in three reservoirs: i)
          the
          "3,800 ft-sand" appears productive from 3,812 ft to 3,827 ft. ii) the "3,500
          ft-sand" appears productive from 3,525 ft to 3,530 ft. and iii) the "2,000
          ft-sand" appears productive from 2,035 ft to 2,040 ft . The Schiurring
          #2 well
          was completed on December 8, 2006. The well was perforated from 3812 to
          3815
          feet and has been producing at test rates ranging from 200 to 250 mcfd.
          Upon
          completion of all gas sales from the 3,800 foot sand, the operator anticipates
          perforating and producing from the 3,500 foot sand and the 2,000 foot
          sand.
  Manvel
          Prospects. On
          October 5, 2006, the Company finalized an Acquisition and Participation
          Agreement with Texhoma for the acquisition of a majority working interest
          in two
          wells located in
 
 3
 
 Brazoria
          County, Texas (the “Manvel Agreement”). Pursuant to the terms of the Manvel
          Agreement, the Company received a 55% working interest in the Manvel 2,000
          ft.
          Miocene Exploration prospect (“Miocene Prospect”) for $20,000 and a 55% working
          interest in the Manvel 4,500 ft. Oakville Development well (“Oakville Prospect”)
          for $40,000, (collectively, “Manvel Prospects”).
 
 The
          Company’s working interest in the leases is subject to an existing overriding
          25% royalty interest. Pursuant to the terms of the Manvel Agreement, Texhoma
          has
          the right to back-in for a 12.5% working interest after payout of the investment
          to the Company for each well. Payout is defined as the receipt by the Company
          of
          the equivalent of the purchase price and the investment out of revenue
          distribution from the Operator, Sunray. Per the Manvel Agreement, Sunray
          is also
          entitled to a 12.5% working interest, proportionately reduced at payout
          for each
          well. Both back-in working interest percentages to Texhoma and to Sunray
          are
          already factored into the Company’s 55% working interest percentage for both
          leases. Subsequently the Company has agreed to convey 10% of its participation
          in the Manvel properties as partial payment for a 10% participation in
          the Sandy
          Point Prospect (see below). Thus, the Company’s working interest in the Manvel
          properties is 45%.
 
 Sandy
          Point Prospect. On
          November 16, 2006, the Company finalized the terms of an agreement with
          Texhoma
          and Sunray to acquire a 10% working interest in the Sandy Point Prospect
          for an
          aggregate amount of $35,928.57. The participation fee is to be paid through
          a
          conveyance of 15% of the Company’s participation in Buck Snag valued at
          $22,500; 10% participation in the Manvel properties valued at $6,000; and
          $7,428.57 in cash. The Company’s initial participation in Buck Snag was 57.5%,
          which was decreased to 42.5% as described above. Additionally, the Company’s
          initial 55% participation in each of the Manvel Prospects has been decreased
          to
          45%. The remaining terms of the Buck Snag and Manvel Agreements were not
          altered. The Sandy Point Prospect covers 196 acres of land in Brazoria
          County,
          Texas.  The Fite No. 3 well will be drilled to the Frio formation to a
          depth of 6,700 to 7,000 feet, where Sunray, the operator for the well,
          expects
          to gain approximately 20 feet of structure to an existing producing well
          known
          as the Fite No. 1. The operator is nearing its completion of the quarter
          mile
          board road to facilitate the transportation of equipment and personnel
          to the
          Fite #3 site. Due to inclement weather, progress has been slower than expected.
          Upon completion, the rig would be moved on site and drilling will commence
          immediately thereafter.
 
  RESULTS
          OF OPERATIONS
 
 The
          Three
          and Six Months Ended December 31, 2006 Compared To The Three and Six Months
          Ended December 31, 2005
  Revenues.
          The Company received $3,494 in revenue from its interests in oil and gas
          properties during the three and six month periods ended December 31, 2006.
          The
          Company did not generate any revenue in the corresponding periods ended
          December
          31, 2005. The Company’s entry into the oil and gas and natural resource
          exploration business began on July 14, 2006. Previously, the Company's
          focus had
          been on the evaluation and selection of existing businesses to effect a
          merger
          or acquisition. The Company has been in the development stage since July
          2001.
  General
          and Administrative Expenses. The Company incurred $818,011 and $1,976,664
          in
          general and administrative expenses for the respective three and six months
          ended December 31, 2006, compared to $752,563 and $1,433,718 for the respective
          three and six months ended December 31, 2005. The increases in 2006 were
          due
          primarily to expenses incurred to support and to facilitate the growth
          of
          Matrixx, as explained below.
  Included
          in general and administrative expense for the three months ended December
          31,
          2006 was $598,916 of expense related to the issuance of an aggregate of
          35,255,571 shares of Common Stock to consultants in lieu of cash compensation.
          In addition, $177,668 of expense was related to the issuance of
  4
 
 an
          aggregate of 7,046,555 shares of Common Stock, for prepaid consulting expenses.
          Included in general and administrative expense for the six months ended
          December
          31, 2006 was $1,643,432 of expense related to the issuance of an aggregate
          of
          63,077,863 shares of Common Stock to consultants in lieu of cash compensation.
          In addition, $409,936 of expense was related to the issuance of an aggregate
          of
          21,907,682 shares of Common Stock, for prepaid consulting expenses. At
          December
          31, 2006, the Company had minimal cash. Consultants receiving stock agreed
          to
          receive these securities, in lieu of cash, for payment of services rendered.
 
 Production
          Expenses. The Company incurred $352 in production expenses for the three
          and six
          months ended December 31, 2006. The production expenses included transportation,
          marketing and severance taxes associated with the production of oil and
          gas
          revenues. There were no production expenses for the corresponding three
          and six
          month periods in 2005.
  Depreciation,
          Depletion, & Amortization (“D D & A”). The Company recognized $222 in D
          D & A expense in the three and six months ended December 31, 2006, and no D
          D& A expense in the three and six months ended December 31, 2005. The
          expense recognized during the three and six months ended December 31, 2006
          represents amortization on evaluated oil and gas properties and is computed
          on
          the units of production method based on all proved reserves.
 
 Interest
          Expense. The Company recognized $12,018 and $17,490 for the respective
          three and
          six months in interest expense in the quarter ended December 31, 2006,
          and
          $1,896 in interest expense in the three and six months ended December 31,
          2005.
          The higher expense realized during the three and six month periods ended
          December 31, 2006 represents interest on borrowings to assist the Company
          with
          its acquisition strategy.
  Net
          Loss.
          As a result of the foregoing factors, the Company's net loss increased
          to
          $826,757 for the three months ended December 31, 2006, compared to a net
          loss of
          $754,459 for the three months ended December 31, 2005. The net loss per
          share
          was negligible for the three months ended December 31, 2006, compared to
          a net
          loss per share of $0.02 for the three months ended December 31, 2005. The
          Company’s net loss increased to $1,990,882 for the six months ended December 31,
          2006, compared to a net loss of $1,435,614 for the six months ended December
          31,
          2005. The net loss per share was $0.00 for the six-month period ended December
          31, 2006, compared to a net loss per share of $0.04 for the six-month period
          ended December 31, 2005.
  
 LIQUIDITY
          AND CAPITAL RESOURCES
 The
              Company has an immediate need for capital. At December 31, 2006, the
              Company had
              only $3,587 in cash or cash equivalents.  The Company’s operating
              activities used $99,325 in net cash during the six months ended December
              31, 2006, compared with $280,374 in net cash used by operating activities
              during
              the six months ended December 30, 2005. The cash provided by operating
              activities during the six months ended December 31, 2006 was primarily
              due to
              non-cash gains of $1,371,992 reflecting the issuance of stock for services
              and
              prepaid services and $420,405 for the issuance of stock on a subscription
              receivable. Other gains contributing to net cash used by operating
              activities
              included a $261,780 decrease in prepaid expenses, an increase in accrued
              liabilities - related parties of $508 and an increase in accrued interest
              of
              $17,490. These gains were offset by an increase in other assets of
              $516 and a
              decrease in accounts payable and accrued liabilities of $180,104. The
              cash used
              by operating activities during the six months ended December 31, 2005
              included
              non-cash gains of $1,277,750 reflecting the issuance of stock for services
              and
              prepaid services offset by other changes affecting net cash used by
              operating
              activities at December 31, 2005. These other changes included a decrease
              in
              prepaid expenses of $92,815, an increase of $1,502 in accrued liabilities
              -
              related parties, and an increase in accrued interest of $1,896, offset
              by an
              increase in deferred cost of acquisition of $212,000 and a decrease
              in accounts
              payable and accrued liabilities of $6,724.
 5
  The
            Company utilized $521,493 in cash for investing activities during the
            six months
            ended December 31, 2006. The Company invested $216,343 in proven oil
            and gas
            properties, net of D D &A, and $400,149
            in unproven oil and gas properties during the six months ended December
            31, 2006
            offset by a decrease in cash paid in advance of acquisitions of $95,000.
            There
            were no investing activities in the six months ended December 31, 2005.
            Financing activities provided $624,333 of cash during the six months
            ended
            December 31, 2006, consisting primarily of $503,143 in proceeds from
            notes
            payable and $146,190 in proceeds from the subscription receivable to
            GCCC,
            offset by $25,000 paid on notes payable. During the six months ended
            December
            31, 2005, financing activities provided $280,336 of cash consisting primarily
            of
            $135,095 in proceeds from the subscription receivable to GCCC, $142,500
            in
            proceeds from notes payable and a bank overdraft of $2,741.
  The
          Company has received minimal revenues to date from to its recent investments
          in
          oil and gas properties, and has experienced operating losses since inception
          primarily caused by its continued development and administrative costs.
          As shown
          in the accompanying financial statements, the Company incurred net losses
          of
          $826,757 and $1,990,882 for the three and six months ended December 31,
          2006.
          Since inception, the Company has incurred a net loss of $19,312,163. Primarily
          as a result of these recurring losses, Matrixx's independent certified
          public
          accountants modified their report on the June 30, 2006 financial statements
          to
          include an uncertainty paragraph wherein they expressed substantial doubt
          about
          the Company's ability to continue as a going concern. Management of the
          Company
          is actively seeking additional capital; however, there can be no assurance
          that
          such financing will be available on terms favorable to the Company, or
          at all.
          The financial statements do not include any adjustments that might be necessary
          if the Company is unable to continue as a going concern. Continuation of
          the
          Company as a going concern is dependent on the Company continuing to raise
          capital, developing significant revenues and ultimately attaining profitable
          operations.
 
 On
          May
          27, 2004 the Company executed a Convertible Promissory Note in the principal
          amount of $160,000 (the "Note") with Interactive Ideas Consulting Group
          (“IICG”). The Note bears interest at the rate of 8% per annum and was due and
          payable in full on or before May 26, 2005. The Company believes that there
          is a
          sufficient basis on which to dispute the amounts of principal and interest
          of
          the Note. As such, the Company accrued interest through the maturity date
          of May 26, 2005, in the amount of $12,800; no amounts for interest have
          been accrued beyond that date. As of the date of this filing the Company
          has not
          converted the Note and IICG has not requested a conversion.
 
 On
          September 14, 2004, the Company executed the SPA with GCCC. The SPA called
          for
          the issuance by the Company of an aggregate of 400,000 shares of Common
          Stock to
          GCCC in consideration of the payment of $500,000 in cash. The Company was
          to receive the funds in $50,000 increments each quarter, beginning October
          15, 2004.  The
          400,000 shares were to be held in escrow by the Company and delivered on
          a
          pro-rata basis within 10 days of receipt of each installment. All shares
          are
          restricted within the meaning of Rule 144 under the Securities Act and
          must be
          held indefinitely unless subsequently registered or qualified for exemption.
          The
          SPA included a provision that the purchase price per share, and therefore
          the
          number of shares to be delivered at the time of each installment payment,
          would
          be calculated for each installment at the lesser of: (a) $1.25 or (b) a
          37.5%
          discount to the 10 day trailing closing price of the Company's Common Stock
          at
          the time of each payment. At September 14, 2004, the Company had an aggregate
          of
          305,108 shares of Common Stock outstanding on a fully-diluted basis. Based
          on
          the price of the Company's Common Stock at that date, GCCC would have owned
          and
          controlled approximately 56.73% of the Company's fully-diluted Common Stock
          and
          56.73% of the Company's outstanding Common Stock calculated pursuant to
          Rule
          13d-3(d)(1)(B) of the Securities Exchange Act of 1934. As of July 18, 2006,
          the
          Company had received an aggregate of $500,810 in financing from the SPA.
          On
          September 18, 2006, the Company delivered 18,543,373 shares of restricted
          Common Stock, at an average price of $0.027 per share, as calculated using
          method (b) described above thus completing the terms of the SPA.
  6
 
 The
          Company and GCCC sought to identify and evaluate business opportunities
          for
          acquisition or merger to provide long-term growth for its shareholders
          and to
          meet the Company’s objective of attaining a listing on a national exchange. On
          October 10, 2005, the Company executed the Hazard Agreement with Overseas
          for the purchase of Overseas’ 98% interest in the Hazard Lake Property in
          Ontario, Canada. The Hazard Agreement called for an aggregate purchase
          price of
          $397,000, of which a note for $130,000 was issued, payable in annual
          installments as follows: $25,000 on March 15, 2006, $30,000 on March 15,
          2007,
          $35,000 on March 15, 2008, and $40,000 on March 15, 2009. Overseas extended
          the
          March 15, 2006 payment date to coincide with the closing of the acquisition
          on
          July 14, 2006. The Company has also issued 2,000,000 shares of Common Stock
          to
          Overseas. These shares were delivered from the 12,500,000 shares issued
          to GCCC
          pursuant to the terms of the GCCC Agreement. The Hazard Agreement valued
          the
          shares at $200,000, or $0.10 per share, based on the current market price
          on the
          date of the Hazard Agreement. However, the 12,500,000 escrowed shares were
          valued at $0.40 per share when issued to GCCC and, therefore, the Company
          was
          initially required to value the 2,000,000 shares transferred to Overseas
          at
          $0.40 per share for an aggregate value of $800,000, thus making the total
          purchase price to Matrixx $997,000.  As a result of the Company's recently
          focused attention on acquiring oil and gas properties, it was determined
          that
          the value of the Hazard Lake Property in deferred acquisition cost was
          impaired. At June 30, 2006, the Company recognized an impairment in the
          value of
          the Hazard Lake Property of $600,000.
 
 On
          November 15, 2005, the Company executed the Letter Agreement with Sterling
          to
          purchase a 5% minority interest in an oil prospect property known as the
          Clovelly Prospect (“Clovelly”). The Letter Agreement called for an aggregate
          purchase price of $115,000, of which $15,000 has been prepaid in cash and
          the
          balance of $100,000 was paid with the issuance of 2,000,000 shares of registered
          Common Stock also delivered from the shares issued to GCCC. The shares
          were
          issued on January 30, 2006 from the 12,500,000 shares issued to GCCC pursuant
          to
          the terms of the GCCC Agreement, leaving the balance of shares in escrow
          at
          8,500,000. The Letter Agreement valued the shares at $100,000, or $0.05
          per
          share, based on the current market price of the Company’s Common Stock on the
          date of the Letter Agreement. However, the 12,500,000 escrowed shares were
          valued at $0.40 per share when issued to GCCC and, therefore the Company
          is
          required to value the 2,000,000 shares transferred to Sterling at $0.40
          per
          share for an aggregate value of $800,000. It is possible that in the future
          the
          Company will be required to recognize an impairment in the value of its
          interest
          in the Clovelly investment. As of December 31, 2006, the Company has paid
          $177,450 in development costs for the first well, the #2 Allain-LeBreton
          well,
          drilled at Clovelly with a balance owing of $102,718.
 
 The
          Company’s goal is to invest cash flow proceeds from successes into new projects.
          To date financing has been supplied by the SPA with GCCC. The Company and
          GCCC
          are in discussions to renew the SPA, however, there can be no assurance
          that a renewal will be reached or that if reached it will be on terms and
          conditions favorable to the Company. In the interim, on August 1, 2006,
          the
          Company executed a Loan Agreement (“Kuma Loan”) with Kuma Holdings LTD,
          a British Columbia corporation (“Kuma”).
 Pursuant
          to the terms of the Kuma Loan, the Company may borrow up to $500,000 to
          pay for
          acquisitions, cash calls, payables and public company expenses. The Kuma
          Loan
          matures in 30 months, on January 31, 2009, and bears interest at 10% per
          annum
          payable at maturity. As an incentive for the Kuma Loan, Kuma will receive
          a 10%
          bonus payable in restricted Common Stock, to be issued upon receipt of
          the
          $500,000 aggregate principal. All shares of Common Stock will be issued
          to Kuma
          as restricted stock within the meaning of Rule 144 under the Securities
          Act and
          must be held indefinitely unless subsequently registered or qualified for
          exemption. As of the date of this filing, the Kuma Loan has been modified
          to
          increase the amount of funding available to the Company to
          $750,000.
 
 As
          of
          December 31, 2006, the Company has received $503,143 in funding from the
          Kuma
          Loan, including the aggregate amount of $27,021 from July which was loaned
          in
          advance based on the agreement in principal as discussed and agreed to
          by
          Matrixx and Kuma. Aggregate principal and interest owing on the Kuma Loan
          at
          December 31, 2006, is $516,392. The shares have not yet been
          issued.
 
 On
          August
          28, 2006, the Company entered into the Buck Snag Agreement for the acquisition
          of a 42.5% working interest in the Buck Snag Field (“Buck Snag”) from Texahoma.
          The Company paid
  7
 
 $150,000
          to Texhoma for an initial 57.5% participation in Buck Snag but subsequently,
          the
          Company has agreed to convey 15% of its participation as partial payment
          for a
          10% participation in the Sandy Point Prospect.
          As of September 30, 2006, the Company has paid the full purchase price
          of
          $150,000, plus an additional $68,750 for development of the Schiurring #1
          well, with $34,761 still owing. As of December 31, 2006, the $34,761 has
          been paid; however there were overage costs on the completion of which
          the
          Company’s portion of $16,054 is still owing. On November 9, 2006, the Company
          received its first revenue payment from proceeds of the Schiurring #1 well
          in
          the amount of $3,494. The Company, the operator and partners initiated
          drilling
          the Schiurring #2 well on November 30, 2006. As of December 31, 2006, the
          Company has paid $79,727 in development costs and $61,527 in completion
          costs,
          representing the Company’s full 42.5% obligation for those costs on the
          Schiurring #2 well.
 
 On
          October 5, 2006, the Company finalized the Manvel Agreement with Texhoma
          for the
          acquisition of 55% majority working interest in the Miocene and Oakville
          Prospects located in Brazoria County, Texas for an aggregate of $60,000.
          Subsequently, the Company has agreed to convey 10% of its participation
          in the
          Manvel Properties to Texhoma as partial payment for a 10% participation
          in the
          Sandy Point Prospect. As of the date of this filing, the Company has paid
          $30,000 toward the participation cost and is further obligated to 42.5%
          of
          estimated dry hole costs for the wells of $76,500 and $45,000,
          respectively. Should the wells be successful, the Company’s estimated
          portion of completion costs is $25,000 for each Manvel
          Prospect.
  On
          November 16, 2006, the Company finalized the terms of Agreement with Texhoma
          and
          Sunray, for the acquisition of a 10% working interest in the Sandy Point
          Prospect.  The acquisition cost of $35,928 is to be paid through a
          conveyance of 15% of the Company’s participation in Buck Snag valued at $22,500;
          10% participation in the Manvel properties valued at $6,000; and $7,428 in
          cash. As of the date of this filing, the Company owes $6,778 in cash for
          participation and $44,500 for the Company’s portion of estimated dry hole costs.
          Management believes that the Fite No. 3's close proximity to the currently
          producing Fite No. 1 well should provide for minimal completion costs.
  RISKS
          AND
          UNCERTAINTIES
 
 The
          Company's business, financial condition or results of operations could
          be
          materially and adversely affected by any of the following risks:
 
 RISKS
          RELATING TO MATRIXX'S BUSINESS
 
 MATRIXX
          NEEDS SIGNIFICANT ADDITIONAL CAPITAL. At December 31, 2006, the Company
          had
          minimal cash or cash equivalents and minimal income producing operations or
          assets. Current cash and cash equivalents are currently insufficient to
          meet
          anticipated cash needs for working capital and capital expenditures. The
          Company
          therefore needs to raise additional funds immediately. If additional funds
          are
          raised through the issuance of equity or convertible debt securities, the
          percentage ownership of existing stockholders will be reduced, and such
          securities may have rights, preferences and privileges senior to those
          of the
          Company's Common Stock. The Company received an aggregate of $500,810
          and issued an aggregate of 18,543,373 shares of Common Stock GCCC, at an
          average
          price of $0.027 per share, pursuant to the terms of the SPA. No further
          payments
          are due to the Company under the SPA. The Company and GCCC are in discussions
          to
          renew the SPA; however, there can be no assurance that the Agreement will
          be
          renewed or that if renewed, that it will be under terms and conditions
          favorable
          to the Company. In the interim, the Company has executed the Kuma Loan
          with Kuma
          Holdings for up to $750,000 in financing. In addition, the Company is currently
          attempting to identify other prospective investors with respect to financing;
          however, the Company has not entered into agreements with any such investors.
          There can be no assurance that additional financing will be available on
          terms
          favorable to the Company or at all. If adequate funds are not available
          or are
          not available on acceptable terms, the Company will not be able to fund
          its
          operations. Such inability to fund operations will have a material adverse
          effect on the Company's business, results of operations and financial
          condition.
 
 8
 
  MATRIXX
          HAS ONLY A LIMITED OPERATING HISTORY. The Company has only a limited operating
          history upon which can be based an evaluation of its prospects and only
          minimal
          experience in the oil and gas industry. Such prospects must be considered
          in
          light of the risks, expenses and difficulties frequently encountered by
          companies entering into the highly speculative business of oil and gas
          exploration. There can be no assurance that the Company will be able to
          identify
          future oil and gas or other prospects for investment or that an investment
          will
          be consummated. Further, there can be no assurance that the investment
          in any
          given prospect will be successful or contribute revenue and income to the
          Company. To address these risks and uncertainties, the Company’s philosophy is
          to take small interests in relatively low risk opportunities. However,
          the
          Company may elect to accept a larger interest when the cost / benefit or
          cost/risk ratio is perceived to be very low. Management attempts to
          minimize risk by working with experienced and reputable partners and operators.
          Factors such as success rates, experience with certain types of wells,
          and the
          cash flow sources of the Company's partners are considered. The
          Company must also evaluate deal structure for fit with the current portfolio
          demands and its ability to raise financing. Lastly, the Company also analyzes
          property specific details such as the type of well, the target depth to
          be
          drilled, the field location and proximity of other wells, and if reserves
          or
          fields are proven. There can be no assurance that Matrixx will successfully
          evaluate or address these challenges.
 
 THE
          COMPANY HAS A HISTORY OF LOSSES, AND ITS INDEPENDENT CERTIFIED PUBLIC
          ACCOUNTANTS' REPORT DATED OCTOBER 9, 2006, INCLUDES AN EXPLANATORY PARAGRAPH
          RELATING TO SUBSTANTIAL DOUBT AS TO MATRIXX'S ABILITY TO CONTINUE AS A
          GOING
          CONCERN. Since the Company's inception in 2001, it has incurred substantial
          losses from operations, resulting primarily from costs related to the search
          for
          an operating business or assets to contribute to the Company. Because Matrixx
          is
          entering into a new business in an industry which is highly speculative
          and of
          which management has no previous experience, management expects to incur
          net
          losses for the foreseeable future for administrative costs. If the Company
          is
          unable to invest in successful projects, Matrixx’s losses will be significantly
          greater. The Company may never achieve profitability. Primarily as a result
          of
          these recurring losses, Matrixx’s independent certified public accountants
          modified their report on the June 30, 2006 financial statements to include
          an
          uncertainty paragraph wherein they expressed substantial doubt about the
          Company's ability to continue as a going concern.
  At
          this
          time, the Company does not have a source of operating capital and has limited
          assets. As a result, Matrixx will attempt to raise additional capital through
          public or private debt or the sale of equity and/or debt securities. However,
          there can be no assurance that additional financing will be available on
          terms
          favorable to Matrixx, or that additional financing will be available at
          all. If
          adequate funds are not available or are not available on acceptable terms,
          the
          Company may not be able to attract favorable investment opportunities or
          be able
          to continue to maintain cost of compliance with SEC reporting requirements.
          Such
          inability could have a material adverse effect on the Company's business,
          financial condition, results of operations and prospects.
 
 MATRIXX
          IS SEEKING ADDITIONAL INVESTMENTS IN OIL AND GAS AND OTHER NATURAL RESOURCES;
          THERE CAN BE NO ASSURANCE THAT THE COMPANY WILL SUCCESSFULLY LOCATE OR
          CONSUMMATE SUCH ADDITIONAL INVESTMENTS OR THAT THE INVESTMENTS THAT IT
          ALREADY
          HAS MADE WILL BE SUCCESSFUL. Matrixx is seeking to invest in oil and gas
          and
          other natural resource prospects. Although it has identified certain prospective
          properties for investment, there can be no assurance that the Company will
          successfully consummate an investment. Matrixx receives most of its investment
          proposals from its partners and consultants. As such, the Company will
          compete
          with other companies that possess financial and personnel resources
          substantially in excess of those which are available to the Company and
          may,
          therefore, be able to pay
 
 9
 greater
          amounts for desirable leases and define, evaluate, bid for and purchase a
          greater number of potential producing prospects that the Company's own
          resources
          permit. Additionally, should Matrixx be unable to fulfill any of its obligations
          with existing partners or consultants, it is unlikely that new investment
          opportunities would be presented to the Company from those sources.
 
 THE
          COMPANY MAY BE UNABLE TO CONDUCT EXTENSIVE DUE DILIGENCE ON A PROSPECTIVE
          INVESTMENT. Matrixx has limited funds and only one full-time manager, thus
          making it impracticable to conduct a complete investigation and analysis
          of
          prospective investment opportunities before the Company commits its capital
          or
          other resources thereto. Therefore, management decisions will likely be
          made
          without detailed feasibility studies, independent analysis or other extensive
          due diligence which they would conduct with more funding and other resources.
          The Company will depend to a great extent upon information provided by
          the
          promoter, operator, participating partner or others associated with the
          investment opportunity seeking the Company's participation.
 
 AN
          INVESTMENT MIGHT BE HIGHLY LEVERAGED AND EXPOSE MATRIXX TO ADDITIONAL LOSSES.
          There is a possibility that any investments in prospects made by the Company
          might be financed by the Company's borrowing against the other investment
          assets
          owned by the Company or against the investment’s future revenues or profits.
          This leverage could increase the Company's exposure to larger losses. An
          investment acquired through a leveraged transaction is profitable only
          if it
          generates enough revenues to cover the related debt and expenses. Matrixx’s
          failure to make payments on the debt incurred to invest in a prospect could
          result in the loss of all of the investment acquired. There can be no assurance
          that any investment acquired through a leveraged transaction will generate
          sufficient revenues to cover the related debt and expenses.
 
 THE
          COMPANY HAS LIMITED MANAGEMENT RESOURCES AND MAY EXPERIENCE MANAGEMENT
          CHANGES;
          CURRENT MANAGEMENT HAS NO EXPERIENCE IN OIL AND GAS OR NATURAL RESOURCES
          INVESTMENT OR OPERATIONS. The Company currently has only one full-time
          manager,
          and thus has limited management resources for both the operation of the
          Company
          and the pursuit of investment opportunities. Additionally, current management
          has no prior experience in oil and gas or natural resource exploration.
          The
          Company plans to seek experienced managers, and therefore there can be
          no
          assurance that current management will continue to serve the Company in
          the
          future.
  THE
          COMPANY'S OPERATING RESULTS MAY VARY FROM QUARTER TO QUARTER. Due the new
          direction in the Company's primary business, the Company's quarterly operating
          results will be difficult to predict and may fluctuate significantly from
          quarter to quarter. Consequently, the market price of Matrixx’s securities has
          been, and can be expected to continue to be, highly volatile. Factors such
          as
          announcements by the Company or others of investments in new prospects,
          commercially successful prospects, regulatory changes or competitive
          developments all may have a significant impact on the Company's future
          business
          prospects and market price of its securities.
 
 LEGISLATIVE
          AND REGULATORY ACTIONS AND POTENTIAL NEW ACCOUNTING PRONOUNCEMENTS ARE
          LIKELY TO
          IMPACT THE COMPANY’S FUTURE FINANCIAL CONDITION AND RESULTS OF OPERATIONS. There
          have been certain regulatory changes, including the Sarbanes-Oxley Act
          of 2002,
          and there may potentially be new accounting pronouncements or additional
          regulatory changes which will have an impact on the Company’s future financial
          condition and results of operations.  The Sarbanes-Oxley Act of 2002 and
          other rule changes as well as proposed legislative initiatives in the past
          three
          years following the Enron and WorldCom bankruptcies will increase general
          and
          administrative costs, as the Company will incur increased legal and accounting
          fees to comply with such rule changes.  In addition, proposed initiatives
          are expected to result in changes in certain accounting and disclosure
          rules.
 These and other potential changes could materially increase the expenses
          reported by the Company in its financial statements and adversely affect
          the
          Company’s operating results.
  11
 RISKS
          RELATED TO THE OIL & GAS INDUSTRY
 
 DRILLING
          ACTIVITIES MAY NOT PRODUCE COMMERCIALLY PRODUCTIVE RESERVOIRS. Drilling
          activities are subject to many risks, including the risk that no commercially productive
          oil or gas reservoirs will be encountered. There can be no assurance that
          new
          wells drilled by the Company will be productive or that it will recover
          all or
          any portion of its investment. Drilling for oil and gas may involve unprofitable
          efforts, not only from dry wells, but also from wells that are productive
          but do
          not produce sufficient net revenues to return a profit after drilling,
          operating
          and other costs. The cost of drilling, completing and operating wells is
          often
          uncertain. Any drilling operations undertaken by the Company may be curtailed,
          delayed or canceled as a result of a variety of factors, many of which
          would be
          beyond its control, including economic conditions, mechanical problems,
          pressure
          or irregularities in formations, title problems, weather conditions, compliance
          with governmental requirements and shortages in or delays in the delivery
          of
          equipment and services. Such equipment shortages and delays sometimes involve
          drilling rigs where inclement weather prohibits the movement of land rigs
          causing a high demand for rigs by a large number of companies during a
          relatively short period of time. Matrixx’s future drilling activities may not be
          successful. Lack of drilling success could have a material adverse effect
          on the
          Company’s financial condition and results of operations.
  MATRIXX
          DOES NOT CURRENTLY HAVE AND MAY NOT BE ABLE TO RAISE THE FUNDS NECESSARY
          TO
          EXPLORE AND DEVELOP ITS OWNED INTERESTS. Matrixx does not currently have
          sufficient funds to for its participation in the planned exploration activities
          at Clovelly, Buck Snag, Manvel or Sandy Point or to develop reservoirs
          at said
          prospects. The development and exploration of
          these
          wells will require significant capital expenditures. Sources of external
          financing may include bank and non-bank borrowings and future debt and
          equity
          offerings. There can be no assurance that financing will be available on
          acceptable terms, or at all. The failure to obtain financing would have
          a
          material adverse effect on the Company’s growth strategy and its results of
          operations and financial condition.
 
 MATRIXX’S
          OPERATIONS MAY BE ADVERSELY AFFECTED BY RISKS AND HAZARDS ASSOCIATED WITH
          THE
          OIL & GAS INDUSTRY. Matrixx’s prospective oil and gas operations are also
          subject to all the hazards and risks normally incident to the development,
          exploitation, production and transportation of, and the exploration for,
          oil and
          gas, including unusual or unexpected geologic formations, pressures, down
          hole
          fires, mechanical failures, blowouts, explosions, uncontrollable flows
          of oil,
          gas or well fluids and pollution and other environmental risks. These hazards
          could result in substantial losses to the Company due to injury and loss
          of
          life, severe damage to and destruction of property and equipment, pollution
          and
          other environmental damage and suspension of operations. The Company intends
          to
          participate in insurance coverage maintained by the operator of its wells,
          although there can be no assurances that such coverage will be sufficient
          to
          prevent a material adverse effect to Matrixx in such events.
 
 ESTIMATES
          OF RESERVES ARE SUBJECTIVE. Estimates of oil and gas reserves, by
          necessity, are projections based on engineering data, and there are
          uncertainties inherent in the interpretation of such data as well as the
          projection of future rates of production and the timing of development
          expenditures. Reserve engineering is a subjective process of estimating
          underground accumulations of oil and gas that are difficult to measure.
          Estimates of economically recoverable oil and gas reserves and of future
          net
          cash flows depend upon a number of variable factors and assumptions, such
          as
          future production, oil and gas prices, operating costs, development costs
          and
          remedial costs, all of which may vary considerably from actual results.
          As a
          result, estimates of the economically recoverable quantities of oil and
          gas and
          of future net cash flows expected there from may vary substantially. Moreover,
          there can be no assurance that our reserves will ultimately be produced
          or that
          any undeveloped reserves will be developed.
 
 MATRIXX’S
          COSTS MAY BE AFFECTED BY NEW GOVERNMENT REGULATION AND ENVIRONMENTAL RISKS.
          Many
          jurisdictions have at various times imposed limitations on the production
          of oil
          and gas by restricting the rate of flow for oil and gas wells below their
          actual
          capacity to produce.
          Because current regulations covering the Company's operations are
          subject to change at any time, it may incur significant costs for compliance
          in
          the future.
 
 12
 RISKS
          RELATED TO THE MINING INDUSTRY
 
 EXPLORATION
          IN GENERAL, AND GOLD EXPLORATION IN PARTICULAR, ARE SPECULATIVE AND ARE
          FREQUENTLY UNSUCCESSFUL. Mineral exploration, particularly for gold and
          silver, is highly speculative in nature, capital intensive, involves many
          risks
          and frequently is nonproductive. There can be no assurance that the Company’s
          mineral exploration efforts will be successful. If the Company discovers
          a site
          with gold or other mineralization, it will take a number of years from
          the
          initial phases of drilling until production is possible, during which time
          the
          economic feasibility of production may change. Substantial expenditures
          are
          required to establish ore reserves through drilling, to determine metallurgical
          processes to extract the metals from the ore and, in the case of new properties,
          to construct mining and processing facilities. As a result of these
          uncertainties, no assurance can be given that Matrixx’s exploration programs
          will result in the expansion or replacement of existing ore reserves that
          are
          being depleted by current production.
 
 MATRIXX
          DOES NOT CURRENTLY HAVE AND MAY NOT BE ABLE TO RAISE THE FUNDS NECESSARY
          TO
          EXPLORE AND DEVELOP THE HAZARD PROPERTY. Matrixx does not currently have
          sufficient funds to complete all of the planned exploration activities
          at Hazard
          or to develop a mine at the Hazard Lake Property. The development and
          exploration of the Hazard Lake Property will require significant capital
          expenditures. Sources of external financing may include bank and non-bank
          borrowings and future debt and equity offerings. There can be no assurance
          that
          financing will be available on acceptable terms, or at all. The failure
          to
          obtain financing would have a material adverse effect on the Company’s growth
          strategy and its results of operations and financial condition.
  MATRIXX’S
          OPERATIONS MAY BE ADVERSELY AFFECTED BY RISKS AND HAZARDS ASSOCIATED WITH
          THE
          MINING INDUSTRY **.** Matrixx’s business is subject to a number of risks and hazards including adverse
          environmental effects, technical difficulties due to unusual or unexpected
          geologic formations, and pit wall failures. Such risks could result in
          personal
          injury, environmental damage, damage to and destruction of production
          facilities, delays in mining and liability. For some of these risks, the
          Company
          will maintain insurance to protect against these losses at levels consistent
          with industry practice. However, Matrixx may not be able to maintain those
          levels of insurance, particularly if there is a significant increase in
          the cost
          of premiums. Insurance against environmental risks is generally too expensive
          or
          not available for the Company and other companies in the mining industry,
          and,
          therefore, the Company does not currently anticipate that it will maintain
          environmental insurance. To the extent the Company is subject to environmental
          liabilities, it would have to pay for these liabilities. Moreover, in the
          event
          that Matrixx is unable to fully pay for the cost of remedying an environmental
          problem, it might be required to suspend or significantly curtail operations
          or
          enter into other interim compliance measures.
 
 
 RISKS
          RELATED TO MATRIXX’S STOCK
 
 SHARES
          ELIGIBLE FOR FUTURE SALE BY CURRENT STOCKHOLDERS MAY ADVERSELY AFFECT THE
          COMPANY’S STOCK PRICE. To date, the Company has had a limited trading volume in
          its Common Stock. As long as this condition continues, the sale of a significant
          number of shares of Common Stock at any particular time could be difficult
          to
          achieve at the market prices prevailing immediately before such shares
          are
          offered. In addition, sales of substantial amounts of Common Stock, including
          shares issued upon the exercise of outstanding options and warrants, under
          Securities and Exchange Commission Rule 144 or otherwise could adversely
          affect
          the prevailing market price of the Common Stock and could impair the Company’s
          ability to raise capital at that time through the sale of securities. In
          the
          past, due to a shortage of cash the Company has compensated its employees
          and
          consultants in shares of its Common Stock. This practice may continue in
          the
          future. Many of these shares have been registered or will be registered
          for
          resale to the public in registration statements on Form S-8.
 
 13
 
 THE
          COMPANY'S COMMON STOCK PRICE IS LIKELY TO BE HIGHLY VOLATILE; THE COMMON
          STOCK
          IS "PENNY STOCK". The market price of the Company's Common Stock is likely
          to be
          highly volatile as the stock market in general, and the market for technology
          companies in particular, has been highly volatile. The trading prices of
          many
          technology companies' stocks have recently been highly volatile and have
          recorded lows well below historical highs.
  Factors
          that could cause such volatility in the Company's Common Stock may include,
          among other things:
 
 -
          actual
          or anticipated fluctuations in quarterly operating results;
 
 -
          announcements of new oil and gas reserves found;
 
 -
          changes
          in financial estimates by securities analysts;
 
 -
          conditions or trends in the Company's industry; and
 
 -
          changes
          in the market valuations of other comparable companies.
  In
          addition, the Company's stock is currently traded on the NASD O-T-C Bulletin
          Board and it is uncertain that it will be able to successfully apply for
          listing
          on the AMEX, the NASDAQ Global Market, or the NASDAQ Capital Market in
          the
          foreseeable future due to the trading price for the Common Stock, the Company's
          lack of working capital and its revenue history. Failure to list the Common
          Stock on the AMEX, or NASDAQ, will impair the liquidity of the Common
          Stock.
 
 The
          Securities and Exchange Commission has adopted regulations which generally
          define a "penny stock" to be any security that 1) is priced under $5.00,
          2) is
          not traded on a national stock exchange or on NASDAQ, 3) may be listed
          in the
          "pink sheets" or the NASD OTC Bulletin Board, 4) is issued by a company
          that has
          less than $5 million in net tangible assets and has been in business less
          than
          three years, or by a company that has under $2 million in net tangible
          assets
          and has been in business for at least three years, or by a company that
          has
          revenues of less than $6 million for three years.
 
 Penny
          stocks can be very risky: penny stocks are low-priced shares of small companies
          not traded on an exchange or quoted on NASDAQ. Prices often are not available.
          Investors in penny stocks are often unable to sell stock back to the dealer
          that
          sold them the stock. Thus an investor may lose his/her investment. The
          Company's
          Common Stock is a "penny stock" and thus is subject to rules that impose
          additional sales practice requirements on broker/dealers who sell such
          securities to persons other than established customers and accredited investors,
          unless the Common Stock is listed on NASDAQ.
 
 Consequently,
          the "penny stock" rules may restrict the ability of broker/dealers to sell
          Matrixx's securities, and may adversely affect the ability of holders of
          the
          Common Stock to resell their shares in the secondary market. In addition,
          according to the SEC, the market for "penny stocks" has suffered in recent
          years
          from patterns of fraud and abuse. Such patterns include (i) control of
          the
          market for the stock by one or a few broker-dealers whom are often related
          to
          the promoter or issuer; (ii) manipulation of prices through prearranged
          matching
          of purchases and sales and false and misleading press releases; (iii) "boiler
          room" practices involving high-pressure sales tactics and unrealistic price
          projections by salespersons; (iv) excessive and undisclosed bid-ask
          differentials and markups by selling broker-dealers after prices have been
          manipulated to a desired level, along with the resulting collapse of those
          prices and investor losses. The Company's management is aware of the abuses
          that
          have occurred historically in the "penny stock" market. Although the Company
          does not expect to be in a position to dictate the behavior of the market
          or of
          broker-dealers who participate in the market, management will strive within
          the
          confines of practical limitations to prevent the described patterns from
          being
          established with respect to the Company's securities.
 
 14
 
 SOME
          OF
          THE INFORMATION IN THIS QUARTERLY REPORT CONTAINS FORWARD-LOOKING STATEMENTS.
          Some of the information in this quarterly report contains forward-looking
          statements that involve substantial risks and uncertainties. These statements
          can be identified by forward- looking
          words such as "may", "will", "expect", "intend", "anticipate", "believe",
          "estimate" and "continue" or similar words.
 
 Statements
          that contain these words should be reviewed carefully because they:
 
 -
          discuss
          management's expectations about the Company's future performance;
 
 -
          contain
          projections of the Company's future operating results or of its future
          financial
          condition; or
  -
          state
          other "forward-looking" information.
 
 Management
          believes it is important to communicate expectations to the Company's
          stockholders. There may be events in the future, however, that management
          is not
          able to predict accurately or over which it has no control. The risk factors
          listed in this section, as well as any cautionary language in this Annual
          Report, provide examples of risks, uncertainties and events that may cause
          the
          Company's actual results to differ materially from the expectations described
          in
          forward- looking statements. The occurrence of any of the events described
          in
          these risk factors and elsewhere in this Annual Report could have a material
          and
          adverse effect on Matrixx's business, results of operations and financial
          condition and that upon the occurrence of any of these events, the trading
          price
          of its Common Stock could decline.
 
 
 ITEM
          3.
          CONTROLS AND PROCEDURES
 
 On
          February 9, 2006, management concluded its evaluation of the effectiveness
          of
          the Company's disclosure controls and procedures. As of that date, the
          Company's
          Chief Financial Officer and acting Chief Executive Officer concluded that
          the
          Company maintains effective disclosure controls and procedures that ensure
          information required to be disclosed in the Company's reports under the
          Securities Exchange Act of 1934 is recorded, processed, summarized and
          reported
          within the time periods specified in the SEC's rules and forms. Specifically,
          the disclosure controls and procedures assure that information is accumulated
          and communicated to the Company's management, including its Chief Financial
          Officer and acting Chief Executive Officer, as appropriate, to allow timely
          decisions regarding required disclosure. There have been no significant
          changes
          in the Company's internal controls or in other factors that could significantly
          affect these controls subsequent to the date of management's
          evaluation.
 
 
 PART
          II -
          OTHER INFORMATION
 
 ITEM
          1.
          LEGAL PROCEEDINGS.
 
 Not
          applicable.
 
 ITEM
          2.
          UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
 
 For
          the
          three months ended December 31, 2006, $598,916 of expense related to the
          issuance of an aggregate of 35,255,571 shares of Common Stock was paid
          to eight
          consultants, including Ms.
  15
 Thompson,
          whom was issued shares for services rendered while acting in her capacity
          as an
          officer of Matrixx, in lieu of cash compensation for various services including
          oil and gas operations including but not limited to reviews and interpretations
          of drilling AFE’s, daily drilling progress, and assessments and interpretations
          of 3D Seismic data. Additional services include locating and reviewing
          further
          acquisition candidates and management consulting. The
          issuances were made in reliance on Section 4(2) of the Securities Act,
          and were
          made without general solicitation or advertising.  The recipients were
          sophisticated investors with access to all relevant information necessary
          to
          evaluate the investments, and who represented to us that the shares were
          being
          acquired for investment purposes.
 
 In
          addition, $177,668 of expense was related to the issuance of 7,046,555
          shares of
          Common Stock, was issued to five consultants for prepaid consulting expenses
          of
          the kind described above. On December 31, 2006, the Company had minimal
          cash.
          Consultants receiving stock agreed to receive these securities, in lieu
          of cash,
          for payment of services rendered. All shares are subject to piggy-back
          registration rights. The
          issuances were made in reliance on Section 4(2) of the Securities Act,
          and were
          made without general solicitation or advertising.  The recipients were
          sophisticated investors with access to all relevant information necessary
          to
          evaluate the investments, and who represented to us that the shares were
          being
          acquired for investment purposes.
 
  ITEM
          3.
          DEFAULTS UPON SENIOR SECURITIES.
 
 Not
          applicable.
 
 ITEM
          4.
          SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  Not
          applicable.
 
 ITEM
          5.
          OTHER INFORMATION.
 
 Not
          applicable.
 
 
 ITEM
          6.
          EXHIBITS
 
 Exhibit
                    No.
                Description---------
                ----------10.3
                Kuma
                    Loan Agreement31.01
                Certification
                    Pursuant to Exchange Act Rules 13a-15(e) and
                    15d-15(c)32.01
                Certification
                    Pursuant to Section 906
   16
 
 SIGNATURES
  In
          accordance with the requirements of the Exchange Act, the registrant caused
          this
          report to be signed on its behalf by the undersigned, hereunto duly
          authorized.
 
 Dated:
          February 20, 2007
 
 MATRIXX
          RESOURCE HOLDINGS, INC.
 
 
 /s/
          Catherine Thompson
 ---------------------------
 Catherine
          Thompson
 Interim
          Chief Executive Officer and
 Chief
          Financial Officer
  17