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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549


Form 10-Q



(Mark One)[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934


For the quarter ended September 30, 2003

or

[  ] 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 0-27646

Matrixx Initiatives, Inc.

(Name of registrant as specified in its charter)


Delaware
(State or other jurisdiction
of incorporation or organization)
    
    87-0482806
(I.R.S. Employer
Identification Number)


2375 East Camelback Road, Suite 500
Phoenix, AZ 85016
(Address of principal executive offices)

(602) 387-5353
(Issuers telephone number)

Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 þ  NO  o

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).  YES o  NO  þ

There were 9,415,851 shares of the registrants common stock, $.001 par value,
outstanding as of October 31, 2003.





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TABLE OF CONTENTS



|                          |                                                                                               |                                                      |  |  |  |  |  | 
|------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|                          |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                          | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                          | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                          | Item 4. Controls and Procedures                                                              
|PART II OTHER INFORMATION
|                          | Item 1. Legal Proceedings                                                                    
|                          | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES               
|EXHIBIT INDEX            
|EX-31.1                  
|EX-31.2                  
|EX-32.1                  
|EX-32.2                  



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MATRIXX INITIATIVES, INC.
FORM 10-Q
INDEX

PART I
    
    FINANCIAL INFORMATION
    
    PageItem 1.
    
    Condensed Consolidated Balance Sheet
as of September 30, 2003 and December 31, 2002
    
    
    1Condensed Consolidated Statements of
Operations for the three months ended
September 30, 2003 and 2002
    
    
    3Condensed Consolidated Statements of
Operations for the nine months ended
September 30, 2003 and 2002
    
    
    4Condensed Consolidated Statements of
Cash Flows for the nine months ended
September 30, 2003 and 2002
    
    
    5Notes to Condensed Consolidated
Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    10Item 3.
    
    Quantitative and Qualitative Disclosures
About Market Risk
    
    
    24Item 4.
    
    Controls and Procedures
    
    
    24PART II
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    25Item 6.
    
    Exhibits and Reports on Form 8-K
    
    
    25SIGNATURES
    
    
    
    
    26




Unless otherwise indicated in this quarterly report, Matrixx, us, we,
our, the Company and similar terms refer to Matrixx Initiatives, Inc. and
its subsidiaries. Zicam is a registered trademark of our subsidiary, Zicam,
LLC, and the Matrixx name and logo are trademarks of the Company.





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MATRIXX INITIATIVES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

ASSETS

|                                 |                                                                             |                            |         |                    |            |                   |         |            |            | 
|-------------------------------- | --------------------------------------------------------------------------- | -------------------------- | ------- | ------------------ | ---------- | ----------------- | ------- | ---------- | ---------- | 
|                                 |                                                                             |                            |         | September 30, 2003 |            | December 31, 2002
|                                 |                                                                             |                            |         |                    |            |                  
|Current Assets:                  |                                                                             |                            |         |                    |            |                   |         |           
|                                 | Cash and cash equivalents                                                   |                            | $       | 6,612,500          |            |                   | $       | 12,010,091 |           
|                                 | Accounts receivable:                                                        |                            |         |                    |            |                   |         |            |           
|                                 | Trade, net allowance for doubtful
accounts of $556,849 and $647,280         |                            |         | 9,594,436          |            |                   |         | 7,037,596  |           
|                                 | Inventories                                                                 |                            |         | 3,776,198          |            |                   |         | 1,573,034  |           
|                                 | Prepaid expenses and other                                                  |                            |         | 480,828            |            |                   |         | 523,829    |           
|                                 | Deferred tax asset                                                          |                            |         | 2,099,438          |            |                   |         | 1,073,765  |           
|                                 |                                                                             |                            |         |                    |            |                   |         |            |           
|                                 |                                                                             | Total Current Assets       |         |                    | 22,563,400 |                   |         |            | 22,218,315 | 
|                                 |                                                                             |                            |         |                    |            |                   |         |            |           
|Property and Equipment, at cost: |                                                                             |                            |         |                    |            |                   |         |           
|                                 | Office furniture and equipment                                              |                            |         | 706,693            |            |                   |         | 588,395    |           
|                                 | Leasehold improvements                                                      |                            |         | 37,202             |            |                   |         | 39,314     |           
|                                 |                                                                             |                            |         |                    |            |                   |         |            |           
|                                 |                                                                             |                            | 743,895 |                    |            |                   | 627,709 |           
|                                 | Less accumulated depreciation                                               |                            |         | (206,938           | )          |                   |         | (89,795    | )         
|                                 |                                                                             |                            |         |                    |            |                   |         |            |           
|                                 |                                                                             | Net Property and Equipment |         |                    | 536,957    |                   |         |            | 537,914    | 
|                                 |                                                                             |                            |         |                    |            |                   |         |            |           
|Other Assets:                    |                                                                             |                            |         |                    |            |                   |         |           
|                                 | Deposits                                                                    |                            |         | 127,697            |            |                   |         | 37,697     |           
|                                 | Debt issuance costs, net of accumulated amortization
of $35,000 and $20,417 |                            |         |                   |            |                   |         | 14,583     |           
|                                 | Deferred tax asset                                                          |                            |         | 5,711,831          |            |                   |         | 8,284,720  |           
|                                 | Patents, net of accumulated amortization of $122,010
and $71,700            |                            |         | 1,001,590          |            |                   |         | 1,051,900  |           
|                                 | Goodwill                                                                    |                            |         | 15,039,836         |            |                   |         | 15,039,836 |           
|                                 |                                                                             |                            |         |                    |            |                   |         |            |           
|                                 |                                                                             | Total Other Assets         |         |                    | 21,880,954 |                   |         |            | 24,428,736 | 
|                                 |                                                                             |                            |         |                    |            |                   |         |            |           
|                                 |                                                                             | Total Assets               |         | $                  | 44,981,311 |                   |         | $          | 47,184,965 | 
|                                 |                                                                             |                            |         |                    |            |                   |         |            |           

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

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MATRIXX INITIATIVES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Continued)
(Unaudited)LIABILITIES AND STOCKHOLDERS EQUITY

|                                              |                                                                                                                    |                                            |            |                    |            |                   |            |            |            | 
|--------------------------------------------- | ------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | ---------- | ------------------ | ---------- | ----------------- | ---------- | ---------- | ---------- | 
|                                              |                                                                                                                    |                                            |            | September 30, 2003 |            | December 31, 2002
|                                              |                                                                                                                    |                                            |            |                    |            |                  
|Current Liabilities:                          |                                                                                                                    |                                            |            |                    |            |                   |            |           
|                                              | Accounts payable and accrued expenses                                                                              |                                            | $          | 3,702,514          |            |                   | $          | 5,771,407  |           
|                                              | Sales returns and allowances                                                                                       |                                            |            | 1,228,760          |            |                   |            | 1,004,713  |           
|                                              | Current portion of long-term debt                                                                                  |                                            |            | 2,720,448          |            |                   |            | 5,253,643  |           
|                                              |                                                                                                                    |                                            |            |                    |            |                   |            |            |           
|                                              |                                                                                                                    | Total Current Liabilities                  |            |                    | 7,651,722  |                   |            |            | 12,029,763 | 
|                                              |                                                                                                                    |                                            |            |                    |            |                   |            |            |           
|Long-Term Debt, net of current portion above: |                                                                                                                    |                                            |            |                    |            |                   |            |           
|                                              | Financial institutions and other                                                                                   |                                            |            | 2,720,448          |            |                   |            | 5,253,643  |           
|                                              | Less current portion above                                                                                         |                                            |            | (2,720,448         | )          |                   |            | (5,253,643 | )         
|                                              |                                                                                                                    |                                            |            |                    |            |                   |            |            |           
|                                              |                                                                                                                    | Total Long-Term Debt                       |            |                    |           |                   |            |            |           | 
|                                              |                                                                                                                    |                                            |            |                    |            |                   |            |           
|Commitments and contingencies                 |                                                                                                                    |                                            |           |                    |            |                   |           |           
|                                             
|Stockholders 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, 9,446,751 and 9,441,451 shares
issued and outstanding |                                            |            | 9,447              |            |                   |            | 9,442      |           
|                                              | Additional paid in capital                                                                                         |                                            |            | 41,563,317         |            |                   |            | 41,524,921 |           
|                                              | Accumulated deficit                                                                                                |                                            |            | (4,003,952         | )          |                   |            | (6,317,305 | )         
|                                              |                                                                                                                    |                                            |            |                    |            |                   |            |            |           
|                                              |                                                                                                                    |                                            | 37,568,812 |                    |            |                   | 35,217,058 |           
|                                              | Less common stock held in treasury, at cost
(35,900 and 9,600 shares)                                              |                                            |            | (239,223           | )          |                   |            | (61,856    | )         
|                                              |                                                                                                                    |                                            |            |                    |            |                   |            |            |           
|                                              |                                                                                                                    | Total Stockholders Equity                 |            |                    | 37,329,589 |                   |            |            | 35,155,202 | 
|                                              |                                                                                                                    |                                            |            |                    |            |                   |            |            |           
|                                              |                                                                                                                    | Total Liabilities and
Stockholders Equity |            | $                  | 44,981,311 |                   |            | $          | 47,184,965 | 
|                                              |                                                                                                                    |                                            |            |                    |            |                   |            |            |           

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

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MATRIXX INITIATIVES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

|                                                   |  |                            |            |                                                      |         |                                  |           |      |          |   |           | 
|-------------------------------------------------- |  | -------------------------- | ---------- | ---------------------------------------------------- | ------- | -------------------------------- | --------- | ---- | -------- | - | --------- | 
|                                                   |  |                            |            |                                                      |         | Three months ended September 30,
|                                                   |  |                            |            |                                                      |         |                                 
|                                                   |  |                            |            |                                                      |         | 2003                             |           | 2002
|                                                   |  |                            |            |                                                      |         |                                  |           |     
|Net sales                                          |  | $                          | 13,374,004 |                                                      |         | $                                | 5,078,596 |     
|Cost of sales                                      |  |                            | 4,215,034  |                                                      |         |                                  | 1,668,153 |     
|                                                   |  |                            |            |                                                      |         |                                  |           |     
|                                                   |  |                            |            | Gross Profit                                         |         |                                  | 9,158,970 |      |          |   | 3,410,443 | 
|                                                  
|Operating expenses                                 |  |                            | 3,755,539  |                                                      |         |                                  | 2,524,927 |     
|Research and development                           |  |                            | 795,429    |                                                      |         |                                  | 149,885   |     
|                                                   |  |                            |            |                                                      |         |                                  |           |     
|                                                   |  |                            |            | Income From Operations                               |         |                                  | 4,608,002 |      |          |   | 735,631   | 
|                                                   |  |                            |            |                                                      |         |                                  |           |     
|Other Income (Expense):                            |  |                            |            |                                                      |         |                                  |           |     
|                                                   |  | Interest and other income  |            |                                                      | 44,944  |                                  |           |      | 174,585  |  
|                                                   |  | Interest and other expense |            |                                                      | (43,732 | )                                |           |      | (126,830 | )
|                                                   |  |                            |            |                                                      |         |                                  |           |     
|                                                   |  |                            |            | Total Other Income (Expense)                         |         |                                  | 1,212     |      |          |   | 47,755    | 
|                                                   |  |                            |            |                                                      |         |                                  |           |     
|Income Before Provision (Benefit) For Income Taxes |  |                            | 4,609,214  |                                                      |         |                                  | 783,386   |     
|                                                  
|Provision (benefit) for income taxes               |  |                            | 1,846,216  |                                                      |         |                                  | (239,348  | )   
|                                                   |  |                            |            |                                                      |         |                                  |           |     
|Net Income                                         |  | $                          | 2,762,998  |                                                      |         | $                                | 1,022,734 |     
|                                                   |  |                            |            |                                                      |         |                                  |           |     
|Net Income (Loss) Per Share of Common Stock:       |  |                            |            |                                                      |         |                                  |           |     
|                                                   |  | Basic:                     |            |                                                      |         |                                  |           |      |          |  
|                                                   |  |                            |            | Weighted Average Number of Common Shares Outstanding |         |                                  | 9,410,965 |      |          |   | 9,422,872 | 
|                                                   |  |                            |            | Net Income (Loss) Per Share of Common Stock          |         | $                                | 0.29      |      |          | $ | 0.11      | 
|                                                   |  | Diluted:                   |            |                                                      |         |                                  |           |      |          |  
|                                                   |  |                            |            | Weighted Average Number of Common Shares Outstanding |         |                                  | 9,439,376 |      |          |   | 9,461,205 | 
|                                                   |  |                            |            | Net Income (Loss) Per Share of Common Stock          |         | $                                | 0.29      |      |          | $ | 0.11      | 

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

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MATRIXX INITIATIVES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

|                                                   |  |                            |            |                                                      |          |                                 |            |      |          |   |           | 
|-------------------------------------------------- |  | -------------------------- | ---------- | ---------------------------------------------------- | -------- | ------------------------------- | ---------- | ---- | -------- | - | --------- | 
|                                                   |  |                            |            |                                                      |          | Nine months ended September 30,
|                                                   |  |                            |            |                                                      |          |                                
|                                                   |  |                            |            |                                                      |          | 2003                            |            | 2002
|                                                   |  |                            |            |                                                      |          |                                 |            |     
|Net sales                                          |  | $                          | 25,270,098 |                                                      |          | $                               | 11,971,803 |     
|Cost of sales                                      |  |                            | 8,009,663  |                                                      |          |                                 | 3,440,276  |     
|                                                   |  |                            |            |                                                      |          |                                 |            |     
|                                                   |  |                            |            | Gross Profit                                         |          |                                 | 17,260,435 |      |          |   | 8,531,527 | 
|                                                  
|Operating expenses                                 |  |                            | 11,619,979 |                                                      |          |                                 | 7,624,110  |     
|Research and development                           |  |                            | 1,702,246  |                                                      |          |                                 | 272,128    |     
|                                                   |  |                            |            |                                                      |          |                                 |            |     
|                                                   |  |                            |            | Income From Operations                               |          |                                 | 3,938,210  |      |          |   | 635,289   | 
|                                                   |  |                            |            |                                                      |          |                                 |            |     
|Other Income (Expense):                            |  |                            |            |                                                      |          |                                 |            |     
|                                                   |  | Interest and other income  |            |                                                      | 140,282  |                                 |            |      | 598,913  |  
|                                                   |  | Interest and other expense |            |                                                      | (216,926 | )                               |            |      | (478,048 | )
|                                                   |  |                            |            |                                                      |          |                                 |            |     
|                                                   |  |                            |            | Total Other Income (Expense)                         |          |                                 | (76,644    | )    |          |   | 120,865   | 
|                                                   |  |                            |            |                                                      |          |                                 |            |     
|Income Before Provision (Benefit) For Income Taxes |  |                            | 3,861,566  |                                                      |          |                                 | 756,154    |     
|                                                  
|Provision (benefit) for income taxes               |  |                            | 1,548,213  |                                                      |          |                                 | (324,050   | )   
|                                                   |  |                            |            |                                                      |          |                                 |            |     
|Net Income                                         |  | $                          | 2,313,353  |                                                      |          | $                               | 1,080,204  |     
|                                                   |  |                            |            |                                                      |          |                                 |            |     
|Net Income (Loss) Per Share of Common Stock:       |  |                            |            |                                                      |          |                                 |            |     
|                                                   |  | Basic:                     |            |                                                      |          |                                 |            |      |          |  
|                                                   |  |                            |            | Weighted Average Number of Common Shares Outstanding |          |                                 | 9,420,213  |      |          |   | 9,422,739 | 
|                                                   |  |                            |            | Net Income (Loss) Per Share of Common Stock          |          | $                               | 0.25       |      |          | $ | 0.11      | 
|                                                   |  | Diluted:                   |            |                                                      |          |                                 |            |      |          |  
|                                                   |  |                            |            | Weighted Average Number of Common Shares Outstanding |          |                                 | 9,426,689  |      |          |   | 9,443,362 | 
|                                                   |  |                            |            | Net Income (Loss) Per Share of Common Stock          |          | $                               | 0.25       |      |          | $ | 0.11      | 

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

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MATRIXX INITIATIVES, INC. AND SUBSIDIARY
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)

|                                                  |                                                                                         |                                                      |                                       |           |                                 |            |      |           |            |            |  
|------------------------------------------------- | --------------------------------------------------------------------------------------- | ---------------------------------------------------- | ------------------------------------- | --------- | ------------------------------- | ---------- | ---- | --------- | ---------- | ---------- | -
|                                                  |                                                                                         |                                                      |                                       |           | Nine months ended September 30,
|                                                  |                                                                                         |                                                      |                                       |           |                                
|                                                  |                                                                                         |                                                      |                                       |           | 2003                            |            | 2002
|                                                  |                                                                                         |                                                      |                                       |           |                                 |            |     
|Cash Flows From Operating Activities:             |                                                                                         |                                                      |                                       |           |                                 |            |      |          
|                                                  | Net income                                                                              |                                                      | $                                     | 2,313,353 |                                 |            | $    | 1,080,204 |           
|                                                  | Adjustments to reconcile net income to net cash
provided (used) byoperating activities: |                                                      |                                       |           |                                 |            |      |           |           
|                                                  |                                                                                         | Depreciation                                         |                                       |           | 117,143                         |            |      |           | 40,030     |           
|                                                  |                                                                                         | Amortization                                         |                                       |           | 50,310                          |            |      |           | 50,310     |           
|                                                  |                                                                                         | Amortization of imputed interest on notes payable    |                                       |           | 216,805                         |            |      |           | 462,111    |           
|                                                  |                                                                                         | Amortization of debt issuance costs                  |                                       |           | 14,583                          |            |      |           | 11,667     |           
|                                                  |                                                                                         | Deferred income taxes                                |                                       |           | 1,547,216                       |            |      |           |           |           
|                                                  |                                                                                         | Loss on disposal of property and equipment           |                                       |           |                                |            |      |           | 20,104     |           
|                                                  |                                                                                         | Other                                                |                                       |           | 2,401                           |            |      |           | 3,912      |           
|                                                  |                                                                                         | Changes in assets and liabilities:                   |                                       |           |                                 |            |      |           |            |           
|                                                  |                                                                                         |                                                      | Restricted cash                       |           |                                 |           |      |           |            | 1,503,150  |  
|                                                  |                                                                                         |                                                      | Accounts receivable                   |           |                                 | (2,556,840 | )    |           |            | 257,997    |  
|                                                  |                                                                                         |                                                      | Inventories                           |           |                                 | (2,203,164 | )    |           |            | 155,728    |  
|                                                  |                                                                                         |                                                      | Prepaid expenses and other            |           |                                 | 43,001     |      |           |            | (178,013   | )
|                                                  |                                                                                         |                                                      | Accounts payable and accrued expenses |           |                                 | (2,270,269 | )    |           |            | (4,305,845 | )
|                                                  |                                                                                         |                                                      | Sales returns and allowances          |           |                                 | 224,047    |      |           |            | (769,142   | )
|                                                  |                                                                                         |                                                      |                                       |           |                                 |            |      |           |           
|                                                  |                                                                                         | Net Cash (Used) By Operating Activities              |                                       |           | (2,501,414                      | )          |      |           | (1,667,787 | )         
|                                                  |                                                                                         |                                                      |                                       |           |                                 |            |      |           |           
|Cash Flows From Investing Activities:             |                                                                                         |                                                      |                                       |           |                                 |            |      |          
|                                                  |                                                                                         | Maturity of marketable securities                    |                                       |           |                                |            |      |           | 10,656,380 |           
|                                                  |                                                                                         | Capital expenditures                                 |                                       |           | (116,186                        | )          |      |           | (521,810   | )         
|                                                  |                                                                                         | Deposits and other                                   |                                       |           | (90,000                         | )          |      |           | (239,075   | )         
|                                                  |                                                                                         | Notes receivable                                     |                                       |           |                                |            |      |           | 200,000    |           
|                                                  |                                                                                         |                                                      |                                       |           |                                 |            |      |           |           
|                                                  |                                                                                         | Net Cash Provided (Used) By Investing Activities     |                                       |           | (206,186                        | )          |      |           | 10,095,495 |           
|                                                  |                                                                                         |                                                      |                                       |           |                                 |            |      |           |           
|Cash Flows From Financing Activities:             |                                                                                         |                                                      |                                       |           |                                 |            |      |          
|                                                  |                                                                                         | Purchase of treasury stock                           |                                       |           | (177,367                        | )          |      |           | (9,420     | )         
|                                                  |                                                                                         | Debt issuance costs                                  |                                       |           |                                |            |      |           | (35,000    | )         
|                                                  |                                                                                         | Principal payments on notes payable                  |                                       |           | (2,548,624                      | )          |      |           | (3,367,813 | )         
|                                                  |                                                                                         | Issuance of common stock                             |                                       |           | 36,000                          |            |      |           |           |           
|                                                  |                                                                                         |                                                      |                                       |           |                                 |            |      |           |           
|                                                  |                                                                                         | Net Cash (Used) By Financing Activities              |                                       |           | (2,689,991                      | )          |      |           | (3,412,233 | )         
|                                                  |                                                                                         |                                                      |                                       |           |                                 |            |      |           |           
|                                                  |                                                                                         | Net Increase (Decrease) in Cash and Cash Equivalents |                                       |           | (5,397,591                      | )          |      |           | 5,015,475  |           
|                                                  |                                                                                         | Cash and Cash Equivalents at Beginning of Period     |                                       |           | 12,010,091                      |            |      |           | 7,342,985  |           
|                                                  |                                                                                         |                                                      |                                       |           |                                 |            |      |           |           
|                                                  |                                                                                         | Cash and Cash Equivalents at End of Period           |                                       | $         | 6,612,500                       |            |      | $         | 12,358,460 |           
|                                                  |                                                                                         |                                                      |                                       |           |                                 |            |      |           |           
|Supplemental Disclosure of Cash Flow Information: |                                                                                         |                                                      |                                       |           |                                 |            |      |          
|                                                  |                                                                                         | Cash paid during the period for:                     |                                       |           |                                 |            |      |           |            |           
|                                                  |                                                                                         |                                                      | Interest                              |           | $                               | 201,498    |      |           | $          | 412,371    |  
|                                                  |                                                                                         |                                                      | Income taxes                          |           |                                 | 997        |      |           |            |           |  

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

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MATRIXX INITIATIVES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



|1. |  | The accompanying financial information of Matrixx Initiatives, Inc. is
prepared in accordance with the rules prescribed for filing condensed
interim financial statements and, accordingly, does not include all
disclosures that may be necessary for complete financial statements
prepared in accordance with generally accepted accounting principles. The
disclosures presented are sufficient, in managements opinion, to make the
interim information presented not misleading. All adjustments, consisting
of normal recurring adjustments, which are necessary so as to make the
interim information not misleading, have been made. Results of operations
for the nine months ended September 30, 2003 are not necessarily
indicative of results of operations that may be expected for the year
ending December 31, 2003. It is recommended that this financial
information be read with the complete financial statements included in
Matrixxs Annual Report on Form 10-K for the year ended December 31, 2002
previously filed with the Securities and Exchange Commission.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|2. |  | As of December 31, 1997, Matrixx adopted Statement of Financial
Accounting Standards (SFAS) No. 128, Earnings Per Share, which specifies
the method of computation, presentation and disclosure of earnings per
share. SFAS No. 128 requires the presentation of two earnings per share
amounts, basic and diluted. Basic earnings per share is calculated using
the average number of common shares outstanding. Diluted earnings per
share is computed on the basis of the average number of common shares
outstanding plus the dilutive effect of outstanding stock options using
the treasury stock method.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The schedule below summarizes the elements included in the calculation of
basic and diluted net income per common share for the three and nine months
ended September 30, 2003 and 2002. Options and warrants to purchase 215,000
and 197,000 shares of common stock for the three months ended September 30,
2003 and 2002, and 376,300 and 419,500 shares of common stock for the nine
months ended September 30, 2003 and 2002, respectively, were not included in
the computation of diluted earnings per share because their effect would be
anti-dilutive.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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MATRIXX INITIATIVES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2003
    
    2002
    
    2003
    
    2002Net income
    
    $
    2,762,998
    
    
    $
    1,022,734
    
    
    $
    2,313,353
    
    
    $
    1,080,204Weighted average common
shares outstanding:Basic
    
    
    9,410,965
    
    
    
    9,422,872
    
    
    
    9,420,213
    
    
    
    9,422,739Dilutive securities
    
    
    28,411
    
    
    
    38,333
    
    
    
    6,476
    
    
    
    20,623Diluted
    
    
    9,439,376
    
    
    
    9,461,205
    
    
    
    9,426,689
    
    
    
    9,443,362Net income
per common share:Basic
    
    $
    .29
    
    
    $
    .11
    
    
    $
    .25
    
    
    $
    .11Diluted
    
    $
    .29
    
    
    $
    .11
    
    
    $
    .25
    
    
    $
    .11




|3. |  | Inventories consisted of the following at September 30, 2003:
|-- |  | -------------------------------------------------------------

Raw materials and packaging
    
    $
    848,834Finished goods
    
    
    3,037,969Less reserve for obsolescence
    
    
    (110,605
    )Total
    
    $
    3,776,198




|4. |  | Stock-Based Compensation
|-- |  | ------------------------

The Company adopted SFAS No. 123, Accounting for Stock-Based Compensation.
The Company will continue to measure compensation expense for its stock-based
employee compensation plans using the intrinsic value method prescribed by APB
Opinion No. 25, Accounting for Stock Issued to Employees and related
interpretations in accounting for its plans and does not recognize compensation
expense for its stock-based compensation plans other than for options granted
to non-employees. If the Company had elected to recognize compensation expense
based upon the fair value at the grant date for awards under its stock-based
compensation plans consistent with the methodology prescribed by SFAS No. 123,
the Companys net income and earnings per share would be reduced to the
following pro forma amounts:

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MATRIXX INITIATIVES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2003
    
    2002
    
    2003
    
    2002Net income applicable to
common shareholders, as reported
    
    $
    2,762,998
    
    
    $
    1,022,734
    
    
    $
    2,313,353
    
    
    $
    1,080,204Less stock based employee compensation
expense determined under fair value
based methods for all awards, net of
related tax effects
    
    
    88,776
    
    
    
    294,884
    
    
    
    331,697
    
    
    
    557,072Pro forma net income
    
    $
    2,674,222
    
    
    $
    727,850
    
    
    $
    1,981,656
    
    
    $
    523,132Net income per share
of common stock:Basic:As reported
    
    $
    .29
    
    
    $
    .11
    
    
    $
    .25
    
    
    $
    .11Pro forma
    
    $
    .28
    
    
    $
    .08
    
    
    $
    .21
    
    
    $
    .06Diluted:As reported
    
    $
    .29
    
    
    $
    .11
    
    
    $
    .25
    
    
    $
    .11Pro forma
    
    $
    .28
    
    
    $
    .08
    
    
    $
    .21
    
    
    $
    .06




|5. |  | Recently Issued Accounting Standards
|-- |  | ------------------------------------

In November 2002, the FASB issued Financial Interpretation No. (FIN) 45,
Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. Among other things, the
Interpretation requires guarantors to recognize, at fair value, their
obligations to stand ready to perform under certain guarantees. FIN 45 became
effective for guarantees issued or modified on or after January 1, 2003 and had
no effect on our financial position or results of operations.

In January 2003, the FASB issued FIN 46, Consolidation of Variable Interest
Entities. In general a variable entity is a corporation, partnership, trust,
or any other legal structure used for business purposes that either (a) does
not have equity investors with voting rights or (b) has equity investors that
do not provide sufficient financial resources for the entity to support its
activities. FIN 46 requires a variable interest entity to be consolidated by a
company if that company is subject to a majority of the risk of loss from the
variable interest entitys activities or entitled to receive a majority of the
entitys residual returns or both. The consolidation requirements of FIN 46
apply immediately to variable interest entities created after January 31, 2003.
The consolidation requirements apply to transactions entered into prior to
February 1, 2003 in the first fiscal year or interim period beginning after
June 15, 2003, which was subsequently delayed until the fourth quarter of 2003.
Certain of the disclosure requirements apply in all financial

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statements issued after January 31, 2003, regardless of when the variable
interest entity was established. The adoption of the interpretation did not
have any impact on our financial statements.

In April 2003, the FASB issued SFAS No.149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities, which amends and clarifies
accounting for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities under SFAS No.133. The
Statement is effective (with certain exceptions) for contracts entered into or
modified after June 30, 2003. The adoption of this Statement had no effect on
our financial position or results of operations.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. It requires
that an issuer classify a financial instrument that is within its scope as a
liability (or an asset in some circumstances). It is effective for financial
instruments entered into or modified after May 31, 2003, and otherwise is
effective at the beginning of the first interim period after June 15, 2003.
The adoption of SFAS No. 150 on July 1, 2003 had no effect on our financial
position or results of operations.

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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

Overview

Through our 100%-owned subsidiary, Zicam LLC, we are engaged in the
development, production and sale of over-the-counter pharmaceutical products.
In 2002, we introduced five new Zicam nasal gel products, improved package
graphics for our entire Zicam product line and engaged a new sales team to
represent our products to retailers. In the third quarter of 2003 we began
shipping three new Zicam Cold Remedy products  Oral Mist, Chewables and
RapidMelts.

We expect earnings in future periods will be significantly affected by the
level of sales, and the timing and amount of our advertising and research and
development expenses. Our expected growth in sales will depend on our success
in securing additional retail distribution of our products, and in particular
additional distribution of the five products that were introduced in 2002 and
the three new products that we began shipping in the third quarter of 2003. In
addition, sales in future periods will be affected by expanding consumer
awareness and acceptance of our entire Zicam brand of products. Expenditures
for advertising and research and development will vary by quarter throughout
the year and could be significantly different from amounts in the same periods
in prior years. We expect advertising expenses to be heaviest in our first and
fourth fiscal quarters.

Results of Operations for the Three Months Ended September 30, 2003 Compared to
the Three Months Ended September 30, 2002

Certain information is set forth below for our Zicam operations expressed
in dollars and as a percentage of net sales for the periods indicated:

Three Months Ended September 30,2003
    
    2002Net sales
    
    $
    13,374,004
    
    
    
    100
    %
    
    $
    5,078,596
    
    
    
    100
    %Cost of sales
    
    
    4,215,034
    
    
    
    31
    
    
    
    1,668,153
    
    
    
    33Gross profit
    
    
    9,158,970
    
    
    
    69
    
    
    
    3,410,443
    
    
    
    67Operating expenses
    
    
    3,755,539
    
    
    
    28
    
    
    
    2,524,927
    
    
    
    50Research and development
    
    
    795,429
    
    
    
    6
    
    
    
    149,885
    
    
    
    3Income from operations
    
    
    4,608,002
    
    
    
    35
    
    
    
    735,631
    
    
    
    14Interest and other income
    
    
    44,944
    
    
    
    
    
    
    
    174,585
    
    
    
    3Interest expense
    
    
    43,732
    
    
    
    
    
    
    
    126,830
    
    
    
    2Income before income taxes
    
    
    4,609,214
    
    
    
    35
    
    
    
    783,386
    
    
    
    15Provision (benefit) for income taxes
    
    
    1,846,216
    
    
    
    14
    
    
    
    (239,348
    )
    
    
    (5
    )Net income
    
    $
    2,762,998
    
    
    
    21
    %
    
    $
    1,022,734
    
    
    
    20
    %


Net sales.Net Zicam sales for the three months ended September 30, 2003
increased to approximately $13.4 million, or approximately 163% above net sales
in the third quarter of the prior year. Approximately one-third of the sales
increase was attributable to sales of the three new Zicam Cold Remedy products
that we began shipping in the third quarter of 2003. The

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remaining two-thirds of the increase was attributable to increased sales
of our seven other Zicam products. Together, sales of these seven products
grew at a combined rate of 87% above sales for the third quarter of 2002.

Demand for our products is highly seasonal which results in significant
fluctuations in our quarterly sales throughout the year. Generally, our third
quarter sales are impacted by the stocking of cold products by retailers prior
to the start of the cold season in October. Sales for the third quarter this
year were also impacted by the initial shipments of the three new products that
were introduced in 2003 as well as additional retail placement of the five
products that were introduced in 2002. We expect increases in sales in future
periods from continued growth, albeit at a lower growth rate than in past
periods, for our Zicam Cold Remedypump and Zicam Allergy Relief products, and
increased distribution and sales of the five products we introduced in 2002 and
the three new products that we have introduced in 2003.

Sales of our swab products during the 2002-2003 cold season were limited
by the inability of our contract manufacturer, Zila Swab Technologies, Inc.
(doing business as Innovative Swab Technologies) (IST) to meet its production
obligations. Since April 2003 we have increased inventory of the current swab
products and expect that we will be able to meet demand for these products
through the end of 2003. We intend to introduce in the first quarter of 2004 a
new, improved swab product designed to appeal more to customers and produced by
a different manufacturer. We expect the new swab design will allow us to
improve the gross margins for our swab products from the 2003 level and the
change to a new swab manufacturer will allow us to avoid the production and
backlog issues that we faced during 2002 and 2003. However, we cannot be
certain that the manufacturer of the new swab will be able to meet our
production expectations nor that the new swab product will attain the level of
customer acceptance achieved by the current swab product. We believe that,
based on initial testing, consumers will enthusiastically accept the new
swabs.

As announced in a September 2003 press release, we expect that our net
sales for the full year in 2003 will be at least 50% greater than the $23.5
million in net sales that we recorded for 2002.

Cost of sales.Our cost of sales increased to $4,215,034, or 153% above
the third quarter of 2002 cost of sales of $1,668,153 which largely reflects
the increase in units sold.

Gross profit.Gross profit for the third quarter of 2003 increased to
approximately $9.2 million, or 169% greater than the third quarter of 2002, due
largely to the substantial increase in units sold and to a lesser extent to an
increase in per unit revenue. The gross margin on products sold improved
slightly from 67% to 69% due to higher net revenue per unit sold achieved in
the 2003 period.

Operating expenses.Operating expenses for the third quarter of 2003
increased approximately $1.2 million, or 49%, from our operating expenses in
the third quarter of 2002. The increase was largely attributable to an accrual
for a portion of year-end compensation expense($675,000), higher sales commission expense ($456,000)
and higher advertising expense ($1,017,000 in 2003 versus $679,000 in 2002).
These increases were offset by decreases in legal expense ($72,000) and outside
consulting services ($56,000). Expenses in future periods will vary largely
in relation to the level of our advertising expenditures, which are heaviest in
the first and fourth quarters.

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Research and development.Research and development expenses increased
from approximately $150,000 in the third quarter of 2002 to approximately
$795,000 in the third quarter of 2003. The increase reflects our previously
announced commitment to expand our research and development efforts in 2003 to
an amount equal to approximately 6% of annual net sales in order to establish a
continuous pipeline of new product offerings in future periods.

Interest and other income.Interest and other income for the third
quarter of 2003 decreased to $45,000, approximately 26% of the amount recorded
in the third quarter of 2002. The decrease is largely due to a decrease of
approximately $92,000 in royalty income between the two periods. The royalty
income in both periods is attributable to a dental gum product sold by the Wm.
Wrigley Jr. Company (Wrigley) that is subject to a royalty agreement between
Wrigley and us. Interest income also declined between the two periods due to a
lower invested cash position and a decline in investment interest rates.

Interest expense.Interest expense for the third quarter of 2003
decreased to approximately $44,000, nearly 66% below the level of the third
quarter of 2002. Interest expense for both periods is related to the imputed
interest associated with the note issued by us to Zensano, Inc. in connection
with our acquisition of Zensanos 40% interest in Zicam, LLC (then Gel Tech,
L.L.C.) in December 2001. The decrease in interest is due to our repayment of
three-quarters of the note in 2002 and 2003. The final required installment of
$2.75 million under the note is due on November 30, 2003.

Income before income taxes.Income before income taxes for the third
quarter of 2003 increased approximately $3.8 million, or 488%, from the third
quarter of 2002 due to higher net sales which offset increases in operating and
research and development expenses. We expect earnings in future periods will
continue to be significantly impacted by the seasonality of our sales, revenues
and expenses associated with new products and the timing and amount of
advertising and research and development expenses.

Provision for income tax expense.In 2003, we recorded a provision for
income tax expense based on an estimate of our effective income tax rate for
the full year. This reflects the determination that we made at the end of
fiscal 2002, that we would more likely than not, be able to realize the benefit
of tax losses accumulated in prior years to offset taxable income in 2003 and
future years. In the third quarter of 2002, we were not able to make a similar
determination, and consequently, reflected a full valuation allowance on the
deferred tax assets.

Net income.We have announced that we expect earnings for the full year
of 2003 to be $0.25-$0.30 per fully diluted share, as compared to $0.14 per
fully diluted share that was earned in 2002, exclusive of the one-time deferred
tax asset that was recorded in late 2002.

Results of Operations for the Nine Months Ended September 30, 2003 Compared to
the Nine Months Ended September 30, 2002

Certain information is set forth below for our Zicam operations expressed
in dollars and as a percentage of net sales for the periods indicated:

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Nine Months Ended September 30,2003
    
    2002Net sales
    
    $
    25,270,098
    
    
    
    100
    %
    
    $
    11,971,803
    
    
    
    100
    %Cost of sales
    
    
    8,009,663
    
    
    
    32
    
    
    
    3,440,276
    
    
    
    29Gross profit
    
    
    17,260,435
    
    
    
    68
    
    
    
    8,531,527
    
    
    
    71Operating expenses
    
    
    11,619,979
    
    
    
    46
    
    
    
    7,624,110
    
    
    
    64Research and development
    
    
    1,702,246
    
    
    
    7
    
    
    
    272,128
    
    
    
    2Income from operations
    
    
    3,933,210
    
    
    
    15
    
    
    
    635,289
    
    
    
    5Interest and other income
    
    
    140,282
    
    
    
    1
    
    
    
    598,913
    
    
    
    5Interest expense
    
    
    216,926
    
    
    
    1
    
    
    
    478,048
    
    
    
    4Income before income taxes
    
    
    3,861,566
    
    
    
    15
    
    
    
    756,154
    
    
    
    6Provision (benefit) for income tax
    
    
    1,548,213
    
    
    
    6
    
    
    
    (324,050
    )
    
    
    (3
    )Net income
    
    $
    2,313,353
    
    
    
    9
    %
    
    $
    1,080,204
    
    
    
    9
    %


Net sales.Net Zicam sales for the nine months ended September 30, 2003
increased to approximately $25.3 million, or almost 111% above net sales in the
first nine months of 2002. Approximately 20% of the sales increase was
attributable to sales of the three new Zicam Cold Remedy products that we began
shipping in the third quarter of 2003. The remaining eighty percent of the
increase was attributable to increased sales of our seven other Zicam products
which grew at a combined rate of 83% above sales for the same period of 2002.

Demand for our products is highly seasonal which results in significant
fluctuations in our quarterly sales throughout the year. We expect increases
in sales in future periods from continued growth, albeit at a lower growth rate
than in past periods, for our Zicam Cold Remedy-pump and Zicam Allergy Relief
products, and increased sales of the five products we introduced in 2002, as
well as the three new products that we have introduced in the third quarter of
2003.

Sales of our swab products during the 2002-2003 cold season were limited
by the inability of our contract manufacturer, Zila Swab Technologies, Inc.
(doing business as Innovative Swab Technologies) (IST) to meet its production
obligations. Since April 2003 we have increased inventory of the current swab
products and expect that we will be able to meet demand for these products
through the end of 2003. We intend to introduce in the first quarter of 2004 a
new, improved swab product designed to appeal more to customers and produced by
a different manufacturer. We expect the new swab design will allow us to
improve the gross margins for our swab products from the 2003 level and the
change to a new swab manufacturer will allow us to avoid the production and
backlog issues that we faced during 2002 and 2003. However, we cannot be
certain that the manufacturer of the new swab will be able to meet our
production expectations nor that the new swab product will attain the level of
customer acceptance achieved by the current swab product. We believe that,
based on initial testing, consumers will enthusiastically accept the new
swabs.

As announced in a September 2003 press release, we expect that our net
sales for 2003 will be at least 50% greater than the $23.5 million in net sales
that we recorded for 2002.

Cost of sales.Our cost of sales in the first nine months of 2003
increased to approximately $8.0 million, or 133% greater than the approximately
$3.4 million cost of sales in

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the first nine months of 2002. This largely reflects the increase in
units sold. The cost of goods was also affected by the mix of products sold,
including the higher cost of the swabs that we agreed to pay in connection with
our settlement with IST. Our swab products cost more per unit than our other
products. Consequently, the increasing percentage of sales from swab products
has resulted in a higher total unit cost. We expect that the unit cost of
goods sold will continue to be affected by the relative mix of products sold.
We also expect that the new swab product to be introduced in the first quarter
of 2004 will result in a decrease in the unit cost of our swab products.

Gross profit.Gross profit for the first nine months of 2003 increased to
approximately $17.3 million, or 102% greater than the first nine months of
2002, due to the substantial increase in units sold. However, the gross margin
on products sold declined from 71% to 68% for the periods due primarily to the
higher per unit cost of the swab products sold in 2003.

Operating expenses.Operating expenses for the first nine months of 2003
increased to $11.6 million, more than 52% above our operating expenses for the
first nine months of 2002. The increase was primarily due to an increase in
advertising expenses of $2.9 million during the first nine months of 2003 ($5.3
million in 2003 versus $2.4 million in 2002). Also contributing to the
increase in operating expenses was an increase in sales commission expense of
approximately $500,000 due to higher sales, and an accrual for year end
compensation expense($675,000). Partially offsetting these increased expenses was the absence of a
royalty payment of approximately $296,000 which we incurred in the first
quarter of 2002. Expenses in future periods will vary largely in relation to
the level of our advertising expenditures, which are the heaviest in the first
and fourth quarters.

Research and development.Research and development expenses increased
more than $1.4 million from approximately $272,000 in the first nine months of
2002. The increase reflects our previously announced commitment to expand our
research and development efforts in 2003 to an amount equal to approximately 6%
of annual net sales in order to establish a continued pipeline of new product
offerings in future periods.

Interest and other income.Interest and other income for the first nine
months of 2003 decreased to $140,000, approximately $459,000 (77%) below the
level recorded in the first nine months of 2002. The decrease is largely due
to a decrease of approximately $282,000 in royalty income between the periods.
The royalty income in both periods is attributable to a dental gum product
sold by Wrigley that is subject to a royalty agreement between Wrigley and us.
The higher royalty amount received in the 2002 period reflects higher level of
shipments during the products introductory period. Interest income also
declined between the two periods due to a lower invested cash position and a
decline in investment interest rates.

Interest expense.Interest expense for the first half of 2003 decreased
to approximately $217,000, or 55% below the level of the first nine months of
2002. Interest expense for both periods is primarily related to the imputed
interest associated with the note issued by us to Zensano, Inc. in connection
with our acquisition of Zensanos 40% interest in Zicam, LLC (then Gel Tech,
L.L.C.) in December 2001. The decrease in interest is due to our repayment of
three-fourths of the note in 2002 and 2003. The final required installment of
$2.75 million under the note is due on November 30, 2003.

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Income before income tax.Income before income taxes for the first nine
months of 2003 increased approximately $3.1 million, or 411%, from the first
nine months of 2002 due to the higher net sales which offset increases in
operating and research and development expenses. We expect that earnings in
future periods will continue to be significantly impacted by the seasonality of
our sales, revenues and expenses associated with new products and the timing
and amount of advertising and research and development expenses.

Provision for income tax expense.In 2003, we recorded a provision for
income tax expense based on an estimate of our effective income tax rate for
the full year. This reflects the determination that we made at the end of
fiscal 2002 that we would more likely than not be able to realize the benefit
of tax losses accumulated in prior years to offset taxable income in 2003 and
future years. In 2002, we were not able to make a similar determination and
consequently reflected a full valuation allowance on the deferred tax assets.
The reduction in income tax expense recorded in the first half of 2002 reflects
a refund of a tax payment made in connection with the sale of our gum assets in
late 2001.

Net income.We have announced that we expect earnings for the full year
of 2003 to be $0.25-$0.30 per fully diluted share, as compared to $0.14 per
diluted share that was earned in 2002, exclusive of the one-time deferred tax
asset that was recorded in late 2002.

Liquidity and Capital Resources

Our working capital increased from approximately $10.2 million at December
31, 2002 to approximately $15.0 million at September 30, 2003. During the
nine-month period ended September 30, 2003, we experienced a decrease in cash
from operating activities of approximately $2.5 million due primarily to an
increase in accounts receivable of approximately $2.6 million, an increase in
inventory of approximately $2.2 million and a decrease in accounts payable of
approximately $2.3 million. These cash decreases were offset by pre-tax net
income of approximately $4.0 million and other non-cash amortization and
depreciation charges of $0.4 million.

Investing activities used approximately $0.2 million of cash for deposits
and capital expenditures while $2.7 million of cash was used for financing
activities to pay the third installment on the note to Zensano, Inc. in late
June 2003 ($2.75 million, including imputed interest). An additional $177,000
of cash was used to repurchase our common stock in the open market between
January and July 2003.

In July 2003, we renewed our $2.5 million credit facility with Comerica
Bank for two years through July 2005. The interest rate on borrowings under
the renewed facility was decreased from Prime plus 1.5% (under the prior credit
facility) to Prime plus 0.75%. Additionally, unlike the prior facility,
borrowings under the new facility are not limited to specified percentages of
accounts receivable and inventory. Due to our current cash position and our
expected cash flows from operations, we do not expect to borrow under the
credit facility in the immediate future.

We believe that our existing capital resources and our credit line will be
sufficient to fund our operations and capital requirements for the next 12
months.

Critical Accounting Policies and Estimates

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Our consolidated financial statements and accompanying notes have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis.The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods.

We regularly evaluate the accounting policies and estimates that we use to
prepare our consolidated financial statements. In general, managements
estimates are based on historical experience, on information from third party
professionals and on various other assumptions that are believed to be
reasonable under the facts and circumstances. Actual results could differ from
those estimates made by management.

We believe that our critical accounting policies and estimates include the
accounting for intangible assets and goodwill, accounting for income taxes, and
accounting for returns and allowances associated with our products.

Intangible assets and goodwill:We recorded approximately $15.0 million in
goodwill in connection with the 40% Zicam, LLC interest that we acquired from
Zensano, Inc. in December 2001. Under SFAS 142, goodwill must be tested
annually to identify a potential impairment and the amount of any impairment
loss. Factors that could affect this analysis would be significant loss of
market share, a general decline in Zicam product sales, higher than expected
increases in expenses and various other matters. Any change in key assumptions
about the business or prospects of Zicam, LLC, or any change in market
conditions or other externalities affecting Zicam, LLC, could result in an
impairment charge, and such a charge could have a material adverse effect on
our financial condition and results of operations. The goodwill was evaluated
in the third quarter of 2003 by an independent valuation firm and no impairment
was found.

Accounting for income taxes:Due to our significant operating losses prior to
2001, we possess a sizeable tax loss carry-forward which can be used to reduce
our taxable income in future periods. Due to our history of operating losses,
we recorded a deferred tax valuation allowance in 2001 and prior years to
offset the entire deferred tax asset arising from our tax loss carry-forward.
However, due to the significant improvement in our net income in 2002, together
with our expectation of continuing profitability in future years, we have
determined that we are more likely than not to realize the tax benefit
associated with our tax loss carry-forward. Consequently, we reduced the
deferred tax valuation allowance and recorded a large portion of the deferred
tax asset in 2002. In subsequent periods, we will record income tax expense
based on our estimated effective income tax rate for each period. We will
continue to evaluate the deferred tax valuation allowance regularly and adjust
the amount to reflect our expectation of our ability to realize the tax benefit
arising from our tax loss carry-forward on a quarterly basis. Should there be
a significant change in our expectations of future income, the impact of
adjusting the deferred tax valuation allowance could be significant which would
negatively impact our earnings.

Accounting for customer returns and allowances.We recognize revenues on the
sale of our products when they are shipped from our warehouse facility, and at
that time record a provision for estimated product returns. The estimate for
product returns is based on our historical experience of sales to retailers and
is reviewed regularly to ensure that it reflects the liability associated with
product returns. To date, our sales returns experience has been consistent
with

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our estimate for returns, except for returns of outdated products arising from
excessive production during the introduction of Zicam Cold Remedy in the
1999-2000 cold season. Currently, we are recording a provision of 3% of gross
sales for our original Zicam Cold Remedy and Zicam Allergy Relief products for
potential returns and allowances. In establishing the appropriate reserve
level for the five new Zicam products introduced in the third quarter of 2002,
we reviewed the similarities and differences of the five products relative to
our original Zicam Cold Remedy and Zicam Allergy Relief products for which we
now have almost three years of product return experience. Based on that
review, effective July 1, 2003 we are now recording a 3% provision of gross
sales for these products. Similarly, we are recording a provision of 7% of
gross sales on the three products that we introduced in 2003. We will review
the return provision regularly on all of our products and adjust these reserve
amounts as actual product return experience continues to develop. Should the
actual level of product returns vary significantly from our estimates, our
operating and financial results would be materially affected. In addition, we
expect that a higher sales returns allowance will be recorded in the future for
any other new products that we introduce, until such products achieve market
acceptance.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTORS

Forward-Looking Statements

This Form 10-Q, including documents incorporated herein by reference,
contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. The words believe, expect,
estimate, anticipate, intend, may, might, will, would, could,
project and predict, or similar words and phrases generally identify
forward-looking statements. Forward looking statements contained herein and in
documents incorporated by reference herein include, but are not limited to
statements regarding:



| |  | our plans to introduce a new, improved swab product in the first
quarter of 2004, and our expectation that the new product will result
in a decrease in the unit cost of our swab products and allow us to
improve our gross margins;
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | our expectation that consumers will enthusiastically accept our new
swab product and that our change of swab manufacturers will allow us to
avoid the production and backlog issues that we faced during 2003 and
2003.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | our expectation regarding increases in sales in future periods of
our current and new Zicam products;
|- |  | -----------------------------------------------------------------------------------------------------



| |  | our belief that sales, expense levels and earnings in future
periods will be primarily affected by timing and amounts of
advertising, research and development expenses, costs of introduction
of new products, our success in securing additional retail
distribution, expanding consumer awareness and acceptance of our entire
Zicam brand of products;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | our expectation regarding the seasonality of our quarterly sales,
and our expectation that future earnings will be impacted by the
seasonality and timing of certain expenditures;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |  | our expectation regarding the growth rates for future sales of
products;
|- |  | ------------------------------------------------------------------------



| |  | our expectation that expenditures for advertising and research and
development will vary by quarter throughout the year, with advertising
expenses being heaviest in the first and fourth fiscal quarters and our
expectation that future operating expenses will vary largely in
relation to the level of advertising expenditures;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | our expectation that we will be able to meet demand for our swab
products through the end of 2003;
|- |  | --------------------------------------------------------------------------------------------------



| |  | our expectation that the cost of goods sold will continue to be
affected by the relative mix of products sold and the planned
introduction of a new swab product will result in a decrease in the
unit cost of our swab products;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | our previously announced commitment to expand our research and
development efforts in 2003 to an amount equal to approximately 6% of
annual net sales;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | our expectation that our net sales for fiscal 2003 will be at least
50% greater than the $23.5 million in net sales that we recorded for
fiscal 2002;
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



| |  | our expectation that net income for 2003 will be $0.25 to $0.30 per
fully diluted share;
|- |  | ----------------------------------------------------------------------------------------



| |  | our belief that our settlement with IST will help facilitate an
orderly transition to the new swab product that we intend to introduce
in early 2004, allowing us to provide appropriate levels of service to
our retail customers until the transition is complete;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | our expectation that we will not borrow under our credit facility
with Comerica Bank in the immediate future;
|- |  | -------------------------------------------------------------------------------------------------------------



| |  | our expectation of continuing profitability in future years;
|- |  | ------------------------------------------------------------



| |  | our intention to continue outsourcing all of our product
manufacturing and packaging for the foreseeable future;
|- |  | ----------------------------------------------------------------------------------------------------------------



| |  | our intention to evaluate our deferred tax valuation allowance
regularly and adjust the amount to reflect our expectation of our
ability to realize the tax benefit arising from our tax loss
carry-forward on a quarterly basis;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | our belief that our current capital resources and credit line are
sufficient to fund the Company for the next 12 months; 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.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

We may make additional written or oral forward-looking statements from
time to time in filings with the Securities and Exchange Commission or in
public news releases. Such additional statements may include, but not be
limited to, projections of revenues, income or loss, capital expenditures,
acquisitions, plans for future operations, financing needs or plans, the

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impact of inflation and plans relating to our products or services, as
well as assumptions relating to the foregoing. Forward-looking statements are
inherently subject to risks and uncertainties, some of which cannot be
predicted or quantified. Future events and actual results could differ
materially from those set forth in, contemplated by, or underlying our
forward-looking statements.

Statements in this Form 10-Q, including those set forth in the sections
entitled Managements Discussion and Analysis of Financial Condition and
Results of Operations, and under the subheading below entitled Risk Factors,
describe factors that could contribute to or cause actual results to differ
materially from our expectations. Other such factors include (i) less than
anticipated demand for our current and future products or a weak cold season,
(ii) lack of market acceptance for or uncertainties concerning the efficacy of
our current and future products, including our new swab, (iii) difficulties in
increasing production or maintaining sufficient inventories to meet
unexpectedly high demand in the short term, including our inability to resolve
product backlog and product pricing issues and difficulties in establishing
adequate manufacturing arrangements for our new swab products, (iv) financial
difficulties encountered by one or more of our principal customers, (v)
difficulties in obtaining additional capital for marketing, research and
development, and other expenses, (vi) oversupply of product inventory to
retailers resulting in unsold product returns, and (vii) material litigation
involving patent and contractual claims, product liabilities or consumer
issues.

Forward-looking statements contained in this Form 10-Q speak only as of
the date of this Form 10-Q or, in the case of any document incorporated by
reference, the date of that document. We do not undertake, and we specifically
disclaim any obligation, to publicly update or revise any forward-looking
statement contained in this Form 10-Q or in any document incorporated herein by
reference to reflect changed assumptions, the occurrence of unanticipated
events or changes to future operating results over time.

Risk Factors

Our new business focus means we have a limited operating history on which to
assess our current and prospective performance

Although we have been in operations for a number of years, the significant
change of direction and focus in our business that we made in 2001 by exiting
the chewing gum business and refocusing entirely on the development, production
and sale of over-the-counter pharmaceutical products presents a limited
operating history upon which you may evaluate our current and prospective
performance. The possibility of our future success must be considered relative
to the problems, challenges, complications and delays frequently encountered in
connection with the development and operation of a new business, and the
development and marketing of relatively new products such as the Zicam
products.

If our Zicam products do not gain widespread market acceptance, our anticipated
sales and results of operations will suffer

Although studies have indicated that Zicam Cold Remedy can significantly reduce
the duration and severity of the common cold, we cannot be certain that this
product (including our new swab formats) will achieve widespread acceptance by
the market. To date, Zicam Allergy Relief has not achieved the market success
presently enjoyed by Zicam Cold Remedy. In addition, given their recent
introduction in late 2002, our five new Zicam products have not yet reached the
level of market recognition achieved by the original Zicam Cold Remedy. While
we are working to

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increase the market presence of Zicam Allergy Relief and our five new Zicam
products, we cannot be certain that demand for these products will grow. It is
too soon to determine how the market will respond to the three new Zicam
products that we began shipping in the third quarter of 2003 or the new swab
products that we plan to begin shipping in the first quarter of 2004. If any
unanticipated problem arises concerning the efficacy of Zicam Cold Remedy,
Zicam Allergy Relief or any of our other new products, or if any of these
products fails to achieve widespread market acceptance for any other reason,
our operating results and prospects would be materially adversely affected.

Unanticipated problems associated with product development and
commercialization could adversely affect our operating results

Our successful development of existing and new products is subject to the risks
of failure and delay inherent in the development and commercialization of
products based on innovative technologies. These risks include the
possibilities that:



| |  | we may experience unanticipated or otherwise negative research and
development results;
|- |  | ---------------------------------------------------------------------------------------



| |  | existing or proposed products may be found to be ineffective or
unsafe, or may otherwise fail to receive required regulatory clearances
or approvals;
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



| |  | we may find that existing or proposed products, while effective,
are uneconomical to commercialize or market;
|- |  | -------------------------------------------------------------------------------------------------------------



| |  | we may be unable to produce sufficient product inventories to meet
customer demand or may encounter other manufacturing difficulties
involving our new products and our new swabs;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | existing or proposed products do not achieve broad market
acceptance; or
|- |  | ------------------------------------------------------------------------



| |  | proprietary rights held by third parties preclude us from
developing or marketing existing or proposed products.
|- |  | ----------------------------------------------------------------------------------------------------------------

Our inability to develop and commercialize our existing products or any new
products on a timely basis and within our financial budgets could have a
material adverse effect on our operating results and future prospects.

Our inability to provide scientific proof for product claims may adversely
affect our sales

The marketing of certain of our Zicam products involves claims that these
products assist in reducing the duration and severity of the common cold (in
the case of Zicam Cold Remedy and the related Zicam swab products) and
controlling allergy symptoms (in the case of Zicam Allergy Relief). Under the
Federal Food and Drug Administration (FDA) and Federal Trade Commission
(FTC) rules, we are required to obtain scientific data to support any health
claims we make concerning our products. Although we have neither provided nor
been requested to provide any scientific data to the FDA in support of claims
regarding our Zicam products, we have obtained necessary scientific data to
support our product claims. We cannot be certain, however, that the scientific
data we have obtained in support of our claims will be deemed acceptable to the
FDA or FTC, should either agency request any such data in the future. If the
FDA or the FTC requests any supporting information, and we are unable to
provide support that

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is acceptable to the FDA or the FTC, either agency could force us to stop
making the claims in question or restrict us from selling the affected
products.

FDA and other government regulation may restrict our ability to sell our
products

We are subject to various federal, state and local laws and regulations
affecting our business. Our Zicam products are subject to regulation by the
FDA, including regulations with respect to labeling of products, approval of
ingredients in products, claims made regarding the products, and disclosure of
product ingredients. If we do not comply with these regulations, the FDA could
force us to stop selling the affected products or require us to incur
substantial costs in adopting measures to maintain compliance with these
regulations. Our advertising claims regarding our products are subject to the
jurisdiction of the FTC as well as the FDA. In both cases we are required to
obtain scientific data to support any advertising or labeling health claims we
make concerning our products, although no pre-clearance or filing is required
to be made with either agency. If we are unable to provide the required
support for such claims, the FTC may stop us from making such claims or require
us to stop selling the affected products.

We may fail to compete effectively, particularly against larger, more
established pharmaceutical and health products companies, causing our business
and operating results to suffer

The consumer health products industry is highly competitive. We compete with
companies in the United States and abroad that are engaged in the development
of both traditional and innovative healthcare products. Many of these
companies have much greater financial and technical resources and production
and marketing capabilities than we do. As well, many of these companies have
already achieved significant product acceptance and brand recognition with
respect to products that compete directly with our Zicam products. Our
competitors may successfully develop and market superior or less expensive
products which could render our Zicam and other future products less valuable
or unmarketable.

If we are unable to protect our intellectual property or if we infringe the
intellectual property of others, our financial condition and future prospects
could be materially harmed

We rely significantly on the protections afforded by patent and trademark
registrations that we routinely seek from the U.S. Patent and Trademark Office
(USPTO) and from similar agencies in foreign countries. We cannot be certain
that any patent or trademark application that we file will be approved by the
USPTO or other foreign agencies. In addition, we cannot be certain that we
will be able to successfully defend any trademark, trade name or patent that we
hold against claims from, or use by, competitors or other third parties. No
consistent policy has emerged from the USPTO or the courts regarding the
breadth of claims allowed or the degree of protection afforded under
biotechnology and similar patents. Our future success will depend on our
ability to prevent others from infringing on our proprietary rights, as well as
our ability to operate without infringing upon the proprietary rights of
others. We may be required at times to take legal action to protect our
proprietary rights and, despite our best efforts, we may be sued for infringing
on the patent rights of others. Patent litigation is costly and, even if we
prevail, the cost of such litigation could adversely affect our financial
condition. If we do not prevail, in addition to any damages we might have to
pay, we could be required to stop the infringing activity or obtain a license.
We cannot be certain that any required license would be available to us on
acceptable terms, or at all. If we fail to obtain a license, our business
might be materially adversely affected. In addition to seeking patent
protection, we rely upon a combination of non-disclosure agreements, other
contractual restrictions and trade secrecy laws to protect proprietary
information. There can be no assurance that these steps will be adequate to
prevent

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misappropriation of our proprietary information or that our competitors will
not independently develop technology or trade secrets that compete with our
proprietary information.

We may incur significant costs resulting from product liability claims

We are subject to significant liability should use or consumption of our
products cause injury, illness or death. Although we carry product liability
insurance, there can be no assurance that our insurance will be adequate to
protect us against product liability claims or that insurance coverage will
continue to be available on reasonable terms. A product liability claim, even
one without merit or for which we have substantial coverage, could result in
significant legal defense costs, thereby increasing our expenses and lowering
our earnings. Such a claim, whether or not proven to be valid, could have a
material adverse effect on our product branding and goodwill, resulting in
reduced market acceptance of our products. This in turn could materially
adversely affect our results of operations and financial condition.

We do not have manufacturing capabilities of our own

We currently do not have the physical or human resources to independently
manufacture our Zicam products or any other products that we may develop. We
currently outsource all of our product manufacturing and packaging operations
and intend to continue this outsourcing for the foreseeable future. If we are
unable to enter into cost-effective or otherwise suitable arrangements for
manufacturing of our Zicam products or any other products, or if our third
party contractors fail to adequately perform their manufacturing operations (as
has occurred to date with our new swab products), our sales and related
financial results could be materially adversely affected. If, in the future,
we decide to establish our own manufacturing facilities, we will require
substantial additional funds and significant additional personnel to undertake
such operations. We cannot be certain that such funding or a sufficient number
of such qualified persons will be available for such an undertaking.

We may continue to experience product backlogs

At the end of 2002, we had approximately $1.3 million in backlog of swab
orders, which continued at reduced levels until the end of March 2003. We
have since increased our inventory of swab products in order to prevent a
similar backlog from occurring in the 2003-2004 cold season. We expect our new
swab manufacturer to provide products beginning in the first quarter of 2004.
However, we cannot be certain that these efforts will be sufficient to prevent
a backlog of these swab products from repeating itself in the 2003-2004 cold
season or that other product backlogs will not occur in the future. Any such
future backlogs will potentially result in higher production costs, higher
freight costs to expedite shipment of raw materials and finished goods, fines
from certain retailers, cancelled orders and lost opportunity costs. These in
turn could materially affect our results of operations and financial condition.

The large number of shares eligible for immediate and future sales may depress
the price of our stock

Sales of substantial amounts of our common stock in the open market or the
availability of a large number of additional shares for sale could adversely
affect the market price of our common stock. Substantially all of our
outstanding shares of common stock, as well as the shares underlying vested but
as yet unexercised warrants and options, have either been registered for public
sale or may be sold under Rule 144 promulgated under the Securities Act of
1933, as amended. Therefore, all of these shares may be immediately sold by
the holders. A substantial increase in sales of our common stock could depress
the price of our common stock.

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Our board of directors is authorized to issue shares of preferred stock that
could have rights superior to our outstanding shares of common stock, and, if
issued, could adversely impact the value of our common stock

Our certificate of incorporation permits our board of directors, in its sole
discretion, to issue up to 2,000,000 shares of authorized but unissued
preferred stock. These shares may be issued by our board without further
action by our shareholders, and may include any of the following rights (among
others) as our board may determine, which rights may be superior to the rights
of our outstanding common stock:



| |  | voting rights, including the right to vote as a class on particular matters;
|- |  | ----------------------------------------------------------------------------



| |  | preferences as to dividends and liquidation rights;
|- |  | ---------------------------------------------------



| |  | conversion rights;
|- |  | ------------------



| |  | anti-dilution protections; and
|- |  | ------------------------------



| |  | redemption rights.
|- |  | ------------------

Since our board of directors has the authority to determine, from time to time,
the terms of our authorized preferred stock, there is no limit on the amount of
common stock that could be issuable upon conversion of any future series of
preferred stock that may be issued. The rights of holders of our common stock
will be subject to, and may be adversely affected by, the rights of the holders
of any series of preferred stock that may be issued in the future. In
addition, the market price of our common stock may be adversely affected by the
issuance of any series of preferred stock with voting or other rights superior
to those of our common stock. The issuance of any series of preferred stock
could also have the effect of making it more difficult for a third party to
acquire a majority of our outstanding common stock.

The price of our stock may continue to be volatile

The market price of our common stock, which is quoted for trading on the Nasdaq
National Market, has been highly volatile and may continue to be volatile in
the future. Any or a combination of the following factors could cause the
market value of our common stock to decline quickly: Operating results that
differ from market expectations, negative or other unanticipated results of
clinical trials or other testing, delays in product development, technological
innovations or commercial product introductions by our competitors, changes in
government regulations, developments concerning proprietary rights, including
pending or threatened patent litigation, public concerns regarding the safety
of any of our products and general economic and stock market conditions. Since
the Spring of 2000, the stock market has experienced, and it may continue to
experience, significant price and volume fluctuations. These fluctuations have
particularly affected the market prices of equity securities of many small
capitalization companies, like Matrixx, that are not yet profitable or that
experience low or inconsistent earnings. Often, the effect on the price of
such securities is disproportionate to the operating performance of such
companies. In our case, such broad market fluctuations may adversely affect
our stockholders ability to dispose of their shares of Matrixx at a price
equal to or above the price at which they purchased such shares.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our primary market risk exposure relates to our variable rate revolving
line of credit with Comerica Bank. At no time during the first nine months of
fiscal 2003 did we have any outstanding balance against this line of credit.
During fiscal 2002, the average outstanding balance on our prior line of credit
on a daily basis was approximately $100,000. Assuming future borrowings in
line with our average borrowings in 2002, a hypothetical interest rate change
of 1% would increase our interest expense approximately $1,000 per year from
the expense levels that we experienced in 2002. Consequently, we believe that
moderate interest rate increases will not have a material adverse impact on our
results of operations or financial position in the foreseeable future.

As of September 30, 2003 and December 31, 2002, we did not participate in
any market risk-sensitive commodity instruments for which fair value disclosure
would be required under Statement of Financial Accounting Standards No. 107.
We presently hold approximately $5.0 million in short-term U.S. treasury
securities which are not subject to material risk. We believe that we are not
subject in any material way to other forms of market risk, such as foreign
currency exchange risk or foreign customer purchases (of which there were none
in the first nine months of fiscal 2003 or in all of 2002) or commodity price
risk.




Item 4. Controls and Procedures

We carried out an evaluation, under the supervision and with the
participation of our Chief Executive Officer and Chief Financial Officer, of
the effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Rules 13a-15 and 15d-15 under the Securities Exchange
Act of 1934. Based upon that evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that, as of the end of the period covered by this
report, our disclosure controls and procedures are effective in timely alerting
them to material information relating to the Company and required to be
included in our periodic SEC filings. There were no significant changes in our
internal controls over financial reporting during our most recently completed
quarter that has materially affected, or is reasonably likely to materially
affect our internal control over financial reporting, or other factors that
could significantly affect these controls subsequent to the date of their
evaluation and there were no corrective actions taken with regard to
significant deficiencies or material weaknesses in our controls.

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PART II

OTHER INFORMATION




Item 1. Legal Proceedings

The Company is subject to legal proceedings and claims that arise in the
ordinary course of business. In the opinion of management, the amount of
ultimate liability with respect to these actions will not materially affect the
Companys financial position or results of operations.




Item 6. Exhibits and Reports on Form 8-K



| |  | A.   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
    
    Second Modification Agreement dated as of July 2, 2003 by and among
Matrixx Initiatives, Inc., Zicam, LLC and Comerica Bank (3)31.1*
    
    Certification of CEO pursuant to Section 302 of Sarbanes-Oxley Act
of 2002.31.2*
    
    Certification of CFO pursuant to Section 302 of Sarbanes-Oxley Act
of 2002.32.1*
    
    Certification pursuant to 18 U.S.C. Section 1350.32.2*
    
    Certification pursuant to 18 U.S.C. Section 1350.


* Filed with this Form 10-Q.(1)
    
    Incorporated by reference to the Companys Amendment No. 1 to
Form 8-A, filed June 18, 2002, file number 000-27646.(2)
    
    Incorporated by reference to the Companys registration
statement on Form 8-A, filed July 23, 2002, file number 000-27646.


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(3)
    
    Incorporated by reference to the Companys quarterly report
on Form 10-Q filed August 14, 2003, file number 000-27646.  B.   Reports on Form 8-K




| |  | On July 24, 2003, the Company filed a report on Form 8-K regarding the
reporting of the Companys earnings for the second quarter of fiscal 2003.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------



| |  | On August 14, 2003, the Company filed a report on Form 8-K regarding the
introduction of a new and improved swab product, the settlement of the
Companys legal proceedings against Zila, Inc. and IST and certain related
adjustments to the Companys second quarter earnings for fiscal 2003.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | On September 30, 2003, the Company filed a report on Form 8-K regarding
the provision of updated earnings guidance for fiscal 2003.
| |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  | On October 23, 2003, the Company filed a report on Form 8-K regarding the
reporting of the Companys earnings for the third quarter of fiscal 2003.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------




SIGNATURES

In accordance with the requirements of the Securities Exchange Act of
1934, the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



| | Matrixx Initiatives, Inc.
| | -------------------------



| | /s/ Carl J. Johnson
Carl J. Johnson
President and
Chief Executive Officer
| | -------------------------------------------------------------------------



| | /s/ William J. Hemelt
William J. Hemelt
Executive Vice President,
Chief Financial Officer,
Treasurer and Secretary
| | ------------------------------------------------------------------------------------------------------------------



| | November 11, 2003
| | -----------------

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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
    
    Second Modification Agreement dated as of July 2, 2003 by and among
Matrixx Initiatives, Inc., Zicam, LLC and Comerica Bank (3)31.1*
    
    Certification of CEO pursuant to Section 302 of Sarbanes-Oxley Act
of 2002.31.2*
    
    Certification of CFO pursuant to Section 302 of Sarbanes-Oxley Act
of 2002.32.1*
    
    Certification pursuant to 18 U.S.C. Section 1350.32.2*
    
    Certification pursuant to 18 U.S.C. Section 1350.


* Filed with this Form 10-Q.(1)
    
    Incorporated by reference to the Companys Amendment No. 1 to
Form 8-A, filed June 18, 2002, file number 000-27646.(2)
    
    Incorporated by reference to the Companys registration
statement on Form 8-A, filed July 23, 2002, file number 000-27646.(3)
    
    Incorporated by reference to the Companys quarterly report
on Form 10-Q filed August 14, 2003, file number 000-27646.