Item under the heading “Report on Internal Control over Financial Reporting of Independent Registered Public Accounting Firm.”

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Matrixx Initiatives, Inc.

     We have audited management’s assessment, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting, that Matrixx Initiatives, Inc. and subsidiaries (the “Company”) did maintain effective internal control over financial reporting as of March 31, 2008, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

     We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

     A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

     Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

     In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2008, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

     We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended March 31, 2008 of the Company and our report dated June 11, 2008 expressed an unqualified opinion on those consolidated financial statements.

/s/ Mayer Hoffman McCann, P.C.

MAYER HOFFMAN MCCANN P.C.

Phoenix, Arizona
June 12, 2008

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

     The information required by this Item for our executive officers is set forth in Part I of this Form 10-K under the heading “Executive Officers of Matrixx.” Other information required by this Item is set forth in our Proxy Statement relating to our 2008 annual meeting of stockholders to be held on August 26, 2008 (the “2008 Proxy Statement”), under the headings, “Information Concerning Directors,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “Additional Information — How do we submit shareholder proposals and director nominations for the next Annual Meeting?” and “Information about our Board, Its Committees and our Corporate Governance — What are the responsibilities of the Audit Committee?” and is incorporated herein by this reference as if set forth in full.

     We have adopted a Code of Ethics that applies to our principal executive officer, our principal financial officer and our controller, as well as to all of our other employees. A copy of the Code of Ethics was attached as an exhibit to our Annual Report on Form 10-K for the period ended December 31, 2003 and is available on our website (www.matrixxinc.com). We will make a copy of the Code of Ethics available to any person without charge, upon request, by writing to Matrixx Initiatives, Inc., 8515 E. Anderson Dr., Scottsdale, AZ 85255, Attn: Corporate Secretary. If we make any substantive amendment to the Code of Ethics or grant any waiver, including any implicit waiver, we will disclose the nature of such amendment or waiver in a Report on Form 8-K within four business days after such amendment is made or such waiver is given.

ITEM 11. EXECUTIVE COMPENSATION

     The information required by this Item is set forth in the 2008 Proxy Statement, under the headings, “Executive Compensation,” “Director Compensation” and “Compensation Committee Interlocks and Insider Participation” and is incorporated herein by this reference as if set forth in full.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

     The information required by this Item for certain of our beneficial owners is set forth in the 2008 Proxy Statement, under the heading, “Security Ownership of Certain Beneficial Owners and Management,” and is incorporated herein by this reference as if set forth in full.

Securities Authorized for Issuance Under Equity Compensation Plans

     The following table sets forth information as of March 31, 2008 with respect to our compensation plans and individual compensation arrangements under which our equity securities were authorized for issuance to directors, officers, employees, consultants and certain other persons and entities in exchange for the provision to us of goods or services.

Number of Securities

Remaining Available for

Number of Securities

Weighted- Average

Future Issuance Under

to be Issued Upon

Exercise Price of

Equity

Exercise of

Outstanding

Compensation Plans

Outstanding Options,

Options, Warrants,

(Excluding Securities

Plan Category

Warrants, and Rights

and Rights

Reflected in Column (a))

(a)

(b)

(c)

Equity compensation plans approved by security holders

549,134

$

12.27

337,707

Equity compensation plans not approved by security holders

—

N/A

N/A

Total

549,134

$

12.27

337,707

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

     The information required by this Item is set forth in the 2008 Proxy Statement, under the headings, “Information About our Board, Its Committees and our Corporate Governance,” “What are our processes and procedures for considering and determining executive compensation? — The Compensation Committee” and “Related Party Transactions” and is incorporated herein by this reference as if set forth in full.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

     The information required by this Item is set forth in the 2008 Proxy Statement, under the heading, “Audit Matters” and is incorporated herein by this reference as if set forth in full. The information set forth in the 2008 Proxy Statement under the heading “Report of the Audit Committee” is not incorporated herein by reference.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

     (a)1. Financial Statements

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Financial Statements		Page
Report of Independent Registered Public Accounting Firm			46
Consolidated Balance Sheets as of March 31, 2008 and 2007			47
Consolidated Statements of Income for the year ended March 31, 2008, three months ended March 31, 2007 and 2006 (Unaudited), and the years ended December 31, 2006 and 2005			48
Consolidated Statements of Changes in Stockholders’ Equity for the year ended March 31, 2008, three months ended March 31, 2007 and 2006, and the years ended December 31, 2006 and 2005			49
Consolidated Statements of Cash Flows for the year ended March 31, 2008 , three months ended March 31, 2007 and 2006 (Unaudited), and the years ended December 31, 2006 and 2005			52
Notes to Consolidated Financial Statements			53

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Matrixx Initiatives, Inc.

We have audited the accompanying consolidated balance sheets of Matrixx Initiatives, Inc. and subsidiaries (the “Company”) as of March 31, 2008 and March 31, 2007 and the related consolidated statements of income, changes in stockholders’ equity and cash flows for the year ended March 31, 2008, three months ended March 31, 2007 and for the years ended December 31, 2006 and 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2008 and 2007, and the results of their operations and their cash flows for the year ended March 31, 2008, three months ended March 31, 2007, and the years ended December 31, 2006 and 2005 in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of March 31, 2008, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated June 11, 2008 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ Mayer Hoffman McCann, P.C.

MAYER HOFFMAN MCCANN P.C.

Phoenix, Arizona

June 12, 2008

MATRIXX INITIATIVES, INC. AND SUBSIDIARIES

		2008				2007
ASSETS
Current Assets:
Cash and cash equivalents		$	27,932,672			$	16,944,189
Accounts receivable:
Trade, net of allowance for doubtful accounts of $209,377 and $429,031			12,051,847				8,256,929
Other receivable			39,363				—
Insurance receivable			75,000				2,200,000
Inventories			11,530,060				15,458,928
Prepaid expenses			1,743,521				584,771
Interest receivable			73,904				84,191
Income tax receivable			—				1,370,277
Deferred tax asset			1,739,490				3,361,605
Total Current Assets			55,185,857				48,260,890
Property and Equipment, at cost:
Office furniture and computer equipment			1,560,403				1,356,931
Machine tooling and manufacturing equipment			5,330,728				5,225,020
Laboratory furniture and equipment			437,267				339,343
Leasehold improvements			514,674				350,576
			7,843,072				7,271,870
Less accumulated depreciation			(2,753,222	)			(1,925,598	)
Net Property and Equipment			5,089,850				5,346,272
Other Assets:
Deposits			379,205				221,963
Other assets			110,034				82,770
Restricted cash			500,000				500,000
Debt issuance costs, net of accumulated amortization of $5,398 and $48,061			8,997				7,171
Patents, net of accumulated amortization of $582,670 and $446,002			1,834,791				1,692,115
Goodwill			15,039,836				15,039,836
Total Other Assets			17,872,863				17,543,855
Total Assets		$	78,148,570			$	71,151,017
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	1,307,881			$	2,584,553
Accrued expenses			4,433,841				3,162,814
Sales commissions			533,384				372,206
Sales returns and allowances			1,271,791				2,391,290
Legal liability			1,100,000				1,045,000
Accrued taxes			1,927,025				—
Total Current Liabilities			10,573,922				9,555,863
Deferred tax liability			2,022,427				1,160,328
Total Liabilities			12,596,349				10,716,191
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, 10,175,412 and 10,079,317 shares issued			10,175				10,079
Additional paid-in capital			50,960,220				49,122,216
Retained earnings			22,126,374				11,698,835
			73,096,769				60,831,130
Less common stock held in treasury, at cost (547,769 and 53,800 shares)			(7,544,548	)			(396,304	)
Total Stockholders’ Equity			65,552,221				60,434,826
Total Liabilities and Stockholders’ Equity		$	78,148,570			$	71,151,017

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

MATRIXX INITIATIVES, INC. AND SUBSIDIARIES

		Year ended				Three months ended March 31,								Years ended December 31,
		March 31,								(Unaudited)
		2008				2007				2006				2006				2005
Net sales		$	100,972,384			$	19,045,754			$	17,675,959			$	96,230,780			$	90,460,595
Cost of sales			34,532,099				7,047,655				5,865,211				32,445,499				28,201,154
Gross Profit			66,440,285				11,998,099				11,810,748				63,785,281				62,259,441
Selling, general and administrative expenses			46,520,327				8,730,650				10,692,507				51,946,219				54,196,370
Research and development			4,108,354				1,137,671				1,126,846				4,684,837				4,069,367
Income From Operations			15,811,604				2,129,778				(8,605	)			7,154,225				3,993,704
Other Income (Expense):
Interest and other income			653,422				203,374				173,911				501,845				417,724
Interest expense			—				—				—				(116,639	)			—
Total Other Income			653,422				203,374				173,911				385,206				417,724
Income Before Provision For Income Taxes			16,465,026				2,333,152				165,306				7,539,431				4,411,428
Provision for income taxes			6,037,487				623,921				68,546				2,612,803				1,332,936
Net Income		$	10,427,539			$	1,709,231			$	96,760			$	4,926,628			$	3,078,492
Net Income Per Share of Common Stock:
Basic:
Weighted Average Number of Common Shares Outstanding			9,704,579				9,749,162				9,565,963				9,620,362				9,486,288
Net Income Per Share of Common Stock		$	1.07			$	0.18			$	0.01			$	0.51			$	0.32
Diluted:
Weighted Average Number of Common Shares Outstanding			10,001,307				10,031,008				10,027,666				9,965,786				9,769,922
Net Income Per Share of Common Stock		$	1.04			$	0.17			$	0.01			$	0.49			$	0.32

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

MATRIXX INITIATIVES, INC. AND SUBSIDIARIES

		Series A																Additional												Total
		Preferred Stock								Common Stock								Paid In				Treasury				Retained				Stockholders’
		Shares				Amount				Shares				Amount				Capital				Stock				Earnings				Equity
Balance at December 31, 2004			—			$	—				9,520,198			$	9,520			$	42,527,862			$	(396,304	)		$	1,984,484			$	44,125,562
Issuance of common stock upon exercise of stock options			—				—				23,134				23				184,106				—				—				184,129
Issuance of restricted stock pursuant to the Company’s restricted stock bonus program			—				—				56,197				56				641,052				—				—				641,108
Income tax benefit from the exercise of stock options			—				—				—				—				80,344				—				—				80,344
Net income			—				—				—				—				—				—				3,078,492				3,078,492
Balance at December 31, 2005			—				—				9,599,529				9,599				43,433,364				(396,304	)			5,062,976				48,109,635
Issuance of common stock upon exercise of stock options			—				—				244,965				245				2,479,671				—				—				2,479,916
Issuance of restricted stock pursuant to the Company’s restricted stock program			—				—				103,258				104				1,342,960				—				—				1,343,064
Income tax benefit from the exercise of stock options			—				—				—				—				1,077,402				—				—				1,077,402
Stock option expense pursuant to SFAS 123R			—				—				—				—				150,800				—				—				150,800
Net income			—				—				—				—				—				—				4,926,628				4,926,628
Balance at December 31, 2006			—				—				9,947,752				9,948				48,484,197				(396,304	)			9,989,604				58,087,445
Issuance of common stock upon exercise of stock options			—				—				27,333				27				251,790				—				—				251,817
Issuance of restricted stock pursuant to the Company’s restricted stock program			—				—				104,232				104				287,819				—				—				287,923
Income tax benefit from the exercise of stock options			—				—				—				—				80,717				—				—				80,717
Stock option expense pursuant to SFAS 123R			—				—				—				—				17,693				—				—				17,693
Net income			—				—				—				—				—				—				1,709,231				1,709,231
Balance at March 31, 2007			—				—				10,079,317				10,079				49,122,216				(396,304	)			11,698,835				60,434,826

(Continued)

MATRIXX INITIATIVES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE YEAR ENDED MARCH 31, 2008, THE THREE MONTHS ENDED MARCH 31, 2007 AND THE YEARS ENDED
DECEMBER 31, 2006 AND 2005
(CONTINUED)

		Series A																Additional												Total
		Preferred Stock								Common Stock								Paid In				Treasury				Retained				Stockholders’
		Shares				Amount				Shares				Amount				Capital				Stock				Earnings				Equity
Issuance of common stock upon exercise of stock options			—			$	—				59,767			$	60			$	611,083			$	—			$	—			$	611,143
Issuance of restricted stock pursuant to the Company’s restricted stock program			—				—				58,760				58				1,294,506				—				—				1,294,564
Purchase of treasury stock			—				—				—				—				—				(7,463,393	)			—				(7,463,393	)
Retirement of treasury stock			—				—				(22,432	)			(22	)			(315,127	)			315,149				—				—
Income tax benefit from the exercise of stock options			—				—				—				—				231,401				—				—				231,401
Stock option expense pursuant to SFAS 123R			—				—				—				—				16,141				—				—				16,141
Net income			—				—				—				—				—				—				10,427,539				10,427,539
Balance at March 31, 2008			—			$	—				10,175,412			$	10,175			$	50,960,220			$	(7,544,548	)		$	22,126,374			$	65,552,221

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

MATRIXX INITIATIVES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2006
(UNAUDITED)

		Series A																Additional												Total
		Preferred Stock								Common Stock								Paid In				Treasury				Retained				Stockholders’
		Shares				Amount				Shares				Amount				Capital				Stock				Earnings				Equity
Balance at December 31, 2005			—			$	—				9,599,529			$	9,599			$	43,433,364			$	(396,304	)		$	5,062,976			$	48,109,635
Issuance of common stock upon exercise of stock options			—				—				117,765				118				1,256,264				—				—				1,256,382
Issuance of restricted stock pursuant to the Company’s restricted stock program			—				—				100,188				100				923,871				—				—				923,971
Stock option expense pursuant to SFAS 123R			—				—				—				—				54,967				—				—				54,967
Net income			—				—				—				—				—				—				96,760				96,760
Balance at March 31, 2006			—			$	—				9,817,482			$	9,817			$	45,668,466			$	(396,304	)		$	5,159,736			$	50,441,715

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

MATRIXX INITIATIVES, INC. AND SUBSIDIARIES

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