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, 2000
OR
[ ] 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, 2000
was 2,179,785.
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PART I
ITEM 1: FINANCIAL STATEMENTS
DIRECTRIX, INC.
CONDENSED BALANCE SHEETS
____________________________________________________________________________________________________________________________________
June 30, March 31,
2000 2000
------------------ ------------------
(unaudited) (derived from
audited financial
statements)
ASSETS:
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Current assets:
Cash and cash equivalents ....................................................... $ 15,000 $ 324,000
Accounts receivable ............................................................. 1,000,000 825,000
Prepaid expenses and other current assets ....................................... 121,000 87,000
------------------ ------------------
Total current assets ............................................. 1,136,000 1,236,000
Property and equipment, net .......................................................... 5,026,000 5,141,000
Library of movies, net ............................................................... 951,000 1,122,000
Deferred financing costs ............................................................. 477,000 562,000
Other assets ......................................................................... 93,000 93,000
------------------ ------------------
Total assets ..................................................... $ 7,683,000 $ 8,154,000
================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable ................................................................. $ 2,348,000 $ 1,867,000
Customer deposits ................................................................ 110,000 110,000
Accrued expenses and other current liabilities ................................... 302,000 322,000
------------------ ------------------
Total current liabilities ........................................ 2,760,000 2,299,000
Transponder lease liability .......................................................... 464,000 464,000
Other liabilities .................................................................... 89,000 96,000
Revolving line of credit ............................................................. 3,068,000 1,913,000
------------------ ------------------
Total liabilities ................................................ 6,381,000 4,772,000
------------------ ------------------
Commitments and contingencies
Stockholders' equity
Common stock, $.01 par value; authorized 25,000,000 shares; 2,179,785 shares
issued and outstanding at June 30, 2000 and March 31, 2000, respectively ....... 22,000 22,000
Additional paid-in capital ....................................................... 20,818,000 20,833,000
Accumulated deficit .............................................................. (19,538,000) (17,473,000)
------------------ ------------------
Total stockholders' equity ....................................... 1,302,000 3,382,000
------------------ ------------------
Total liabilities and stockholders' equity ....................... $ 7,683,000 $ 8,154,000
================== ==================
The accompanying notes are an integral part of these financial statements.
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DIRECTRIX, INC.
CONDENSED STATEMENTS OF OPERATIONS (unaudited)
____________________________________________________________________________________________________________________________________
Three Months Ended June 30,
2000 1999
------------------ ------------------
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Revenues ............................................................................. $ 1,641,000 $ 2,415,000
------------------ ------------------
Operating expenses:
Salaries, wages and benefits ..................................................... 809,000 683,000
Library amortization ............................................................. 170,000 94,000
Satellite costs .................................................................. 1,673,000 1,573,000
Selling, general and administrative expenses ..................................... 561,000 1,068,000
Depreciation ..................................................................... 348,000 270,000
------------------ ------------------
Total operating expenses .................................................. 3,561,000 3,688,000
------------------ ------------------
Loss from operations ...................................................... (1,920,000) (1,273,000)
Interest expense ..................................................................... (145,000) (35,000)
Gain on sale of marketable securities ................................................ -- 488,000
------------------ ------------------
Net loss .................................................................. $ (2,065,000) $ (820,000)
================== ==================
Net loss per common share
Basic and diluted .............................................................. $ (0.95) $ (0.39)
================== ==================
Weighted average number of shares outstanding:
Basic and Diluted (note 7) ..................................................... 2,179,785 2,081,092
================== ==================
The accompanying notes are an integral part of these financial statements.
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DIRECTRIX, INC.
CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY (unaudited)
FOR THE THREE MONTHS ENDED JUNE 30, 2000
____________________________________________________________________________________________________________________________________
Additional
Common Paid-in Accumulated
Stock Capital Deficit Total
----------- --------------- ---------------- --------------
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Balance at March 31, 2000 ...................................... $ 22,000 $ 20,833,000 $ (17,473,000) $ 3,382,000
Adjustment to value of warrants issued in connection with
credit facility .......................................... -- (15,000) -- (15,000)
Net loss ................................................... -- -- (2,065,000) (2,065,000)
----------- --------------- ---------------- --------------
Balance at June 30, 2000 ....................................... $ 22,000 $ 20,818,000 $ (19,538,000) $ 1,302,000
=========== =============== ================ ==============
The accompanying notes are an integral part of these financial statements.
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DIRECTRIX, INC.
CONDENSED STATEMENTS OF CASH FLOWS (unaudited)
____________________________________________________________________________________________________________________________________
Three months ended June 30,
2000 1999
---- ----
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Cash flows from operating activities:
Net loss ..................................................................... $ (2,065,000) $ (820,000)
--------------- -------------
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of property and equipment ....................................... 348,000 270,000
Amortization of library of movies ............................................ 170,000 94,000
Amortization of deferred financing costs ..................................... 70,000 23,000
Gain on sale of marketable securities ........................................ -- (488,000)
Bad debt expense ............................................................. -- 200,000
Consulting expense satisfied through the issuance of warrants ................ -- 175,000
Changes in assets and liabilities:
Increase in accounts receivable ......................................... (175,000) (502,000)
Increase in officer loans ............................................... -- (670,000)
Increase in prepaid expenses and other current assets ................... (34,000) (240,000)
Increase in other assets ................................................ -- (26,000)
Increase in accounts payable and accrued expenses ....................... 462,000 274,000
Increase in customer deposits ........................................... -- 67,000
Decrease in other liabilities ........................................... (7,000) --
--------------- -------------
Total adjustments ............................................. 834,000 (823,000)
--------------- -------------
Net cash used in operating activities ......................... (1,231,000) (1,643,000)
--------------- -------------
Cash flows from investing activities:
Proceeds from sale of Playboy Stock ..................................... -- 2,388,000
Purchase of property and equipment ...................................... (233,000) (782,000)
--------------- -------------
Net cash (used in) provided by investing activities ........... (233,000) 1,606,000
--------------- -------------
Cash flows from financing activities:
Payment of capital lease obligations .................................... -- (99,000)
Borrowings under revolving line of credit ............................... 1,155,000 --
--------------- -------------
Net cash provided by (used in) financing activities ........... 1,155,000 (99,000)
--------------- -------------
Net decrease in cash and cash equivalents ..................... (309,000) (136,000)
Cash and cash equivalents, beginning of the period ............................... 324,000 1,450,000
--------------- -------------
Cash and cash equivalents, end of the period .................. $ 15,000 $ 1,314,000
=============== =============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest ...................................................... $ 56,000 $ 12,000
=============== =============
Supplemental schedule of non-cash investing and financing activities:
Adjust value of warrants in connection with the credit facility ......... $ (15,000) $ --
The accompanying notes are an integral part of these financial statements.
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DIRECTRIX, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2000 (unaudited)
________________________________________________________________________________
1. In the opinion of Directrix, Inc. ("Directrix"), the accompanying unaudited
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position as of
June 30, 2000, and the results of operations and cash flows for the three months
ended June 30, 2000.
2. The results of operations for the three months ended June 30, 2000 are not
necessarily indicative of the results to be expected for the full year.
3. Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
("GAAP") have been condensed or omitted. These financial statements should be
read in conjunction with the financial statements and notes thereto included in
Directrix's Annual Report on Form 10-KSB for the year ended March 31, 2000.
4. Directrix, a Delaware corporation, is a full service provider of digital
video asset management services, primarily to the entertainment industry.
Directrix provides all of the technical services required to create, support
and deliver digital video programming and data services from its advanced
digital network facility. Directrix offers a number of services including
digital video playback, downlink and uplink, satellite space segments, digital
video archiving and trafficking, video Internet streaming, digital ad
insertion and digital archiving and distribution for VOD (Video-on-Demand)
platforms.
Spice Entertainment Companies, Inc. ("Spice") formed Directrix in 1998
in contemplation of Spice's acquisition by Playboy Enterprises, Inc.
("Playboy"). On the March 15, 1999 closing of the Playboy transaction, Spice
transferred its network services division to Directrix including Spice's master
control and digital playback facility ("Operations Facility"), service
agreements to provide network creation, playback and other technical services to
Emerald Media, Inc. ("EMI") and others, an option (the "EMI Option") to acquire
the network business or stock of EMI, certain rights in Spice's library of adult
films, approximately $0.8 million in cash, certain prepaid assets and accounts
receivable. Spice also transferred 173,784 shares of Playboy Class B Common
Stock to Directrix that it had acquired as part of the Playboy transaction.
Directrix also assumed certain liabilities related to the transferred assets.
Spice then spun off Directrix to its former stockholders, distributing the
Directrix stock as part of the merger consideration.
5. Directrix commenced operations as a stand-alone business following its
spin-off from Spice on March 16, 1999. Directrix incurred net losses of
$2.1 million for the three months ended June 30, 2000 and $6.1 million for the
year ended March 31, 2000. At June 30, 2000, Directrix had a working capital
deficiency of $1.7 million. These matters raise substantial doubt about
Directrix's ability to continue as a going concern. Directrix's continued
existence is dependant upon several factors, including its ability to generate
operating cash flow via execution of its long-term business plan, and secure
additional financing to provide for the immediate deficiency in working capital.
On September 1, 1999, Directrix relocated its Operations Facility to a
new facility located in Northvale, New Jersey. The new fully automated network
origination center is designed to be a 24 hours a day by 7 days a week full
service provider of all the technical and creative services required to develop,
support and deliver network television, video, audio and data services via
satellite, fiber and Internet.
Management believes that the relocation and buildout of the Operations
Facility is critical to the realization of Directrix's long-term business plan.
Management also believes that since the buildout of the Operations Facility is
substantially complete, Directrix now has the capacity to increase revenue by
using its technological resources to expand its customer base and develop new
business lines without significantly changing its cost structure and, as a
result, generate operating cash flow. However, there can be no assurance that
management will actually be successful at executing its long-term business plan
or that the successful implementation of the business plan will improve
operating results.
Directrix has a $3.5 million revolving line of credit, from which
approximately $3.1 million has been drawn down as of June 30, 2000. Management
forecasts that Directrix will require additional funding to provide for the
deficiency in working capital until Directrix generates operating cash flow.
Management believes that it has access to potential sources of capital
sufficient enough to meet Directrix's needs over the next twelve months. The
potential sources of capital include, but are not limited to: (i) an increase in
its line of credit, (ii) the sale of its option to acquire EMI and/or (iii) a
possible private placement of equity securities with individual, institutional
and strategic investors. There can be no assurance, however, that management
will be successful in its efforts to obtain sufficient capital.
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DIRECTRIX, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2000 (unaudited) CONTINUED
_______________________________________________________________________________
6. During the three months ended June 30, 1999, Directrix sold 73,784 shares of
Playboy stock contributed by Spice at Closing for net cash proceeds of
approximately $2.4 million, resulting in a gain of approximately $0.5 million.
7. Net loss per share for the three months ended June 30, 1999 and June 30, 2000
are calculated in accordance with Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings Per Share." Since Directrix reported a net loss for
all periods presented, basic and diluted earnings per share exclude dilution and
are computed by dividing net loss attributable to common shareholders by the
weighted-average common shares outstanding for the period. Options and warrants
were excluded from the calculation of earnings per share because their effect
would be anti-dilutive. Directrix had 287,973 Common Stock options outstanding
as of June 30, 2000. At June 30, 2000 all Common Stock purchase warrants were
exercised.
8. Directrix capitalizes the acquisition costs for the rights to movie titles
purchased or licensed. The acquisition costs are amortized on a straight-line
basis over the shorter of the useful life or the license period, ranging from
one to five years. Effective April 1, 2000, Directrix changed the estimated life
of its library of movies to two years.
9. To assist Directrix in achieving its business objectives, Messrs. Faherty,
McDonald and Kirby, Directrix's Chief Executive Officer, President and Chief
Operating Officer, respectively, voluntarily agreed to a reduction in their
annual salaries of $200,000 for Mr. Faherty, $24,750 for Mr. McDonald and
$22,584 for Mr. Kirby. The salary reductions took effect on June 24, 2000 and
will continue for the remainder of the year ended March 31, 2001. In
consideration of their agreements to the salary reduction, the Compensation
Committee of the Board of Directors granted each of Messrs. McDonald and Kirby
5,000 fully vested options to acquire shares of the Common Stock of Directrix
exercisable at $4.00 per share, the closing price of Directrix's stock on June
22, 2000. In consideration of Mr. Faherty's agreement to the salary reduction,
after considering several alternatives, the Compensation Committee has decided
to grant Mr. Faherty additional options, the amount of which has not yet been
determined.
On May 1, 2000, pursuant to employment agreements, Directrix granted
employees an aggregate of 40,000 options to acquire shares of the Common Stock
of Directrix exercisable at $5.75 per share, the fair market value of the Common
Stock on the date of grant.
In accordance with APB Opinion No. 25 "Accounting for Stock Issued to
Employees," and related interpretations in accounting for its stock incentive
plans, Directrix did not recognize compensation expense in connection with the
above mentioned grants because the exercise price was equal to the market value
of the stock on the grant date.
In May 2000, Directrix entered into a four-month agreement with one of
its non-employee directors to provide various consulting services to Directrix.
In consideration for providing these services, Directrix agreed to pay an
aggregate of $20,000 over the term of the agreement.
10. Effective April 1, 2000, Directrix and EMI agreed to extend the terms of
their existing service and license Agreements to December 31, 2002. Directrix's
service agreements with Playboy and Califa currently expire on March 15, 2001.
Directrix is currently in negotiations to extend the term of these agreements
and is seeking to add additional networks and services. However, there is no
assurance that Directrix will be able to extend the terms of these agreements.
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DIRECTRIX, INC.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
_______________________________________________________________________________
Except for the historical information contained therein, the matters discussed
in "Management's Discussion and Analysis of Financial Condition and Results of
Operations" are not historical facts, but are "forward-looking statements," as
that term is defined in the Private Securities Litigation Reform Act of 1995. In
addition, Directrix or its representatives have made and may continue to make
forward-looking statements, orally or in writing, in other contexts, such as in
reports filed with the Securities and Exchange Commission, press releases or
statements made with the approval of an authorized Directrix executive officer.
These forward-looking statements can be identified by the use of forward-looking
terminology such as "believes," "expects," "plans," "may," "will," "would,"
"could," "should," "anticipates," "estimates," "project," "intend," or "outlook"
or the negative of these words or other variations of these words or other
comparable words, or by discussion of strategy that involve risks and
uncertainties. These forward-looking statements are only predictions, and actual
events or results may differ materially as a result of a wide variety of factors
and conditions, many of which are beyond Directrix's control.
Overview
Directrix is a Delaware corporation formed by Spice in contemplation of
Spice's acquisition by Playboy. On March 15, 1999, prior to the Closing, Spice
contributed to Directrix, among other things, all of the assets and liabilities
associated with the Operations Facility, the EMI Option and the rights to
distribute the explicit version of Spice's adult films in the c-band direct-to
-home ("DTH") market and over the Internet. Spice also contributed approximately
$0.8 million in cash, accounts receivable and other current assets totaling
approximately $1.2 million and 173,784 shares of Playboy stock valued at
approximately $4.5 million, which were purchased by Spice prior to the Closing.
On September 1, 1999, Directrix relocated its Operations Facility to a
new facility located in Northvale, New Jersey. The new fully automated network
origination center is designed to be a 24 hours a day by 7 days a week full
service provider of all the technical and creative services required to develop,
support and deliver network television, video, audio and data services via
satellite, fiber and Internet.
For the period from April 1, 1999 to December 31, 1999, Directrix
recorded revenues from EMI based on contractual amounts. Prior to that time,
Directrix had been recording revenues from EMI based on cash receipts. During
the fourth quarter ended March 31, 2000, due to renewed uncertainty surrounding
EMI's ability to pay for all services provided, Directrix resumed recording
revenues from EMI based on cash receipts. For the three months ended June 30,
1999, Directrix recorded bad debt expense associated with EMI of approximately
$0.2 million.
Directrix's service agreements with Playboy and Califa currently expire
on March 15, 2001. Directrix is currently in negotiations to extend the term of
these agreements and is seeking to add additional networks and services.
Results of Operations
Net Loss. Directrix reported a net loss of $2.1 million for the three
months ended June 30, 2000, as compared to a net loss of $0.8 million for the
corresponding period in 1999. The increase in net loss was primarily
attributable to a decrease in revenue from EMI of $0.8 million. Also
contributing to the increase in net loss was the inclusion of a gain on the sale
of Playboy stock of approximately $0.5 million in the net loss for the three
months ended June 30, 1999. Increases in salary expense, library amortization,
satellite expense, depreciation expense and interest expense of approximately
$0.1 million each were offset by a decrease in selling, general and
administrative expenses of approximately $0.5 million.
Revenues. Total revenue for the three months ended June 30, 2000
decreased by $0.8 million as compared to the same period in 1999. The
decrease in revenue was primarily attributable to a decrease in revenue
associated with the recording of EMI revenue based on cash receipts for the
three months ended June 30, 2000 as compared to recording EMI revenue based on
contractual amounts for the three months ended June 30, 1999. Total revenue from
Directrix's other customers increased by approximately ten percent (10%) for the
three months ended June 30, 2000 as compared to the corresponding period in
1999.
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DIRECTRIX, INC.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
_______________________________________________________________________________
Salaries, Wages and Benefits. Salaries, wages and benefits for the
three months ended June 30, 2000 increased by $0.1 million as compared to the
same period in 1999. The increase in salaries, wages and benefits was
attributable to the addition of two senior sales and marketing executives during
the three months ended June 30, 2000 as compared to the three months ended June
30, 1999.
Library Amortization. Library amortization for the three months ended
June 30, 2000 increased by approximately $0.1 million as compared to the
corresponding period in 1999. The increase was attributable to the additional
amortization from the acquisition of EMI's library of movies acquired on
September 30, 1999 and Directrix's change of the estimated life of its library
of movies to two years effective April 1, 2000.
Satellite Costs. Satellite costs for the three months ended June 30,
2000 increased by $0.1 million as compared to the corresponding period in 2000.
The increase was primarily attributable to the replacement of a pre-emptible
transponder lease with a non-preemptible transponder lease during November,
1999.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the three months ended June 30, 2000 decreased by
approximately $0.5 million as compared to the corresponding period in 1999. The
decrease was primarily attributable to a decrease in provision for bad debt
expense relating to EMI of $0.2 million and the inclusion of approximately $0.2
million of expense associated with the issuance of stock options to non-employee
directors recorded in the three months ended June 30, 1999.
Depreciation of Fixed Assets. Depreciation of fixed assets for the
three months ended June 30, 2000 increased by approximately $0.1 million as
compared to the same period in 1999. The increase was primarily attributable to
fixed assets associated with the relocation and buildout of the Operations
Facility at Northvale, New Jersey.
Interest Expense. Interest expense for the three months ended June 30,
2000 increased by approximately $0.1 million as compared to the same period in
1999. The increase was attributable to interest on the amounts drawn down from
Directrix's revolving line of credit and the amortization of additional Common
Stock purchase warrants issued in February 2000 in connection with the revolving
line of credit.
Liquidity and Capital Resources
1. On March 31, 2000 and June 30, 2000, Directrix had working capital deficiency
of approximately $1.1 million and $1.7 million, respectively. The decline in
working capital during the three months ended June 30, 2000 was primarily
attributable to purchases of property and equipment associated with the buildout
of the Operations Facility at Northvale, New Jersey of $0.2 million and a $2.0
million operating loss. Directrix projects to spend an additional $0.3 million
on the renovation and buildout of the Operations Facility at Northvale.
Directrix has a revolving line of credit of $3.5 million ("Credit
Facility") pursuant to the terms of a March 15, 1999 Security and Loan
Agreement, as amended by the Amended and Restated Loan and Security Agreement
(as amended, the "Amended Loan Agreement") dated February 15, 2000. Under the
terms of the Amended Loan Agreement, the Credit Facility was increased from $1.5
million to $3.5 million, the maturity date of the Credit Facility was changed
from March 15, 2004 to March 15, 2002 and the terms of the Loan Agreement were
modified to provide that Directrix was not permitted to draw down on the Credit
Facility after March 15, 2001. The providers of the Credit Facility include the
Chairman of the Board and Chief Executive Officer, the President and a Director
of Directrix, as well as two unrelated parties (collectively, the "Lenders").
The Credit Facility bears interest at 11% per annum, payable monthly, and
matures on March 15, 2002. In consideration of their agreeing to provide the
Credit Facility, Directrix granted the Lenders an aggregate of 105,000 Common
Stock purchase warrants, exercisable for 10 years at $0.01 per share. The
aggregate fair market value of the warrants (determined using the Black-Scholes
pricing model) amounts to approximately $0.7 million and is being amortized over
the term of the Credit Facility. All of the warrants were exercised as of June
30, 2000.
As of June 30, 2000, Directrix has drawn down approximately $3.1
million from the Credit Facility, with approximately $0.4 million unused and
available funds remaining under the Credit Facility. Directrix is in final
negotiations to increase the funds available under the Credit Facility from $3.5
million to $4.5 million and expects to execute definitive agreements during the
calendar third quarter of 2000.
<PAGE>
DIRECTRIX, INC.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
_______________________________________________________________________________
As previously mentioned, Directrix commenced operations as a
stand-alone business following its spin-off from Spice on March 16, 1999.
Directrix incurred net losses of $2.1 million for the three months ended June
30, 2000 and $6.1 million for the year ended March 31, 2000. At June 30, 2000,
Directrix had a working capital deficiency of $1.7 million. These matters raise
substantial doubt about Directrix's ability to continue as a going concern.
Directrix's continued existence is dependant upon several factors, including its
ability to generate operating cash flow via execution of its long term business
plan, and secure additional financing to provide for the immediate deficiency in
working capital.
Management believes that the relocation and buildout of the Operations
Facility is critical to the realization of Directrix's long-term business plan.
Management also believes that since the buildout of the Operations Facility is
substantially complete, Directrix now has the capacity to increase revenue by
using its technological resources to expand its customer base and develop new
business lines without significantly changing its cost structure and, as a
result, generate operating cash flow.
Management forecasts that Directrix will require additional funding to
provide for the deficiency in working capital until Directrix generates
operating cash flow. Management believes that it has access to potential sources
of capital sufficient enough to meet Directrix's needs over the next twelve
months. The potential sources of capital include, but are not limited to: (i) an
increase in its line of credit, (ii) the sale of its option to acquire EMI
and/or (iii) a possible private placement of equity securities with individual,
institutional and strategic investors. There can be no assurance, however, that
management will be successful in its efforts to obtain sufficient capital,
execute its long-term business plan, or that the successful implementation of
the business plan will improve operating results.
2. During the three months ended June 30, 1999, Directrix sold 73,784 shares of
Playboy stock contributed by Spice at Closing for net cash proceeds aggregating
approximately $2.4 million, resulting in a gain of approximately $0.5 million.
3. Certain payments made by Spice prior to Closing resulted in a dispute between
Playboy and Directrix. As a result, Playboy withheld approximately $0.5 million
of severance payments payable to the Chief Executive Officer of Directrix.
Pending resolution of the dispute, Directrix loaned approximately $0.6 million
to the Chief Executive Officer. The loan was secured by an assignment of the
withheld severance payments. In September 1999, Playboy and Directrix settled
the dispute, at which time Playboy paid the severance to the Chief Executive
Officer, and the Chief Executive Officer repaid the loan to Directrix.
<PAGE>
PART II - OTHER INFORMATION
Item 1: Legal Proceedings.
None.
Item 6: Exhibits and Reports On Form 8-K.
(a) Exhibits.
Exhibit 27.00 - Financial Data Schedule.
(b) Reports on Form 8-K.
None.
<PAGE>
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 16, 2000
By: /s/ Donald J. McDonald, Jr.
---------------------------------------
Donald J. McDonald, Jr.
President, Director, Chief Financial
Officer and Principal Accounting Officer
