SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-QSB/A
AMENDMENT NO. 1

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

For the quarterly period ended September 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.)

230 Pegasus Avenue, Northvale, New Jersey 07647
(Address of principal executive offices)

(201) 750-8000
(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 October 31, 2001
was 2,483,456.

PART I

ITEM 1: FINANCIAL STATEMENTS
DIRECTRIX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (as restated, note 4)
___________________________________________________________________________________________________________________________________

Sept 30,
2001
---------------
(unaudited)

ASSETS:
Current assets:
Cash and cash equivalents ....................................... $ 12,000
Marketable securities ........................................... 158,000
Accounts receivable, billed ..................................... 87,000
Accounts receivable, unbilled ................................... 40,000
Prepaid expenses and other current assets ....................... 107,000
---------------
Total current assets ............................. 404,000
Property and equipment, net .......................................... 3,533,000
Library of movies, net ............................................... 210,000
Deferred financing costs ............................................. 449,000
Deferred lease costs ................................................. 426,000
Other assets ......................................................... 42,000
---------------
Total assets ..................................... $ 5,064,000
===============

LIABILITIES AND STOCKHOLDERS' DEFICIT:

Current liabilities:
Accounts payable ................................................ $ 2,595,000
Transponder lease liability...................................... 10,726,000
Accrued expenses and other current liabilities .................. 249,000
Customer deposits ............................................... 359,000
---------------
Total current liabilities ........................ 13,929,000

Deferred rent ........................................................ 25,000
Revolving line of credit ............................................. 4,168,000
Subordinated convertible debentures .................................. 750,000
---------------
Total liabilities ................................ 18,872,000
---------------

Commitments and contingencies

Stockholders' deficit
Common stock, $.01 par value; authorized 25,000,000 shares;
2,456,670 shares issued and outstanding at September 30, 2001.. 25,000
Additional paid-in capital ...................................... 22,593,000
Deferred Compensation ........................................... (259,000)
Accumulated other comprehensive loss ............................ (184,000)
Accumulated deficit ............................................. (35,983,000)
---------------
Total stockholders' deficit ...................... (13,808,000)
---------------
Total liabilities and stockholders' deficit ...... $ 5,064,000
===============

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

DIRECTRIX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS of OPERATIONS (unaudited)(as restated, note 4)
___________________________________________________________________________________________________________________________________

THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2001 2000 2001 2000
------------------------------------- ------------------------------------

Revenues $ 671,000 $ 1,169,000 $ 1,858,000 $ 2,810,000
---------------- ---------------- ---------------- ----------------

Operating expenses:
Salaries, wages and benefits ................. 837,000 827,000 1,709,000 1,636,000
Library amortization ......................... 136,000 162,000 276,000 333,000
Satellite costs .............................. 119,000 1,690,000 481,000 3,363,000
Broadband expenses ........................... 194,000 112,000 660,000 112,000
Selling, general and administrative expenses . 382,000 707,000 816,000 1,268,000
Depreciation ................................. 342,000 351,000 699,000 699,000
---------------- ---------------- ---------------- ----------------
Total operating expenses .............. 2,010,000 3,849,000 4,641,000 7,411,000
---------------- ---------------- ---------------- ----------------

Loss from operations .................. (1,339,000) (2,680,000) (2,783,000) (4,601,000)

Other expenses:
Interest expense ............................. (471,000) (205,000) (825,000) (350,000)
Transponder penalty .......................... -- -- (4,620,000) --
---------------- ---------------- ---------------- ----------------
Total other expenses .................. (471,000) (205,000) (5,445,000) (350,000)

---------------- ---------------- ---------------- ----------------
Net loss............................... $ (1,810,000) $ (2,885,000) $ (8,228,000) $ (4,951,000)
================ ================ ================ ================

Net loss per common share:
Basic & Diluted: $ (0.75) $ (1.32) $ (3.46) $ (2.27)
================ ================ ================ ================

Weighted average number of common shares outstanding:
Basic & Diluted............................. 2,409,804 2,179,785 2,379,811 2,179,785
================ ================ ================ ================

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

DIRECTRIX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT of STOCKHOLDERS' DEFICIT (unaudited)(as restated, note 4)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2001
___________________________________________________________________________________________________________________________________

Accumulated
Number Additional Other
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 (259,000) -- -- 215,000

Intrinsic value of
beneficial conversion
feature of debentures ....... -- -- 313,000 -- -- -- 313,000

Stock issued in connection
with PIK credit facility
interest .................... 53,230 1,000 155,000 -- -- -- 156,000

Adjust value of stock issued
in connection with credit
facility interest to fair
market value ................ -- -- (9,000) -- -- -- (9,000)

Warrants issued in connection
with the West Coast
facility ................... -- -- 224,000 -- -- -- 224,000

Additional warrants issued
in connection with credit
facility .................... -- -- 267,000 -- -- -- 267,000

Net loss ..................... -- -- -- -- -- (8,228,000) (8,228,000)

Comprehensive loss due to
decline in market
value of marketable
securities .................. -- -- -- -- (184,000) -- (184,000)
------------
Comprehensive Loss ........... -- -- -- -- -- -- (8,412,000)
------------
--------- -------- ------------ ------------ ------------- ------------- ------------
Balance at September 30, 2001 .... 2,456,670 $ 25,000 $ 22,593,000 $ (259,000) $ (184,000) $(35,983,000) $(13,808,000)
========= ======== ============ ============ ============= ============= ============

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

DIRECTRIX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)(as restated, note 4)
___________________________________________________________________________________________________________________________________

Six months ended September 30,
2001 2000
---------------- ----------------

Cash flows from operating activities:
Net loss ........................................................... $ (8,228,000) $ (4,951,000)
---------------- ----------------

Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation of property and equipment ............................. 699,000 699,000
Amortization of library of movies .................................. 276,000 333,000
Amortization of deferred financing costs ........................... 198,000 139,000
Bad debt expense ................................................... 38,000 200,000
Non-cash rent expense .............................................. (24,000) (13,000)
Non-cash interest for beneficial conversion feature of debentures .. 313,000 --
Non-cash interest for PIK of credit facility interest .............. 147,000 --
Deferred compensation .............................................. 215,000 --
Increase in transponder penalty .................................... 4,620,000 --
Changes in assets and liabilities:
Decrease (Increase) in accounts receivable .................... 449,000 (262,000)
Increase in prepaid expenses and other current assets ......... (49,000) (8,000)
Decrease in other assets ...................................... 125,000 51,000
Increase in deferred lease costs .............................. (202,000) --
Increase in accounts payable and accrued expenses ............. 1,074,000 2,091,000
Decrease (increase) in customer deposits ...................... (35,000) 61,000
---------------- ----------------
Total adjustments ................................... 7,844,000 3,291,000
---------------- ----------------

---------------- ----------------
Net cash used in operating activities ............... (384,000) (1,660,000)
---------------- ----------------

Cash flows from investing activities:
Purchase of property and equipment ............................ (52,000) (265,000)
---------------- ----------------
Net cash used in investing activities ............... (52,000) (265,000)
---------------- ----------------

Cash flows from financing activities:
Officer loans ................................................. (8,000) --
Borrowings under revolving line of credit ..................... 2,000 1,604,000
Proceeds from issuance of subordinated convertible debentures . 375,000 -
---------------- ----------------
Net cash provided by financing activities ........... 369,000 1,604,000
---------------- ----------------

Net decrease in cash and cash equivalents .............................. (67,000) (321,000)
Cash and cash equivalents, beginning of the period ..................... 79,000 324,000
---------------- ----------------
Cash and cash equivalents, end of the period ........................... $ 12,000 $ 3,000
================ ================

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest ............................................ $ -- $ 145,000
================ ================

Supplemental schedule of non-cash investing and financing activities:
Reduction of accounts receivable in exchange for
marketable securities ....................................... $ (342,000) $ --
Warrants issued in connection with the credit facility ........ $ 267,000 $ --

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 & SIX MONTHS ENDED SEPTEMBER 30, 2001 (unaudited)
(as restated, note 4)
________________________________________________________________________________

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 and six months ended September
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. As described more fully in Note 4,
the accompanying financial statements have been restated from the financial
statements originally filed by Directrix with its Form 10-QSB for the quarterly
period ended September 30, 2001.

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 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, $.01 par
value ("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 service agreements and its
transponder services agreement. Directrix is in the process of building out a
109,000 square foot teleport, master control, and soundstage complex in Los
Angeles (the "West Coast Facility"). Under a transaction which was completed on
September 20, 2001, Directrix will provide network origination and production
services, digital archiving, studio facilities and personnel, and production and
post-production offices to Playboy at the facility over a 15-year term
(collectively, the "Playboy Transaction"). See Note 5 for a more complete
description of the Playboy Transaction.

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 $8.2 million for the six months ended September 30, 2001. At September
30, 2001, Directrix has a working capital deficiency of $13.5 million. These
matters raise substantial doubt about Directrix' ability to continue as a going
concern. Directrix' continued existence is dependent upon several factors,
including management's ability to successfully implement the restructuring plan
described below and its ability to generate operating cash flow through the
successful 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 5.

4. Restatement. As noted above, the accompanying financial statements have
been restated from those filed by Directrix on November 19, 2001 with its
Form 10-QSB for the quarterly period ended September 30, 2001. Previously
Directrix reported an extraordinary gain of approximately $5.2 million as a
consequence of a July 13, 2001 letter agreement and term sheet (the
"Restructuring Agreement") with Loral SpaceCom Corporation ("Loral") under which
Loral agreed to extinguish its receivable and the early termination charge under
the Agreement for SkyNet Transponder Services between Loral and Directrix
("Transponder Agreement") in exchange for Directrix' issuance to Loral of: (i) a
$1.65 million note under the Credit Facility, (ii) $3.0 million face amount of a
new Series B junior preferred stock and (iii) a five year warrant to acquire
200,000 shares of common stock at an exercise price of $3.00 per share. The
Restructuring Agreement was conditioned upon the completion of the Playboy
Transaction which occurred on September 20, 2001. Upon further review of the
Restructuring Agreement, it was determined that consummation of the
Restructuring Agreement as it relates to the extinguishment of the Loral
receivable and early termination charge was also conditioned upon the execution
of definitive documents by January 14, 2002. As definitive documents have not
yet been executed, the extraordinary gain and associated transactions should not
have been recognized during the quarterly period ended September 30, 2001. The
following table summarizes the effects on the financial statements of this
adjustment:

THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, 2001 SEPTEMBER 30, 2001
--------------------------- -----------------------------
As As As As
Reported Restated Reported Restated
--------------------------- -----------------------------

Total Assets 5,064,000 5,064,000 5,064,000 5,064,000
Total Liabilities 8,146,000 18,872,000 8,146,000 18,872,000
Liabilities to be Settled in Preferred Stock 4,650,000 - 4,650,000 -
Total Stockholder's Equity (7,732,000) (13,808,000) (7,732,000) (13,808,000)

Loss before extraordinary item (1,810,000) (1,810,000) (8,228,000) (8,228,000)
Extraordinary item:
Gain on extinguishment of transponder liability 5,220,000 - 5,220,000 -
----------- ----------- ----------- -----------
Net Income (loss) 3,410,000 (1,810,000) (3,008,000) (8,228,000)
=========== =========== =========== ===========

Net Income (Loss) per Common Share:
Basic & Diluted:
Loss before extraordinary gain $ (0.75) $ (0.75) $ (3.46) $ (3.46)
Extraordinary gain 2.17 - 2.20 -
--------- --------- --------- ---------
Net Income (loss) $ 1.42 $ (0.75) $ (1.26) $ (3.46)
========= ========= ========= =========

Weighted average number of common shares outstanding:
Basic & Diluted 2,409,804 2,409,804 2,379,811 2,379,811

5. 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 termination of Directrix' transponder services agreement,
(ii) restructuring of Directrix' revolving line of credit ("Credit Facility"),
(iii) the West Coast Facility, (iv) transition of its new business to the West
Coast Facility and attracting new business and (v) new financing.

Termination of Directrix' Transponder Services Agreement. Approximately
$10.7 million of current liabilities are attributable to amounts owed to Loral
under the Transponder Agreement. In May 2001, Directrix terminated its
Transponder Agreement and transferred its transponder service 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. Under the terms of the Restructuring Agreement, Loral agreed
to extinguish its receivable and the early termination charge in exchange for
Directrix' issuance to Loral of: (i) a $1.65 million note under the Credit
Facility, (ii) $3.0 million face amount of a new Series B junior preferred stock
(described below in Note 6) and (iii) a five-year warrant to acquire 200,000
shares at an exercise price of $3.00 per share. The Restructuring Agreement was
conditioned upon the consummation of the Playboy Transaction on September 20,
2001 and the execution of definitive documentation by no later than January 14,
2002. As definitive documents have not yet been executed, the Restructuring
Agreement as it relates to the extinguishment of the Loral receivable and early
termination charge has not taken effect.

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.

If the Restructuring Agreement takes effect, Directrix will recognize
an extraordinary gain; the amount of the gain will be dependent, in part, on the
value of the preferred stock and warrants which cannot be ascertained at this
time.

Directrix recognized $0.8 million and $1.9 million, respectively, of
revenue attributable to the leasing of transponders for the three and six months
ended September 30, 2000 of which $0.6 million and $1.6 million, respectively,
related to Emerald Media, Inc. (EMI"). As a result of the May 2001 termination
of the Transponder Agreement, Directrix recognized approximately $0.1 million of
revenue from transponder leasing for the six months ended September 30, 2001.

Restructuring of the Credit Facility. Directrix has a $4.5 million
Credit Facility, from which $4.2 million has been drawn down as of September 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 negotiated a restructuring of the Credit
Facility as part of the Restructuring Agreement. While those aspects of the
Restructuring Agreement that deal with Loral's agreement to extinguish its
receivable and early termination charge have not taken effect, the aspects of
the Restructuring Agreement that modified the Credit Facility have taken effect.
Under the Restructuring 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 pay in kind ("PIK") the interest payment with shares of Directrix
Common Stock and (iii) revise the stockholders' equity covenant commencing with
the fiscal year ending March 31, 2002 to require 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 Loral
and the two executive officers of Directrix who agreed to swap their portion of
the Credit Facility for a new Series A of senior preferred stock (which has not
occurred because of that portion of the Restructuring Agreement has not taken
effect), warrants to acquire 125,000 shares of Directrix common stock at an
exercise price of $3.00 per share.

As part of the agreement with Loral, the Credit Facility notes held by
two executive officers of Directrix, which aggregated $1.65 million at September
20, 2001, were to be cancelled and replaced with $1.65 million face amount of a
new Series A senior preferred stock. Directrix was also to issue five year
warrants to acquire 200,000 shares of Common Stock with an exercise price of
$3.00 to the two officers. Because this aspect of the Restructuring Agreement
has not yet taken effect, the Series A Preferred stock and and warrants have not
been issued and the officers currently retain their $1.65 million of Credit
Facility notes. The terms of the Series A preferred stock if and when issued are
described below in Note 7.

The holders of the Credit Facility agreed to permit Directrix to PIK
the interest payment owed on the Credit Facility with shares of Directrix Common
Stock for the period from June 1, 2001 through September 19, 2001. (Under the
Restructuring Agreement, Directrix can PIK the interest on the Credit Facility a
going forward basis.) Directrix issued 53,230 shares of Common Stock with an
aggregate fair market value of $156,000 as the PIK interest payment for the
period from June 1, 2001 through September 30, 2001. The PIK interest payment is
accounted for at its fair market value on the accompanying statement of
stockholders' deficit.

West Coast Facility. Management believes that the establishment of the
West Coast Facility is critical to the realization of its long-term business
plan. To finance the acquisition, renovation and outfitting of the West Coast
Facility, Directrix entered into a three party letter of intent with Kingston
Investors Corp. ("Kingston") and Playboy, under which Kingston agreed to
purchase the building and make improvements to the property and enter into a
triple net lease of the property with Directrix for fifteen years. During final
negotiation, the transaction was restructured and under the revised arrangement
among the parties, Kingston acquired the property on September 20, 2001 and
triple net leased the property to Playboy under a 15 year Master Lease. Playboy
then subleased, on a triple net basis, approximately 55% of the property to
Directrix under a 15 year Sublease which provides for monthly sublease payments
of $99,442 in the first year increasing 3% per year for the first 10 years. For
the last five years of the sublease, the rent shall be 110% of the tenth year
rent. Directrix is required to pay its proportionate share of the insurance,
real estate taxes and operating expenses of the facility. The sublease commences
in stages; rent on Studio A commences 30 days after Kingston delivers Studio A
renovated in accordance with specifications set forth in the Master Lease,
anticipated to occur in the fiscal quarter ended March 31, 2002. The sublease
commences with respect to the balance of the subleased premises 30 days after
they are delivered in accordance with the work letter which is an exhibit to the
Master Lease.

As contemplated by a February 26, 2001 letter of intent between Playboy
and Directrix ("LOI"), the parties negotiated a 15-year Master Services
Agreement under which Directrix will provide network origination and studio
management services for Playboy's networks and productions. The Master Services
Agreement calls for minimum monthly service payments of $257,500 per month,
increasing 3% per year. The Master Services Agreement as it relates to the
studio services commences when Studio A is operational in accordance with
technical specifications set forth in an exhibit to the Master Services
Agreement. It is anticipated that this will occur 30 days after delivery by
Kingston of Studio A. The Master Services Agreement for network origination
services commences when Directrix is capable of originating the networks from
the West Coast Facility. Directrix also has a right of first refusal to provide
substantially all of Playboy's other technical service needs. 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.

On September 19, 2001, the parties executed a binding agreement under
which Directrix will provide to Playboy network origination, studio facilities
and related technical services in consideration of Playboy's payment of the
service fees provided for in the most recent draft of the Master Services
Agreement. In the September 19th agreement the parties agreed to execute the
long form Master Services Agreement once the financing arrangements for the
equipment and integration services associated with outfitting the West Coast
Facility were finalized. The letter agreement also provides for Directrix to
manage the West Coast Facility.

In July 2001, Playboy exercised its option to acquire the networks
operated by Califa Entertainment Group, Inc. ("Califa") and VOD, Inc. ("VODI"),
an affiliate of Califa. Under the Master Services Agreement, Directrix will
continue to provide network origination services for the networks acquired by
Playboy from Califa and VODI in addition to providing network origination
services for all of Playboy's other networks from the West Coast Facility. The
Master Services Agreement also provides for the extension of the existing
service agreements until the networks are originated from the West Coast
Facility. Upon execution of the Master Services Agreement, Directrix will issue
a warrant to Playboy to acquire 650,000 shares of its common stock at an
exercise price of $3.45.

Directrix is obligated to provide equipment, integration and technical
improvements necessary to provide the services under the Master Services
Agreement when the facility is operational. Directrix is currently finalizing
the terms of $15 million of equipment lease financing which includes financing
of systems integration fees and extended manufacturers' warranties. Directrix
does not currently anticipate using the entire $15 million and under the
proposed terms, the unused portion of the financing can be drawn down until
December 31, 2002 which will afford Directrix financing to upgrade the West
Coast Facility if required. There are no assurances that the equipment lease can
be finalized.

Transition of its Existing Business to the West Coast Facility and
Attract New Business. Although Playboy will serve as the anchor tenant for the
West Coast Facility, the facility will have the capacity to provide network
origination, studio facilities and other technical services to additional
customers and has two additional studios 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 West Coast Facility, and anticipates providing services
to additional customers from the facility.

After transitioning Directrix' existing service agreements for the
networks operated by Playboy, to the West Coast Facility, Directrix will have
substantial unused capacity at its Northvale facility. Management would prefer
to maintain the Northvale facility and have 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. Directrix management and its investment banker are
currently seeking up to $10 million of financing in addition to the equipment
lease financing noted above.

As a first step, Directrix secured $337,500 of interim financing on
October 25, 2001 (the "Interim Financing") in a private placement to existing
shareholders and investors. The terms of the interim financing include a one
year note secured by a perfected first lien on Directrix' assets. Under a letter
agreement dated October 28, 2001, the Credit Facility holders agreed to
subordinate their security interest to the interim financing holders' first
lien. The interim financing bears 20% interest payable upfront in shares of
Directrix common stock. Directrix issued 26,786 shares of common stock as
payment of the interest on the interim financing.

Directrix, with the assistance of its investment bankers, is seeking $5
million to $10 million of permanent financing under terms to be determined. The
interim financing will be prepaid if Directrix places the permanent financing.
There are no assurances that management will be successful in securing the
permanent financing or even if successful, whether the proceeds of such
financing will be sufficient to maintain Directrix as a going concern.

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.

6. Preferred Stock. The Restructuring Agreement sets forth the terms of
the Series A and Series B preferred stock to be issued if and when the
portion of the Restructuring Agreement relating to the extinguishment of the
Loral receivable and early termination charge takes effect. If this occurs
Directrix will issue $1.65 million of Series A Preferred Stock to two of
Directrix' executive officers and $3.0 million of Series B Preferred Stock to
Loral. When issued, the Series A Preferred Stock will bear a 6% cumulative
dividend which Directrix may, at its option, PIK with Common Stock, will be
senior in liquidation preference to the Series B Preferred Stock and convertible
at $1.50 per share. The conversion price will be subject to standard
anti-dilution adjustments for stock splits and dividends, recapitalizations,
etc. and volume weighted anti dilution adjustments for below market issuances of
Common Stock and issuances of convertible securities with a conversion price
less than the Series A Preferred Stock conversion price. The Series A Preferred
Stock will also be entitled to vote on an as converted basis and the holders
will have the right to appoint two members to the Directrix Board of Directors.
The holders of the Series A Preferred Stock may demand redemption after 10 years
or upon change in control of Directrix (a person or group acquires more than 35%
of the outstanding voting securities). Directrix has the option of paying the
redemption price in cash or as a PIK. The Series B Preferred Stock if and when
issued will have the same terms as the Series A Preferred Stock except that it
will be junior to the Series A Preferred Stock on liquidation preference, have a
$3.00 per share conversion price and not have voting rights or rights to appoint
Board members.

7. Warrants. As part of the fee arrangement for assisting with the Playboy
Transaction, Directrix issued to Kingston a five-year warrant to acquire 100,000
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 aggregate fair
market value of the warrants (preliminarily determined by management using the
Black-Scholes pricing model) amounts to approximately $0.2 million and is
capitalized as a deferred lease cost on the accompanying balance sheet. As noted
above in Note 5, Directrix has committed to issue to Playboy upon execution of
the Master Services Agreement, a five year warrant to acquire 650,000 shares at
an exercise price of $3.45 per share. As noted above in Note 5 and as part of
the Restructuring Agreement, Directrix issued five year warrants to acquire
125,000 shares to the Credit Facility holders. Directrix will also issue
warrants to acquire 200,000 shares to each of Loral and the two executive
officers of Directrix (as a group) if and when the Restructuring Agreement as it
relates to the extinguishment of the Loral receivable and early termination
charge takes effect. All of the warrants have an exercise price of $3.00 per
share. The aggregate fair market value of the warrants (preliminarily determined
by management using the Black-Scholes pricing model) issued to the Credit
Facility holders amounts to approximately $0.3 million and is being amortized
over the term of the Credit Facility. The final determination of the valuation
of the warrants described above will be based on an analysis done by Directrix.

8. Net Loss per Share. Net loss per share for the three and six months
ended September 30, 2000 and September 30, 2001 are calculated in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings Per Share." Since Directrix reported a 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 325,219 and 312,973
common stock options outstanding as of September 30, 2001 and September 30,
2000, respectively. At September 30, 2001 and 2000, all common stock purchase
warrants were exercised except for the warrants described above in Note 7.

9 Significant Customers; Litigation. 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 dated May 1, 2001 that provided for the extinguishment of the option
Directrix held to acquire the business or assets of EMI (the "EMI Option") and
for EMI's transfer of the cash and stock proceeds from the sale of its customer
list to Directrix in settlement of the EMI receivable which amounted to
approximately $0.6 million. 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. During
the six months ended September 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 September 30, 2001, the
94,137 shares of New Frontier stock were recorded at a value of $1.68 each,
which was the per share market value. In accordance with SFAS No. 130,
"Reporting Comprehensive Income," the $0.2 million loss associated with the
decrease in per share market value through September 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. 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. Subsequently,
Mr. Barsky was dismissed from the action. Directrix believes the Logix suit and
the cross complaint are without merit and plans a vigorous defense.

10. 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
Executive 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 fiscal 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. In consideration of the additional salary reduction that
took effect on May 1, 2001, the Compensation Committee granted each of the
executives 11,063 restricted shares of Directrix common stock. All the shares of
restricted stock were issued on May 1, 2001. Directrix recorded approximately
$475,000 of deferred compensation, of which $215,000 was expensed at September
30, 2001. The remaining amounts will be amortized over the remainder of the
fiscal year.

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 option grants because the exercise price of the options 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.

11. Subordinated Convertible Debentures. Directrix placed $500,000 of
convertible debentures ("Debentures") in an offering completed in June 30, 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.

In July 2001, Directrix offered up to $600,000 of a second series of
convertible debentures with the same terms as the Debentures. Through September
30, 2001, Directrix placed $250,000 of Debentures from the second series;
$50,000 of Debentures were issued to an executive officer of Directrix.

During the three and six months ended September 30, 2001, Directrix
recorded interest expense attributable to the intrinsic value of the beneficial
conversion feature of the convertible debenture of $250,000 and $312,500,
respectively, based on the difference between the conversion price and the fair
market value of Directrix common stock on the February 28, 2001 commitment date.

12. 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.

13. Recent Accounting Pronouncements. In August 2001, the FASB issued
statement of Financial Accounting Standard No.144 "Accounting for the Impairment
or Disposal of Long Lived Assets", ("SFAS144"). This statement is effective for
fiscal years beginning after December 15, 2001. This supercedes SFAS 121, while
retaining many of the requirements of such statement. The Company is currently
evaluating the impact of the statement.

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 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 transponder services
agreement. The transferred assets included the agreements to provide network
origination services for the three networks acquired by Playboy and Califa
Entertainment Group, Inc. ("Califa") as part of the Merger and the agreements to
provide transponder and network origination services for the C-Band networks
operated by Emerald Media, Inc. ("EMI"). Spice also transferred its option to
acquire the network business or stock of EMI (the "EMI Option"). Directrix
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 and Califa were set 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 ("West
Coast Facility") with Playboy as its anchor tenant and primary customer. Under
the transaction which was completed on September 20, 2001, Directrix will build,
outfit and operate a 109,000 square foot teleport, master control, and
soundstage complex at the West Coast Facility. When complete, Directrix will
provide network origination and production services, digital archiving, studio
facilities and personnel, and production and post-production offices to Playboy
at the facility over a 15-year term (collectively, the "Playboy Transaction").
In June 2001, Playboy acquired the four networks operated by Califa and its
affiliate and these networks were included in the Master Services Agreement
between Directrix and Playboy.

The accompanying financial statements have been restated from those
originally filed by Directrix on November 19, 2001 with its Form 10-QSB for the
quarterly period ended September 30, 2001. Previously Directrix reported an
extraordinary gain of approximately $5.2 million as a consequence of a
July 13, 2001 letter agreement and term sheet (the "Restructuring
Agreement") with Loral SpaceCom Corporation ("Loral") under which Loral agreed
to extinguish its receivable and the early termination charge under the
Agreement for SkyNet Transponder Services ("Transponder Agreement") between
Loral and Directrix in exchange for Directrix' issuance to Loral of: (i) a $1.65
million note under the Credit Facility, (ii) $3.0 million face amount of a new
Series B junior preferred stock and (iii) a five year warrant to acquire 200,000
shares of common stock at an exercise price of $3.00 per share. The
Restructuring Agreement was conditioned upon the completion of the Playboy
Transaction which occurred on September 20, 2001. Upon further review of the
Restructuring Agreement, it was determined that consummation of the
Restructuring Agreement as it relates to the extinguishment of the Loral
receivable and early termination charge was also conditioned upon the execution
of definitive documents by January 14, 2002. As definitive documents have not
yet been executed, the extraordinary gain and associated transactions should not
have been recognized during the quarterly period ended September 30, 2001,
necessitating this amended filing.

Results of Operations

Revenues. Total revenue for the six and three months ended September
30, 2001 decreased by approximately $1.0 million and $0.5 million, respectively,
as compared to the same periods in 2000. The decrease in revenue was primarily
attributable to a decrease in revenue from EMI of $1.7 million and $0.7 million
for the six and three months ended September 30, 2001, respectively, offset by
the inclusion of revenue attributable to broadband services of $0.7 million and
$0.2 million for the six and three months ended September 30, 2001,
respectively. For the six and three months ended September 30, 2001, revenue
from additional networks operated by Playboy and Califa increased by $0.2
million and $0.1 million, respectively, as compared to the corresponding periods
in 2000.

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, in consideration of EMI's transfer
of the cash and stock proceeds from the sale of its customer list to Directrix.
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. For the six months ended September 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 under the terms of a February 26, 2001 letter of
intent ("LOI") concerning the arrangements surrounding the West Coast Facility.
Directrix continued to provide services to Califa and its affiliate VOD, Inc.
("VODI") and was in negotiation to extend their agreements and to provide
additional services. In June 2001, Playboy exercised its option to acquire the
networks operated by Califa and VODI. Under the Master Services Agreement with
Playboy, Directrix will provide network origination services for the four
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 six
months ended September 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 in consideration of salary reductions taken
by key executives during the six months ended September 30, 2001, which exceeded
the amount that would have been recorded had the executives received cash
compensation.

Salaries, wages and benefits for the three months ended September 30,
2001 were comparable to salaries, wages and benefits for the same period in
2000. Decreases in salaries, wages and benefits for the executive and sales &
marketing departments during the three months ended September 30, 2001 were
offset by the recording of compensation expense associated with the issuance of
restricted stock for the salary reductions described above.

Library Amortization. Library amortization for the six and three
months ended September 30, 2001 was comparable to library amortization for
the same periods in 2000.

Satellite Costs. Satellite costs for the six and three months ended
September 30, 2001 decreased by approximately $2.9 million and $1.6 million,
respectively, as compared to the same periods in 2000. 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, Restructuring Plan, Transponder Agreement. "

Broadband Expenses. Broadband expenses for the six and three months
ended September 30, 2001 increased by approximately $0.5 million and $0.1
million, respectively, as compared to the same periods in 2000. The increase in
broadband expenses was attributable to the activities of a wholly-owned
subsidiary, Directrix Broadband, Inc, which was a reseller of Internet media
delivery services provided by Akamai Technologies, Inc. ("Akamai") under an
Amended and Restated Akamai Reseller Agreement dated August 15, 2000, as amended
(the "Reseller Agreement").

On July 30, 2001, the parties terminated the Reseller Agreement.
The Reseller Agreement calls for Akamai to directly provide services to
Directrix' 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 Directrix 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.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the six and three months ended September 30, 2001
decreased by approximately $0.5 million and $0.3 million, respectively, as
compared to the six and three months ended September 30, 2000. The decrease in
selling, general and administrative expenses was attributable to decreases in
various expenses including bad debt expense, production costs, public relation
costs, convention and trade show costs and office cleaning costs.

Depreciation of Fixed Assets. Depreciation of fixed assets for the six
and three months ended September 30, 2001 was comparable to the corresponding
periods in 2000.

Interest Expense. Interest expense for the six and three months ended
September 30, 2001 increased by approximately $0.5 million and $0.3 million,
respectively, as compared to the six and three months ended September 30, 2000.
The increase in interest expense was primarily attributable to interest
associated with the intrinsic value of the beneficial conversion feature of the
convertible debentures issued in March 2001, interest on the amounts drawn down
from Directrix' revolving line of credit, and the amortization of additional
common stock purchase warrants issued in October 2000 in connection with the
revolving line of credit.

Transponder Penalty. When the Transponder Agreement was terminated in
May 2001, Directrix owed Loral approximately $6.1 million for past due
service fees and a $4.6 million early termination charge that was recorded
during the six months ended September 30, 2001. Under a July 13, 2001 letter
agreement and Term Sheet ("Restructuring Agreement"), Loral agreed to settle
this amount upon the satisfaction of certain conditions including consummation
of the Playboy Transaction and the execution of definitive agreements. As
definitive agreements have not yet been executed, this aspect of the
Restructuring Agreement has not taken effect and the receivable and early
termination charge are included in Directrix' current liabilities. The
Restructuring Agreement as it relates to the Transponder Agreement is described
below under "Liquidity and Capital Resources, Restructuring Plan, Transponder
Agreement ". If the Restructuring Agreement takes effect, Directrix will
recognize an extraordinary gain; the amount of the gain will be dependent, in
part, on the value of the preferred stock and warrants which cannot be
ascertained at this time.

Directrix recognized $0.8 million and $1.9 million, respectively, of
revenue attributable to the leasing of transponders for the three and six months
ended September 30, 2000 of which $0.6 million and $1.6 million, respectively,
related to EMI. As a result of the May 2001 termination of the Transponder
Agreement, Directrix recognized approximately $0.1 million of revenue from
transponder leasing for the six months ended September 30, 2001.

Net Loss. For the six months ended September 30, 2001, Directrix
reported a net loss of $8.2 million as compared to a net loss of $5.0 million
for the corresponding period in 2000. For the three months ended September 30,
2001, Directrix reported net loss of $1.8 million as compared to a net loss of
$2.9 million for the corresponding period in 2000. The change in the net loss
for the three and six months ended September 30, 2001 was attributable to all
the factors noted above.

Liquidity and Capital Resources

Working Capital. Directrix had a working capital deficiency of $13.5 million on
September 30, 2001 as compared to a working capital deficiency of $11.4 million
on March 31, 2001. The increase in the working capital deficiency for the six
months ended September 30, 2001 was primarily attributable to the negative cash
flow and net losses from operations.

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 "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 was extended to March 31, 2003. Substantially all of Directrix'
assets have been pledged as collateral for this obligation.

As of September 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.

At March 31, 2001, the Lenders agreed as part of modifications to the
Credit Facility to revise the stockholders' equity financial covenant as more
fully described below. The Credit Facility was further amended under the
Restructuring Agreement which is described below under "Restructuring Plan,
Restructuring of the Credit Facility."

Subordinated Convertible Debentures. Directrix placed $500,000 of convertible
debentures ("Debentures") in an offering completed in June 30, 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.

Warrants. As part of the fee arrangement for assisting with the Playboy
Transaction, Directrix issued to Kingston a five-year warrant to acquire 100,000
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 aggregate fair
market value of the warrants (preliminarily determined by management using the
Black-Scholes pricing model) amounts to approximately $0.2 million and is
capitalized as a deferred lease cost on the accompanying balance sheet.
Directrix has committed to issue to Playboy upon execution of the Master
Services Agreement, a five year warrant to acquire 650,000 shares at an exercise
price of $3.45 per share. As part of the Restructuring Agreement, Directrix
issued five year warrants to acquire 125,000 shares to the Credit Facility
holders. Directrix will also issue warrants to acquire 200,000 shares to each of
Loral and the two executive officers of Directrix (as a group) if and when the
Restructuring Agreement as it relates to the extinguishment of the Loral
receivable and early termination charge takes effect. . All of the warrants have
an exercise price of $3.00 per share. The aggregate fair market value of the
warrants (preliminarily determined by management using the Black-Scholes pricing
model) issued to the Credit Facility holders amounts to approximately $0.3
million and is being amortized over the term of the Credit Facility. The final
determination of the valuation of the warrants described above will be based on
an analysis done by Directrix.

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 $3.0 million for the six months ended September 30, 2001. At
September 30, 2001, Directrix has a working capital deficiency of $2.8 million.
These matters raise substantial doubt about Directrix' ability to continue as a
going concern. Directrix' continued existence is dependent upon several factors,
including 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
termination of Directrix' transponder services agreement, (ii) restructuring of
Directrix' revolving line of credit ("Credit Facility"), (iii) the West Coast
Facility, (iv) transition of its new business to the West Coast Facility and
attracting new business and (v) new financing.

As part of the agreement with Loral, the Credit Facility notes held by
two executive officers of Directrix, which aggregated $1.65 million at September
20, 2001, were to be cancelled and replaced with $1.65 million face amount of a
new Series A senior preferred stock. Directrix was also to issue five year
warrants to acquire 200,000 shares of Common Stock with an exercise price of
$3.00 to the two officers. Because this aspect of the Restructuring Agreement
has not yet taken effect, the Series A Preferred stock and warrants have not
been issued and the officers currently retain their $1.65 million of Credit
Facility notes.

The holders of the Credit Facility agreed to permit Directrix to PIK
the interest payment owed on the Credit Facility with shares of Directrix Common
Stock for the period from June 1, 2001 through September 19, 2001. (Under the
Restructuring Agreement, Directrix can PIK the interest on the Credit Facility
on a going forward basis.) Directrix issued 53,230 shares of Common Stock with
an aggregate fair market value of $156,000 as the PIK interest payment for the
period from June 1, 2001 through September 30, 2001. The PIK interest payment is
accounted for at its fair market value on the accompanying statement of
stockholders' deficit.

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 Angeles 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. Subsequently, Mr. Barsky
was dismissed from the action. 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 had a preexisting
business relationship with Directrix and its senior executive
officers 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.

In July 2001, Directrix offered up to $600,000 of a second
series of convertible debentures which have the same terms as
the Debentures. 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. Through September 30, 2001, Directrix
has issued $250,000 of Debentures from the second series;
$50,000 of Debentures were issued to Mr. Faherty, Directrix'
Chairman and Chief Executive Officer.

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

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

(a) Exhibits.

Exhibit 4.8 - Form of Common Stock Purchase Warrant issued to
Andrita Management, LLC. For 200,000 shares. Incorporated by
reference to the corresponding exhibit to the Form 10-QSB
filed with the Securities and Exchange Commission on November
19, 2001.

Exhibit 10.22 - Sublease agreement between Playboy
Entertainment Group, Inc. and Directrix dated September 20,
2001. Incorporated by reference to the corresponding exhibit
to the Form 10-QSB filed with the Securities and Exchange
Commission on November 19, 2001.

Exhibit 10.23 - Letter agreement dated September 19, 2001
between Playboy Entertainment Group, Inc. and Directrix.
Incorporated by reference to the corresponding exhibit to the
Form 10-QSB filed with the Securities and Exchange Commission
on November 19, 2001.

(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: March 25, 2002

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