SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-QSB

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2000

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period

Commission file number 000-25111

Directrix, Inc.
(Exact name of registrant as specified in its charter)

Delaware 13-4015248
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

236 West 26th Street, Suite 12W, New York, NY 10001
(Address of principal executive offices)

(212) 741-6511
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has 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
filing requirements for the past 90 days.

Yes [X] No [ ]

Number of shares outstanding of Registrant's Common Stock as of January 31, 2001
was 2,239,785.

PART I

ITEM 1: FINANCIAL STATEMENTS
DIRECTRIX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
____________________________________________________________________________________________________________________________________

Dec 31, March 31,
2000 2000
----------------------------------------
(unaudited) (derived from
audited financial
statements)

ASSETS:

Current assets:
Cash and cash equivalents .................................................. $ 127,000 $ 324,000
Accounts receivable, net ................................................... 962,000 825,000
Prepaid expenses and other current assets .................................. 87,000 87,000
--------------- ----------------
Total current assets ........................................ 1,176,000 1,236,000
Property and equipment, net ..................................................... 4,463,000 5,141,000
Library of movies, net .......................................................... 634,000 1,122,000
Deferred financing costs ........................................................ 479,000 562,000
Other assets .................................................................... 42,000 93,000
--------------- ----------------
Total assets ................................................ $ 6,794,000 $ 8,154,000
=============== ================

LIABILITIES AND STOCKHOLDERS' EQUITY:

Current liabilities:
Accounts payable ............................................................ $ 5,819,000 $ 1,867,000
Customer deposits ........................................................... 220,000 110,000
Accrued expenses and other current liabilities .............................. 303,000 322,000
--------------- ----------------
Total current liabilities ................................... 6,342,000 2,299,000

Transponder lease liability ..................................................... 120,000 464,000
Other liabilities ............................................................... 76,000 96,000
Revolving line of credit ........................................................ 4,034,000 1,913,000
--------------- ----------------
Total liabilities ........................................... 10,572,000 4,772,000
--------------- ----------------

Commitments and contingencies

Stockholders' equity

Common stock, $.01 par value; authorized 25,000,000 shares; 2,239,785 and
2,179,785 shares issued and outstanding at December 31, 2000 and
March 31, 2000, respectively ............................................... 22,000 22,000
Additional paid-in capital .................................................. 20,983,000 20,833,000
Accumulated deficit ......................................................... (24,783,000) (17,473,000)
--------------- ----------------
Total stockholders' equity .................................. (3,778,000) 3,382,000
--------------- ----------------
Total liabilities and stockholders' equity .................. $ 6,794,000 $ 8,154,000
=============== ================

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

DIRECTRIX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS of OPERATIONS (unaudited)
____________________________________________________________________________________________________________________________________

THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
2000 1999 2000 1999
------------------------------------- -------------------------------------

Revenues ............................................ $ 1,203,000 $ 2,164,000 $ 4,013,000 $ 7,000,000
----------------- ----------------- ----------------- -----------------

Operating expenses:
Salaries, wages and benefits .................... 828,000 723,000 2,464,000 2,170,000
Library amortization ............................ 155,000 131,000 488,000 315,000
Satellite costs ................................. 1,427,000 1,642,000 4,790,000 4,857,000
Broadband expenses .............................. -- -- 113,000 --
Selling, general and administrative expenses .... 499,000 1,184,000 1,767,000 3,278,000
Depreciation .................................... 353,000 315,000 1,051,000 912,000
----------------- ----------------- ----------------- -----------------
Total operating expenses ................. 3,262,000 3,995,000 10,673,000 11,532,000
----------------- ----------------- ----------------- -----------------

Loss from operations ..................... (2,059,000) (1,831,000) (6,660,000) (4,532,000)

Interest expense .................................... (300,000) (4,000) (650,000) (71,000)
Gain (loss) on sale of marketable securities ........ -- (144,000) -- 344,000
----------------- ----------------- ----------------- -----------------

Net loss ................................. $ (2,359,000) $ (1,979,000) $ (7,310,000) $ (4,259,000)
================= ================= ================= =================

Net loss per common share
Basic and Diluted ............................. $ (1.06) $ (0.93) $ (3.33) $ (2.01)
================= ================= ================= =================

Weighted average number of shares outstanding:
Basic and Diluted (Note 7) .................... 2,230,002 2,119,785 2,196,585 2,114,549
================= ================= ================= =================

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

DIRECTRIX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT of STOCKHOLDERS' EQUITY (unaudited)
FOR THE NINE MONTHS ENDED DECEMBER 31, 2000
____________________________________________________________________________________________________________________________________

Additional
Number of Common Paid-in Accumulated
Shares Stock Capital Deficit Total
-------------- ------------ ---------------- ---------------- --------------

Balance at March 31, 2000 ....................... 2,179,785 $ 22,000 $ 20,833,000 $ (17,473,000) $ 3,382,000)

Adjustment to value of warrants issued in
connection with credit facility........... -- -- (15,000) -- (15,000)

Additional warrants issued in connection with
credit facility........................... 60,000 -- 165,000 -- 165,000

Net loss..................................... -- -- -- (7,310,000) (7,310,000)
-------------- ------------ ---------------- ---------------- ---------------
Balance at December 31, 2000 .................... 2,239,785 $ 22,000 $ 20,983,000 $ (24,783,000) $ (3,778,000)
============== ============ ================ ================ ==============

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

DIRECTRIX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
____________________________________________________________________________________________________________________________________

Nine months ended December 31,
2000 1999
---- ----

Cash flows from operating activities:
Net loss ...................................................................... $ (7,310,000) $ (4,259,000)
------------------- -------------------
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of property and equipment ........................................ 1,051,000 912,000
Amortization of library of movies ............................................. 488,000 315,000
Amortization of deferred financing costs ...................................... 233,000 23,000
Gain on sale of marketable securities ......................................... -- (344,000)
Bad debt expense .............................................................. 200,000 971,000
Changes in assets and liabilities:
Increase in accounts receivable .......................................... (337,000) (1,889,000)
Decrease in prepaid expenses and other current assets .................... -- 54,000
Decrease (increase) in other assets ...................................... 51,000 (27,000)
Increase in accounts payable and accrued expenses ........................ 3,589,000 2,098,000
Increase in customer deposits ............................................ 110,000 --
Decrease in other liabilities ............................................ (20,000) --
------------------- -------------------
Total adjustments .............................................. 5,365,000 2,113,000
------------------- -------------------
Net cash used in operating activities .......................... (1,945,000) (2,146,000)
------------------- -------------------
Cash flows from investing activities:
Proceeds from sale of Playboy Stock ...................................... -- 3,558,000
Purchase of property and equipment ....................................... (373,000) (3,566,000)
------------------- -------------------
Net cash used in investing activities .......................... (373,000) (8,000)
------------------- -------------------
Cash flows from financing activities:
Payment of capital lease obligations ..................................... -- (307,000)
Borrowings under revolving line of credit ................................ 2,121,000 500,000
Borrowings from margin account ........................................... -- 597,000
------------------- -------------------
Net cash provided by financing activities ...................... 2,121,000 790,000
------------------- -------------------
Net decrease in cash and cash equivalents ...................... (197,000) (1,364,000)
Cash and cash equivalents, beginning of the period ................................ 324,000 1,450,000
------------------- -------------------
Cash and cash equivalents, end of the period ................... $ 127,000 $ 86,000
=================== ===================

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest ....................................................... $ 245,000 $ 27,000
=================== ===================

Supplemental schedule of non-cash investing and financing activities:
Adjustment to value of warrants issued in connection with the
revolving line of credit ................................................. $ (15,000) $ --

Acquisition of movie rights in exchange for reducing Accounts
Receivable ............................................................... $ -- $ 735,000

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

DIRECTRIX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED DECEMBER 31, 2000 (unaudited)
- --------------------------------------------------------------------------------

1. In the opinion of Directrix, Inc. ("Directrix"), the accompanying
unaudited financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the financial position
as of December 31, 2000, and the results of operations and cash flows for the
nine and three months ended December 31, 2000.

2. The results of operations for the nine and three months ended
December 31,2000 are not necessarily indicative of the results to be expected
for the full year.

3. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles ("GAAP") have been condensed or omitted. These financial statements
should be read in conjunction with the financial statements and notes thereto
included in Directrix's Annual Report on Form 10-KSB for the year ended
March 31, 2000.

4. Directrix, a Delaware corporation, is a full service provider of
digital video asset management services, primarily to the entertainment
industry. Directrix provides all of the technical services required to create,
support and deliver digital video programming and data services from its
advanced digital network facility. Directrix offers a number of services
including digital video playback, downlink and uplink, satellite space segments,
digital video archiving and trafficking, video Internet streaming, digital
ad insertion and digital archiving and distribution for VOD (Video-on-Demand)
platforms.

Spice Entertainment Companies, Inc. ("Spice") formed Directrix in 1998
in contemplation of Spice's acquisition by Playboy Enterprises, Inc.
("Playboy"). On the March 15, 1999 closing of the Playboy transaction, Spice
transferred its network services division to Directrix including Spice's master
control and digital playback facility ("Operations Facility"), service
agreements to provide network creation, playback and other technical services to
Emerald Media, Inc. ("EMI") and others, an option (the "EMI Option") to acquire
the network business or stock of EMI, certain rights in Spice's library of adult
films, approximately $0.8 million in cash, certain prepaid assets and accounts
receivable. Spice also transferred 173,784 shares of Playboy Class B Common
Stock to Directrix that it had acquired as part of the Playboy transaction.
Directrix also assumed certain liabilities related to the transferred assets.
Spice then spun off Directrix to its former stockholders, distributing the
Directrix stock as part of the merger consideration.

5. Directrix commenced operations as a stand-alone business following
its spin-off from Spice on March 16, 1999. Directrix incurred net losses
of approximately $7.3 million and $2.4 million for the nine and three months
ended December 31, 2000, respectively. Directrix also incurred a net loss of
$6.1 million for the year ended March 31, 2000. At December 31, 2000, Directrix
had a working capital deficiency of $5.2 million, primarily resulting from the
deferral of transponder lease liability payments under an amended lease
agreement that is being renegotiated as described below. These matters raise
substantial doubt about Directrix's ability to continue as a going concern.
Directrix's continued existence is dependant upon several factors, including its
ability to generate operating cash flow via execution of its long-term business
plan, and secure additional financing to provide for the immediate deficiency
in working capital.

On September 1, 1999, Directrix relocated its Operations Facility to a
new facility in Northvale, New Jersey. The new fully automated network
origination and digital video asset management center is designed to be a 24
hours a day by 7 days a week full service provider of all the technical and
creative services required to develop, support and deliver network television,
video, audio and data services via satellite, fiber and Internet.

Management believes that the relocation and buildout of the Operations
Facility is critical to the realization of Directrix's long-term business plan.
Management also believes that since the buildout of the Operations Facility has
been completed, Directrix now has the capacity to increase revenue by using its
technological resources to expand its customer base and develop new business
lines without significantly

DIRECTRIX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED DECEMBER 31, 2000 (unaudited)CONTINUED
- --------------------------------------------------------------------------------

changing its cost structure and, as a result, generate operating cash flow.
However, there can be no assurance that management will actually be successful
at executing its long-term business plan or that the successful implementation
of the business plan will improve operating results.

Directrix has a $4.5 million revolving line of credit (the "Credit
Facility"), from which approximately $4.0 million has been drawn down as of
December 31, 2000. On October 16, 2000, Directrix and the providers of the
Credit Facility (the "Lenders") agreed to modify the terms of the Credit
Facility (the "Amendment"). The Amendment increased the Credit Facility from
$3.5 million to $4.5 million, and modified the financial covenants so that
beginning with the year ended March 31, 2001, Directrix must have $3.0 million
of stockholders' equity at the end of each fiscal year. The Amendment also
states that if Directrix has not sold or transferred the EMI Option by
March 31, 2001, then the Lenders shall have the option to convert their Notes
into Directrix Common Stock. If Directrix sells, assigns or otherwise transfers
the EMI Option for consideration payable in cash, then Directrix must apply the
cash consideration in excess of the receivable owed to Directrix by EMI, as a
reduction of the amounts drawn down from the Credit Facility. If the cash
consideration in excess of the receivable owed to Directrix by EMI is less than
the amounts drawn down from the Credit Facility, then Directrix and the Lenders
will negotiate to give the Lenders the option to convert their remaining Notes
into Directrix Common Stock. Directrix shall then be entitled to draw down any
repaid amounts from the Credit Facility as provided for in the Amended Loan
Agreement and the Amendment.

In consideration of their agreeing to provide the additional Credit
Facility and the modification of the covenants, Directrix granted the Lenders an
aggregate of 60,000 Common Stock purchase warrants, exercisable for ten years
at $0.01 per share. All of the warrants were exercised as of December 31, 2000.

As of December 31, 2000, there were no financial covenants in which
Directrix must be in compliance. Directrix has drawn down approximately $4.0
million from the Credit Facility, leaving approximately $0.5 million of funds
available under the Credit Facility.

Directrix leased four satellite transponders under various lease
agreements (as amended), with monthly transponder lease payments aggregating
$520,000. The lease agreements were scheduled to expire at various times through
November, 2004. In December, 1999, Directrix entered into an agreement to defer
approximately $1.0 million of lease payments to be paid in twenty-four equal
monthly installments of $40,833 beginning April 1, 2000 of which $0.1 million is
classified as non-current. At December 31, 2000, Directrix has a current
transponder lease liability of $4.7 million, which included $4.4 million of past
due amounts.

In December 2000, Directrix amended its lease agreements with its
transponder provider. Under terms of the amendment, the expiration date of all
of the agreements was extended to November 30, 2002, the number of leased
transponders was reduced from four to three and have a lower level of protection
in the first year if a transponder fails. The amendment also provides for a
reduction of Directrix' monthly transponder costs from $520,000 to $240,000 for
the twelve months ending November 30, 2001 and $300,000 for the final twelve
months ending November 30, 2002. The amendment also states that the parties
would continue negotiations to determine a long term repayment schedule of the
past due transponder payments as of December 31, 2000. If Directrix and its
transponder provider are unable to reach an agreement for repayment of the past
due transponder payments, then Directrix will have to find another transponder
provider. There can be no assurance that management will be successful in its
efforts to finalize the renegotiation of its existing transponder lease
agreements pertaining to the past due transponder payments.

the sale of the EMI Option and/or (iii) a possible private placement of equity
securities with individual, institutional and strategic investors. There can be
no assurance, however, that management will be successful in its efforts to
obtain sufficient capital.

6. During the nine months ended December 31, 1999, Directrix sold 124,784
shares of Playboy stock contributed by Spice at Closing for net cash proceeds
of approximately $3.6 million, resulting in a gain of approximately $0.3million.

7. Net loss per share for the nine and three months ended December 31,
1999 and December 31, 2000 are calculated in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share." Since
Directrix reported a net loss for all periods presented, basic and diluted
earnings per share exclude dilution and are computed by dividing net loss
attributable to common shareholders by the weighted-average common shares
outstanding for the period. Common Stock purchase options were excluded from
the calculation of earnings per share because their effect would be anti-
dilutive. Directrix had 312,973 Common Stock options outstanding as of
December 31, 2000.

8. Directrix capitalizes the acquisition costs for the rights to movie
titles purchased or licensed. The acquisition costs are amortized on a straight-
line basis over the shorter of the useful life or the license period, ranging
from one to five years. Effective April 1, 2000, Directrix reduced the estimated
life of its library of movies to two years.

9. To assist Directrix in achieving its business objectives, Messrs.
Faherty, McDonald and Kirby, Directrix's Chief Executive Officer, President and
Chief Operating Officer, respectively, voluntarily agreed to a reduction in
their annual salaries of $200,000 for Mr. Faherty, $24,750 for Mr. McDonald
and $22,584 for Mr. Kirby. The salary reductions took effect on June 24, 2000
and will continue for the remainder of the year ended March 31, 2001.
In consideration of their agreements to the salary reduction, the Compensation
Committee of the Board of Directors granted each of Messrs. McDonald and Kirby
5,000 fully vested options to acquire shares of the Common Stock of Directrix
exercisable at $4.00 per share, the closing price of Directrix's stock on June
22, 2000. In consideration of Mr. Faherty's agreement to the salary reduction,
after considering several alternatives, the Compensation Committee decided to
grant Mr. Faherty 25,000 fully vested options to acquire shares of the Common
Stock of Directrix exercisable at $2.25 per share, the closing price of
Directrix's stock on September 18, 2000.

On May 1, 2000, pursuant to employment agreements, Directrix granted
employees an aggregate of 40,000 options to acquire shares of the Common Stock
of Directrix exercisable at $5.75 per share, the fair market value of the Common
Stock on the date of grant.

In accordance with APB Opinion No. 25, "Accounting for Stock Issued to
Employees," and related interpretations in accounting for its stock incentive
plans, Directrix did not recognize compensation expense in connection with the
above mentioned grants because the exercise price was equal to the market value
of the stock on the grant date.

In May, 2000, Directrix entered into a four-month agreement with one of
its non-employee directors to provide various consulting services to Directrix.
In consideration for providing these services, Directrix agreed to pay an
aggregate of $20,000 over the term of the agreement.

10. Directrix's service agreements with Playboy and Califa currently expire
on March 15, 2001. Directrix is currently in negotiations to extend the term of
these agreements and is seeking to add additional networks and services.
However, there is no assurance that Directrix will be able to extend the terms
of these agreements.

Directrix and Playboy are in the final stages of negotiating a Letter
of Intent ("LOI") regarding certain network transmission services and studio
facilities to be provided by Directrix, and Playboy's commitment to be the
anchor tenant in such facility. As per terms of the LOI, Directrix will build,
own and operate a large Los Angeles based facility with Playboy serving as the
anchor tenant for the facility. When complete, Directrix will provide
satellite and production services, studio facilities and personnel, production
and post-production offices and commercial space to Playboy at the Los Angeles
based facility. In consideration for providing the above-mentioned services,
Playboy will pay to Directrix a fixed monthly rate for 10 years for rent and
some services, plus additional payments for other services to be provided to
Playboy. The LOI is subject to certain terms and conditions that must be adhered
to by both parties before a binding agreement can be executed. If the LOI is
agreed to by both parties, there is no assurance that Directrix will be able to
obtain the financing necessary to construct the Los Angeles based facility.

Directrix had entered into a satellite services agreement with TV X
Broadcasting ("TV X"), pursuant to which Directrix was to provide playback,
uplink and compressed transponder services for three TV X networks. The TV X
networks were scheduled to launch in December 2000 and were to be originated and
uplinked through the Directrix Operations Facility. Directrix and TV X have
mutually agreed to terminate the agreement.

On July 31, 2000, Directrix entered into an agreement with Akamai
Technologies, Inc. ("Akamai") to act as a authorized reseller to market, resell
and support Akamai's broadband static and streaming services to content
providers over the Directrix Network. Directrix expects to begin generating
revenues from broadband services in March 2000.

On November 13, 2000, Directrix signed a contract with LTV Networks,
Inc., to provide satellite transponder capacity, uplink and digital services to
LTV beginning in December 2000.

11. In August, 2000, in order to segregate its broadband services from its
other business lines, Directrix formed two wholly-owned subsidiaries, Directrix
Broadband, Inc. and Directrix Satellite, Inc.

DIRECTRIX, INC. AND SUBSIDIARIES
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------

Except for the historical information contained therein, the matters discussed
in "Management's Discussion and Analysis of Financial Condition and Results of
Operations" are not historical facts, but are "forward-looking statements," as
that term is defined in the Private Securities Litigation Reform Act of 1995. In
addition, Directrix or its representatives have made and may continue to make
forward-looking statements, orally or in writing, in other contexts, such as in
reports filed with the Securities and Exchange Commission, press releases or
statements made with the approval of an authorized Directrix executive officer.
These forward-looking statements can be identified by the use of forward-looking
terminology such as "believes," "expects," "plans," "may," "will," "would,"
"could," "should," "anticipates," "estimates," "project," "intend," or "outlook"
or the negative of these words or other variations of these words or other
comparable words, or by discussion of strategy that involve risks and
uncertainties. These forward-looking statements are only predictions, and actual
events or results may differ materially as a result of a wide variety of factors
and conditions, many of which are beyond Directrix's control.

Overview

Directrix is a Delaware corporation formed by Spice in contemplation of
the Spice's acquisition by Playboy. On March 15, 1999, prior to the Closing,
Spice contributed to Directrix, among other things, all of the assets and
liabilities associated with the Operations Facility, the EMI Option and the
rights to distribute the explicit version of Spice's adult films in the C-Band
direct-to-home ("DTH") market and over the Internet. Spice also contributed
approximately $0.8 million in cash, accounts receivable and other current assets
totaling approximately $1.2 million and 173,784 shares of Playboy stock valued
at approximately $4.5 million, which were purchased by Spice prior to the
Closing.

On September 1, 1999, Directrix relocated its Operations Facility to a
new facility located in Northvale, New Jersey. The new fully automated network
origination and digital video asset management center is designed to be a 24
hours a day by 7 days a week full service provider of all the technical and
creative services required to develop, support and deliver network television,
video, audio and data services via satellite, fiber and Internet.

For the period from April 1, 1999 to December 31, 1999, Directrix
recorded revenues from EMI based on contractual amounts. Prior to that time,
Directrix had been recording revenues from EMI based on cash receipts. During
the fourth quarter ended March 31, 2000, due to renewed uncertainty surrounding
EMI's ability to pay for all services provided, Directrix resumed recording
revenues from EMI based on cash receipts. For the nine and three months ended
December 31, 1999, Directrix recorded bad debt expense associated with EMI of
approximately $1.0 million and $0.4 million, respectively.

Directrix's service agreements with Playboy and Califa currently expire
on March 15, 2001. Directrix is currently in negotiations to extend the term of
these agreements and is seeking to add additional networks and services.

Directrix and Playboy are in the final stages of negotiating a Letter
of Intent ("LOI") regarding certain network transmission services and studio
facilities to be provided by Directrix, and Playboy's commitment to be the
anchor tenant in such facility. As per terms of the LOI, Directrix will build,
own and operate a large Los Angeles based facility with Playboy serving as the
anchor tenant for the facility. When complete, Directrix will provide satellite
and production services, studio facilities and personnel, production and
post-production offices and commercial space to Playboy at the Los Angeles based
facility. In consideration for providing the above-mentioned services, Playboy
will pay to Directrix a fixed monthly rate for 10 years for rent and some
services, plus additional payments for other services to be provided to Playboy.
The LOI is subject to certain terms and conditions that must be adhered to by
both parties before a binding agreement can be executed. If the LOI is agreed to
by both parties, there is no assurance that Directrix will be able to obtain the
financing necessary to construct the Los Angeles based facility.

DIRECTRIX, INC. AND SUBSIDIARIES
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
- --------------------------------------------------------------------------------

On July 31, 2000, Directrix entered into an agreement with Akamai
Technologies, Inc. ("Akamai") to act as an authorized reseller to market, resell
and support Akamai's broadband static and streaming services to content
providers over the Directrix Network. Directrix expects to begin generating
revenues from broadband services in March 2000.

On November 13, 2000, Directrix signed a contract with LTV Networks,
Inc., to provide satellite transponder capacity, uplink and digital services to
LTV beginning in December, 2000.

In August, 2000, in order to segregate its broadband services from its
other business lines, Directrix formed two wholly-owned subsidiaries, Directrix
Broadband, Inc. and Directrix Satellite, Inc.

Results of Operations

Net Loss. For the nine and three months ended December 31, 2000,
Directrix reported a net loss of approximately $7.3 million and $2.3 million,
respectively, as compared to a net loss of $4.3 million and $2.0 million for the
corresponding periods in 1999. The increase in net loss for the nine months
ended December 31, 2000 was primarily attributable to a decrease in revenue from
EMI of $3.0 million for the same period in 1999. Increases in salary expense,
library amortization, broadband expense, depreciation expense and interest
expense totaling approximately $1.2 million for the nine months ended December
31, 2000 and the inclusion of a gain on the sale of Playboy stock of
approximately $0.3 million in the net loss for the nine months ended December
31, 1999 were offset by decreases in selling, general and administrative
expenses of approximately $1.5 million for the nine months ended December 31,
2000.

The increase in net loss for the three months ended December 31, 2000
was primarily attributable to a decrease in revenue from EMI of approximately
$0.9 million for the same period in 1999, offset by decreases in selling,
general and administrative expenses of approximately $0.7 million. Also
contributing to the increase in net loss was the inclusion of a gain on the sale
of Playboy stock of approximately $0.1 million in the net loss for the three
months ended December 31, 1999.

Revenues. Total revenue for the nine and three months ended December
31, 2000 decreased by $3.0 million and $0.9 million, respectively, as compared
to the same periods in 1999. The decrease in revenue was primarily attributable
to a decrease in revenue associated with the recording of EMI revenue based on
cash receipts for the nine and three months ended December 31, 2000 as compared
to recording EMI revenue based on contractual amounts for the same periods in
1999.

Salaries, Wages and Benefits. Salaries, wages and benefits for the nine
and three months ended December 31, 2000 increased by $0.3 million and $0.1
million, respectively, as compared to the same periods in 1999. The increase in
salaries, wages and benefits was primarily attributable to the addition of two
senior sales and marketing executives in April, 2000.

Library Amortization. Library amortization for the nine months ended
December 31, 2000 increased by approximately $0.2 million as compared to the
same period in 1999. The increase in library amortization was attributable to
the additional amortization from the acquisition of EMI's library of movies
acquired on September 30, 1999 and Directrix's reduction of the estimated life
of its library of movies to two years effective April 1, 2000.

Library amortization for the three months ended December 31, 2000 was
comparable to the same period as 1999.

Satellite Costs. Satellite costs for the three months ended December
31, 2000 decreased by approximately $0.2 million as compared to the same periods
in 1999. The decrease in satellite costs for the three months ended December 31,
2000 was primarily attributable to the amendment of Directrix' lease agreement
with its transponder provider in December 2000, which provided for, among other
things, a reduction in the number of leased transponders from four to three and
have a lower level of protection in the first year if a transponder fails, and a
reduction of Directrix' monthly transponder costs from $520,000 to $240,000 for
the twelve months ending November 30, 2001.

Satellite costs for the nine months ended December 31, 2000 were
comparable to the same period as 1999.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the nine and three months ended December 31, 2000
decreased by approximately $1.5 million and $0.7 million, respectively, as
compared to the corresponding periods in 1999. The decrease was primarily
attributable to a decrease in provision for bad debt expense relating to EMI of
$1.0 million and $0.4 million, respectively, as compared to the corresponding
periods in 1999. Also contributing to the decrease in selling, general and
administrative expenses for the nine and three months ended December 31, 2000
were decreases in production services, rent and utilities, relocation and
temporary help expenses totaling approximately $0.5 million and $0.3 million,
respectively.

Depreciation of Fixed Assets. Depreciation of fixed assets for the nine
months ended December 31, 2000 increased by approximately $0.1 million as
compared to the same period in 1999. The increase was primarily attributable to
fixed assets associated with the relocation and buildout of the Operations
Facility at Northvale, New Jersey. Depreciation of fixed assets for the three
months ended December 31, 2000 was comparable to the corresponding period in
1999.

Interest Expense. Interest expense for the nine and three months ended
December 31, 2000 increased by approximately $0.6 million and $0.3 million,
respectively, as compared to the same periods in 1999.The increase was primarily
attributable to interest on the amounts drawn down from Directrix's revolving
line of credit and the amortization of additional Common Stock purchase warrants
issued in February and October 2000 in connection with the revolving line of
credit.

Liquidity and capital resources

1. On March 31, 2000 and December 31, 2000, Directrix had working capital
deficiency of approximately $1.1 million and $4.8 million, respectively. The
decline in working capital during the nine and three months ended December 31,
2000 was primarily attributable to operating losses of $6.7 million and $2.1
million for the corresponding periods.

Directrix has a revolving line of credit of $3.5 million ("Credit
Facility") pursuant to the terms of a March 15, 1999 Security and Loan
Agreement, as amended by the Amended and Restated Loan and Security Agreement
(as amended, the "Amended Loan Agreement") dated February 15, 2000. Under the
terms of the Amended Loan Agreement, the Credit Facility was increased from $1.5
million to $3.5 million, the maturity date of the Credit Facility was changed
from March 15, 2004 to March 15, 2002 and the terms of the Loan Agreement were
modified to provide that Directrix was not permitted to draw down on the Credit
Facility after March 15, 2001. The providers of the Credit Facility include the
Chairman of the Board and Chief Executive Officer, the President and a Director
of Directrix, as well as two unrelated parties (collectively, the "Lenders").
The Credit Facility bears interest at 11% per annum, payable monthly, and
matures on March 15, 2002.

On October 16, 2000, Directrix and the Lenders agreed to modify the
terms of the credit facility (the "Amendment"). The Amendment provides for an
increase in the Credit Facility from $3.5 million to $4.5 million, and a
modification of the financial covenants, so that beginning with the year ended
March 31, 2001, Directrix must have $3.0 million of stockholders' equity at the
end of each fiscal year. The Amendment also states that if Directrix has not
sold or transferred the EMI Option by March 31, 2001, then the Lenders shall
have the option to convert their Notes into Directrix Common Stock. If Directrix
sells, assigns or otherwise transfers the EMI Option for consideration payable
in cash, then Directrix must apply the cash consideration in excess of the
receivable owed to Directrix by EMI, as a reduction of the amounts drawn down
from the Credit Facility. If the cash consideration in excess of the receivable
owed to Directrix by EMI is less than the amounts drawn down from the Credit
Facility, then Directrix and the Lenders will negotiate to give the Lenders the
option to convert their remaining Notes into Directrix Common Stock. Directrix
shall then be entitled to draw down any repaid amounts from the Credit Facility
as provided for in the Amended Loan Agreement and the Amendment.

In consideration of their agreeing to provide the Credit Facility and
the Amendment, Directrix granted the Lenders an aggregate of 105,000 and 60,000
Common Stock purchase warrants, exercisable for ten years at $0.01 per share,
respectively. The aggregate fair market value of the warrants (determined using
the Black-Scholes pricing model) amounts to approximately $0.8 million and is
being amortized over the term of the Credit Facility. All of the warrants were
exercised as of December 31, 2000.

Directrix leased four satellite transponders under various lease
agreements (as amended), with monthly transponder lease payments aggregating
$520,000. The lease agreements were scheduled to expire at various times through
November, 2004. In December, 1999, Directrix entered into an agreement to defer
approximately $1.0 million of lease payments to be paid in twenty-four equal
monthly installments of $40,833 beginning April 1, 2000 of which $0.1 million is
classified as non-current. At December 31, 2000, Directrix had a current
transponder lease liability of $4.4 million, which included $4.1 million of past
due amounts.

In December 2000, Directrix amended its existing lease agreements with
its transponder provider. Under terms of the amendment, the expiration date of
all of the agreements was extended to November 30, 2002, the number of leased
transponders was reduced from four to three and have a lower level of protection
in the first year if a transponder fails. The amendment also provides for a
reduction of Directrix' monthly transponder costs from $520,000 to $240,000 for
the twelve months ending November 30, 2001 and $300,000 for the final twelve
months ending November 30, 2002. The amendment also states that the parties
would continue negotiations to determine a long term repayment schedule of the
past due transponder payments as of December 31, 2000. If Directrix and its
transponder provider are unable to reach an agreement for repayment of the past
due transponder payments, then Directrix will have to find another transponder
provider. There can be no assurance that management will be successful in its
efforts to finalize the renegotiation of its existing transponder lease
agreements pertaining to the past due transponder payments.

As previously mentioned, Directrix commenced operations as a
stand-alone business following its spin-off from Spice on March 16, 1999.
Directrix incurred net losses of approximately $7.3 million and $2.4 million for
the nine and three months ended December 31, 2000, respectively. Directrix also
incurred a net loss of $6.1 million for the year ended March 31, 2000. At
December 31, 2000, Directrix had a working capital deficiency of $5.2 million,
primarily resulting from the deferral of transponder lease liability payments
under an amended lease agreement that is being renegotiated as described
below. These matters raise substantial doubt about Directrix's ability to
continue as a going concern. Directrix's continued existence is dependant upon
several factors, including its ability to generate operating cash flow via
execution of its long-term business plan, and secure additional financing to
provide for the immediate deficiency in working capital.

Management believes that the relocation and buildout of the Operations
Facility is critical to the realization of Directrix's long-term business
plan. Management also believes that since the buildout of the Operations
Facility has been completed, Directrix now has the capacity to increase revenue
by using its technological resources to expand its customer base and develop
new business lines without significantly changing its cost structure and, as a
result, generate operating cash flow.

Management forecasts that Directrix will require additional funding to
provide for the deficiency in working capital until Directrix generates
operating cash flow. Management believes that it has access to potential sources
of capital sufficient enough to meet Directrix's needs over the next twelve
months. The potential sources of capital include, but are not limited to: (i) an
additional increase in its line of credit, (ii) the sale of the EMI Option
and/or (iii) a possible private placement of equity securities with individual,
institutional and strategic investors. There can be no assurance, however, that
management will be successful in its efforts to obtain sufficient capital,
execute its long-term business plan, or that the successful implementation of
the business plan will improve operating results.

2. During the nine months ended December 31, 1999, Directrix sold 124,784
shares of Playboy stock contributed by Spice at Closing for net cash proceeds
of approximately $3.6 million,resulting in a gain of approximately $0.3 million.

PART II - OTHER INFORMATION

Item 1: Legal Proceedings.

None.

Item 6: Exhibits and Reports On Form 8-K.

(a) Exhibits.

None.

(b) Reports on Form 8-K.

None.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf of the
undersigned, thereunto duly authorized.

DIRECTRIX, INC.

Dated: February 20, 2001

By:/s/ Donald J. McDonald, Jr.
----------------------------------------
Donald J. McDonald, Jr.
President, Director, Chief Financial
Officer and Principal Accounting Officer