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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 
 Form 10-Q
 (Mark One)
 þ
    
    Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarter ended March 31, 2006
 or
 o
    
    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 001-31404
 Matrixx Initiatives, Inc.
  Delaware
    
    87-0482806(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification Number)
 4742 N. 24th Street, Suite 455
Phoenix, AZ 85016
 (602) 385-8888
 þ o
  Large accelerated filer
               Accelerated filer
    
    Yes o
Yes þ
    
    No þ
No oNon-accelerated filer
    
    Yes o
    
    No þ
 o þ




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##### 



MATRIXX INITIATIVES, INC.
FORM 10-Q
INDEX
 PagePART I
    
    FINANCIAL INFORMATIONItem 1.
    
    Condensed Consolidated Balance Sheets as of
March 31, 2006 (Unaudited) and December 31, 2005
    
    
    1Condensed Consolidated Statements of
Income for the three months ended
March 31, 2006 and 2005 (Unaudited)
    
    
    3Condensed Consolidated Statements of
Cash Flows for the three months ended
March 31, 2006 and 2005 (Unaudited)
    
    
    4Notes to Condensed Consolidated
Financial Statements (Unaudited)
    
    
    5Item 2.
    
    Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    12Item 3.
    
    Quantitative and Qualitative Disclosures
About Market Risk
    
    
    20Item 4.
    
    Controls and Procedures
    
    
    20PART II
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    21Item 1A.
    
    Risk Factors
    
    
    21Item 6.
    
    Exhibits
    
    
    21SIGNATURES
    
    
    
    
    22Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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MATRIXX INITIATIVES, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
  ASSETS
 March 31, 2006
    
    December 31, 2005Current Assets:Cash and cash equivalents
    
    $
    11,401,441
    
    
    $
    12,266,671Accounts receivable:Trade, net allowance for doubtful
accounts of $365,472 and $642,915
    
    
    8,327,052
    
    
    
    28,719,382Other receivable
    
    
    1,237,455
    
    
    
    1,234,886Insurance receivable
    
    
    4,800,000
    
    
    
    4,800,000Inventories
    
    
    11,527,115
    
    
    
    8,803,135Prepaid expenses
    
    
    756,233
    
    
    
    837,877Interest receivable
    
    
    167,934
    
    
    
    124,533Deferred tax asset
    
    
    7,797,299
    
    
    
    7,797,299Total Current Assets
    
    
    46,014,529
    
    
    
    64,583,783Property and Equipment, at cost:Office furniture and computer equipment
    
    
    1,268,688
    
    
    
    1,248,427Machine tooling and manufacturing equipment
    
    
    662,370
    
    
    
    616,645Leasehold improvements
    
    
    179,964
    
    
    
    178,7572,111,022
    
    
    
    2,043,829Less accumulated depreciation
    
    
    (941,908
    )
    
    
    (803,479Net Property and Equipment
    
    
    1,169,114
    
    
    
    1,240,350Other Assets:Deposits
    
    
    1,047,283
    
    
    
    1,008,309Other assets
    
    
    57,963
    
    
    
    57,963Restricted cash
    
    
    5,000,000
    
    
    
    5,000,000Debt issuance costs, net of accumulated amortization
of $45,101 and $29,166
    
    
    33,266
    
    
    
    46,262Deferred tax asset
    
    
    9,348
    
    
    
    Patents, net of accumulated amortization of $315,950
and $283,437
    
    
    1,741,722
    
    
    
    1,774,235Goodwill
    
    
    15,039,836
    
    
    
    15,039,836Total Other Assets
    
    
    22,929,418
    
    
    
    22,926,605Total Assets
    
    $
    70,113,061
    
    
    $
    88,750,738
  1




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MATRIXX INITIATIVES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 LIABILITIES AND STOCKHOLDERS EQUITY
 March 31, 2006
    
    December 31, 2005Current Liabilities:Accounts payable
    
    $
    4,438,090
    
    
    $
    8,741,651Accrued expenses
    
    
    6,362,258
    
    
    
    7,774,871Sales commissions
    
    
    1,336,502
    
    
    
    2,600,467Sales returns and allowances
    
    
    2,673,831
    
    
    
    3,880,552Legal liability
    
    
    1,245,000
    
    
    
    13,245,000Accrued taxes
    
    
    99,714
    
    
    
    882,611Total Current Liabilities
    
    
    16,155,395
    
    
    
    37,125,152Deferred tax liability
    
    
    3,515,951
    
    
    
    3,515,951Total Liabilities
    
    
    19,671,346
    
    
    
    40,641,103Commitments and ContingenciesStockholders Equity:Preferred stock: $.001 par value, 2,000,000 shares
authorized, none issued or outstanding
    
    
    
    
    
    
    Common stock: $.001 par value, 30,000,000 shares
authorized, 9,817,482 and 9,599,529 issued and outstanding
    
    
    9,817
    
    
    
    9,599Additional paid in capital
    
    
    46,845,858
    
    
    
    43,433,364Unearned compensation
    
    
    (1,177,392
    )
    
    
    Retained earnings
    
    
    5,159,736
    
    
    
    5,062,97650,838,019
    
    
    
    48,505,939Less common stock held in treasury, at cost
(53,800 and 53,800 shares)
    
    
    (396,304
    )
    
    
    (396,304)Total Stockholders Equity
    
    
    50,441,715
    
    
    
    48,109,635Total Liabilities and Stockholders Equity
    
    $
    70,113,061
    
    
    $
    88,750,738
  2




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MATRIXX INITIATIVES, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
  Three months ended March 31,2006
    
    
    2005Net sales
    
    $
    17,675,959
    
    
    $
    14,981,590Cost of sales
    
    
    5,865,211
    
    
    
    4,237,434Gross Profit
    
    
    11,810,748
    
    
    
    10,744,156Selling, general and administrative expenses
    
    
    10,692,507
    
    
    
    8,823,514Research and development
    
    
    1,126,846
    
    
    
    499,561Income From Operations
    
    
    (8,605
    )
    
    
    1,421,081Other Income (Expense):Interest and other income
    
    
    173,911
    
    
    
    61,155Interest expense
    
    
    
    
    
    
    Total Other Income
    
    
    173,911
    
    
    
    61,155Income Before Provision For Income Taxes
    
    
    165,306
    
    
    
    1,482,236Provision for income taxes
    
    
    68,546
    
    
    
    586,678Net Income
    
    $
    96,760
    
    
    $
    895,558Net Income Per Share of Common Stock:Basic:Weighted Average Number of Common Shares Outstanding
    
    
    9,565,963
    
    
    
    9,481,914Net Income Per Share of Common Stock
    
    $
    0.01
    
    
    $
    0.09Diluted:Weighted Average Number of Common Shares Outstanding
    
    
    10,027,666
    
    
    
    9,661,113Net Income Per Share of Common Stock
    
    $
    0.01
    
    
    $
    0.09
  3




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MATRIXX INITIATIVES, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  Three months ended March 31,2006
    
    
    2005Cash Flows From Operating Activities:Net income
    
    $
    96,760
    
    
    $
    895,558Adjustments to reconcile net income to net cash
provided (used) by operating activities:Depreciation
    
    
    138,429
    
    
    
    64,196Amortization
    
    
    48,448
    
    
    
    23,020Deferred income taxes
    
    
    (9,348
    )
    
    
    497,144Common stock issued for compensation
    
    
    978,938
    
    
    
    320,009Changes in assets and liabilities:Accounts receivable
    
    
    20,389,761
    
    
    
    4,166,204Interest receivable
    
    
    (43,401
    )
    
    
    (48,395
    )Inventories
    
    
    (2,723,980
    )
    
    
    1,560,392Prepaid expenses and other
    
    
    81,644
    
    
    
    (414,447
    )Accounts payable
    
    
    (4,303,561
    )
    
    
    (2,414,656
    )Accrued expenses
    
    
    (3,459,475
    )
    
    
    (2,222,665
    )Legal liability
    
    
    (12,000,000
    )
    
    
    Sales returns and allowances
    
    
    (1,206,721
    )
    
    
    83,475Net Cash Provided (Used) By Operating Activities
    
    
    (2,012,506
    )
    
    
    2,509,835Cash Flows From Investing Activities:Capital expenditures
    
    
    (67,193
    )
    
    
    (15,486
    )Deposits and other
    
    
    (38,974
    )
    
    
    (93,119
    )Net Cash (Used) By Investing Activities
    
    
    (106,167
    )
    
    
    (108,605
    )Cash Flows From Financing Activities:Debt issuance costs
    
    
    (2,939
    )
    
    
    Issuance of common stock
    
    
    1,256,382
    
    
    
    Net Cash Provided By Financing Activities
    
    
    1,253,443
    
    
    
    Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    (865,230
    )
    
    
    2,401,230Cash and Cash Equivalents at Beginning of Period
    
    
    12,266,671
    
    
    
    12,694,486Cash and Cash Equivalents at End of Period
    
    $
    11,401,441
    
    
    $
    15,095,716Supplemental Disclosure of Cash Flow Information:Cash paid during the period for:Interest
    
    $
    
    
    
    $
    Income taxes
    
    
    860,790
    
    
    
    262,801
  4




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MATRIXX INITIATIVES, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
     Share-Based Payment Accounting for
Stock-Based Compensation, Accounting for Stock Issued to
Employees.
  2005
    
    2004
    
    2003Risk-free interest rate
    
    
    3.66
    %
    
    
    3.25
    %
    
    
    3.12
    %Expected life
    
    5.00 years
    
    4.95 years
    
    4.88 yearsExpected volatility
    
    
    61.40
    %
    
    
    66.44
    %
    
    
    62.96
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
 5




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MATRIXX INITIATIVES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Three Months EndedMarch 31, 2005Net income applicable to common shareholders, as
reported
    
    $
    895,558Add stock-based employee compensation expense
included in net earnings, net of tax
    
    
    Less stock based employee compensation expense
determined under fair value based methods for all awards, net of
related tax effects
    
    
    1,379,438Proforma Net Income (Loss)
    
    $
    (483,880
    )Net income (loss) per share of common stock:Basic:As reported
    
    $
    0.09Pro forma
    
    $
    (0.05
    )DilutedAs reported
    
    $
    0.09Pro forma
    
    $
    (0.05
    )
 ,
  Earnings Per Share
  6




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MATRIXX INITIATIVES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Three Months EndedMarch 31,2006
    
    
    2005Net income applicable to common shareholders
    
    $
    96,760
    
    
    $
    895,558Weighted average common shares outstanding  Basic
    
    
    9,565,963
    
    
    
    9,481,914Dilutive Securities
    
    
    461,703
    
    
    
    179,199Weighted average common shares outstanding  Diluted
    
    
    10,027,666
    
    
    
    9,661,113Net Income per common share:Basic
    
    $
    0.01
    
    
    $
    0.09Diluted
    
    $
    0.01
    
    
    $
    0.09
   March 31,
    
    
    December 31,2006
    
    
    2005Raw materials and packaging
    
    $
    3,027,914
    
    
    $
    3,520,013Finished goods
    
    
    8,825,681
    
    
    
    5,829,699Less reserve for obsolescence
    
    
    (326,480
    )
    
    
    (546,577
    )Total
    
    $
    11,527,115
    
    
    $
    8,803,135
    Inventory Costs  An Amendment of ARB No. 43,
Chapter 4
 7




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MATRIXX INITIATIVES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Accounting Changes and Error Corrections  A
Replacement of APB Opinion No. 20 and FASB Statement No. 3.
    Litigation
   Product Liability Matters
  8




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MATRIXX INITIATIVES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
     9




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MATRIXX INITIATIVES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
     Litigation Reserves
  10




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MATRIXX INITIATIVES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Securities Litigation Matters
  Federal Trade Commission Letter
 ® ® ® ® ® ®
 ®
 11




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Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
 ®
   Quarterly Results:
 $000s
    
    Q1 2006
    
    % NS
    
    Q1 2005
    
    % NSNet Sales
    
    $
    17,676
    
    
    
    
    
    
    $
    14,982Marketing
    
    $
    6,699
    
    
    
    38
    %
    
    $
    5,069
    
    
    
    34
    %Sales
    
    $
    568
    
    
    
    3
    %
    
    $
    614
    
    
    
    4
    %General & Administrative
    
    $
    2,176
    
    
    
    12
    %
    
    $
    1,852
    
    
    
    12
    %Legal
    
    $
    1,249
    
    
    
    7
    %
    
    $
    1,288
    
    
    
    9
    %Total Operating Expenses
    
    $
    11,819
    
    
    
    60
    %
    
    $
    9,324
    
    
    
    59
    %Research and Development
    
    $
    1,127
    
    
    
    6
    %
    
    $
    500
    
    
    
    3
    %
   12




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1)
    
    We compare our year to date sales and net income performance against our stated annual
goal for each. For fiscal 2006, our goal is to grow sales 25%  35% and net income 15% -
25% above the $7.6 million level realized in 2005, exclusive of the impact of an $8.5
million (approximately $5 million net of tax) charge recorded in the fourth quarter of 2005
for settling Arizona product liability litigation claims and recording a reserve for the
remaining product liability lawsuits and tax credits of approximately $477,000. The
foregoing is a non-GAAP financial measure as defined in Item 10(e) of Regulation S-K of
the Exchange Act. We believe our 2005 net income excluding the settlement, reserve, and
tax credits that were recognized in the fourth quarter of 2005 provides investors with a
useful indicator of our results that is comparable among periods because it excludes the
effects of unusual items that may occur on an irregular basis. Investors should note that
this non-GAAP financial measure involves judgments by management, including whether the
item is classified as an unusual item. We use similar concepts to measure our performance
internally in reports for management.2)
    
    For the three months ended March 31, 2006 net sales have increased 18% to $17.7 million
and net income decreased to approximately $97,000 from net income of $896,000 for the same
period in 2005. Net income was impacted by increased investment in marketing and research
and development, as well as lower gross margins (primarily related to our new flu relief
products and increased freight costs). We remain focused on the introduction of our new
Cold Remedy RapidMelts + C, Cough Melts, and the improved Cold Remedy Swab products
during the third quarter of this year. Due to the share growth we have achieved and the
introduction of these new items and anticipated cost reductions, we continue to be
comfortable with our previous annual guidance, which expects 2006 annual sales to increase
25%-35% over the $90.5 million recorded in 2005. We also expect net income growth of
15%-25% above the $7.6 million level realized in 2005, exclusive of the one-time items
mentioned above.3)
    
    We monitor our share of the cough and cold market. For the 12 weeks ended March 19,
2006, retail sales of our products (as measured by three outlet syndicated scanner data,
not including our largest customer, Wal-Mart) increased approximately 16% over the
comparable period in the previous year, while sales within the entire cough and cold
category decreased approximately 8% over the same period. The increased sales of our
products for the 12 weeks ended March 19, 2006 achieved a share of approximately 3.3% of
the entire cough and cold market compared to a share of 2.6% in the comparable period the
previous year.4)
    
    We measure our ability to maintain strong gross margins on our products. We achieved an
average gross margin of 67% for the first quarter of 2006, which is below our goal of 70%,
and below the average gross margin of 72% achieved in the first quarter of 2005 (gross
margins on our existing products,
 13




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exclusive of the flu relief, vary between 60% and 80%).
The decrease in gross margins is primarily
attributable to higher start-up costs related to our flu relief products and increased
freight costs. We expect to reduce costs on our flu relief products and realize improved
gross margins during the second half of 2006.5)
    
    We evaluate our operating performance by reviewing, over time, our ability to decrease
operating costs as a percentage of net sales. For the three months ended
March 31, 2006, our operating expenses (which excludes research and development expense)
were approximately 60% of our net sales compared to 59% for the first three months of 2005.
Legal expense continues to negatively impact results. First quarter 2006
legal expense was approximately $1.3 million unchanged from the $1.3 million (net of the
$800,000 insurance reimbursement discussed in Note 7) recognized in the first quarter of
2005.6)
    
    We measure the distribution of our products by key national retailers. Our ten
largest retail customers, which are responsible for approximately 70% of sales, carry, on
average, 14 of our 23 products (Zicam & Nasal Comfort), compared to 12 of our 16 products
in the first quarter of 2005.
 Critical Accounting Policies and Estimates
    Intangible Assets and Goodwill:
 Income Taxes:
 Revenue Recognition:
 14




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Customer Sales Returns and Allowances:
 Insurance Reimbursements:
 Legal Contingencies:
 Results of Operations for the Three Months Ended March 31, 2006 Compared to the Three Months
Ended March 31, 2005
  Three Months Ended March 31,2006
    
    
    2005Net sales
    
    $
    17,675,959
    
    
    
    100
    %
    
    $
    14,981,590
    
    
    
    100
    %Cost of sales
    
    
    5,865,211
    
    
    
    33
    
    
    
    4,237,434
    
    
    
    28Gross profit
    
    
    11,810,748
    
    
    
    67
    
    
    
    10,744,156
    
    
    
    72Operating expenses
    
    
    10,692,507
    
    
    
    60
    
    
    
    8,823,514
    
    
    
    59Research & development
    
    
    1,126,846
    
    
    
    6
    
    
    
    499,561
    
    
    
    3Income (Loss) from
operations
    
    
    (8,605
    )
    
    
    
    
    
    
    1,421,081
    
    
    
    9Interest and other income
    
    
    173,911
    
    
    
    1
    
    
    
    61,155
    
    
    
    Interest expense
    
    
    0
    
    
    
    
    
    
    
    0
    
    
    
    Income before income taxes
    
    
    165,306
    
    
    
    1
    
    
    
    1,482,236
    
    
    
    10Provision for income taxes
    
    
    68,546
    
    
    
    
    
    
    
    586,678
    
    
    
    4Net income
    
    $
    96,760
    
    
    
    1
    %
    
    $
    895,558
    
    
    
    6
    %
 15




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Net Sales
  Cost of Sales
  Gross Profit
  Operating Expenses
     Research and Development
  Interest & Other Income
  16




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Income Before Income Taxes
  Income Tax Expense
  Net Income
  Liquidity and Capital Resources
      17




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Contractual Obligations
  Contractual Cash Obligations(In thousands of dollars)Payments due by Period as of March 31, 2006Less than
    
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    
    1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 yearsLong-Term Debt Obligations
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0Capital Lease Obligations
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Operating Lease Obligations
    
    
    284
    
    
    
    120
    
    
    
    164
    
    
    
    0
    
    
    
    0Purchase Obligations
    
    
    8,948
    
    
    
    8,948
    
    
    
    0
    
    
    
    0
    
    
    
    0Other Long-Term Liabilities Reflected on the
Companys Balance Sheet under GAAP
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Total
    
    $
    9,232
    
    
    $
    9,068
    
    
    $
    164
    
    
    $
    0
    
    
    $
    0
 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
 Forward Looking Statements
  
    
    our belief that the reserve for litigation losses will be sufficient to resolve the
remaining cases;
    
    our expectations regarding 2006 net sales and net income and our expectations for the
second quarter of 2006;
 18




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##### Table of Contents




    
    our belief that Cough products will achieve higher consumer acceptance in the future;
    
    our belief that new advertising approaches and public relations efforts will continue to
build brand awareness;
    
    our anticipation that we will continue to incur approximately $1.0 to $1.5 million in legal
expense each quarter as a result of the Zicam Cold Remedy product liability and securities
litigation in which we are engaged;
    
    our intention to vigorously defend the Zicam Cold Remedy product liability and securities
litigation claims, our expectation that additional product liability lawsuits may be filed
against us, and our belief that any liability resulting from these or other lawsuits,
including any adverse publicity, could materially impact our financial results;
    
    our expectation that the trend of growth in sales in future periods will continue as we
expand consumer awareness and acceptance of our entire Zicam brand of products, increase
distribution, introduce new products, and avoid additional adverse publicity;
    
    our expectation regarding future net income, our belief that expenditures for advertising
and research and development will vary by quarter throughout the year, and our expectation
that advertising expenses will be heaviest in our first and fourth fiscal quarters;
    
    our belief that the new brand, Nasal Comfort, will gain consumer acceptance and retail distribution;
    
    our expectation of the effect of recently issued accounting standards;
    
    our expectation that our mix of products sold will change due to seasonality and varying
growth rates within our three market categories;
    
    our expectation of our 10 largest retailers adding new products;
    
    our expectation of continuing profitability in future years;
    
    our intention to review our product return reserve provision monthly and adjust the reserve
amounts as actual product return experience continues to develop, and our expectation that a
higher sales returns allowance will be recorded in the future for new products that we
introduce until such products achieve market acceptance;
    
    our expectation of making income tax payments at our statutory rates in future years;
    
    our expectation that the average unit cost of goods sold and gross margin will continue to
be affected by the relative mix of products sold;
    
    our expectation that our net income and operating expenses in future periods will vary
largely in connection with the level of our advertising, research and development, and legal
expenses;
    
    our expectation that research and development spending will be between 4-6% of net sales
for 2006 and in subsequent years;
    
    our expectation that earnings in future periods will be significantly impacted by the
seasonality of our sales, the severity of the cold season, the revenues and expenses
associated with new products, and the timing and amount of advertising, research and
development, and legal expenses;
    
    our belief that our existing capital resources and our credit line will be sufficient to
fund our operations and capital requirements for the next 12 months;
    
    our expectation regarding reimbursement for legal expense from our insurance carriers;
    
    our having no plans to directly manufacture and store our products;
    
    our expectation of investing $4 million to build new swab manufacturing equipment;
    
    our anticipation that initial sales and shipments of the Zicam Rapid Melts +C and Zicam
Cough Melts will begin in the third quarter of 2006;
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
    
    our expectation that our manufacturers will have produced inventory available for sales of
products through the 2006-2007 cough and cold season;
    
    our expectation of achieving a 70% gross margin in the future;
    
    our belief that the new insurance program is adequate; and
    
    our belief that moderate interest rate increases will not have a material adverse impact on
our results of operations or financial position in the foreseeable future.
    
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
   
 Item 4. Controls and Procedures
  20




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##### Table of Contents



PART II
 OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 6. Exhibits
 Exhibit No.
    
    Title3.01
    
    Articles of Incorporation and Amendments thereto of the registrant (1)3.02
    
    Bylaws of the registrant (1)4.01
    
    Rights Agreement dated as of July 22, 2002 by and between the registrant and
Corporate Stock Transfer, Inc. (2)10.01
    
    Form of Change in Control Agreement between Registrant and Registrants
Executive Officers (3)31.1*
    
    Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2*
    
    Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1*
    
    Certification of CEO pursuant to 18 U.S.C. Section 135032.2*
    
    Certification of CFO pursuant to 18 U.S.C. Section 1350
 
 *
    
    Filed with this Report on Form 10-Q.**
    
    Indicates management compensatory contract, plan or arrangement.(1)
    
    Incorporated by reference to the Registrants Amendment No. 1 to Form 8-A,
filed June 18, 2002, file number 000-27646.(2)
    
    Incorporated by reference to the Registrants Registration Statement on Form
8-A, filed July 23, 2002, file number 001-31404.(3)
    
    Incorporated by reference to the Registrants Report on Form 10-K, filed March
13, 2006, file number 001-31404. 21




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##### Table of Contents



SIGNATURES
  Matrixx Initiatives, Inc./s/ Carl J. JohnsonCarl J. Johnson
President and
Chief Executive Officer/s/ William J. HemeltWilliam J. HemeltExecutive Vice President,
Chief Financial Officer, &
Treasurer
  22




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Title3.01
    
    Articles of Incorporation and Amendments thereto of the registrant (1)3.02
    
    Bylaws of the registrant (1)4.01
    
    Rights Agreement dated as of July 22, 2002 by and between the registrant and
Corporate Stock Transfer, Inc. (2)10.01
    
    Form of Change in Control Agreement between Registrant and Registrants
Executive Officers (3)31.1*
    
    Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2*
    
    Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1*
    
    Certification of CEO pursuant to 18 U.S.C. Section 135032.2*
    
    Certification of CFO pursuant to 18 U.S.C. Section 1350
 
 *
    
    Filed with this Report on Form 10-Q.**
    
    Indicates management compensatory contract, plan or arrangement.(1)
    
    Incorporated by reference to the Registrants Amendment No. 1 to Form 8-A,
filed June 18, 2002, file number 000-27646.(2)
    
    Incorporated by reference to the Registrants Registration Statement on Form
8-A, filed July 23, 2002, file number 001-31404.(3)
    
    Incorporated by reference to the Registrants Report on Form 10-K, filed March
13, 2006, file number 001-31404.