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Pastimes : Investment Chat Board Lawsuits -- Ignore unavailable to you. Want to Upgrade?

To: Jeffrey S. Mitchell who wrote (9451)	5/11/2006 2:53:49 PM
From: Jeffrey S. Mitchell	Respond to of 12465

Re: 4/25/06 - [MTXX] Matrixx Initiatives, Inc. Notes to Condensed Consolidated Financial Statements MATRIXX INITIATIVES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) At April 25, 2006, 30 product liability cases, covering 39 plaintiffs in 13 states, were pending against the Company, excluding those cases subject to the Arizona settlement. In addition, as noted above, 5 of the cases subject to the Arizona settlement will remain pending on behalf of 8 plaintiffs, each who were ineligible to participate in the Arizona settlement. In addition, the Company has been advised by two of the plaintiffs’ attorneys in the pending cases that they collectively represent approximately 100 additional potential claimants for whom they have not yet filed lawsuits. The Company is unable to determine the number of potential claimants, the nature or basis of their purported claims, or when or if the potential claimants will ultimately file one or more lawsuits against the Company. Plaintiffs’ law firms may continue to solicit potential claimants through the Internet and other media; as a result, additional lawsuits may be filed against us. We believe the allegations relating to Zicam Cold Remedy are unfounded. Zicam Cold Remedy has been studied in two independent, placebo-control studies. In those studies, there was no statistically significant difference in adverse events between the placebo and non-placebo group, and there was no indication in either group of impairment to the sense of smell. Further, the incidence of smell disorders is reported at 1% to 2% of the population on average, and is very common in those over age 50. Upper respiratory infections are among the most common causes of impairment to sense of smell. Therefore, any product such as Zicam Cold Remedy designed to treat upper respiratory illnesses may be mistakenly associated with distortion of sense of smell. The rate of reported complaints of distortion of the sense of smell associated with Zicam Cold Remedy is well below these national incidence levels. We convened a two-day meeting of our Scientific Advisory Board in September 2004 to review the findings of studies initiated in the first quarter of fiscal 2004. The Scientific Advisory Board is comprised of medical doctors and researchers that are independent of the Company. Matrixx provided honorariums for members’ attendance at meetings, travel expenses, and funded grants to design and perform research studies investigating the contention that Zicam Cold Remedy zinc gluconate nasal gel is associated with disorders of smell. Members of the Scientific Advisory Board presented the results of their studies on the epidemiology, anatomy, and physiology of smell disorders. It was the unanimous opinion of the Scientific Advisory Board that the cumulative scientific evidence does not support the contention that Zicam Cold Remedy zinc gluconate nasal gel is associated with disorders of smell. The Scientific Advisory Board may reconvene from time to time to review the findings of ongoing studies. We have submitted all of the existing lawsuits to our insurance carriers. In April 2004, we established a fully-funded deductible insurance program through a product liability insurance carrier. The settlement of the consolidated Arizona litigation exhausted this insurance program. In April 2006, we replaced the self-funded program with a limited traditional insurance program. This new insurance program does not cover existing lawsuits and only applies to any future claims made. We cannot predict the outcome of the litigation but we will defend ourselves vigorously. If any liability were to result from one or more of these or future lawsuits, we believe our financial results could be materially impacted. Our financial results also could be materially impacted by the adverse publicity that may result from the lawsuits. Litigation Reserves secfilings.nasdaq.com