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 June 30, 2001

[ ] 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 July 31, 2001
was 2,403,440.

PART I

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

June 30, March 31,
2001 2001
----------------------------------------
(unaudited) (derived from
audited financial
statements)

ASSETS:

Current assets:
Cash and cash equivalents .............................................. $ 24,000 $ 79,000
Marketable securites ................................................... 245,000 --
Accounts receivable, billed ............................................ 292,000 879,000
Accounts receivable, unbilled .......................................... 22,000 77,000
Prepaid expenses and other current assets .............................. 97,000 58,000
---------------- ----------------
Total current assets .................................... 680,000 1,093,000
Property and equipment, net ................................................. 3,859,000 4,180,000
Library of movies, net ...................................................... 346,000 486,000
Deferred financing costs .................................................... 280,000 380,000
Deferred lease costs ........................................................ 110,000 --
Other assets ................................................................ 167,000 167,000
---------------- ----------------
Total assets ............................................ $ 5,442,000 $ 6,306,000
================ ================

LIABILITIES AND STOCKHOLDERS' DEFICIT:

Current liabilities:
Accounts payable ....................................................... $ 2,088,000 $ 1,687,000
Transponder lease liability ............................................ 10,726,000 5,798,000
Accrued expenses and other current liabilities ......................... 380,000 399,000
Officer loan payable ................................................... 87,000 --
Customer deposits ...................................................... 386,000 394,000
Revolving line of credit ............................................... 4,166,000 4,166,000
---------------- ----------------
Total current liabilities ............................... 17,833,000 12,444,000

Deferred rent ............................................................... 37,000 49,000
Subordinated convertible debentures ......................................... 500,000 375,000
---------------- ----------------
Total liabilities ....................................... 18,370,000 12,868,000
---------------- ----------------

Commitments and contingencies

Stockholders' deficit
Common stock, $.01 par value; authorized 25,000,000 shares; 2,403,440 and
2,239,785 shares issued and outstanding at June 30, 2001 and
March 31, 2001, respectively ......................................... 24,000 23,000
Additional paid-in capital ............................................. 21,706,000 21,170,000
Deferred Compensation .................................................. (388,000) --
Accumulated other comprehensive loss ................................... (97,000) --
Accumulated deficit .................................................... (34,173,000) (27,755,000)
---------------- ----------------
Total stockholders' deficit ............................. (12,928,000) (6,562,000)
---------------- ----------------
Total liabilities and stockholders' deficit ............. $ 5,442,000 $ 6,306,000
================ ================

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

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

Three Months Ended June 30,
2001 2000
--------------------- --------------------

Revenues .................................................. $ 1,187,000 $ 1,641,000
--------------------- --------------------

Operating expenses:
Salaries, wages and benefits .......................... 872,000 809,000
Library amortization .................................. 140,000 170,000
Satellite costs ....................................... 362,000 1,673,000
Broadband expenses .................................... 466,000 --
Selling, general and administrative expenses .......... 435,000 561,000
Depreciation .......................................... 356,000 348,000
--------------------- --------------------
Total operating expenses ....................... 2,631,000 3,561,000
--------------------- --------------------

Loss from operations ........................... (1,444,000) (1,920,000)

Other expenses:
Interest expense ...................................... (354,000) (145,000)
Transponder penalty ................................... (4,620,000) --
--------------------- --------------------
Total other expenses ........................... (4,974,000) (145,000)

--------------------- --------------------
Net loss ....................................... $ (6,418,000) $ (2,065,000)
===================== ====================

Net loss per common share:
Basic and Diluted ..................................... $ (2.73) $ (0.95)
===================== ====================

Weighted average number of shares outstanding:
Basic and Diluted ..................................... 2,349,488 2,179,785
===================== ====================

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

DIRECTRIX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT of STOCKHOLDERS' EQUITY (unaudited)
FOR THE THREE MONTHS ENDED JUNE 30, 2001
____________________________________________________________________________________________________________________________________

Additional Other
Number of Common Paid-in Deferred Comprehensive Accumulated
Shares Stock Capital Compensation Loss Deficit Total
--------- ------- ----------- ------------ ------------- ------------- -------------

Balance at March 31, 2001 .............. 2,239,785 $23,000 $21,170,000 $ -- $ -- $(27,755,000) $(6,562,000)

Restricted stock issued in
connection with salary
reductions ....................... 163,655 1,000 473,000 (388,000) -- -- 86,000

Intrinsic value of benenficial
conversion feature of
debentures ....................... -- -- 63,000 -- -- -- 63,000

Net loss ........................... -- -- -- -- -- (6,418,000) (6,418,000)

Comprehensive loss due to decline
in market value of marketable
securities ....................... -- -- -- -- (97,000) -- (97,000)

-------------
Comprehensive Loss ................. -- -- -- -- -- -- (6,515,000)
-------------

--------- ------- ----------- ------------ ------------- -------------- -------------
Balance at June 30, 2001 ............... 2,403,440 $24,000 $21,706,000 $ (388,000) $ (97,000) $(34,173,000) $(12,928,000)
========= ======= =========== ============ ============= ============== =============

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

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

Three months ended June 30,
2001 2000
----------------- -----------------

Cash flows from operating activities:
Net loss ................................................................ $ (6,418,000) $ (2,065,000)
----------------- -----------------

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of property and equipment .................................. 356,000 348,000
Amortization of library of movies ....................................... 140,000 170,000
Amortization of deferred financing costs ................................ 100,000 70,000
Non-cash rent expense ................................................... (12,000) (7,000)
Non-cash interest ....................................................... 63,000 --
Deferred compensation ................................................... 86,000 --
Changes in assets and liabilities:
Decrease (Increase) in accounts receivable ......................... 300,000 (175,000)
Increase in prepaid expenses and other current assets .............. (39,000) (34,000)
Increase in deferred lease costs ................................... (110,000) --
Increase in accounts payable and accrued expenses .................. 698,000 462,000
Increase in transponder penalty .................................... 4,620,000 --
Decrease in customer deposits ...................................... (8,000) --
----------------- -----------------
Total adjustments ........................................ 6,194,000 834,000
----------------- -----------------

Net cash used in operating activities .................... (224,000) (1,231,000)
----------------- -----------------

Cash flows from investing activities:
Purchase of property and equipment ................................. (35,000) (233,000)
----------------- -----------------
Net cash used in investing activities .................... (35,000) (233,000)
----------------- -----------------

Cash flows from financing activities:
Officer loans ...................................................... 79,000 --
Borrowings under revolving line of credit .......................... -- 1,155,000
Proceeds from issuance of subordinated convertible debentures ...... 125,000 --
----------------- -----------------
Net cash provided by financing activities ................ 204,000 1,155,000
----------------- -----------------

Net decrease in cash and cash equivalents ................................... (55,000) (309,000)
Cash and cash equivalents, beginning of the period .......................... 79,000 324,000
----------------- -----------------
Cash and cash equivalents, end of the period ................................ $ 24,000 $ 15,000
================= =================

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest ........................................................ $ 118,000 $ 56,000
================= =================

Supplemental schedule of non-cash investing and financing activities:
Reduction of accounts receivable in exchange for
marketable securities ........................................... $ (342,000) $ --

Adjustment to value of warrants issued in connection with the
revolving line of credit ........................................ $ -- $ (15,000)

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

DIRECTRIX, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2001 (unaudited)
- --------------------------------------------------------------------------------

1. Basis of Presentation. The accompanying unaudited financial
statements have been prepared in accordance with accounting principles generally
accepted in the United States of America for interim financial information and
the instructions to Form 10-QSB and do not include all the information and
footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements. In the opinion of
management, all adjustments consisting of normal recurring accruals, considered
necessary for a fair presentation of the results for the interim period have
been included. Operating results for the three months ended June 30, 2001 are
not necessarily indicative of the results that may be expected for the year
ended March 31, 2002. The accompanying condensed consolidated financial
statements and the information included under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations" should
be read in conjunction with the condensed consolidated financial statements and
related notes thereto included in Directrix' Annual Report for the year ended
March 31, 2001 as filed with our Form 10-KSB.

2. Business Organization. Directrix, Inc. ("Directrix"), a Delaware
corporation, is a full service provider of network origination, digital video
asset management and digital content delivery services, primarily to the adult
entertainment industry. Directrix offers a complete range of network
origination services for the creation and distribution of traditional television
networks using advanced video file server based playback capabilities.
Directrix provides digital content management and delivery services using The
Directrix Content Delivery Network that provides media owners with the ability
to manage their content and distribute it using Directrix' satellite, fiber
optic and Internet connectivity.

Directrix was originally a wholly owned subsidiary of Spice
Entertainment Companies, Inc. ("Spice") and provided network origination and
technical services for Spice's networks. Directrix became a stand-alone company
when, as part of the March 15, 1999 merger ("Merger") of Spice into Playboy
Enterprises Group, Inc. ("Playboy"), Spice spun off Directrix by distributing
approximately 2,075,000 shares of Directrix common stock to the Spice
stockholders. As part of the Merger, Spice contributed certain assets to
Directrix including its New York City based master control and playback facility
and related technical services agreements, and its option to acquire the network
business or stock of Emerald Media, Inc. (the "EMI Option"). Directrix also
assumed certain liabilities related to the transferred assets.

In September 1999, Directrix relocated its master control and playback
facility from New York City to Northvale, New Jersey. Directrix' service
agreements with Playboy were to expire on March 15, 2001. During the
negotiations to secure an extension and expansion of Playboy's service
agreements, Directrix agreed to establish a network origination, studio services
and uplink facility in Los Angeles with Playboy as its anchor tenant and primary
customer. To that end, Directrix and Playboy entered into a February 26, 2001
letter of intent ("LOI") whereby Playboy agreed to become the anchor tenant of
the proposed new facility and upon the planned acquisition of such facility,
agreed to enter into a multi-year master services agreement for network
origination and studio services for Playboy's networks and original productions.
In connection with the proposed transaction with Playboy, Directrix entered into
a three party letter of intent with Kingston Investors Corp. ("Kingston") and
Playboy. Under the three party letter of intent, Kingston agreed to purchase
the property and make improvements to the property. Kingston and Directrix are
in final negotiations of a 15 year triple net lease of the property. Directrix
and Playboy are in final negotiations of a triple net sublease for approximately
half of the property and a 15 year service agreement (the "Master Services
Agreement") for the technical services described above (collectively, the
"Playboy Transaction"). See Note 4 for a more complete description of these
transactions.

3. Financial Condition & Liquidity. The accompanying financial
statements have been prepared in conformity with accounting principles generally
accepted in the United States of America, which contemplate continuation of
Directrix as a going concern. However, since becoming a stand-alone company on
March 15, 1999, Directrix incurred net losses of $6.1 million and $10.3 million
for the years ended March 31, 2000 and March 31, 2001, respectively, and a net
loss of $6.4 million for the three months ended June 30, 2001. At June 30,
2001, Directrix has a working capital deficiency of $17.2 million. These
matters raise substantial doubt about Directrix' ability to continue as a going
concern. Directrix' continued existence is dependent upon several factors,
including the completion of the Master Services Agreement with Playboy,
management's ability to successfully implement the restructuring plan described
below and its ability to generate operating cash flow via execution of its
long-term business plan. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or amounts and classification of liabilities that might be necessary
should Directrix be unable to continue in existence. Management's plans and
intentions in regard to this matter are described below in Note 4.

4. Restructuring Plan. Management has developed and begun implementation
of a multi-phase restructuring plan. The restructuring plan addresses the areas
that management believes are critical to the realization of Directrix' short and
long-term plans. The areas addressed by this plan are outlined below, and
include (i) the transponder services agreement, (ii) restructuring of its
revolving line of credit ("Credit Facility"), (iii) the Los Angeles facility,
(iv) transition of its new business to the Los Angeles based facility and
attracting new business and (v) new financing.

Transponder Services Agreement. Approximately $10.7 million of the
working capital deficiency was attributable to amounts owed to Loral Skynet
("Loral") under Directrix' Agreement for Transponder Services ("Transponder
Agreement"). In May 2001, Directrix terminated its Transponder Agreement and
transitioned its transponder services customers to Loral.

When the Transponder Agreement was terminated, Directrix owed Loral
approximately $6.1 million for past due service fees and a $4.6 million early
termination charge. As part of the restructuring plan, in July 2001, Loral
agreed to extinguish its receivable and the early termination charge in exchange
for (i) the issuance to Loral of a $1.65 million note under the Credit Facility,
(ii) Directrix' issuance of $3.0 million face amount of a new series of junior
preferred stock convertible at $3.00 per share and bearing a 6% dividend which
may be paid in kind ("PIK") with Directrix common stock or in cash, at
Directrix' option and (iii) Directrix' issuance of a five-year warrant to
acquire 200,000 shares at an exercise price of $3.00 per share. The
agreement is subject to the execution of formal documentation and consummation
of the Playboy Transaction.

Management believes that the direct leasing of satellite transponders
no longer fits into Directrix' long-term plans and by terminating the
Transponder Agreement, Directrix has eliminated its largest recurring monthly
charge and has ceased providing transponder services.

Directrix recognized revenue attributable to the leasing of
transponders of $0.1 million and $1.2 million for the three months ended
June 30, 2001 and 2000, respectively, of which $1.0 million of revenue related
to EMI for the three months ended June 30, 2000.

Restructuring of the Credit Facility. Directrix has a $4.5 million
Credit Facility, from which $4.2 million has been drawn down as of June 30,
2001. The Credit Facility was to mature on March 15, 2002, but after March 15,
2001, Directrix could no longer draw down any further advances under the Credit
Facility. The Credit Facility is secured by a first lien on all of Directrix'
assets.

To facilitate the agreement with Loral and enhance Directrix' ability
to attract new capital, Directrix has negotiated a restructuring of the Credit
Facility. Under the agreement, the holders of the Credit Facility agreed to (i)
extend the maturity date by one year until March 31, 2003, (ii) permit Directrix
to PIK the interest payment and (iii) waive the March 31, 2001 violation of
and eliminate the stockholders' equity covenant and replace it with an annual
covenant commencing with the fiscal year ending March 31, 2002 which requires
that Directrix not allow its stockholders' deficit to exceed $5.0 million. In
consideration of the foregoing, Directrix agreed to issue to the holders of the
Credit Facility, excluding Messrs. Faherty and McDonald (two executive officers
of Directrix), and Loral, warrants to acquire 125,000 shares of Directrix common
stock at an exercise price of $3.00 per share. The agreement is subject to the
execution of formal documentation and consummation of the Playboy Transaction.

Messrs. Faherty and McDonald agreed to the cancellation of their notes
under the Credit Facility, which aggregated $1.65 million at March 31, 2001. In
consideration thereof, Directrix will issue $1.65 million face amount of a new
series of senior preferred and warrants to acquire 200,000 shares of Directrix
common stock, subject to the execution of formal documentation and consummation
of the Playboy Transaction. The senior preferred will have the same terms as
the junior preferred issued to Loral except (i) it will have priority over the
Loral preferred on liquidation, (ii) the conversion price will be $1.50 per
share, (iii) the holders will have the right to appoint two members to the
Directrix Board of Directors and (iv) the holders will have voting rights as if
their preferred stock had been converted into common stock. The warrants will
have an exercise price of $3.00 per share and will be exercisable for five
years.

Los Angeles Facility. Management believes that the establishment of
the Los Angeles facility is critical to the realization of its long-term
business plan. As noted above and in connection with the proposed transaction
with Playboy, Directrix entered into a three party letter of intent with
Kingston and Playboy, under which Kingston agreed to purchase the building, make
improvements to the property and enter into a triple net lease of the property
with Directrix for fifteen years. The purchase and sale agreement for the
property, to which Directrix was not a party, was executed by Kingston and the
prospective seller on March 30, 2001, and the parties to this transaction
anticipate a closing on or about August 31, 2001. Directrix and Kingston are in
final negotiations of a triple net lease of the property.

Kingston was obligated to deposit $250,000 upon the execution of the
purchase and sale agreement of the property. Directrix was obligated to
contribute half of this amount and Playboy advanced this amount to Directrix as
a prepayment for future network origination services. The deposit will be
refunded when Kingston acquires the property. In the event Kingston does not
acquire the property, Directrix will lose its deposit and Playboy will be
entitled to apply the $125,000 against the payments due for the network
origination services.

As contemplated by the letter of intent between Playboy and Directrix
("LOI"), the parties are in final negotiations of a 15-year triple net sublease
for approximately half of the premises and a 15-year Master Services Agreement,
under which Directrix will provide network origination and studio management
services for Playboy's networks and productions. The LOI also extended the
term of Directrix' current services agreement with Playboy, which was set to
expire on March 15, 2001, to March 31, 2002. Directrix has agreed to provide
equipment, integration and technical improvements necessary to provide the
services under the Master Services Agreement when the facility is operational
and has secured up to $5.0 million of financing towards equipment and system
integration fees from CapitalSource Finance LLC, subject to due diligence, the
execution of formal documentation and the consummation of the Playboy
Transaction. Upon execution of the Master Services Agreement, Directrix will
issue a warrant to Playboy to acquire 600,000 shares of its common stock at an
exercise price of $3.50.

Directrix was in final negotiations to extend the term of its service
agreements with Califa and its affiliate, VOD, Inc. ("VODI") to provide network
origination services for their networks. These agreements were set to expire in
March 15, 2001. In May 2001, Directrix began providing network origination
services to VODI for an additional network. In July 2001, Playboy exercised its
option to acquire the networks operated by Califa and VODI. Under the Master
Services Agreement, when executed, Directrix will provide network origination
services for the networks operated by Califa and VODI in addition to providing
network origination services for several Playboy owned and operated networks
from the Los Angels based facility. The agreement will also provide for the
extension of the existing service agreements until the networks are originated
from the West Coast facility.

Transition of its Existing Business to the Los Angeles Facility and
Attract New Business. Although Playboy will serve as the anchor tenant for the
Los Angeles facility, the facility will have the capacity to provide network
origination, studio facilities and other technical services to additional
customers and has a second studio that will only be partially utilized by
Playboy. Management intends to transition Directrix' existing service
agreements for the networks operated by Playboy (including the networks formerly
owned by Califa and VODI) to the Los Angeles based facility, and anticipates
providing services to additional customers from the facility.

After transitioning Directrix' existing service agreements for the
networks operated by Playboy, Califa and VODI to the West Coast facility,
Directrix will have substantial unused capacity at its Northvale facility.
Management would prefer to maintain the Northvale facility and operation centers
on both coasts and is currently exploring several options for the productive
utilization of the facility, including diversifying its East Coast customer base
or subleasing the facility to a third party. There can be no assurances that
Directrix will be successful in obtaining new business sufficient to maintain
operation centers on both coasts or find a lessee for the Northvale facility.

New Financing. The final phase of management's plan is to locate a new
source of working capital. Management forecasts that Directrix will require
additional funding to complete the buildout of the West Coast facility and to
provide for the deficiency in working capital until Directrix generates
operating cash flow. Management is exploring various options, including the
possible private placement of equity securities with individual, institutional
and/or strategic investors, but has yet to secure a commitment for any such
financing. There can be no assurance that management will be successful in its
efforts to obtain sufficient capital.

Management believes that if it is successful in implementing the
restructuring plan described above, Directrix will be able to realize its
long-term business plan and achieve profitability. However, there can be no
assurance that Directrix will be able to implement the restructuring plan or
realize on its long-term business plan. Moreover, there can be no assurance
that the successful implementation of the business plan will improve operating
results and/or result in Directrix achieving profitability. There also can be
no assurance that unforeseen circumstances could prevent Directrix from
achieving its goal.

5. Warrants. On April 30, 2001, Directrix issued Kingston five-year
warrants to acquire 37,500 shares of Directrix common stock at an exercise price
of $2.90 per share, the fair market value of Directrix stock on the grant date.
The issuance and exercise of the warrant is subject to the closing of the
property, as previously decribed in Note 4 "Los Angeles Facility".

6. Net Loss per share. Net loss per share for the three months ended
June 30, 2000 and June 30, 2001 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. Options, warrants and convertible debentures were
excluded from the calculation of diluted earnings per share because their effect
would be anti-dilutive. Directrix had 330,596 and 287,973 common stock options
outstanding as of June 30, 2001 and June 30, 2000, respectively. At June 30,
2001 and 2000, all common stock purchase warrants were exercised except for the
warrants issued to Kingston in April 2001 as described in Note 5.

7. Significant Customers. In May 2001, Emerald Media, Inc. ("EMI") shut
down its networks, and sold its customer list to its largest competitor, a
wholly owned subsidiary of New Frontier Media, Inc. ("New Frontier"), for cash
and 94,137 shares of New Frontier stock. Directrix entered into an agreement
with EMI that provided for the extinguishment of the EMI Option and for the
settlement of the EMI receivable, which amounted to approximately $0.6 million.
As per terms of the agreement, on May 1, 2001, Directrix forgave its rights to
the EMI Option, and EMI agreed to transfer cash and stock proceeds from the sale
of its customer list to Directrix as settlement of the EMI receivable. At May
1, 2001, the 94,137 shares of New Frontier stock were recorded at a value of
$3.63 each, which was the per share market value, aggregating approximately $0.3
million of marketable securities. As of June 30, 2001, Directrix recorded
approximately $0.1 million of cash basis revenue associated with recovery of
amounts owed in excess of the EMI receivable.

In accordance with SFAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," on May 1, 2001, Directrix classified the 94,137
shares of New Frontier stock as "available for sale." At June 30, 2001, the
94,137 shares of New Frontier stock were recorded at a value of $2.60 each,
which was the per share market value. In accordance with SFAS No. 130,
"Reporting Comprehensive Income," the $0.1 million loss associated with the
decrease in per share market value through June 30, 2001 is recorded as equity
under "Accumulated other comprehensive loss."

EMI had acquired some of its networks from Logix Development
Corporation ("Logix") under an agreement dated January 18, 1997. Under that
agreement, EMI engaged Logix to operate its call center for the EMI networks.
After the sale of the customer list to the New Frontier subsidiary, Logix
brought an action in the Los Angels County Superior Court (Logix, et. al. v.
Emerald Media, Inc., et. al., Case No. BC250732) in May 2001, naming Directrix
as a defendant to the suit. Logix also named as defendants in the action Spice
(now a subsidiary of Playboy Enterprises, Inc.) and New Frontier. The suit
alleges, among other things, that the sale of the customer list to New Frontier
was in derogation of Logix' rights to the customer list. The suit alleges
breach of contract, fraud and negligent misrepresentation and Logix is seeking
damages in excess of $10 million. Directrix is obligated to defend the suit on
behalf of Spice.

On July 12, 2001, New Frontier filed a cross complaint against Logix,
EMI, Roger Faherty and Donald McDonald, Directrix' Chief Executive Officer and
President, respectively, and Daniel J. Barsky, counsel to EMI in the New
Frontier transaction. The cross complaint alleges, among other things, that EMI
breached its representations and warranties concerning its rights to the
customer list and that Messrs. Faherty, McDonald and Barsky had misrepresented
EMI's rights to the customer list. Directrix has undertaken the defense of the
cross complaint on behalf of Messrs. Faherty, McDonald and Barsky. Directrix
believes the Logix suit and the cross complaint are without merit and plans a
vigorous defense.

8. Executive Compensation. To assist Directrix in achieving its business
objectives, Messrs. Faherty, McDonald and Kirby, Directrix' Chief Executive
Officer, President and Chief Operating Officer, respectively, voluntarily agreed
to extend the prior year reductions in their annual salaries through March 31,
2002. The reductions took effect on June 24, 2000 and provided for reductions
in their annual salaries of $200,000 for Mr. Faherty, $24,750 for Mr. McDonald
and $22,584 for Mr. Kirby. In addition, the three officers and Terry Taylor,
the Vice-President of Sales and Marketing, voluntarily agreed to an additional
reduction in their annual salaries of $25,000 on an annualized basis. The
additional salary reductions took effect on May 1, 2001 and will continue for
the remainder of the year ended March 31, 2002.

In consideration of their agreements to the June 24, 2000 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' stock on June 22, 2000. Mr. Faherty was granted 25,000 fully vested
stock options exercisable at $2.25 per share, the closing price of Directrix'
stock on September 18, 2000.

In consideration of their agreement to continue the salary reductions
through March 31, 2002, the Compensation Committee awarded Messrs. Faherty,
McDonald and Kirby 96,552, 11,948 and 10,903 restricted shares, respectively, of
Directrix common stock at $2.90 per share. In consideration of the additional
salary reduction which took effect on May 1, 2001, the Compensation Committee
granted each of the executives 11,063 restricted shares of Directrix common
stock at $2.90 per share. All the shares of restricted stock were issued on May
1, 2001. At June 30, 2001, Directrix recorded approximately $388,000 of
deferred compensation and compensation expense of approximately $86,000
pertaining to the restricted stock.

On May 1, 2000, pursuant to employment agreements, Directrix granted
employees an aggregate of 50,000 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.

9. Subordinated Convertible Debentures. During the three months ended
June 30, 2001, Directrix received the remaining $125,000 of cash under its
$500,000 private placement of convertible debentures ("Debentures") executed in
March 2001. The Debentures are convertible into shares of Directrix common
stock at any time, at the option of the holders, at a conversion rate of $1.50
per share of common stock. The conversion rate is subject to anti-dilution
protection for stock splits, stock dividends, stock reclassifications and
mergers. Directrix can require conversion at any time if the average trading
price of its common stock is over $5.00 for any ten consecutive trading days
prior to maturity. The Debentures mature on March 31, 2003, are senior to all
of Directrix' other obligations other than the Credit Facility and bear interest
at 6% per annum, payable at maturity. Directrix can elect to PIK the interest
payment in lieu of a cash interest payment. Directrix has granted the Debenture
holders registration rights for the shares of common stock into which the
Debentures are convertible and has committed to file the registration statement
during the year ended March 31, 2002.

During the three months ended June 30, 2001, Directrix recorded
interest expense attributable to the intrinsic value of the beneficial
conversion feature of the convertible debenture of $62,500, based on the
difference between the conversion price and the fair market value of Directrix
common stock on the February 28, 2001 commitment date.

In July 2001, Directrix offered up to $600,000 of a second series of
convertible debentures which have the same terms as the Debentures. To date,
$250,000 of debentures from the second series have been issued, of which $50,000
were issued to Mr. Faherty, the Chief Executive Officer of Directrix.

10. Library of Movies. 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.

11. Significant Agreements. Directrix received an undated notice of
default from Akamai Technologies, Inc. ("Akamai") for amounts owed under the
Amended and Restated Akamai Reseller Agreement dated August 15, 2000, as amended
(the "Reseller Agreement"). Directrix contested the default notice as to the
amount owed and asserted that Akamai has failed to fulfill its commitments to
Directrix and its customers and that there were several service related issues.
The parties attempted to resolve the open issues and negotiate a settlement of
the outstanding amounts owed but were unable to do so. As a result, on July 31,
2001, Directrix issued a termination notice to Akamai terminating the Reseller
Agreement. Akamai also notified Directrix that it was terminating the Reseller
Agreement. The Reseller Agreement calls for Akamai to directly provide services
to these customers unless these accounts choose to move to another Content
Delivery Network.

Directrix is currently seeking a replacement broadband services
provider. There can be no assurance that Directix will be successful in
securing a replacement broadband services provider or if a replacement provider
is found, whether the terms of any such agreement would be acceptable to
Directrix.

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, a Delaware corporation, is a full service provider of
network origination, digital video asset management and digital content delivery
services, primarily to the adult entertainment industry. Directrix offers a
complete range of network origination services for the creation and distribution
of traditional television networks using advanced video file server based
playback capabilities. Directrix provides digital content management and
delivery services using The Directrix Content Delivery Network that provides
media owners with the ability to manage their content and distribute it using
Directrix' satellite, fiber optic and Internet connectivity.

Directrix was originally a wholly owned subsidiary of Spice
Entertainment Companies, Inc. ("Spice") and provided network origination and
technical services for Spice's networks. Directrix became a stand-alone company
when, as part of the March 15, 1999 merger ("Merger") of Spice into Playboy
Enterprises, Inc. ("Playboy"), Spice spun off Directrix by distributing
approximately 2,075,000 shares of Directrix common stock to the Spice
stockholders. As part of the Merger, Spice contributed certain assets to
Directrix including its New York City based master control and playback facility
and related technical services agreements, and its option to acquire the network
business or stock of Emerald Media, Inc. (the "EMI Option"). Directrix also
assumed certain liabilities related to the transferred assets.

Directrix received an undated notice of default from Akamai
Technologies, Inc. ("Akamai") for amounts owed under the Amended and Restated
Akamai Reseller Agreement dated August 15, 2000, as amended (the "Reseller
Agreement"). Directrix contested the default notice as to the amount owed and
asserted that Akamai has failed to fulfill its commitments to Directrix and its
customers and that there were several service related issues. The parties
attempted to resolve the open issues and negotiate a settlement of the
outstanding amounts owed but were unable to do so. As a result, on July 31,
2001, Directrix issued a termination notice to Akamai terminating the Reseller
Agreement. Akamai also notified Directrix that it was terminating the Reseller
Agreement. The Reseller Agreement calls for Akamai to directly provide services
to these customers unless these accounts choose to move to another Content
Delivery Network.

Directrix is currently seeking a replacement broadband services
provider. There can be no assurance that Directix will be successful in
securing a replacement broadband services provider or if a replacement provider
is found, then the terms of any such agreement would be acceptable at all.

Results of Operations

Net Loss. For the three months ended June 30, 2001, Directrix reported
a net loss of $6.4 million as compared to a net loss of $2.1 million for the
corresponding period in 2000. The increase in net loss for the three months
ended June 30, 2001 was primarily attributable to the inclusion of the $4.6
million transponder penalty associated with the termination of the Transponder
Agreement during the three months ended June 30, 2001. Decreases in satellite
costs totaling approximately $1.3 million for the three months ended June 30,
2001 were mostly offset by a decrease in revenue of $0.5 million as compared to
the three months ended June 30, 2000, an increase in interest expense of $0.2
million as compared to the three months ended June 30, 2000, and the inclusion
of $0.5 million of expenses associated with broadband services.

Revenues. Total revenue for the three months ended June 30, 2001
decreased by approximately $0.5 million as compared to the same periods in 2000.
The decrease in revenue was primarily attributable to a decrease in revenue from
EMI of $1.0 million, offset by the inclusion of $0.5 million of revenue
attributable to broadband services and a $0.1 million increase in revenue from
additional networks operated by Playboy and Califa.

The decrease in revenue from EMI was attributable to the shut down of
the EMI networks. In May 2001, EMI shut down its networks, and sold its
customer list to its largest competitor, a wholly owned subsidiary of New
Frontier Media, Inc. ("New Frontier"), for cash and 94,137 shares of New
Frontier stock. Directrix entered into an agreement with EMI that provided for
the extinguishment of the EMI Option and for the settlement of the EMI
receivable, which amounted to approximately $0.6 million. As per terms of the
agreement, on May 1, 2001, Directrix forgave its rights to the EMI Option, and
EMI agreed to transfer cash and stock proceeds from the sale of its customer
list to Directrix as settlement of the EMI receivable. At May 1, 2001, the
94,137 shares of New Frontier stock were recorded at a value of $3.63 each,
which was the per share market value, aggregating approximately $0.3 million of
marketable securities. As of June 30, 2001, Directrix recorded approximately
$0.1 million of cash basis revenue associated with recovery of amounts owed in
excess of the EMI receivable.

Directrix' original service agreements with Playboy and Califa expired
on March 15, 2001. Directrix extended the term of its service agreements with
Playboy through March 31, 2002 as per the LOI, and while continuing to provide
services for Califa, was in final negotiations to extend the term of its service
agreements with Califa and its affiliate VOD, Inc. ("VODI") and to provide
additional services to Califa and VODI. In May 2001, Directrix began providing
network origination services to VODI for an additional network. In July 2001,
Playboy exercised its option to acquire the networks operated by Califa and
VODI. Under the Master Services Agreement, when executed, Directrix will
provide network origination services for the networks operated by Califa and
VODI in addition to providing network origination services for several Playboy
owned and operated networks from the Los Angels based facility. The agreement
will also provide for the extension of the existing service agreements until the
networks are originated from the West Coast facility.

Salaries, Wages and Benefits. Salaries, wages and benefits for the
three months ended June 30, 2001 increased by $0.1 million as compared to the
same period in 2000. The increase in salaries, wages and benefits was primarily
attributable to the recording of compensation expense associated with the
issuance of restricted stock issued for salary reductions taken by key
executives during the three months ended June 30, 2001, which exceeded the
amount that would have been recorded if the executives received cash
compensation.

Library Amortization. Library amortization for the three months ended
June 30, 2001 was comparable to library amortization for the same period in
2000.

Satellite Costs. Satellite costs for the three months ended June 30,
2001 decreased by approximately $1.3 million as compared to the same period in
1999. The decrease in satellite costs was primarily attributable to the
termination of the Transponder Agreement with Loral in May 2001, as more fully
described in ("Liquidity and Capital Resources").

Broadband Expenses. Directrix reported broadband expenses of
approximately $0.5 million for the three months ended June 30, 2001. The
addition of broadband expenses was attributable to the activities of its
wholly-owned subsidiary, Directrix Broadband, Inc, which was a reseller of
Akamai's Internet architecture and related broadband services.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the three months ended June 30, 2001 decreased by
approximately $0.1 million as compared to the three months ended June 30, 2000.
The decrease in selling, general and administrative expenses was attributable to
decreases in various expenses including production costs, public relations
costs, convention and trade show costs and office cleaning costs.

Depreciation of Fixed Assets. Depreciation of fixed assets for the
three months ended June 30, 2001 was comparable to the corresponding period in
2000.

Interest Expense. Interest expense for the three months ended June 30,
2001 increased by approximately $0.2 million as compared to the three months
ended June 30, 2001. The increase in interest expense was attributable to
interest on the amounts drawn down from Directrix' revolving line of credit,
interest pertaining to the transponder lease liability in the three months ended
June 30, 2000, interest associated with the intrinsic value of the beneficial
conversion feature of the convertible debentures issued in March 2001 and the
amortization of additional common stock purchase warrants issued in October 2000
in connection with the revolving line of credit.

Transponder Penalty. Directrix recorded an early termination charge of
$4.6 million associated with the termination of the Transponder Agreement during
the three months ended June 30, 2001. In May 2001, Directrix terminated its
Transponder Agreement and transitioned its transponder services customers to
Loral.

When the Transponder Agreement was terminated, Directrix owed Loral
approximately $6.1 million for past due service fees and a $4.6 million early
termination charge. Loral agreed to extinguish its receivable and the early
termination charge in exchange for (i) the issuance to Loral of a $1.65 million
note under the Credit Facility, (ii) Directrix' issuance of $3.0 million face
amount of a new series of junior preferred stock convertible at $3.00 per share
bearing a 6% PIK dividend and (iii) Directrix' issuance of a five-year warrant
to acquire 200,000 shares at an exercise price of $3.00 per share. The
agreement is subject to the execution of formal documentation and consummation
of the Playboy Transaction.

Liquidity and Capital Resources

Working Capital. Directrix had a working capital deficiency of $17.2 million on
June 30, 2001 as compared to a working capital deficiency of $11.4 million on
March 31, 2001. The decline in working capital for the three months ended June
30, 2001 was primarily attributable to the inclusion of an early termination
charge associated with the termination of the Transponder Agreement of $4.6
million in the three months ended June 30, 2001.

Credit Facility. Directrix has a $4.5 million revolving line of credit pursuant
to the terms of a March 15, 1999 Loan and Security Agreement, as amended by the
Amended and Restated Loan and Security Agreement dated February 15, 2000 (as
amended, the "Amended Loan Agreement"). The providers of the Credit Facility
include the Chief Executive Officer, the President and four unrelated parties
(collectively, the "Lenders"). The Credit Facility bears interest at 11% per
annum, payable monthly, and was to mature on March 15, 2002. As part of the
restructuring, the maturity date will be extended to March 31, 2003, subject to
the execution of formal documentation and consummation of the Playboy
Transaction. Substantially all of Directrix' assets have been pledged as
collateral for this obligation.

On October 16, 2000, Directrix and the Lenders agreed to modify the
terms of the Amended Loan Agreement. The Amendment increased the Credit
Facility from $3.5 million to $4.5 million and modified the financial covenants
which required that beginning with the year ended March 31, 2001 Directrix have
at least $3.0 million of stockholders' equity at the end of each fiscal year.
The Amendment also states that if Directrix had not sold or transferred the EMI
Option by March 31, 2001, then the Lenders would have the option to convert
their Notes into Directrix common stock on the same terms as the most recent
placement of Directrix common stock or, if there has been no placement of
Directrix common stock, on terms to be negotiated, in good faith, by the
Borrower and the Lenders. As of June 30, 2001, the Lenders have not converted
their notes into Directrix common stock.

At March 31, 2001, Directrix was in violation of the stockholders'
equity financial covenant. The Lenders agreed as part of modifications to the
Credit Facility to waive the violation of the financial covenant as more fully
described below.

As of June 30, 2001, Directrix has drawn down approximately $4.2
million from the Credit Facility, with $0.3 million unused funds remaining under
the facility. Under the Credit Facility, Directrix is not permitted to draw
down on the Credit Facility after March 15, 2001.

Convertible Debentures. During the three months ended June 30, 2001, Directrix
received the remaining $125,000 of cash pertaining to its $500,000 private
placement of convertible debentures ("Debentures") executed in March 2001. The
Debentures are convertible into shares of Directrix common stock at any time, at
the option of the holders, at a conversion rate of $1.50 per share of common
stock. The conversion rate is subject to anti-dilution protection for stock
splits, stock dividends, stock reclassifications and mergers. Directrix can
require conversion at any time if the average trading price of its common stock
is over $5.00 for any ten consecutive trading days prior to maturity. The
Debentures mature on March 31, 2003, are senior to all of Directrix' other
obligations other than the Credit Facility and bear interest at 6% per annum,
payable at maturity. Directrix can elect to pay the interest by issuing
additional shares of Directrix common stock in lieu of a cash interest payment.
Directrix has granted the Debenture holders registration rights for the shares
of common stock into which the Debentures are convertible and has committed to
file the registration statement during the year ended March 31, 2002.

In July 2001, Directrix offered up to $600,000 of a second series of
convertible debentures which have the same terms as the Debentures. To date,
$250,000 of debentures from the second series have been issued, of which $50,000
were issued to Roger Faherty, the Chief Executive Officer of Directrix.

Warrants. On April 30, 2001, Directrix issued Kingston five-year warrants to
acquire 37,500 shares of Directrix common stock at an exercise price of $2.90
per share, the fair market value of Directrix stock on the grant date. The
issuance and exercise of the warrant is subject to the closing of the property,
as decribed below in "Restructuring Plan, Los Angeles Facility".

Restructuring Plan. Since becoming a stand-alone company on March 15, 1999,
Directrix incurred net losses of $6.1 million and $10.3 million for the years
ended March 31, 2000 and March 31, 2001, respectively, and a net loss of
approximately $6.7 million for the three months ended June 30, 2001. At June
30, 2001, Directrix has a working capital deficiency of $17.2 million. These
matters raise substantial doubt about Directrix' ability to continue as a going
concern. Directrix' continued existence is dependent upon several factors,
including the completion of the master services agreement with Playboy,
management's ability to successfully implement the restructuring plan described
below and its ability to generate operating cash flow via execution of its
long-term business plan.

Management has developed and begun implementation of a multi-phase
restructuring plan. The restructuring plan addresses the areas that management
believes are critical to the realization of Directrix' short and long-term
plans. The areas addressed by this plan are outlined below, and include (i) the
transponder services agreement, (ii) restructuring of its revolving line of
credit ("Credit Facility"), (iii) the Los Angeles facility, (iv) transition of
its new business to the Los Angeles based facility and attracting new business
and (v) new financing.

Transponder Services Agreement. Approximately $10.7 million of the
working capital deficiency was attributable to amounts owed to Loral under
Directrix' Agreement for Transponder Services ("Transponder Agreement"). In May
2001, Directrix terminated its Transponder Agreement and transitioned its
transponder services customers to Loral.

To facilitate the agreement with Loral and enhance Directrix' ability
to attract new capital, Directrix has negotiated a restructuring of the Credit
Facility. Under the agreement, the holders of the Credit Facility agreed to (i)
extend the maturity date by one year until March 31, 2003, (ii) permit Directrix
to PIK the interest payment and (iii) waive the March 31, 2001 violation of and
eliminate the stockholders' equity covenant and replace it with an annual
covenant commencing with the fiscal year ending March 31, 2002 which requires
that Directrix not allow its stockholders' deficit to exceed $5.0 million. In
consideration of the foregoing, Directrix agreed to issue to the holders of the
Credit Facility, excluding Messrs. Faherty and McDonald (two executive officers
of Directrix), and Loral, warrants to acquire 125,000 shares of Directrix common
stock at an exercise price of $3.00 per share. The agreement is subject to the
execution of formal documentation and consummation of the Playboy Transaction.

As contemplated by the letter of intent between Playboy and Directrix
("LOI"), the parties are in final negotiations of a 15-year triple net sublease
for approximately half of the premises and a 15-year Master Services Agreement,
under which Directrix will provide network origination and studio management
services for Playboy's networks and productions. The LOI also extended the
terms of the Services Agreement with Playboy, which was set to expire on March
15, 2001, to March 31, 2002. Directrix has agreed to provide equipment,
integration and technical improvements necessary to provide the services under
the Master Services Agreement when the facility is operational and has secured
up to $5.0 million of financing towards equipment and system integration fees
from CapitalSource Finance LLC, subject to due diligence, the execution
of formal documentation and the consummation of the Playboy Transaction.

Upon execution of the Master Services Agreement, Directrix will issue a
warrant to Playboy to acquire 600,000 shares of its common stock at an exercise
price of $3.50.

Commitments and Contingencies.

Legal Proceedings. Directrix was named as a defendant in an action
brought by Logix Development Corporation ("Logix") in the Los Angels County
Superior Court (Logix, et. al. v. Emerald Media, Inc., et. al., Case No.
BC250732) in May 2001. Logix also named as defendants in the action Spice
Entertainment Companies, Inc. and New Frontier Media, Inc. ("New Frontier").
The suit arises out of EMI's sale of its customer list to a wholly owned
subsidiary of New Frontier and alleges, among other things, that the sale was in
derogation of Logix' rights to the customer list. The suit alleges breach of
contract, fraud and negligent misrepresentation and Logix is seeking damages in
excess of $10 million. Directrix is obligated to defend the suit on behalf of
Spice Entertainment Companies, now a subsidiary of Playboy Enterprises, Inc.

PART II - OTHER INFORMATION

Item 1: Legal Proceedings.

Directrix was named as a defendant in an action brought by Logix
Development Corporation ("Logix") in the Los Angels County Superior
Court (Logix, et. al. v. Emerald Media, Inc., et. al., Case No.
BC250732) in May 2001. Logix also named as defendants in the action
Spice Entertainment Companies, Inc. and New Frontier Media, Inc. ("New
Frontier"). The suit arises out of EMI's sale of its customer list to
a wholly owned subsidiary of New Frontier and alleges, among other
things, that the sale was in derogation of Logix' rights to the
customer list. The suit alleges breach of contract, fraud and
negligent misrepresentation and Logix is seeking damages in excess
of $10 million. Directrix is obligated to defend the suit on behalf
of Spice Entertainment Companies, now a subsidiary of Playboy
Enterprises, Inc.

On July 12, 2001, New Frontier filed a cross complaint against Logix,
EMI, Roger Faherty and Donald McDonald, Directrix' Chief Executive
Officer and President, respectively, and Daniel J. Barsky, counsel to
EMI in the New Frontier transaction. The cross complaint alleges,
among other things, that EMI breached its representations and
warranties concerning its rights to the customer list and that Messrs.
Faherty, McDonald and Barsky had misrepresented EMI's rights to the
customer list. Directrix has undertaken the defense of the cross
complaint on behalf of Messrs. Faherty, McDonald and Barsky.
Directrix believes the Logix suit and the cross complaint are without
merit and plans a vigorous defense.

Item 2: Changes in Securities and Use of Proceeds.

On March 28, 2001, Directrix issued an aggregate of $375,000 of a
total offering of $500,000 of Subordinated Convertible Debentures
("Debentures") in a private placement to five persons. During the
three months ended June 30, 2001, Directrix issued the remaining
$125,000 of Debentures to four persons, one of which participated in
the March 28, 2001 offering. All proceeds were paid in cash and
there were no underwriting discounts or commissions paid in connection
with the offering. The offering was made solely to accredited
investors who had made previous investments in Directrix and/or had a
preexisting business relationship with Directrix and its senior
executive officers and in reliance of Section 4(2) of the Securities
Act of 1933.

The Debentures are convertible into shares of Directrix common stock
at any time, at the option of the holders, at a conversion rate of
$1.50 per share of common stock. The conversion rate is subject to
anti-dilution protection for stock splits, stock dividends, stock
reclassifications and mergers. Directrix can require conversion at
any time if the average trading price of its common stock is over
$5.00 for any ten consecutive trading days prior to maturity. The
Debentures mature on March 31, 2003, are senior to all of Directrix'
other obligations other than the Credit Facility and bear interest at
6% per annum, payable at maturity. Directrix can elect to pay the
interest by issuing additional shares of Directrix common stock in
lieu of a cash interest payment. Directrix has granted the Debenture
holders registration rights for the shares of common stock into which
the Debentures are convertible and has committed to file the
registration statement during the year ended March 31, 2002.

The proceeds of the Debenture offerings were used for working
capital purposes.

Item 5: Other Information.

In Directrix' Form 10-KSB for the fiscal year ended March 31,
2001, Directrix reported that it planned to have its annual
meeting of stockholders on September 25, 2001. The Board of
Directors has determined to postpone the meeting for a brief
period of time to enable senior management to focus on finishing
the documentation for the Playboy Transaction.

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: August 20, 2001

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