UNITED STATES SECURITIES EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                   FORM 10-QSB


(Mark One)
[X]        QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
           EXCHANGE ACT OF 1934

           For the quarter ended May 31, 1997

                                 OR

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

           For the transition period from ___________ to ___________.

                        Commission File Number 000-21211

                               ___________________


                                 ML DIRECT INC.
                 (Name of small business issuer in its charter)

                 DELAWARE                                13-3842020
      (State or other jurisdiction of                 (I.R.S. Employer
      incorporation or organization)                  Identification No.)

           3001 Executive Drive, Suite 120, Clearwater, Florida  34622
                    (Address of principal executive offices)


                                 (813) 572-8703
              (Registrant's telephone number, including area code)


Check  whether  the issuer  (1) has filed all  reports  required  to be filed by
Section  13 or 15(d) of the  Securities  and  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 such filing requirements for
the past 90 days.

                        YES [X]                NO [ ]


Total  number  of  shares  of  outstanding  Common  Stock as of July 3, 1997 was
4,224,000.





<PAGE>

PART I - FINANCIAL INFORMATION

ITEM I - FINANCIAL STATEMENTS

                                 ML DIRECT, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
                                     ASSETS

                                                            May 31, 1997   November 30, 1996
                                                            ------------   -----------------
<S>                                                          <C>            <C>        
CURRENT ASSETS
Cash                                                         $   535,255    $ 2,562,227
Inventory                                                      1,163,172      1,150,590
Accounts Receivable, Net                                         738,477        437,432
Accounts Receivable from Related Party                           431,525              -
Prepaid Expenses                                                 412,482        588,455
Prepaid Expenses to Related Party                                 22,500              -
                                                             -----------    -----------
     Total Current Assets                                      3,303,411      4,738,704
                                                             -----------    -----------

FIXED ASSETS, NET                                                395,000        290,234

OTHER ASSETS
Organization Costs, Net                                           16,440         17,240
Unsecured Non-Transferable Convertible Promissory
   Note Receivable, Net of Allowance for Loss of $500,000              -              -
Security Deposit                                                  85,000        130,400
Other                                                            120,000        100,000
                                                             -----------    -----------
     Total Other Assets                                          221,440        247,640
                                                             -----------    -----------

TOTAL ASSETS                                                 $ 3,919,851    $ 5,276,578
                                                             ===========    ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts Payable                                             $ 1,172,383    $ 1,162,359
Accrued Returns and Allowances                                   124,057         73,654
Accrued Expenses                                                 174,022        133,840
Accrued Royalty to Related Party                                 191,329        108,517
                                                             -----------    -----------
     Total Current Liabilities                                 1,661,791      1,478,370
                                                             -----------    -----------

COMMITMENTS                                                            -              -

STOCKHOLDER'S EQUITY
Common Stock                                                         422            422
Paid in Capital - Common                                       7,687,669      7,605,851
Retained Earnings (Deficit)                                   (4,864,840)    (3,146,815)
Deferred Compensation Expense                                   (565,191)      (661,250)
                                                             -----------    -----------
     Total Stockholder's Equity                                2,258,060      3,798,208
                                                             -----------    -----------
                                                             $ 3,919,851    $ 5,276,578
                                                             ===========    ===========
</TABLE>

                   The accompanying notes are an integral part
              of these condensed consolidated financial statements

                                       2


<PAGE>

                                                                             
                                       ML DIRECT, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
                                         THREE MONTHS ENDED MAY 31,     SIX MONTHS ENDED MAY 31,
                                         --------------------------    --------------------------  
                                             1997            1996         1997            1996
                                              ----            ----         ----            ----
<S>                                      <C>            <C>            <C>            <C>        
REVENUES
  Revenues                               $   722,469    $    59,618    $ 1,072,982    $    88,842
  Revenues from Related Party                756,729              -      1,190,729              -
                                         -----------    -----------    -----------    -----------
     Net Revenues                          1,479,198         59,618      2,263,711         88,842

Cost of Sales                                906,008         56,255      1,510,668         84,536
                                         -----------    -----------    -----------    -----------

     Gross Profit                            573,190          3,363        753,043          4,306
                                         -----------    -----------    -----------    -----------

OPERATING EXPENSES

Selling Expenses                             165,797         86,759        585,958        163,749
General and Administrative Expenses          958,556        244,565      1,721,836        360,409
Related Party Expenses                        90,940        105,059        169,464        183,418
Depreciation and Amortization Expenses        15,966              -         25,476              -
                                         -----------    -----------    -----------    -----------
     Total Operating Expenses              1,231,259        436,383      2,502,734        707,576
                                         -----------    -----------    -----------    -----------

LOSS FROM OPERATIONS                        (658,069)      (433,020)    (1,749,691)      (703,270)
                                         -----------    -----------    -----------    -----------

Interest Income                               10,029          1,091         31,666          2,389


NET LOSS                                 ($  648,040)   ($  431,929)   ($1,718,025)   ($  700,881)
                                         ===========    ===========    ===========    ===========

Weighted Average Number of Shares          4,224,000      3,120,000      4,224,000      3,060,493

NET LOSS PER SHARE                       ($     0.15)   ($     0.14)   ($     0.41)   ($     0.23)
                                         ===========    ===========    ===========    ===========
</TABLE>


















                          The accompanying notes are an integral part
                     of these condensed consolidated financial statements

                                              3


<PAGE>



                                              ML DIRECT, INC.
                       CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                            Common
                                            Stock      Additional       Retained       Deferred          Total
                                           $0.0001      Paid-in         Earnings     Compensation    Stockholders'
                                          Par Value     Capital        (Deficit)       Expense          Equity
                                        ---------------------------------------------------------------------------
<S>                                        <C>       <C>            <C>               <C>            <C>         
Balance at November 30, 1996               $  422    $  7,605,851   $  (3,146,815)    $ (661,250)    $  3,798,208
Stock Options Issued to Related Party           -          81,818               -        (81,818)               -
Amortization of Deferred Compensation
   Expense Resulting from Issuance of
   Stock Options                                -               -               -        177,877          177,877       
Net Loss for the Six Months Ended                                                       
   May 31, 1997                                 -               -      (1,718,025)             -       (1,718,025)
                                        ---------------------------------------------------------------------------

Balance at May 31, 1997                    $  422    $  7,687,669   $  (4,864,840)    $ (565,191)    $  2,258,060
                                        ===========================================================================

</TABLE>
















































                                 The accompanying notes are an integral part
                            of these condensed consolidated financial statements

                                                     4


<PAGE>


                                       ML DIRECT, INC.
                     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>

                                                                   FOR THE SIX     FOR THE SIX
                                                                   MONTHS ENDED    MONTHS ENDED
                                                                       MAY 31,        MAY 31,
                                                                        1997           1996
                                                                   -----------    -----------
<S>                                                                <C>            <C>         
CASH FLOW- OPERATING ACTIVITIES :
     Net Income (Loss)                                             ($1,718,025)   ($  700,880)
     Adjustments to Reconcile Net Loss to Net Cash
      Used by Operating Activities :
     Depreciation and Amortization                                      25,476          3,462
     Deferred Compensation                                             177,877         52,000
     Changes in Assets and Liabilities
       (Increase) in Inventory                                         (12,582)       (49,887)
       (Increase) in Accounts Receivable                              (301,045)       (14,250)
       Decrease in Prepaid Expenses                                    175,973          4,255
       (Increase) in Prepaid Expenses to Related Parties               (22,500)             -
       (Increase) Decrease in Related Party Receivable                (431,525)        48,982
       (Increase) in Other Assets                                      (20,000)             -
       Increase (Decrease) in Accounts Payable and Payroll Taxes        10,024        199,846
       Increase (Decrease) in Accounts Payable to Related Party              -         94,182
       Increase (Decrease) in Accrued Royalty to Related Party          82,812              -
       Increase (Decrease) in Accrued Expenses                          40,182         70,187
       Increase (Decrease) in Returns and Allowances                    50,403          2,083
                                                                   -----------    -----------
NET CASH USED IN OPERATING ACTIVITIES                               (1,942,930)      (290,020)
                                                                   -----------    -----------

CASH FLOWS - INVESTING ACTIVITIES :
     Purchase of Displays and Equipment                               (129,442)      (125,359)
     Organization Costs                                                      -         (4,761)
     Notes Receivable - Related Party                                        -         50,000
     Notes Payable - Related Party                                           -         36,500
     Deposits                                                           45,400         (5,000)

                                                                   -----------    -----------
NET CASH USED IN INVESTING ACTIVITIES                                  (84,042)       (48,620)
                                                                   -----------    -----------

CASH FLOWS - FINANCE ACTIVITIES :
     Proceeds from Issuance of Preferred Stock                               -        100,000
     Offering Costs                                                          -        (70,100)
                                                                   -----------    -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                    -         29,900
                                                                   -----------    -----------

DECREASE IN CASH AND CASH EQUIVALENT                                (2,026,972)      (308,740)

Cash and Cash Equivalents - Beginning of Periods                     2,562,227        336,884
                                                                   -----------    -----------

CASH AND CASH EQUIVALENTS - END OF PERIODS                         $   535,255    $    28,144
                                                                   ===========    ===========

</TABLE>

                            The accompanying notes are an integral part
                      of these condensed consolidated financial statements

                                               5


<PAGE>
                                 ML DIRECT, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND BUSINESS

GENERAL

       ML Direct, Inc. (the "Company"), a Delaware corporation, was incorporated
on June 22, 1995. In that same month,  June of 1995, the Company  entered into a
binding  letter of intent with HSN Direct Joint Venture  ('HSND') which provided
for the creation of a new entity,  KN2B,  Inc.,  which  operates  under the name
"Home Shopping  Showcase(TM)"  ('HSS').  HSS was organized to establish  display
programs in retail venues through which a variety of consumer  products,  all of
which had already  been  successfully  marketed via direct  response  television
(DRTV) programming and/or advertising, could be offered for sale. At the time of
execution of the binding  letter of intent,  HSND was a  subsidiary  of the Home
Shopping  Network,  Inc.  HSND is now a  majority-owned  subsidiary of Flextech,
P.L.C.  (a UK  Company,  which  itself  is a  subsidiary  of  Telecommunications
Company,  Inc.). Home Shopping Network, Inc. continues to hold a minority equity
position in HSND.  The binding letter of intent between the Company and HSND has
been twice  amended,  first in August of 1995 in  connection  with the Company's
initial  funding of HSS, and then in February of 1996,  in  connection  with the
change in majority ownership of HSND.

       The  Company  contributed  $4,000,000  in  cash  to  HSS,  as well as its
existing and future retail rights to products and services,  in exchange for the
1,500 shares of Class A Common Stock of HSS it was issued pursuant to the letter
of intent.  The Company funded the $4,000,000 from the proceeds of the completed
public  offering in September  1996.  HSND, on the other hand,  contributed  the
right  to  use  the  name  "Home  Shopping  Showcase(TM)"  and  certain  related
trademarks,  logos and service marks,  as well as its existing and future retail
rights to products  and  services,  in exchange  for the 1,499 shares of Class B
Common Stock of HSS it was issued pursuant to the letter of intent.

NOTE 2 - BASIS OF PRESENTATION

       The accompanying Condensed Consolidated Financial Statements include both
the accounts of the Company and KN2B,  Inc. All  intercompany  transactions  and
accounts have been eliminated.  The Condensed  Consolidated Financial Statements
are unaudited and should be read in  conjunction  with the audited  Consolidated
Financial  Statements  and notes thereto for the fiscal year ended  November 30,
1996.

       In the  opinion  of  management,  all  adjustments  necessary  for a fair
presentation  of such  Condensed  Consolidated  Financial  Statements  have been
included.  Such  adjustments  consist only of normal  recurring  items.  Interim
results are not necessary  indicative of results for a full year.  The Condensed
Consolidated  Financial  Statements and notes thereto are presented as permitted
by the Securities and Exchange Commission and do not contain certain information
included in the  Company's  annual  Consolidated  Financial Statements and notes
thereto as discussed above.

NOTE 3 - RELATED PARTY TRANSACTIONS

       During the quarter  ended May 31, 1997 the Company and HSS  reimbursed  a
partnership  in which  one of the  partners  is the  Chairman  of the  Board for
approximately $11,791 for travel and entertainment  expenses and office expenses
expended on behalf of the Company.

       On January 1, 1997, the Company entered into a Consulting  Agreement with
The Columbus  Circle  ("TCC"),  a New York  partnership  of which one of the two
general partners is owned and controlled by the Company's Chairman,  pursuant to
which TCC agrees to provide certain general management and other services to the
Company.  This agreement,  which expires on December 31, 1999, provides that the
Company  pay to TCC an initial  fee of $120,000  and a monthly  amount  equal to


                                       6


<PAGE>

$15,000.  KN2B,  Inc.  also  entered  into a  Consulting  Agreement  with TCC in
January,  1997,  pursuant  to  which  TCC  agrees  to  provide  certain  general
management and other  services to KN2B,  Inc. This  agreement,  which expires on
December 31, 1999 provides that KN2B,  Inc. pay to TCC an initial fee of $60,000
and a monthly amount equal to $7,500. The initial fees totaling $180,000 will be
capitalized  and amortized over the three-year  term. The consulting  agreements
may be terminated by either party for  non-performance.  Under the terms of this
agreement  the Company  expensed  $137,500  for five months of services  for the
period ended May 31, 1997.

       On January 1, 1997, pursuant to the above described  Consulting Agreement
between the Company and TCC, the Company  entered into a Stock Option  Agreement
(the "ML Option  Agreement") with TCC. Pursuant to the ML Option Agreement,  the
Company granted TCC an option to purchase 54,545 Shares exercisable from January
1, 1997  through  January 1, 2002 at an  exercise  price of $4.50 per share.  In
addition,  the ML Option  Agreement  provides  that the Company issue to TCC the
following  options to purchase  the  Company's  common  stock  ("Shares")  at an
exercise price of $4.50 per share:  (i) if the Consulting  Agreement shall be in
effect at any time  during the  120-day  period  ending on  January 1, 1999,  an
option to purchase an additional 54,545 Shares  exercisable from January 1, 1999
through January 1, 2004; (ii) if the Consulting  Agreement shall be in effect at
any time  during the  120-day  period  ending on  January 1, 2000,  an option to
purchase an additional  54,545 Shares  exercisable  from January 1, 2000 through
January 1, 2005; (iii) if the Company closes any transaction whereby the Company
receives  an  infusion  or  infusions  of cash  (either  equity or debt),  or it
acquires  (directly or indirectly)  another  company,  an option to purchase the
number of Shares obtained by dividing by 4.5, the total  consideration  received
by the Company in the case of a cash infusion,  or the total consideration given
by the Company in the case of an acquisition,  and (iv) if Consulting  Agreement
shall be in effect at any time within the 120-day  period ending on the last day
of the Company's  1997,  1998 and 1999 fiscal  years,  an option to purchase the
number of shares  obtained by multiplying  54,545 by the percentage  increase in
earnings per share from the  Company's  1996 fiscal year end earnings per share.
To the  extent not  exercised,  all  options  terminate  on the day  immediately
following the fifth  anniversary of the date of grant.  The ML Option  Agreement
permits  either party to terminate  the agreement  upon 90 days' notice  without
cause.

       On January 1, 1997,  pursuant  to above  described  Consulting  Agreement
between KN2B,  Inc. and TCC, the Company  entered into a Stock Option  Agreement
with TCC (the "KN2B Option  Agreement").  Pursuant to the KN2B Option Agreement,
the Company  granted TCC an option to purchase  27,273 Shares  exercisable  from
January 1, 1997 through January 1, 2002 at an exercise price of $4.50 per share.
In addition,  the KN2B Option  Agreement  provides that the Company issue to TCC
the  following  options to  purchase  Shares at an  exercise  price of $4.50 per
share: (i) provided that the Consulting Agreement shall be in effect at any time
during the  120-day  period  ending on January  1, 1999,  an option to  purchase
27,273 Shares  exercisable  from January 1, 1999 through  January 1, 2004;  (ii)
provided that the Consulting Agreement shall be in effect at any time during the
120-day  period ending on January 1, 2000,  an option to purchase  27,273 Shares
exercisable  from  January 1, 2000 through  January 1, 2005;  (iii) in the event
that KN2B closes any  transaction  whereby  the Company  receives an infusion or
infusions  of cash  (either  equity  or debt),  or KN2B  acquires  (directly  or
indirectly)  another  company,  and such  transaction  was  initiated by TCC and
closed  prior to the  termination  of the  Consulting  Agreement  or within  the
120-day period following the termination of the Consulting Agreement,  an option
to  purchase  the  number of  Shares  obtained  by  dividing  by 4.5,  the total
consideration  received  by the Company in the case of a cash  infusion,  or the
total consideration given by the Company in the case of an acquisition, and (iv)
provided that the Consulting Agreement shall be in effect at any time within the
120-day  period  ending  on the last day of the  Company's  1997,  1998 and 1999
fiscal years, an option to purchase the number of shares obtained by multiplying
27,273 by the percentage  increase in KN2B's earnings per share from KN2B's 1996
fiscal year end earnings  per share.  To the extent not  exercised,  all options
terminate on the day immediately  following the fifth anniversary of the date of
grant. The KN2B Option Agreement permits either party to terminate the agreement
upon 90 days' notice without cause.

                                       7


<PAGE>


ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

       The  following is a discussion  of material  changes in the  consolidated
results of operations of ML Direct,  Inc. and its 50.02% owned  subsidiary KN2B,
Inc.  The  following   discussion   should  be  read  in  conjunction  with  the
consolidated  financial  statements  of the Company and notes  thereto  included
elsewhere herein.

A.  RESULTS OF OPERATIONS

QUARTER  ENDED MAY 31, 1997  COMPARED TO THE QUARTER  ENDED MAY 31, 1996 AND SIX
MONTHS ENDED MAY 31, 1997 COMPARED TO THE SIX MONTNS ENDED MAY 31, 1996

REVENUES AND COST OF SALES

       Revenues for  the  quarter  and  six  months  ended  May  31,  1997  were
approximately  $1,479,000 and $2,263,711  respectively compared to approximately
$60,000 and $88,000  respectively  for the quarter and six months  ended May 31,
1996.  The  1997  increase  in  revenues  is  primarily  due to  HSS's  sale  of
approximately  $693,000,  or 47% of revenues for the quarter,  and $1,129,000 or
50% of  revenues  for the six  months  ended  May 31,  1997 of  product  to Home
Shopping  Network Direct ("HSND") in connection with a third party  distribution
agreement. The gross profit percentage of these sales was 20.3%. In addition the
Company  recognized an increase in sales  resulting  from securing  distribution
rights to additional  products and selling them to various chain retailers.  The
Company  achieved a gross profit  percentage  of 39% and 33% for the quarter and
six  months  ended  May 31,  1997  respectively,  compared  to 6% and 5% for the
corresponding  periods in 1996. The increase in gross profit percentages for the
quarter and six months  ended May 31, 1997  compared to the same periods in 1996
were from the sale of one HSS product which accounted for  approximately 67% and
69% of sales and 73% and 75% in gross  profit  for the  quarter  and six  months
ended May 31, 1997 respectively.

       On-going  efforts are aimed at increasing the number of products to which
the Company has direct or retail distribution rights and penetrating  additional
retail  chains  with these  products.  HSS  continues  to expand its  program of
executing permanent store-within-a-store display fixtures in Supermarkets. As of
May 31, 1997,  twenty-four  such programs were active and commitments  have been
obtained  to add five new stores in June 1997,  to yield a total of  twenty-nine
fixtures opened by June 30, 1997.

OPERATING EXPENSES

       Operating expenses were  approximately  $1,231,000 and $2,503,000 for the
quarter and six months ended May 31, 1997 respectively compared to approximately
$437,000 and $708,000 for respective corresponding periods in 1996. The majority
of the  increase in expenses  for the quarter and six months  ended May 31, 1997
were for  compensation  and benefits of  approximately  $179,000  and  $699,000,
respectively,  as a result of the hiring of marketing,  sales and administrative
personnel.  In order to implement  the  supermarket  kiosk  program  within Home
Shopping  Showcase(TM)  and to market  the  services  of ML  Direct,  additional
expenses  were  incurred  for the quarter and six months ended May 31, 1997 for:
travel and  entertainment of approximately  $78,000 and $242,000,  respectively;
advertising and promotions of approximately $80,000 and $149,000,  respectively;
and  consulting  which  includes  legal  expenses of  approximately  $66,000 and
$125,000, respectively.

       In  addition,  the  Company  recorded  additional   compensation  expense
(approximately  $178,000) which was recorded as a result of the  amortization of
the deferred  compensation  cost which was recorded as a result of stock options
issued to employees and consultants with exercise prices below fair market value
on the date of grant.  The Company also incurred  $137,500 in management fees to
The  Columbus  Circle,  a New York  partnership  of which one of the two general
partners is owned and controlled by the Company's  chairman,  under the terms of
the Consulting Agreement dated January 1, 1997.


                                       8

<PAGE>

B.  LIQUIDITY AND CAPITAL RESOURCES

       The Company had working capital of $1,642,000 at May 31, 1997.  Cash used
by operating  activities was  approximately  $1,943,000 for the six months ended
May 31, 1997.

       As of May 31,  1997,  ML Direct had no material  commitments  for capital
expenditures.  During  the six  months  ended  May 31,  1997  the  Company  used
available  cash  balances to  purchase  approximately  $129,000 in displays  and
equipment. ML Direct has no capital needs for the remainder of fiscal year 1997.
Home Shopping  Showcase plans to continue  building  kiosks in  supermarkets  in
fiscal year 1998.

       The  consolidated  financial  statements  do not include any  adjustments
relating to the  recoverability  and  classification of recorded asset amount or
the amounts and classification of liabilities that might be necessary should the
Company be unable to continue as a going  concern.  Management is continuing its
efforts to  generate  positive  cash flows and  profits by  expanding  its sales
through  distribution  channels such as supermarkets,  mass merchandisers,  drug
chains, and department stores as well as informercials and shopping networks and
catalogs and print  media.  The  Company's  continuation  as a going  concern is
dependent  upon its  ability  and the  ability  of its  subsidiary  to  generate
sufficient cash flow to meet their  obligations on a timely basis and ultimately
on the Company's and its subsidiary's attaining successful operations.


PART II - OTHER INFORMATION
---------------------------

Item 6 - Exhibits and Reports on Form 8-K

(b)     Reports on Form 8-K.

        None.


































                                       9


<PAGE>


                                   SIGNATURES

       In  accordance  with  Section  13 or  15(d)  of  the  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

                                      ML DIRECT INC.

July 21, 1997                    By: /s/  Nancy Shalek
                                     --------------------------
                                          Nancy Shalek
                                          Chairman of the Board

       In accordance with the Exchange Act, this report has been signed below by
the following  persons on behalf of the  Registrant and in the capacities and on
the date indicated.



/s/ NANCY SHALEK                                July 21, 1997
--------------------------
Nancy Shalek
Chairman of the Board




/s/ JAMES M. LAWLESS                            July 15, 1997
--------------------------
James M. Lawless
President and
Principal Accounting Officer






















                                       10