Zila Achieves Favorable Settlement in Dispute with Matrixx.

Business Editors/Health/Medical Writers

PHOENIX--(BUSINESS WIRE)--Aug. 14, 2003

Zila, Inc. (Nasdaq:ZILA) announced today it has settled the claims brought against Zila and the Company's Zila Swab Technologies, Inc. subsidiary ("ZST") by Matrixx Initiatives, Inc. ("Matrixx") (Nasdaq:MTXX) of Phoenix, Arizona.

Matrixx sought arbitration in April against ZST and filed a claim against the Company and ZST in the Superior court of Arizona seeking a temporary restraining order ("TRO"). Under the arbitration claim, which sought monetary damages, Matrixx alleged that ZST breached certain obligations by failing to produce requested levels of swabs for Matrixx under a swab manufacturing contract and by raising its prices. In the TRO action, Matrixx asked to require ZST to produce at requested levels and at the former prices.

Under the settlement, Matrixx withdrew all its claims against Zila and accepted the ZST price increase on the swabs and ZST's current level of production. Also, Zila said that certain other terms related to its volume commitments were renegotiated to ZST's benefit.

Zila Chairman, President and Chief Executive Officer Doug Burkett, Ph.D., said, "We are pleased with this settlement. Given the economics of the settlement, we expect that ZST will be profitable in FY04 and we feel we have established a better business relationship with Matrixx going forward."

Zila's existing contract with Matrixx was extended by 90 days to March 31, 2004 under the terms of the agreement, but it is unlikely that the contract will be renewed at that time.

Zila, Inc., headquartered in Phoenix, is an international provider of healthcare and biotechnology products for dental/medical professionals and consumers. Zila has three business units:

-- Zila Biotechnology, a research, development and licensing

business specializing in pre-cancer/cancer detection through

its patented Zila(R) Tolonium Chloride and OraTest(R)

technologies.

-- Zila Nutraceuticals, manufacturer and marketer of Ester-C(R),

a branded, superior efficacy nutrition product.

-- Zila Pharmaceuticals, "The Oral Soft Tissue Experts" marketing

ViziLite(TM) oral examination kits, Zilactin(R) OTC oral care

products, and Peridex(R) prescription periodontal rinse.

For more information about Zila, visit www.zila.com.

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based largely on Zila's expectations or forecasts of future events, can be affected by inaccurate assumptions and are subject to various business risks and known and unknown uncertainties, a number of which are beyond the Company's control. Therefore, actual results could differ materially from the forward-looking statements contained herein. A wide variety of factors could cause or contribute to such differences and could adversely impact revenues, profitability, cash flows and capital needs, including the ability of ZST to operate profitably in fiscal 2004 by, among other items, achieving manufacturing efficiencies and controlling its costs. There can be no assurance that the forward-looking statements contained in this press release will, in fact, transpire or prove to be accurate. For a more detailed description of these and other cautionary factors that may affect Zila's future results, please refer to Zila's Form 10-K and 10-K/A for its fiscal year ended July 31, 2002, and its Form 10-Q for the quarter ended April 30, 2003, filed with the Securities and Exchange Commission.