---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

Form 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2009or

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

For the transition period from ___________ to ____________

Commission File Number 333-109990

MELT INC.(Exact name of
registrant as specified in its charter)

|Nevada                                                               | 47-0925451                       
|-------------------------------------------------------------------- | ---------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (IRS Employer Identification No.)
|                                                                     |                                  
|31556 Loma Linda Road, Temecula, CA                                  | 92592                            
|(Address of principal executive offices)                             | (Zip Code)                       

310.601.7907(Registrants telephone number,
including area code)

N/A(Former name, former address and former
fiscal year, if changed since last report)

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 such
filing requirements for the past 90 days.[X] YES [ ] NO

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a small
reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act

|Large accelerated filer [ ] |                                               | Accelerated filer [ ]        
|--------------------------- | --------------------------------------------- | -----------------------------
|Non-accelerated filer [ ]   | (Do not check if a smaller reporting company) | Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act[ ] YES [X] NO

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports
required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.[ ] YES [ ]
NO

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the latest practicable date. 21,290,000
common shares issued and outstanding as of April 30, 2009

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

It is the opinion of management that the interim consolidated
financial statements as of and for the periods ended March 31, 2009 include all
adjustments necessary in order to ensure that the interim consolidated financial
statements are not misleading.

2

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MELT INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2009 and December 31, 2008

F-1



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MELT INC. AND SUBSIDIARIESConsolidated Balance
Sheets

ASSETS

|                                                      |   | March 31,   |  |   | December 31, | 
|----------------------------------------------------- | - | ----------- |  | - | ------------ | 
|                                                      |   | 2009        |  |   | 2008         | 
|                                                      |   | (Unaudited) |  |   |              | 
|CURRENT ASSETS                                        |   |             |  |   |              | 
|Cash                                                  | $ | 25,030      |  | $ | 59,925       | 
|Receivables, net of allowance
      of $0 and $1,005, |   |             |  |   |              | 
|respectively                                          |   | 12,021      |  |   | 12,874       | 
|Total
      Current Assets                            |   | 37,051      |  |   | 72,799       | 
|OTHER ASSETS                                          |   |             |  |   |              | 
|Debt
      issuance costs                             |   | 18,667      |  |   | 20,067       | 
|Total Other Assets                                    |   | 18,667      |  |   | 20,067       | 
|TOTAL ASSETS                                          | $ | 55,718      |  | $ | 92,866       | 

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

F-2

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MELT INC. AND SUBSIDIARIESConsolidated Balance Sheets
(Continued)

LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)

|                                                        |   | March 31,   |   |   | December 31, |  
|------------------------------------------------------- | - | ----------- | - | - | ------------ | -
|                                                        |   | 2009        |   |   | 2008         |  
|                                                        |   | (Unaudited) |   |   |              |  
|CURRENT LIABILITIES                                     |   |             |   |   |              |  
|                                                        |   |             |   |   |              |  
|Accounts payable                                        | $ | 125,307     |   | $ | 130,505      |  
|Accrued expenses                                        |   | 19,000      |   |   | 15,000       |  
|Accrued management fees 
      related party (Note 5)  |   | 88,000      |   |   | 88,000       |  
|Notes payable- related party (Note 5)                   |   | 100,000     |   |   | 100,000      |  
|Accrued interest - related
      party (Note 5)         |   | 83,763      |   |   | 81,263       |  
|Notes payable                                           |   | 200,000     |   |   | 182,630      |  
|Accrued interest                                        |   | 42,464      |   |   | 45,606       |  
|Deferred revenue                                        |   | 75,000      |   |   | 100,000      |  
|                                                        |   |             |   |   |              |  
|Total
      Current Liabilities                         |   | 733,534     |   |   | 743,004      |  
|                                                        |   |             |   |   |              |  
|LONG-TERM LIABILITIES                                   |   |             |   |   |              |  
|                                                        |   |             |   |   |              |  
|Notes payable                                           |   | 400,000     |   |   | 400,000      |  
|                                                        |   |             |   |   |              |  
|LIABILITES OF DISCONTINUED OPERATIONS (Note 3)          |   | 679,722     |   |   | 679,722      |  
|                                                        |   |             |   |   |              |  
|TOTAL LIABILITIES                                       |   | 1,813,256   |   |   | 1,822,726    |  
|                                                        |   |             |   |   |              |  
|STOCKHOLDERS EQUITY (DEFICIT)                          |   |             |   |   |              |  
|                                                        |   |             |   |   |              |  
|Common stock: $0.001 par value 100,000,000
      shares |   |             |   |   |              |  
|authorized; 21,290,000 and 21,290,000 shares issued and |   |             |   |   |              |  
|outstanding, respectively                               |   | 21,290      |   |   | 21,290       |  
|Additional paid-in capital                              |   | 1,837,173   |   |   | 1,877,113    |  
|Deferred equity compensation                            |   | -           |   |   | (39,940      | )
|Accumulated deficit                                     |   | (3,616,001  | ) |   | (3,588,323   | )
|                                                        |   |             |   |   |              |  
|Total
      Stockholders Equity (Deficit)              |   | (1,757,538  | ) |   | (1,729,860   | )
|                                                        |   |             |   |   |              |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY              |   |             |   |   |              |  
|(DEFICIT)                                               | $ | 55,718      |   | $ | 92,866       |  

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

F-3

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MELT INC. AND SUBSIDIARIESConsolidated Statements of
Operations (Unaudited)

|                                                           |   | For the Three Months Ended |  
|---------------------------------------------------------- | - | -------------------------- | -
|                                                           |   | March 31,                  |  
|                                                           |   | 2009                       |  
|REVENUES                                                   |   |                            |  
|Food and beverage sales                                    | $ | 25,465                     |  
|Royalty and marketing fees                                 |   | 131,948                    |  
|Franchise fees                                             |   | 25,000                     |  
|Equipment sales                                            |   | -                          |  
|Miscellaneous finders and professional fees                |   | 17,874                     |  
|Total
      Revenues                                       |   | 200,287                    |  
|COST OF SALES                                              |   |                            |  
|Cost of food and beverage                                  |   | -                          |  
|Materials and supplies                                     |   | -                          |  
|Total
      Cost of Sales                                  |   | -                          |  
|GROSS PROFIT                                               |   | 200,287                    |  
|EXPENSES                                                   |   |                            |  
|Depreciation and amortization                              |   | -                          |  
|Marketing                                                  |   | 1,905                      |  
|Professional fees                                          |   | 45,686                     |  
|Rent                                                       |   | -                          |  
|Management fees                                            |   | 96,000                     |  
|Bad debt expense                                           |   | 276                        |  
|General and administrative                                 |   | 63,364                     |  
|Total
      Expenses                                       |   | 207,231                    |  
|LOSS FROM OPERATIONS                                       |   | (6,944                     | )
|OTHER INCOME (EXPENSES)                                    |   |                            |  
|Interest expense                                           |   | (20,734                    | )
|LOSS BEFORE DISCONTINUED OPERATIONS AND
      INCOME TAXES |   | (27,678                    | )
|INCOME FROM DISCONTINUED OPERATIONS (NOTE 3)               |   | -                          |  
|INCOME (LOSS) BEFORE INCOME TAXES                          |   | (27,678                    | )
|INCOME TAX EXPENSE                                         |   | -                          |  
|NET INCOME (LOSS)                                          | $ | (27,678                    | )

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

F-4

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MELT INC. AND SUBSIDIARIESConsolidated Statements of
Operations (Continued) (Unaudited)

|                                                            |   | For the Three Months Ended |  
|----------------------------------------------------------- | - | -------------------------- | -
|                                                            |   | March 31,                  |  
|                                                            |   | 2009                       |  
|BASIC NET INCOME (LOSS) PER SHARE:                          |   |                            |  
|(Loss) per share on
      continuing operations             | $ | (0.00                      | )
|Income
      (loss) per share on discontinued operations    |   | -                          |  
|Net income (loss) per
      share                           | $ | (0.00                      | )
|WEIGHTED AVERAGE NUMBER OF SHARES
      OUTSTANDING - BASIC |   | 21,290,000                 |  
|DILUTED NET INCOME (LOSS) PER SHARE:                        |   |                            |  
|(Loss)
      per share on continuing operations             |   |                            |  
|Income per share on
      discontinued operations           |   |                            |  
|Net
      income (loss) per share                           |   |                            |  
|WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED     |   |                            |  

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

F-5

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MELT INC. AND SUBSIDIARIESConsolidated Statement of
Stockholders Equity (Deficit)

|                                  |  |              |  |   |         |  |   | Additional |   |   |              |   |   |            |  
|--------------------------------- |  | ------------ |  | - | ------- |  | - | ---------- | - | - | ------------ | - | - | ---------- | -
|                                  |  | Common Stock |  |   | Paid-in |  |   | Deferred   |   |   | Accumulated  |  
|                                  |  | Shares       |  |   | Amount  |  |   | Capital    |   |   | Compensation |   |   | Deficit    |  
|                                  |  |              |  |   |         |  |   |            |   |   |              |   |   |            |  
|Balance, December 31, 2008        |  | 21,290,000   |  | $ | 21,290  |  | $ | 1,877,113  |   | $ | (39,940      | ) | $ | (3,588,323 | )
|                                  |  |              |  |   |         |  |   |            |   |   |              |   |   |            |  
|                                  |  |              |  |   |         |  |   |            |   |   |              |   |   |            |  
|Cumulative effect of stock option |  |              |  |   |         |  |   |            |   |   |              |   |   |            |  
|forfeitures (unaudited)           |  | -            |  |   | -       |  |   | (39,940    | ) |   | 39,940       |   |   | -          |  
|                                  |  |              |  |   |         |  |   |            |   |   |              |   |   |            |  
|Net loss for the three months     |  |              |  |   |         |  |   |            |   |   |              |   |   |            |  
|ended March 31, 2009              |  |              |  |   |         |  |   |            |   |   |              |   |   |            |  
|(unaudited)                       |  | -            |  |   | -       |  |   | -          |   |   | -            |   |   | (27,678    | )
|                                  |  |              |  |   |         |  |   |            |   |   |              |   |   |            |  
|Balance, March 31, 2009           |  |              |  |   |         |  |   |            |   |   |              |   |   |            |  
|(unaudited)                       |  | 21,290,000   |  | $ | 21,290  |  | $ | 1,837,173  |   | $ | -            |   | $ | (3,616,001 | )

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

F-6

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MELT INC. AND SUBSIDIARIESConsolidated Statements of
Cash Flows (Unaudited)

|                                                                 |   | For the Three Months Ended |  
|---------------------------------------------------------------- | - | -------------------------- | -
|                                                                 |   | March 31,                  |  
|                                                                 |   | 2009                       |  
|CASH FLOWS FROM OPERATING ACTIVITIES                             |   |                            |  
|                                                                 |   |                            |  
|Net income (loss) after discontinued
      operations            | $ | (27,678                    | )
|Less: income (loss) from discontinued operations                 |   | -                          |  
|                                                                 |   |                            |  
|Net loss before discontinued operations                          |   | (27,678                    | )
|Items to reconcile net loss to net cash
      provided (used) by |   |                            |  
|operating activities:                                            |   |                            |  
|Depreciation and amortization                                    |   | -                          |  
|Bad debt expense                                                 |   | 276                        |  
|Amortization of deferred equity compensation                     |   | -                          |  
|Amortization of deferred debt
      issuance costs               |   | 1,400                      |  
|Changes in operating assets
      and liabilities:               |   |                            |  
|Decrease in receivables                                          |   | 577                        |  
|Decrease
      in other assets                                   |   | -                          |  
|(Decrease) in accounts
      payable and accrued expenses        |   | (1,198                     | )
|Increase
      in interest payable  related party               |   | 2,500                      |  
|Increase (Decrease) in
      interest payable                    |   | 14,228                     |  
|(Decrease) in deferred revenue                                   |   | (25,000                    | )
|                                                                 |   |                            |  
|Net Cash Used by Operating Activities                            |   | (34,895                    | )
|                                                                 |   |                            |  
|Net Cash Provided by Discontinued Activities                     |   | -                          |  
|                                                                 |   |                            |  
|Total Net Cash Provided (Used) by Operating and                  |   |                            |  
|Discontinued Activities                                          |   | (34,895                    | )
|                                                                 |   |                            |  
|CASH FLOWS FROM INVESTING ACTIVITIES                             |   | -                          |  
|                                                                 |   |                            |  
|CASH FLOWS FROM FINANCING ACTIVITIES                             |   |                            |  
|                                                                 |   |                            |  
|Payments on notes payable                                        |   | -                          |  
|Payments on notes payable  related party                        |   | -                          |  
|                                                                 |   |                            |  
|Net Cash Used by Financing Activities                           |   |                            |  
|Continuing
      Operations                                      |   | -                          |  
|                                                                 |   |                            |  
|DECREASE IN CASH                                                 |   | (34,895                    | )
|                                                                 |   |                            |  
|CASH AT BEGINNING OF PERIOD                                      |   | 59,925                     |  
|                                                                 |   |                            |  
|CASH AT END OF PERIOD                                            | $ | 25,030                     |  
|                                                                 |   |                            |  
|CASH PAID FOR:                                                   |   |                            |  
|                                                                 |   |                            |  
|Interest                                                         | $ | -                          |  
|Income taxes                                                     | $ | -                          |  

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

F-7

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|MELT INC. AND SUBSIDIARIES                    
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|March 31, 2009 and December 31, 2008          

|NOTE 1 - | ORGANIZATION AND SIGNIFICANT ACCOUNTING
      POLICIES
|-------- | ------------------------------------------------------

This summary of significant accounting
policies of Melt Inc. and Subsidiaries is presented to assist in understanding
the Companys consolidated financial statements. The consolidated financial
statements and notes are representations of the Companys management, which is
responsible for their integrity and objectivity. These accounting policies
conform to accounting principles generally accepted in the United States of
America and have been consistently applied in the preparation of the
consolidated financial statements.

a. Organization and Business
Activities

Melt Inc. (Hereinafter referred to as
the Company) was organized on July 18, 2003, under the laws of the State of
Nevada. The Company operates as a holding company for operating
subsidiaries.

Melt (California), Inc. a wholly owned
subsidiary (hereinafter referred to as Melt (CA)) was organized on August 6,
2003, under the laws of the State of California. Melt (CA) was in the business
of owning and operating corporate owned stores, of which none were in existence
during the year ended December 31, 2008 and the period ended March 31, 2009,
managing the construction process for both corporate and franchisee owned
stores, securing retail space for either corporate or franchise stores to
operate from, as well as the sale and distribution of product to franchise owned
stores until October 2007. Melt (CA) ceased managing the construction of stores
during September 2007. All assets, liabilities and operating results related to
store construction and retail leases are therefore included in discontinued
operations as of March 31, 2009 (see note 3). Additionally, all operations of
Melt (CA) relating to sales of food and beverages to franchise owned stores have
been transferred to Melt Franchising, LLC.

Melt Franchising LLC (hereinafter
referred to as Melt (FA)) a wholly owned subsidiary was organized on February 2,
2005 under the laws of the State of Nevada. Melt (FA) is responsible for selling
franchises to allow franchisees to own and operate stores trading under the
name of Melt  gelato italiano, Melt  café & gelato bar and Melt  gelato
& crepe café as well as the sale and distribution of product to franchisees,
marketing and the collection of royalties. To date, Melt (FA) has sold
forty-nine franchises of which twenty-two are operating, fifteen agreements have
been terminated by the Company as a result of the franchisees not securing
retail space or other reasons, three are in the process of finding suitable
locations to operate their stores, two are in the process of building their
stores and seven have closed their operations.

b. Depreciation

The cost of the equipment and property
is depreciated over the estimated useful life of 5 years. Depreciation is
computed using the straight-line method beginning when the assets are placed in
service. Depreciation expense on assets used in continuing operations for the
three months ended March 31, 2009 and 2008 was $0 and $3,209, respectively.

c. Accounting Method

The Companys consolidated financial
statements are prepared using the accrual method of accounting. The Company has
elected a December 31 year-end.

F-8

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|MELT INC. AND SUBSIDIARIES                    
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|March 31, 2009 and December 31, 2008          

|NOTE 1 - | ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES
      (Continued)
|-------- | -----------------------------------------------------------------

d. Cash and Cash Equivalents

For the purpose of the statement of
cash flows, the Company considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents.

e. Estimates

The preparation of financial
statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

f. Revenue Recognition

The Companys revenues are derived
primarily from franchising activities, including sales of franchise licenses,
food and beverage products, equipment, marketing services and royalties from
franchisee sales.

Food and Beverage

Revenue from the sale of food and
beverages at corporate owned stores and to franchisees is recognized as products
are sold and when all rights and obligations of the Company have been met.

Franchise Fee Revenue

The Companys franchise agreements
require an initial franchise fee of $25,000 and have a ten year term with two
five year options. The agreements also call for weekly royalty payments of six
percent and a one percent marketing fee.

Revenue from initial franchise fees
are recognized when the Company has completed its obligation to the franchisee,
the franchise store has opened and there is (a) no remaining obligation or
intent to refund amounts paid, (b) substantially all of the initial services
required by the Uniform Franchise Offering Circular have been performed, and (c)
there are no other material conditions or obligations related to substantial
performance. Franchise fees collected for franchise agreements that are
ultimately terminated are recognized as revenue only when the Company has met
its obligations under the Uniform Franchise Offering Circular and there are no
material conditions or obligations remaining. During the three months ended
March 31, 2009 and 2008, the Company recognized $25,000 and $40,000 in franchise
fee revenue, respectively.

Revenue from continuing royalties and
marketing fees, which are based on a percentage of net sales of franchised
restaurants, are recognized as income is earned and when it becomes receivable
from the franchisee.

F-9

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|MELT INC. AND SUBSIDIARIES                    
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|March 31, 2009 and December 31, 2008          

|NOTE 1 - | ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES
      (Continued)
|-------- | -----------------------------------------------------------------

f. Revenue Recognition (Continued)

Deferred Revenue

As of March 31, 2009 and December 31,
2008 the company maintained deferred revenue of $75,000 and $100,000,
respectively. This represents franchise fees received, which have not been
recognized as revenue.

Miscellaneous Finder and
Professional Fees

Miscellaneous finder and professional
fees revenue consists of services performed by the Company for franchise store
design, lease review and site finders fees. The revenue from these professional
fees is recognized as services are performed and when all rights and obligations
of the Company have been met.

g. Accounts Receivable and Allowance
for Doubtful Accounts

Accounts receivable consists primarily
of amounts due from the sale of products and services to franchisees for store
construction. Accounts receivable also includes amounts related to franchise
royalties, rents and other miscellaneous items.

The Company recognizes allowances for
doubtful accounts to ensure receivables are not overstated due to
uncollectibility. Bad debt reserves are maintained for customers in the
aggregate based on a variety of factors, including the length of time
receivables are past due, significant one-time events and historical experience.
An additional reserve for individual accounts is recorded when the Company
becomes aware of potential uncollectibility. The allowance for doubtful accounts
on continuing operations was $0 and $1,005 at March 31, 2009 and December 31,
2008, respectively, while bad debt expense on continuing operations totaled $276
and $11,102 for the three months ended March 31, 2009 and 2008,
respectively.

h. Advertising and Marketing

The Company follows the policy of
charging the costs of marketing and advertising to expense as incurred.
Marketing and Advertising expense for the three months ended March 31, 2009 and
2008 was $1,905 and $34,444, respectively.

i. Principles of Consolidation

The consolidated financial statements
include the amounts of Melt Inc. and its wholly owned subsidiaries, Melt (CA)
and Melt (FA). All material inter-company accounts and transactions have been
eliminated.

F-10

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|MELT INC. AND SUBSIDIARIES                    
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|March 31, 2009 and December 31, 2008          

|NOTE 1 - | ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES
      (Continued)
|-------- | -----------------------------------------------------------------

j. Long Lived Assets

The Company adopted Statement of
Financial Accounting Standards No. 144 (SFAS 144), "Accounting for the
Impairment or Disposal of Long-Lived Assets". SFAS 144 develops one accounting
model (based on the model in SFAS 121) for long-lived assets that are to be
disposed of by sale, and addresses the principal implementation issues. SFAS 144
requires that long-lived assets that are to be disposed of by sale be measured
at the lower of book value or fair value less cost to sell. This requirement
eliminates APB30's requirement that discontinued operations be measured at net
realizable value or that entities include under discontinued operations in the
financial statements amounts for operating losses that have not yet occurred.
Additionally, SFAS 144 expands the scope of discontinued operations to include
all components of an entity with operations that (1) can be distinguished from
the rest of the entity and (2) will be eliminated from the ongoing operations of
the entity in a disposal transaction.

l. Fair Value of Financial
Instruments

The carrying amounts of the Companys
financial instruments, including cash, accounts payable, and accrued
liabilities, approximate fair value due to their short maturities.

|NOTE 2 - | LITIGATION
|-------- | ----------

Melt Franchising, LLC and Melt
(California), Inc. (Melt) v. Steven A. Field, M.D.,MMS
Coconut Point, LLC, and MMS King of Prussia Court, LLC
(Respondents).

On March 18, 2007, we and Melt CA
filed a demand for arbitration against Steven A. Field, MD., MMS Coconut Point,
LLC and MMS King of Prussia Court, LLC (collectively, Field) seeking a finding
and/or declaration of entitlement to terminate Fields four franchise
agreements. Melt also is also seeking unpaid royalties and advertising
contributions; rent and other charges due under a sublease with Melt CA; an
amount equal to all unpaid construction invoices; an amount equal to all unpaid
invoices for products purchased by Field; and costs and expenses of arbitration
and attorneys fees. As of March 31, 2009, the demand is still pending.

David Gold, Elena Gold, EAOA,
Inc., Steven Field, MMS Management, LLC, MMSCoconut Point,
LLC, Jong Han, Yon Ho Kim, Young Suk Kim, Kang Won Lee, Yoo &Lee Enterprises, Inc., Charindra Liyanage, Liyange Investments, LLC,
PMIEnterprises, Inc. and John Flannery (Plaintiffs) v.
Melt, Inc., Melt (California), Inc.,Melt Franchising, LLC,
Clive V. Barwin, Brandon Barwin, Michael Zorehkey, RickZorehkey, Eddie Ollman, Scott Miller, and Alin Cruz.

On September 19, 2007, six of our
franchisees filed a putative class action lawsuit against us, our affiliates,
our officers and some of our employees in which the franchisees allege that we
fraudulently induced the franchisees to enter into franchise agreements by
misrepresenting facts about the franchise opportunity. The lawsuit sought
injunctive relief and damages, in an unspecified amount, under several state
franchise acts, restitution and injunctive relief under various provisions of
the California Unfair Business Practices Act, damages and injunctive relief
under the Cartwright Act, and damages for fraud, interference with prospective
economic advantage, and unjust enrichment and declaratory relief. On or about
June 30, 2008, the Court dismissed the plaintiffs lawsuit. On or about August
26, 2008, the Plaintiffs

F-11

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|MELT INC. AND SUBSIDIARIES                    
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|March 31, 2009 and December 31, 2008          

|NOTE 2 - | LITIGATION (CONTINUED)
|-------- | ----------------------

filed a Notice of Appeal. Kang Won
Lee, You & Lee Enterprises Inc, Yon Ho Kim and Young Suk Kim have withdrawn
their appeals.

Melt Franchising, LLC v. PMI
Enterprises, Inc. and John Flannery.

On June 24, 2008, we filed an ex parte
application for a temporary restraining order and preliminary injunction against
PMI Enterprises, Inc. and John Flannery for significant violations of the
franchise agreement. On August 18, 2008, the Court granted our motion for a
preliminary injunction and ordered the parties to allow us to assume management
of the store, cease using our marks, assign the parties lease for the store to
us, and required the parties to sell all or any portions of the assets. On
September 4, 2008, the parties filed counterclaims for injunctive relief,
restitution, fraud, unjust enrichment, and declaratory relief. Melt filed a
Motion to Dismiss the parties counterclaims and on January 9, 2009, the Court
dismissed all of the parties California claims and asked the parties to amend
their complaint. As of March 31, 2009, this case is in the discovery phase.

Jong Han v. Melt, Inc., Melt
(California), Inc., Melt Franchising, LLC, Clive V. Barwin,Brandon Barwin, Michael Zorehkey, Rick Zorehkey, Eddie Ollman, and
Alin Cruz.

On August 22, 2008, Jong Han filed a
Complaint against us similar to the purported class action suit that was
dismissed by the Court. On or about December 8, 2008, the Court granted our
motion to compel arbitration. As of April 20, 2009 no arbitration has been
filed.

Mayflower Emerald Square LLC v.
Melt Inc and Melt (California), Inc.

In October 2008, Mayflower Emerald
Square LLC filed a complaint against both Melt CA and our company for early
termination of a lease in North Attleboro, MA. The lease was signed by Melt CA
only, however, the plaintiff claims Melt CA was acting as an agent of our
company and thus has named Melt Inc. as a defendant. Melt Inc has filed a motion
to dismiss, which has been heard by the court and the decision is pending.

Braintree Property Associates LP
v. Melt Inc, Melt Franchising LLC, Clive Barwin(Melt)

On April 2nd, 2009
plaintiff (landlord) filed suit against defendants which alleges that Melt made
a verbal representation to landlord that Melt would be assuming obligations of a
lease made between landlord and a former Melt franchisee. Melt will be
vigorously defending these allegations. Melt is in the process of preparing a
reply to the claims.

|NOTE 3 - | DISCONTINUED OPERATIONS
|-------- | -----------------------

During the period ended September
2007, Melt (CA) elected to discontinue the operations related to construction of
stores for franchisees, due to continuing losses. All assets, liabilities and
operating results related to store construction are therefore included in
discontinued operations as of March 31, 2009 and 2008. No tax benefit has been
attributed to discontinued operations. The following is an unaudited summary of
the assets and liabilities related to discontinued operations of construction
activities:

F-12

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|MELT INC. AND SUBSIDIARIES                    
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|March 31, 2009 and December 31, 2008          

| |                                             |   | March 31, |  |   | December 31, | 
| | ------------------------------------------- | - | --------- |  | - | ------------ | 
| |                                             |   | 2009      |  |   | 2008         | 
| | LIABILITIES                                 |   |           |  |   |              | 
| |                                             |   |           |  |   |              | 
| | Accounts
      payable and accrued expenses | $ | 679,722   |  | $ | 679,722      | 

The following is an unaudited summary
of the loss from discontinued operations resulting from the discontinuation of
construction activities:

| |                                 |   | For the Three Months Ended | 
| | ------------------------------- | - | -------------------------- | 
| |                                 |   | March 31,                  | 
| |                                 |   | 2009                       | 
| | EXPENSES                        |   |                            | 
| | Bad debt                        | $ | -                          | 
| | LOSS FROM OPERATIONS            |   | -                          | 
| | OTHER INCOME (EXPENSE)          |   |                            | 
| | Miscellaneous income            |   | -                          | 
| | INCOME (LOSS) FROM DISCONTINUED |   |                            | 
| | OPERATIONS                      | $ | -                          | 

|NOTE 4 - | OUTSTANDING STOCK PURCHASE WARRANTS AND OPTIONS
|-------- | -----------------------------------------------

Employee Stock Options

During March 2009, Josiah Puder,
resigned as Vice President and General Counsel of the Company, forfeiting
options to purchase 500,000 shares of common stock. As a result, $20,591 in
previously deferred compensation expense was reversed against additional paid in
capital.

During March 2009, Brandon Barwin,
Vice President and Director, agreed to cancel his remaining 200,000 options to
purchase common stock. As a result, $19,349 in previously deferred compensation
expense was reversed against additional paid in capital.

A summary of the status of the
Companys outstanding stock options as of December 31, 2008 and March 31, 2009
and changes during the periods is presented below:

| |                                |  |          |   |   | Weighted       |  |   | Weighted         | 
| | ------------------------------ |  | -------- | - | - | -------------- |  | - | ---------------- | 
| |                                |  |          |   |   | Average        |  |   | Average          | 
| |                                |  | Options  |   |   | Exercise Price |  |   | Fair
      Value | 
| | Outstanding, December 31, 2008 |  | 700,000  |   | $ | 0.34           |  | $ | 0.17             | 
| | Issued                         |  | -        |   |   | -              |  |   | -                | 
| | Exercised                      |  | -        |   |   | -              |  |   | -                | 
| | Forfeited                      |  | (700,000 | ) |   | 0.34           |  |   | 0.17             | 
| | Expired                        |  | -        |   |   | -              |  |   | -                | 
| |                                |  |          |   |   |                |  |   |                  | 
| | Outstanding, March 31, 2009    |  | -        |   | $ | -              |  | $ | -                | 

F-13

---

|MELT INC. AND SUBSIDIARIES                    
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|March 31, 2009 and December 31, 2008          

|NOTE 5 - | RELATED PARTY TRANSACTIONS
|-------- | --------------------------

Management Fees

During the three months ended March
31, 2009 and 2008, the Company paid Chill, Inc., a related party company, a
management fee of $96,000 and $98,500, respectively, representing the salaries,
wages, benefits, rent and overhead expenses related to the operation of the
Company during the periods.

Notes Payable

During the three months ended March
31, 2009 and 2008, the Company repaid $0 and $49,465 of its note payable to its
President, respectively. The note balance and accrued interest at March 31, 2009
and December 31, 2008 was $100,000 and $100,000, respectively.

|NOTE 6 - | GOING CONCERN
|-------- | -------------

The Company's consolidated financial
statements are prepared using Generally Accepted Accounting Principals
applicable to a going concern that contemplates the realization of assets and
liquidation of liabilities in the normal course of business. However, the
Company has accumulated significant losses, has negative working capital and a
deficit in stockholders' equity. All of these items raise substantial doubt
about its ability to continue as a going concern. Management's plans with
respect to alleviating the adverse financial conditions that caused management
to express substantial doubt about the Company's ability to continue as a going
concern are as follows:

Management believes that, based upon
the current operating plan of divesting itself of operations failing to produce
cash flows from operations should help alleviate the adverse financial condition
of the Company. If the Company is not successful in identifying positive cash
flow revenue streams from its franchising activities, the Company may be forced
to raise additional equity or debt financing to fund its ongoing obligations,
seek protection under existing bankruptcy laws or cease doing business. If
additional funds are raised through the issuance of equity securities, the
percentage ownership of the Company's then-current stockholders would be
diluted. If additional funds are raised through the issuance of debt securities,
the Company will incur interest charges until the related debt is paid off.

There can be no assurance that the
Company will be able to achieve its business plans, raise any required capital
or secure the financing necessary to achieve its current operating plan. The
ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plan described in the preceding paragraph
and eventually attain profitable operations. The accompanying consolidated
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.

F-14

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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.

FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements.
These statements relate to future events or our future financial performance. In
some cases, you can identify forward-looking statements by terminology such as
"may", "should", "expects", "plans", "anticipates", "believes", "estimates",
"predicts", "potential" or "continue" or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, that may cause our or our
industry's actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.

Our unaudited financial statements are stated in United States
Dollars (US$) and are prepared in accordance with United States Generally
Accepted Accounting Principles. The following discussion should be read in
conjunction with our financial statements and the related notes that appear
elsewhere in this quarterly report. The following discussion contains
forward-looking statements that reflect our plans, estimates and beliefs. Our
actual results could differ materially from those discussed in the forward
looking statements. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed below and elsewhere in this
quarterly report.

In this quarterly report, unless otherwise specified, all
dollar amounts are expressed in United States dollars. All references to "US$"
refer to United States dollars and all references to "common shares" refer to
the common shares in our capital stock.

As used in this quarterly report, the terms "we", "us", "our",
"our company" and Melt mean Melt Inc. and our wholly owned subsidiaries Melt
(California) Inc. and Melt Franchising LLC. The term Melt CA refers to Melt
(California) Inc. and the term Melt Franchising refers to Melt Franchising
LLC, unless otherwise indicated.

Results of Operations

Three month Summary ending March 31, 2009 and 2008

Three Months EndedMarch 312009
    
    
    2008Revenue
    $
    200,287
    
    $
    672,808Cost of Sales
    $
    -
    
    $
    386,988Operating Expenses
    $
    207,231
    
    $
    288,060Net Income (Loss)
    $
    (27,678
    )
    $
    10,545


3

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Revenue

Our revenue for the three month periods ended March 31, 2009
and 2008 are outlined in the table below:

Three Months EndedMarch 312009
    
    
    2008Food and beverage sales
    $
    25,465
    
    $
    425,783Royalty and marketing fees
    $
    131,948
    
    $
    148,157Franchise fees
    $
    25,000
    
    $
    40,000Equipment sales
    $
    -
    
    $
    38,778Miscellaneous finders andprofessional fees
    $
    17,874
    
    $
    20,090


Revenue for the three month period ended March 31, 2009,
decreased by 70% as compared to the comparative period in 2008 primarily as a
result of a 94% decrease in food and beverage sales and a 100% decrease in
equipment sales. During the third quarter of 2008 r Melt Franchising LLC decided
to phase out selling food and beverages to its franchisees, this phase out was
primarily completed by Dec 31, 2008.. The franchisees now purchase product
directly from the distributors.

Expenses

Our operating expenses for the three month periods ended March
31, 2009 and 2008 are outlined in the table below:

Three Months EndedMarch 312009
    
    
    2008Depreciation and Amortization
    $
    -
    
    $
    3,357Marketing
    $
    1,905
    
    $
    34,444Professional Fees
    $
    45,686
    
    $
    66,850Rent
    $
    -
    
    $
    11,729Management fees
    $
    96,000
    
    $
    98,500Bad debt expense
    $
    276
    
    $
    11,102General and administrative
    $
    63,364
    
    $
    62,078


Operating expenses for the three months ended March 31, 2009,
decreased by 28% as compared to the comparative period in 2008 primarily as a
result of a 94% reduction in marketing expenses, a 32% reduction in professional
fees, a 100% reduction in rent expense and 3% reduction in management fees as a
result of the management arrangement with Chill, Inc., and a 98% decrease in bad
debt expense.

Equity Compensation

We have no formal plan for compensating our directors for their
service in their capacity as directors, although such directors are expected in
the future to receive stock options to purchase common shares as awarded by our
board of directors or (as to future stock options) a compensation committee
which may be established. Directors are entitled

4

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to reimbursement for reasonable travel and other out-of-pocket
expenses incurred in connection with attendance at meetings of our board of
directors. Our board of directors may award special remuneration to any director
undertaking any special services on our behalf other than services ordinarily
required of a director. No director received and/or accrued any compensation for
their services as a director, including committee participation and/or special
assignments.

Liquidity and Financial Condition

Working CapitalAt March
    
    
    At December
    
    
    Percentage31, 2009
    
    
    31, 2008
    
    
    Increase/DecreaseCurrent Assets
    $
    37,051
    
    $
    72,799
    
    
    (49 ) %Current Liabilities
    $
    733,534
    
    $
    743,004
    
    
    (1 ) %Working Capital (Deficit)
    $
    (696,483
    )
    $
    (670,205
    )
    
    (4 ) %


Cash FlowsAt March
    
    
    At March31, 2009
    
    
    31, 2008Net Cash Provided (Used) by Operating
      Activities
    $
    (34,895
    )
    $
    580Net Cash Provided (Used) by Investing Activities
    $
    -
    
    $
    -Net Cash Provided (Used) by Financing
      Activities
    $
    -
    
    $
    (50,041
    )(Decrease) In Cash
    $
    (34,895
    )
    $
    (49,461
    )


As of March 31, 2009, our company had a working capital deficit
of $696,483. We estimate our operating expenses and
working capital requirements for the next twelve month period to be as
follows:

Estimated Expenses for the Next Twelve Month PeriodOperating ExpensesMarketing
    $
    80,000Professional Fees
    $
    120,000Rent
    $
    60,000Management fees
    $
    300,000Interest
    $
    80,000General and administrative
    $
    100,000Total
    $
    740,000


We plan to raise additional capital required to meet immediate
short-term needs and to meet the balance of our estimated funding requirements
for the twelve months, primarily through the private placement of our
securities.

We are not aware of any known trends, demands, commitments,
events or uncertainties that will result in or that are reasonably likely to
result in our liquidity increasing or decreasing in any material way.

Future Financings

We will require additional financing in order to enable us to
proceed with our plan of operations, as discussed above, of approximately
$1,000,000 over the next 12 months to pay for our ongoing expenses and expansion
plans. These expenses include, marketing, professional fees, management fees,
and general and administrative. Accordingly, we will require additional
financing in order to continue operations. There is no assurance that any party
will advance additional funds to us in order to enable us to sustain our plan of
operations.

We anticipate continuing to rely on equity sales of our common
stock in order to continue to fund our business operations. Issuances of
additional shares will result in dilution to our existing stockholders. There is
no assurance that we will achieve any additional sales of our equity securities
or arrange for debt or other financing to fund our planned business
activities.

5

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We presently do not have any arrangements for additional
financing for the expansion of our operations, and no potential lines of credit
or sources of financing are currently available.

Contractual Obligations

As a smaller reporting company, we are not required to
provide tabular disclosure obligations.

Going Concern

We anticipate that additional funding will be required in the
form of equity financing from the sale of our common stock. At this time, we
cannot provide investors with any assurance that we will be able to raise
sufficient funding from the sale of our common stock or through a loan from our
directors to meet our obligations over the next twelve months. We do not have
any arrangements in place for any future debt or equity financing.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to
stockholders.

Critical Accounting Policies

Our consolidated financial statements and accompanying notes
are prepared in accordance with generally accepted accounting principles used in
the United States. Preparing financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, and expenses. These estimates and assumptions are affected
by management's application of accounting policies. We believe that
understanding the basis and nature of the estimates and assumptions involved
with the following aspects of our consolidated financial statements is critical
to an understanding of our financials.

Item 3. Quantitative Disclosures About Market Risks

As a smaller reporting company, we are not required to
provide the information required by this Item.

Item 4. Controls and Procedures.

We maintain disclosure controls and procedures that are
designed to ensure that information required to be disclosed in our reports
filed under the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms, and that such information
is accumulated and communicated to our management, including our president and
chief executive officer (who is acting as our principal executive officer,
principal financial officer and principle accounting officer) to allow for
timely decisions regarding required disclosure. In designing and evaluating our
disclosure controls and procedures, our management recognizes that any controls
and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and our
management is required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.

As of March 31, 2009, the end of the period covered by this
report, our president and chief executive officer (our principal executive
officer, principal financial officer and principle accounting officer) carried
out an evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures. Based on the foregoing, our president and
chief executive officer (our principal executive officer, principal financial
officer and principle accounting officer) concluded that our disclosure controls
and procedures were effective as of the end of the period covered by this
quarterly report.

There have been no significant changes in our internal controls
over financial reporting that occurred during the quarter ended March 31, 2009
that have materially affected, or are reasonably likely to materially affect,
our internal controls over financial reporting.

6

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Melt Franchising, LLC and Melt (California), Inc. v.
Steven A. Field, M.D., MMS Coconut Point, LLC, andMMS King
of Prussia Court, LLC (Respondents).

On March 18, 2007, we and Melt CA filed a demand for
arbitration against Steven A. Field, MD., MMS Coconut Point, LLC and MMS King of
Prussia Court, LLC (collectively, Field) seeking a finding and/or declaration
of entitlement to terminate Fields four franchise agreements. We and Melt CA
also seek unpaid royalties and advertising contributions; rent and other charges
due under a sublease with Melt CA; an amount equal to all unpaid construction
invoices; an amount equal to all unpaid invoices for products purchased by
Field; and costs and expenses of arbitration and attorneys fees. As of March
31, 2009, the demand is still pending.

David Gold, Elena Gold, EAOA, Inc., Steven Field, MMS
Management, LLC, MMS Coconut Point, LLC,Jong Han, Yon Ho
Kim, Young Suk Kim, Kang Won Lee, Yoo & Lee Enterprises, Inc., Charindra
Liyanage,Liyange Investments, LLC, PMI Enterprises, Inc.
and John Flannery (Plaintiffs) v. Melt, Inc., Melt(California), Inc., Melt Franchising, LLC, Clive V. Barwin, Brandon
Barwin, Michael Zorehkey, RickZorehkey, Eddie Ollman,
Scott Miller, and Alin Cruz.

On September 19, 2007, six of our franchisees filed a putative
class action lawsuit against us, our affiliates, our officers and some of our
employees in which the franchisees allege that we fraudulently induced the
franchisees to enter into franchise agreements by misrepresenting facts about
the franchise opportunity. The lawsuit sought injunctive relief and damages, in
an unspecified amount, under several state franchise acts, restitution and
injunctive relief under various provisions of the California Unfair Business
Practices Act, damages and injunctive relief under the Cartwright Act, and
damages for fraud, interference with prospective economic advantage, and unjust
enrichment and declaratory relief. On or about June 30, 2008, the Court
dismissed the plaintiffs lawsuit. On or about August 26, 2008, the Plaintiffs
filed a Notice of Appeal. Kang Won Lee, You & Lee Enterprises Inc, Yon Ho
Kim and Young Suk Kim have withdrawn their appeals.

Melt Franchising, LLC v. PMI Enterprises, Inc. and John
Flannery.

On June 24, 2008, we filed an ex parte application for a
temporary restraining order and preliminary injunction against PMI Enterprises,
Inc. and John Flannery for significant violations of the franchise agreement. On
August 18, 2008, the Court granted our motion for a preliminary injunction and
ordered the parties to allow us to assume management of the store, cease using
our marks, assign the parties lease for the store to us, and required the
parties to sell all or any portions of the assets. On September 4, 2008, the
parties filed counterclaims for injunctive relief, restitution, fraud, unjust
enrichment, and declaratory relief. Melt filed a Motion to Dismiss the parties
counterclaims and on January 9, 2009, the Court dismissed all of the parties
California claims and asked the parties to amend their complaint. As of March
31, 2009, this case is in the discovery phase.

Jong Han v. Melt, Inc., Melt (California), Inc., Melt
Franchising, LLC, Clive V. Barwin, Brandon Barwin,Michael
Zorehkey, Rick Zorehkey, Eddie Ollman, and Alin Cruz.

On August 22, 2008, Jong Han filed a Complaint against us
similar to the purported class action suit that was dismissed by the Court. On
or about December 8, 2008, the Court granted our motion to compel arbitration.
As of April 30, 2009 no arbitration has been filed.

Mayflower Emerald Square LLC v. Melt Inc and Melt
(California), Inc.

In October 2008, Mayflower Emerald Square LLC filed a complaint
against both Melt CA and our company for early termination of a lease in North
Attleboro, MA. The lease was signed by Melt CA only, however, the plaintiff
claims Melt CA was acting as an agent of our company and thus has named Melt
Inc. as a defendant. Melt Inc has filed a motion to dismiss, which has been
heard by the court and the decision is pending.

7

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Braintree Property Associates LP v. Melt Inc, Melt
Franchising LLC, Clive Barwin (Melt)

On April 2nd, 2009 plaintiff (landlord) filed suit
against defendants which alleges that Melt made a verbal representation to
landlord that Melt would be assuming obligations of a lease made between
landlord and a former Melt franchisee. Melt will be vigorously defending these
allegations. Melt is in the process of preparing a reply to the claims.

Item 1A. RISK FACTORS

Much of the information included in this annual report includes
or is based upon estimates, projections or other "forward looking statements".
Such forward looking statements include any projections or estimates made by us
and our management in connection with our business operations. While these
forward-looking statements, and any assumptions upon which they are based, are
made in good faith and reflect our current judgment regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions or other future performance
suggested herein.

Such estimates, projections or other "forward looking
statements" involve various risks and uncertainties as outlined below. We
caution the reader that important factors in some cases have affected and, in
the future, could materially affect actual results and cause actual results to
differ materially from the results expressed in any such estimates, projections
or other "forward looking statements".

Our common shares are considered speculative as our business is
still in an early growth stage of its development. Prospective investors should
consider carefully the risk factors set out below.

Risks Related to our Business

We commenced our business operations in July, 2003 and
opened our first retail store in November, 2003 and thus have a limited
operating history. If we cannot successfully manage the risks normally faced by
early stage companies, our business may fail.

We have a limited operating history. Our future is subject to
the risks and expenses encountered by early stage companies, such as uncertainty
regarding level of future revenue and inability to budget expenses and manage
growth accordingly, uncertainty regarding acceptance of our products and retail
operations and inability to access sources of financing when required and at
rates favourable to us. Our limited operating history and the highly competitive
nature of the retail food industry make it difficult to predict future results
of our operations. We may not establish a customer following that will make us
profitable, which might result in the loss of some or all of your investment in
our common stock.

If we are unable to protect our trade name, our efforts to
increase public recognition of our Melt brand may be impaired and we may be
required to incur substantial costs to protect our trade name.

Our service/trademarks M Melt® "Melt-gelato italiano®", Melt
 café & gelato bar®, and Melt  gelato and crepe café® have been
registered with the US Patent & Trade Mark Office. However, these measures
may not be adequate to prevent the unauthorized use of our trade names. We may
be unable to prevent third parties from acquiring and using names that are
similar to, infringe upon or otherwise decrease the value of our trademarks and
other proprietary rights. We may need to bring legal claims to enforce or
protect such intellectual property rights. Any litigation, whether successful or
unsuccessful, could result in substantial costs and diversion of resources. Any
claims, by or against us, could be time consuming and costly to defend or
litigate, divert our attention and resources and result in the loss of goodwill
associated with our trade names. An adverse outcome in litigation or similar
proceedings could subject us to

8

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significant liabilities to third parties; require expenditure
of significant resources to develop non-infringing trade name and trademarks,
any of which could have a material adverse effect on our business, operating
results and financial condition.

The franchising industry is a highly litigious industry and
almost all franchisors have one or many lawsuits filed against it. If we have
many lawsuits filed against us, we may be required to incur substantial costs to
defend them, which might result in the loss of some or all of your investment in
our common stock.

Although we engage in ethical business practices at all times
and adhere to all the rules and regulations governed by the franchise act, due
to the litigious nature of our industry we could have more lawsuits filed
against us. .Any litigation, by or against us, could be time consuming
and costly to instuite or defend, and divert our attention and resources. An
adverse outcome in litigation could have a material adverse effect on our
business, operating results and financial condition.

The establishment and maintenance of the brand identity
Melt is critical to our future success. If we are unable to promote and
maintain our Melt brand, our business could fail.

Since we expect that substantially all of our revenues will be
generated from purchases by the consumer of our gelato and related products at
franchise owned and operated retail outlets, market acceptance of our products
is critical to our future success. Factors such as market positioning, retail
locations, the availability and price of competing products (in particular,
frozen desserts), and the introductions of new products will affect the market
acceptance of our business.

We believe that establishing and maintaining the brand identity
of our products will increase the appeal of our products to prospective
customers. Consumer recognition and a preference of our "Melt" brand products
over similar products offered by our competition will be critical to our future
success. Promotion and enhancement of our gelato and related products will
depend largely on our success in continuing to provide high quality products and
service. In order to attract and retain customers and to promote and maintain
our "Melt" brand in response to competitive pressures, we may increase our
financial commitment to creating and maintaining a distinct brand loyalty among
our customers. Currently, given the large number of factors and variables in
achieving and maintaining consumer recognition and brand loyalty, we cannot
anticipate or estimate how much we may be required to spend to establish such
loyalty. If we are unable to provide high quality products, or otherwise fail to
promote and maintain our "Melt" brand, incur excessive expenses in an attempt to
improve, or promote and maintain our brand, we may not be able to successfully
implement our business plan and achieve a profitable level of operations.

Due to the nature of our products, we will be subject to
specific risks unique to the retail frozen desert industry.

Specialty retail food businesses such as ours are often
affected by changes in consumer and competitive conditions, including changes in
consumer tastes; national, regional, and local economic conditions and
demographic trends; and the type, number, and location of competing businesses.
Adverse publicity resulting from food quality, illness, injury, or other health
concerns or operating issues stemming from one of our products may adversely
affect our retail operations. We, as well as our competitors, are subject to the
foregoing risks, the occurrence of any of which would impair or prevent our
efforts to establish and expand our frozen dessert operations. The occurrence of
such risks may result in an investor losing some or all of their investment in
our common stock.

Because we face intense competition, an investment in our
company is highly speculative.

The retail frozen dessert industry is characterized by intense
and substantial competition. We believe that our business competes with large
and established ice cream retailers such as Ben & Jerry's, Haagen-Dazs,
Dreyers, Baskin-Robbins, Dairy Queen and Cold Stone Creamery Company, as well
as other small to medium sized ice cream and gelato business entities that
provide similar products, including stores that sell frozen yogurt.

A number of our competitors are well established, substantially
larger, and have substantially greater market recognition, greater resources and
broader distribution capabilities than we have. These existing and future

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competitors may be able to respond more quickly than us to new
or changing opportunities, product and customer requirements, and may be able to
undertake more extensive promotional activities, offer more retail locations to
customers and adopt more aggressive pricing policies than we do. Increased
competition by these existing and future competitors could materially and
adversely affect our ability to commence, maintain, or expand our
operations.

Our operations are subject to governmental regulation
associated with the food service industry, the operation and enforcement of
which may restrict our ability to carry on our business.

We are in the perishable food industry. The development,
manufacture and marketing of products sold by us will be subject to extensive
regulation by various government agencies, including the U.S. Food and Drug
Administration and the U.S. Federal Trade Commission, as well as various state
and local agencies. These agencies regulate production processes, product
attributes, packaging, labelling, advertising, storage and distribution. These
agencies establish and enforce standards for safety, purity and labelling. In
addition, other governmental agencies (including the U.S. Occupational Safety
and Health Administration), establish and enforce health and safety standards
and regulations in the workplace, including those in our retail locations. Our
retail locations will be subject to inspection by federal, state, and local
authorities. We will seek to comply at all times with all such laws and
regulations. We will obtain and maintain all necessary permits and licenses
relating to our operations, and will ensure that our facilities and practices
comply with applicable governmental laws and regulations. Nevertheless, there is
no guarantee that we will be able to comply with any future laws and
regulations. Our failure to comply with applicable laws and regulations could
subject us to civil remedies including fines, injunctions, recalls or seizures
as well as potential criminal sanctions.

As a result of such regulations we may encounter a variety of
difficulties or extensive costs, which could delay or preclude us from marketing
our products or continuing or expanding our operations. We cannot predict if all
necessary approvals will be granted or that if granted, any approval will be
received on a timely basis. If approvals are not obtained or are delayed, this
may also preclude us from marketing our products or continuing or expanding our
operations.

Because our officers, directors and principal shareholders
control a substantial portion of our common stock, investors will have little or
no control over our management or other matters requiring shareholder
approval.

Our officers and directors, in the aggregate, beneficially own
29.93% of the issued and outstanding shares of our common stock. In addition,
Glynis Sive, the spouse of Clive Barwin, beneficially owns 9.34% of the issued
and outstanding shares of our common stock. As a result, these individuals have
the ability to exert significant influence over matters affecting minority
shareholders, including the election of our directors, the acquisition or
disposition of our assets, and the future issuance of our shares. Because our
officers, directors and Glynis Sive can exercise such influence over our
company, investors may not be able to replace our management if they disagree
with the way our business is being run. Because control by these insiders could
result in management making decisions that are in the best interest of those
insiders and not in the best interest of the investors, you may lose some or all
of the value of your investment in our common stock.

Because we might not have sufficient insurance to cover any
losses that may arise, we might have uninsured losses, increasing the
possibility that you would lose your investment.

We may incur uninsured liabilities and losses as a result of
the conduct of our business. At the moment, we do not carry directors and
officers insurance nor do we cover insurance for lawsuits brought against our
company or our directors. Should uninsured losses occur, purchasers of our
common stock could lose their entire investment.

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Because we can issue additional common shares, purchasers of
our common stock may incur immediate dilution and may experience further
dilution.

We are authorized to issue up to 100,000,000 common shares, of
which 21,290,000 are issued and outstanding. Our board of directors has the
authority to cause our company to issue additional shares of common stock or
issue warrants or options to purchase shares of common stock without the consent
of any of our shareholders. Consequently, our shareholders may experience more
dilution in their ownership of our company in the future.

RISKS ASSOCIATED WITH OUR COMMON STOCK

Trading on the OTC Bulletin Board may be volatile and
sporadic, which could depress the market price of our common stock and make it
difficult for our stockholders to resell their shares.

Our common stock is quoted on the OTC Bulletin Board service of
the Financial Industry Regulatory Authority. Trading in stock quoted on the OTC
Bulletin Board is often thin and characterized by wide fluctuations in trading
prices, due to many factors that may have little to do with our companys
operations or business prospects. This volatility could depress the market price
of our common stock for reasons unrelated to operating performance. Moreover,
the OTC Bulletin Board is not a stock exchange, and trading of securities on the
OTC Bulletin Board is often more sporadic than the trading of securities listed
on a quotation system like NASDAQ or a stock exchange like Amex. Accordingly,
shareholders may have difficulty reselling any of the shares.

Our stock is a penny stock. Trading of our stock may be
restricted by the SECs penny stock regulations and the FINRAs sales practice
requirements, which may limit a stockholders ability to buy and sell our
stock.

Our stock is a penny stock. The Securities and Exchange
Commission has adopted Rule 15g-9 which generally defines penny stock to be
any equity security that has a market price (as defined) less than $5.00 per
share or an exercise price of less than $5.00 per share, subject to certain
exceptions. Our securities are covered by the penny stock rules, which impose
additional sales practice requirements on broker-dealers who sell to persons
other than established customers and accredited investors. The term
accredited investor refers generally to institutions with assets in excess of
$5,000,000 or individuals with a net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document in a form prepared by the SEC which provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customers account. The bid and offer
quotations, and the broker-dealer and salesperson compensation information, must
be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customers
confirmation. In addition, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from these rules, the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchasers written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for the stock
that is subject to these penny stock rules. Consequently, these penny stock
rules may affect the ability of broker-dealers to trade our securities. We
believe that the penny stock rules discourage investor interest in and limit the
marketability of our common stock.

In addition to the penny stock rules promulgated by the
Securities and Exchange Commission, FINRA has adopted rules that require that in
recommending an investment to a customer, a broker-dealer must have reasonable
grounds for believing that the investment is suitable for that customer. Prior
to recommending speculative low priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information
about the customers financial status, tax status, investment objectives and
other information. Under interpretations of these rules, FINRA believes that
there is a high probability that speculative low priced securities will not be
suitable for at least some customers. FINRA requirements make it more difficult
for broker-dealers to recommend that their customers buy our common stock, which
may limit your ability to buy and sell our stock.

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Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security
Holders.

None.

Item 5. Other Information

None.

Item 6. Exhibits.

Exhibits required by Item 601 of Regulation S-K

|Exhibit Number | Description                                                                                                                                                                                      
|-------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3)            | (i) Articles of Incorporation; and (ii) Bylaws                                                                                                                                                   
|3.1            | Articles of Incorporation (incorporated by reference from
      our Form SB-2 Registration Statement, filed on October 2, 2003).                                                                 
|3.2            | Bylaws (incorporated by reference from our Form SB-2
      Registration Statement, filed on October 2, 2003).                                                                                    
|(10)           | Material Contracts                                                                                                                                                                               
|10.1           | Operating Agreement between Melt Inc. and Dolce Dolci,
      LLC dated July 21, 2004 (incorporated by reference from our Form 10-KSB,
      filed on March 31, 2005).                            
|10.2           | Operating Agreement between Melt Inc. and Melt
      Franchising LLC dated February 25, 2005 (incorporated by reference from
      our Form 10-KSB, filed on March 31, 2005).                    
|10.3           | Form of loan agreement entered into with each of:
       Clive Barwin Errol Brome Lance Rosenberg Cecil
      Hofman (incorporated by reference from our Form 8-K, filed on June 12,
      2005).
|10.4           | Franchise Offering Circular (incorporated by reference
      from our Form 10-QSB, filed on November 14, 2005).                                                                                  

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|Exhibit Number | Description                                                                                                          
|-------------- | ---------------------------------------------------------------------------------------------------------------------
|(14)           | Code of Ethics                                                                                                       
|14.1           | Code of Business Conduct and Ethics. (incorporated
      by reference from our Form 10-KSB, filed on March 30, 2004).
|(21)           | Subsidiaries of the small business
      issuer   
      Melt (California) Inc. 
      Melt Franchising LLC          
|(31)           | Rule 13a-14(a)/15d-14(a) Certifications                                                                              
|31.1*          | Certification
      under Sarbanes-Oxley Act of 2002                                                                 
|(32)           | Section 1350 Certifications                                                                                          
|32.1*          | Certification
      under Sarbanes-Oxley Act of 2002                                                                 

* Filed herewith

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

|                    | MELT INC.                                              
|------------------- | -------------------------------------------------------
|                    | (Registrant)                                           
|                    |                                                        
|                    |                                                        
|Dated: May 14, 2009 | /s/
      Clive Barwin                                 
|                    | Clive Barwin                                           
|                    | President, CEO, Chief Financial Officer,               
|                    | Secretary and Director                                 
|                    | (Principal Executive Officer, Principal
      Financial
|                    | Officer and Principal Accounting Officer)              

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