WOWOWOW... Matrixx suing the Truthseeker for airing their dirty laundry?? Kudos to Jeffrey Mitchell for finding this:
2/9/04 - [MTXX] NY Post: A Thing to Sneeze At
A THING TO SNEEZE AT
By CHRISTOPHER BYRON
--------------------------------------------------------------------------------
February 9, 2004 -- AN intriguing press release crossed my desk last week. The document bore the name of an Arizona company called Matrixx Initiatives Inc., which makes a line of homeopathic cold remedies.
Thanks to some alleged health problems that published reports have tied to the use of one of its products, Matrixx's Nasdaq-listed shares have been getting knocked around quite a bit lately.
The aforementioned press release was apparently intended to contain the damage, calm investors down, and put some oomph back in the company's stock, which at one point last week had fallen by nearly 50 percent from its early January level of more than $19 per share.
Fortunately for the company, by week's end Matrixx's share price had at least stopped falling; it actually inched back up a few cents in after-hours trading Friday evening to hit $10.43 per share.
Yet it remains to be seen how long the calm will last before turmoil breaks out in the stock all over again because concerns continue to mount over the effects of zinc-based products like Matrixx's Zicam nasal spray, used to treat nasal congestion from the common cold.
The main health question in the Zicam spat concerns whether zinc-based products such as Zicam can permanently destroy a person's sense of smell by inducing a medical condition known as amnosia.
Matrixx last week issued a series of statements insisting that the claims against Zicam are "completely unfounded and misleading" and that "no clinical trials" have produced a single instance of a person losing his or her sense of smell from using Zicam.
Yet alarming anecdotal evidence is beginning to accumulate that Zicam can cause just that. On Friday, Jan. 30, the Dow Jones news wires reported that the U.S. Food and Drug Administration has begun investigating complaints from consumers who say they've used Zicam and lost their sense of smell as a result.
Last week, ABC's "Good Morning America" carried a lengthy report on Zicam users who claim to have suffered the same fate. A Denver woman named Linda Bayley complained of using Zicam as directed and of reeling from an intense burning sensation afterward, followed by a total loss of her sense of smell.
Dr. Bruce Jafek of the University of Colorado Center For Taste and Smell Disorders says Linda Bayley is one of more than a dozen such patients he has recently examined who have reported the same reaction from using Zicam.
Since October, lawsuits against Matrixx have been filed in Michigan, Arizona, Alabama and California. In them, plaintiffs complain of having used Zicam as directed and of instantly experiencing an excruciating burning sensation in their nasal passages, followed by a complete and seemingly permanent loss of the sense of smell.
WITH litigation piling up against it, the company has responded with what appears to be one of the most misguided and counterproductive public relations campaigns imaginable. Instead of issuing an immediate, nationwide recall of Zicam until the cause of the problem can be isolated and fixed, Matrixx issued a press release last Monday in the wake of the Dow Jones story, insisting that Zicam is totally safe.
Worse, the Matrixx press release claimed that Matrixx knew of no FDA inquiry into Zicam, and that the Dow Jones story had been fed to the writer by an individual named Floyd Schneider, whom Matrixx claimed to be suing for allegedly posting false and defamatory messages about the company on the Internet.
In fact, though the FDA may not have notified Matrixx of its inquiry, it is impossible for Matrixx not to have known of the existence of the probe - since the Dow Jones story the previous Friday had quoted an FDA spokesperson as confirming the FDA's interest in the matter. An FDA official reconfirmed the existence of the inquiry for this column late last week.
Nor did the question of where or how the Dow Jones writer, Carol Redmond, got her information seem relevant to anything. The only thing that mattered was whether her facts were correct, which they appear to be - and the Matrixx bunch seems to have known it, though at week's end they repeated their statement, now more precisely crafted, about being unaware of any investigation regarding Zicam.
Meanwhile, a lot of information that Matrixx really should be disclosing to shareholders doesn't seem to be reaching them at all - at least not by way of the company.
For example, in Matrixx's latest 10Q quarterly financial report to the Securities and Exchange Commission, filed on Nov. 11, 2003, the company acknowledged that it faces "significant liability should use or consumption of our products cause injury, illness or death," and that even a single product liability claim, whether the claim has any merit or not, could have a materially adverse effect on Matrixx's entire business.
That being so, it is hard to understand why the first of the product liability suits filed against Matrixx - in Kalamazoo, Mich., on Oct 13, 2003, a full month before the 10Q itself was filed with the SEC - wasn't mentioned in the Nov. 11 filing, as it obviously should have been.
Most recently, the company issued a press release on Jan. 7, 2004, increasing its full-year earnings forecast for 2003 by eight cents per share. But it has so far made no known statements regarding the growing number of product liability lawsuits against it, which now total four.
IS there some infinitely tedious reading of the SEC's rules and regulations to justify this silence? I'm sure there is - some little nugget of exculpatory weaseling by which it becomes OK to break out the press release pom-poms for an eight-cents-per-share Beat The Street hooray, while staying deaf and dumb on an avalanche of lawsuits in which people all over America are claiming to have been maimed for life by squeezing a spray of Zicam up their beezers to get rid of a cold.
I'm sure as well that the language, as crafted in the company's two press releases last week, will be found to contain enough artfulness and ecclesiastical slipperiness to allow the company to claim that it really didn't intend to say what the plain meaning of the release's words make undeniable - that it knew nothing of an FDA inquiry into the apparent health risks of Zicam.
From spectacles such as this a question arises: Is there no shame whatsoever left in our public lives? Are we willing to do anything to take responsibility for our sins? When the president of the United States can look the nation in the eye and ask, "What do you mean by the word 'is'?," I suppose the answer is yes.
Downtown in federal court, the second full week of testimony begins today in Martha Stewart's corruption, obstruction and fraud trial, which in its way amounts to looking the nation in the eye and saying, "I did not have sex with that $60-and-out stop-loss order."
Matrixx has done well with Zicam - or at least let us say, it appears to have done well, reporting $2.3 million of net income on revenues of $25.3 million for the nine months ended Sept. 30.
But that $2.3 million of net income is in fact an illusion when it comes to actual cash money, for during the same nine month period the company's cash flow from operations ran $2.5 million in the red.
What accounted for the difference? According to the company's nine-month financials, most of the cash flow appears to have been devoured by increasing inventories and uncollected bills.
What does this tell us? Maybe a lot, maybe nothing. But to find out, an investor is going to have to sit with the stock for a while and see how the business develops. Do you think Matrixx Initiatives has earned your trust with what's going on now? Then go ahead.
* Please send e-mail to: cbyron@nypost.com
Copyright 2004 NYP Holdings, Inc. All rights reserved.
nypost.com |
