UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C.  20549 Form 10-QSB (Mark One) xQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended  March 31, 2007 [
        ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from __________ to __________ Commission file number333-109990 MELT INC.(Exact name of small business issuer as specified in its charter)  Nevada
        
        47-0925451(State or other jurisdiction of incorporation or organization)
        
        (IRS Employer Identification No.)  22912 Mill Creek Dr, Suite D, Laguna Hills, CA 92653(Address of principal executive offices)  949.707.0456(Issuer's telephone number)  32222 Corte Tomatlan, Temecula, CA  92592(Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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.     YesxNo [   ] APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the issuer has filed all documents and reports required to be filed by Section 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 State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:21,290,000 common shares issued and outstanding as of May 1, 2007 Transitional Small Business Disclosure Format (Check one):
        Yes [
        ]
        Nox Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o     No [X ]     - 2    Item1.Financial Statements.  It is the opinion of management that the interim consolidated financial statements for the quarter ended March 31, 2007 include all adjustments necessary in order to ensure that the interim consolidated financial statements are not misleading.           - 3               MELT INC. AND SUBSIDIARIES  CONSOLIDATED FINANCIAL STATEMENTS  March 31, 2007 and December 31, 2006         MELT INC. AND SUBSIDIARIES Consolidated Balance Sheets  ASSETS  March 312007
        
        December 31,2006(Unaudited)CURRENT ASSETSCash
        $
        343,670
        
        $
        555,230Receivables, net of allowance
        
        359,649
        
        
        804,685Inventory
        
        4,130
        
        
        4,130Prepaid expenses
        
        14,497
        
        
        7,500Construction in-process
        
        824,104
        
        
        732,624Total Current Assets
        
        1,546,050
        
        
        2,104,169FIXED ASSETS, NET
        
        52,377
        
        
        51,518OTHER ASSETSTrademark, net
        
        1,167
        
        
        1,239Deposits
        
        246,500
        
        
        196,817Total Other Assets
        
        247,667
        
        
        198,056TOTAL ASSETS
        $
        1,846,094
        
        $
        2,353,743    The accompanying notes are an integral part of the consolidated financial statements 4       MELT INC. AND SUBSIDIARIES Consolidated Balance Sheets (Continued)  LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)   March 312007
        
        December 31,2006(Unaudited)CURRENT LIABILITIESAccounts payable
        $
        469,058
        
        $
        870,058Accrued expenses
        
        86,299
        
        
        192,498Accrued management fees  related party
        
        69,911
        
        
        63,911Notes payable - related party
        
        242,000
        
        
        242,000Accrued interest - related party
        
        56,574
        
        
        40,328Notes payable
        
        113,283
        
        
        113,239Accrued interest
        
        -
        
        
        10,195Construction deposits
        
        888,594
        
        
        326,507Deferred revenue
        
        525,000
        
        
        550,000Total Current Liabilities
        
        2,450,719
        
        
        2,408,736STOCKHOLDERS EQUITY (DEFICIT)Common stock; $0.001 par value, 100,000,000  shares authorized, 21,200,000 shares issued  and outstanding
        
        21,200
        
        
        21,200Additional paid-in capita
        
        1,767,017
        
        
        1,767,017Accumulated deficit
        
        (2,392,842)
        
        
        (1,843,210)Total Stockholders Equity (Deficit)
        
        (604,625)
        
        
        (54,993)TOTAL LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)
        $
        1,846,094
        
        $
        2,353,743    The accompanying notes are an integral part of the consolidated financial statements 5       MELT INC. AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited)  For the Three Months EndedMarch 31,2007
        
        2006REVENUESFood and beverage sales
        $
        343,889
        
        $
        250,816Franchise store construction/equipment
        
        71,125
        
        
        147,470Royalty and marketing fee
        
        91,416
        
        
        29,215Franchise fees
        
        75,000
        
        
        -Miscellaneous finders and professional fees
        
        22,207
        
        
        42,141Total Revenues
        
        603,637
        
        
        469,642COST OF SALESCost of food and beverage
        
        310,713
        
        
        203,129Franchise stores construction/equipment costs
        
        142,373
        
        
        121,089Materials and supplies
        
        17,047
        
        
        29,569Miscellaneous finders and professional fees
        
        22,500
        
        
        -Total Cost of Sales
        
        492,633
        
        
        353,787GROSS PROFIT
        
        111,004
        
        
        115,855EXPENSESSalaries and wages
        
        225,666
        
        
        56,174Marketing
        
        161,053
        
        
        8,645Rent
        
        123,274
        
        
        19,237Professional fees
        
        60,774
        
        
        27,777Depreciation and amortization
        
        3,032
        
        
        11,304Management fees
        
        6,388
        
        
        25,500General and administrative
        
        71,660
        
        
        57,698Total Expenses
        
        651,847
        
        
        206,335(LOSS) FROM OPERATIONS
        
        (540,843)
        
        
        (90,480)OTHER INCOME (EXPENSE)Interest income
        
        890
        
        
        -Interest expense
        
        (9,679)
        
        
        (6,050)Total Other Income (Expenses)
        
        (8,789)
        
        
        (6,050)(LOSS) BEFORE INCOME TAXES AND MINORITY INTEREST
        
        (549,632)
        
        
        (96,530)INCOME TAX EXPENSE
        
        -
        
        
        -    The accompanying notes are an integral part of the consolidated financial statements 6       MELT INC. AND SUBSIDIARIES Consolidated Statements of Operations (Continued) (Unaudited)   For the Three Months EndedMarch 31,2007
        
        2006(LOSS) BEFORE MINORITY INTEREST
        $
        (549,632)
        
        $
        (96,530)MINORITY INTEREST IN LOSS
        
        -
        
        
        22,687LOSS BEFORE DISCONTINUED OPERATIONS
        
        (549,632)
        
        
        (73,843)LOSS ON DISCONTINUED OPERATIONS (NOTE 3)
        
        -
        
        
        (43,519)NET (LOSS)
        $
        (549,632)
        
        $
        (117,362)BASIC AND DILUTED LOSS PER SHARE:Loss per share on continuing operations
        
        (0.03)
        
        
        (0.01)Loss per share on discontinued operations
        
        -
        
        
        (0.00)Net loss per share
        $
        (0.03)
        
        $
        (0.01)WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
        
        21,200,000
        
        
        20,280,000      The accompanying notes are an integral part of the consolidated financial statements 7     - 8 -    MELT INC. AND SUBSIDIARIES Consolidated Statement of Stockholders Equity (Deficit)   Common Stock
        
        
        Additional Paid-In Capital
        
        
        Accumulated DeficitShares
        
        
        AmountBalance, December 31, 2006
        21,200,000
        
        $
        21,200
        
        $
        1,767,017
        
        $
        (1,843,210)Net loss for the three months ended March 31, 2007 (unaudited)
        -
        
        
        -
        
        
        -
        
        
        (549,632)Balance, March 31, 2007 (unaudited)
        21,200,000
        
        $
        21,200
        
        $
        1,767,017
        
        $
        (2,392,842)            - 9 -   MELT INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited)  For the Three Months EndedMarch 31,2007
        
        2006CASH FLOWS FROM OPERATING ACTIVITIESNet loss
        $
        (549,632)
        
        $
        (117,362)Items to reconcile net loss to netcash (used) by operating activities:Depreciation and amortization
        
        3,032
        
        
        11,304Depreciation and amortization  discontinued
        
        -
        
        
        17,553Minority interest
        
        -
        
        
        (22,687)Changes in operating assets and liabilities:(Increase) in construction work in-process
        
        (91,480)
        
        
        -(Increase) decrease in receivables
        
        445,036
        
        
        (233,888)Decrease in supplies and inventory
        
        -
        
        
        57,050(Increase) in supplies and inventory - discontinued
        
        -
        
        
        (410)(Increase) in prepaid expenses
        
        (6,997)
        
        
        (3,056)(Increase) in deposits
        
        (49,683)
        
        
        (5,000)Increase (decrease) in accrued expenses
        
        (106,154)
        
        
        -Increase in accrued expenses - discontinued
        
        -
        
        
        -Increase in accrued management fees
        
        6,000
        
        
        6,000Increase (decrease) in accounts payable
        
        (401,000)
        
        
        68,453Increase in accounts payable  discontinued
        
        -
        
        
        52,227Increase in interest payable
        
        -
        
        
        1,050Increase in interest payable  related party
        
        6,050
        
        
        2,600Increase (decrease) in deferred revenue
        
        (25,000)
        
        
        75,000Increase in construction and equipment deposits
        
        562,087
        
        
        56,300Net Cash (Used) by Operating Activities
        
        (207,741)
        
        
        (34,866)CASH FLOWS FROM INVESTING ACTIVITIESPurchases of fixed assets
        
        (3,819)
        
        
        (3,425)Purchases of fixed assets - discontinued
        
        -
        
        
        (1,800)Net Cash (Used) by Investing Activities
        
        (3,819)
        
        
        (5,225)CASH FLOWS FROM FINANCING ACTIVITIESPayments on notes payable  related party
        
        -
        
        
        (24,000)Net Cash (Used) by Financing Activities
        
        -
        
        
        (24,000)(DECREASE) IN CASH
        
        (211,560)
        
        
        (64,091)CASH AT BEGINNING OF PERIOD
        
        555,230
        
        
        245,064CASH AT END OF PERIOD
        $
        343,670
        
        $
        180,973CASH PAID FOR:Interest
        $
        3,628
        
        $
        2,400Income taxes
        $
        -
        
        $
        -       - 10 -   MELT INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements March 31, 2007 and December 31, 2006 NOTE 1 -
        ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements have been omitted in accordance with such rules and regulations.  The information furnished in the interim consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements.  Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim consolidated financial statements be read in conjunction with the Companys most recent audited financial statements and notes thereto included
in its December 31, 2006 Annual Report on Form 10-KSB.  Operating results for the period ended March 31, 2007 are not necessarily indicative of the results that may be expected for the year ending December 31, 2007. NOTE 2 -
        SIGNIFICANT EVENTS Franchise Locations During the first quarter of 2007, five franchisee locations elected to terminate their franchise agreement.  The franchise fees associated with those locations are non refundable and were included in deferred revenue at December 31, 2006.  Three of these locations are with the franchisee described in the litigation note below. On March 12, 2007, the franchisee for the Valencia Mall ceased to operate.  On March 15, 2007, the company terminated the franchise agreement and is seeking post closure remedies to collect outstanding bills.  All outstanding receivables as of March 31, 2007 were written off. Litigation On March 20, 2007, the Company filed for arbitration with its Florida franchisee.  The Company believes the franchisee owes the Company over $181,000.  To date, discovery has not been initiated and as such no reasonable assessment of the likely outcome can be made. Commitments and Contingencies On March 15, 2007, one of the eleven noncancelable leases held by the Company was assigned to a franchisee.  With the assignment, the company is no longer liable for any future minimum lease payments.  In addition, one other noncancelable lease was subleased to a franchisee. NOTE 3 -
        SALE OF SUBSIDIARY On August 22, 2006, the Company entered into an agreement to sell its equity interest in its 50% owned subsidiary Villa Melt, LLC to the remaining interest holders for $145,000.  A cash payment of $50,000 was received upon closing and a receivable of $95,000 was recorded at September 30, 2006.  Upon close of the sale, the Company recognized a loss on sale of assets of $22,149.      - 11 -   MELT INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements March 31, 2007 and December 31, 2006 NOTE 3 -
        SALE OF SUBSIDIARY (CONTINUED) All operating results of Villa Melt, LLC are included in discontinued operations as of March 31, 2006.  No tax benefit has been attributed to discontinued operations.  The following is an unaudited summary of the loss from discontinued operations resulting from the sale of Villa Melt, LLC:  For the ThreeMonths EndedMarch 31, 2006REVENUES
        $
        105,680COST OF SALES
        
        32,888GROSS PROFIT
        
        72,792EXPENSESDepreciation and amortization
        
        17,553Rent
        
        38,209Salaries and wages
        
        39,857General and administrative
        
        20,692Total Expenses
        $
        116,311LOSS FROM DISCONTINUED OPERATIONS
        $
        (43,519) NOTE 4 -
        OUTSTANDING STOCK PURCHASE WARRANTS   Weighted
        
        WeightedOptions
        
        Average
        
        AverageWarrants
        
        Price
        
        Fair ValueOutstanding, December 31, 2006
        1,390,000
        
        $
        0.82
        
        $
        0.57Outstanding, March 31, 2007
        1,390,000
        
        $
        0.82
        
        $
        0.57Exercisable, March 31, 2007
        1,390,000
        
        $
        0.82
        
        $
        0.57  Outstanding
        
        ExercisableWeightedNumber
        
        Average
        
        Weighted
        
        Number
        
        WeightedRange of
        
        Outstanding
        
        Remaining
        
        Average
        
        Exercisable
        
        AverageExercise
        
        at
        
        Contractual
        
        Exercise
        
        at
        
        ExercisePrices
        
        3/31/07
        
        Life
        
        Price
        
        3/31/07
        
        Price$0.90  1.00
        
        460,000
        
        1.55
        
        $      0.95
        
        460,000
        
        $      0.950.75
        
        930,000
        
        0.13
        
        $      0.75
        
        930,000
        
        $      0.75$0.75  1.00
        
        1,390,000
        
        0.60
        
        $     0.85
        
        1,390,000
        
        $     0.82       - 12 -   MELT INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements March 31, 2007 and December 31, 2006 NOTE 5 -
        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 shareholders 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. NOTE 6 -
        SUBSEQUENT EVENTS Employee Stock Options On April 2, 2007, the Company issued 1,720,000 stock options to employees with an exercise price of $0.40, which was the previous five day weighted average price of the Companys common stock when issued. The options have a five year term and vest over a 4 year period at a rate of 25% per year.  The options terminate upon leaving the Company prior to vesting and as such, one employee resigned and forfeited 100,000 options. Stock Issuance On April 19, 2007, the Company issued 90,000 shares of its common stock to an investor relations firm as a result of a December 1, 2006 consultant agreement. Pursuant to the terms of the six month consultant agreement, the Company agreed to pay $15,000 on signing as payment for the first and last months payment and $7,500 on or before the first day of each of the next four months and issue 90,000 shares of its common stock.        - 13 -   Item2.Management's Discussion and Analysis or Plan of Operation. FORWARD LOOKING STATEMENTS This quarterly report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  These statements relate to future events or our future financial performance.  In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology.  These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our company's or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. In this quarterly report, unless otherwise specified, all dollar amounts are expressed in 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" and "Melt" mean Melt, Inc. 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. You should read the following discussion of our financial condition and results of operations together with the unaudited financial statements and the notes to unaudited financial statements included elsewhere in this filing prepared in accordance with accounting principles generally accepted in the United States.  This discussion contains forward-looking statements that reflect our plans, estimates and beliefs.  Our actual results could differ materially from those anticipated in these forward-looking statements. RESULTS OF OPERATIONS Three Months ending March 31, 2007 The period covered by our unaudited financial statements is for the three months ended March 31, 2007 during which time we generated $603,637 in revenue from continuing operations and recognized a net loss before discontinued operations of $549,632 during the same period last year we generated $469,642 in revenue from continuing operations and incurred a loss of $73,843 from continuing operations.  The revenue was generated from franchise fees, from revenue generated in royalty revenues, from food and supplies sold to our franchise owned stores and from revenue generated from the sale of equipment and build out of stores to our franchisees. The increase in revenues for the current period was largely due to franchise fees, food and supplies sold to franchise owned stores, and royalty revenue.  Cost of sales from continuing operations amounted to $492,633, resulting in gross profit from continuing operations of
$111,004, or 18.4% compared to cost of sales of $353,787, resulting in gross profit from continuing operations of $115,855, or 24.7% for the same period last year.  The percentage decrease is due to the change in gross profit from sales of equipment and build out of stores to our franchisees.  In the first quarter of 2006, we realized a gross profit of 18% from these sales, but in the first quarter of 2007 we experience a gross profit loss of 100% in this area.  Rental expenses from continuing operations for the retail stores amounted to $123,274 or 20.4% of sales and $19,237 or 4.1% of sales for the same period last year. The increase is due to $113,915 in pre opening rent the company paid.  Had it not been for this pre opening rent, rent expense would     - 14 -   have been $9,359 or 1.5% of revenue.  The pre opening rent is due to lease obligations commencing prior to stores being opened and transferred to franchisees.  Salaries and wages from continuing operations amounted to $225,666 or 37.4% of sales and $56,174 or 12.0% of sales for the same period last year.  The percentage increase is due to the increase in corporate staff.   General and administrative expenses from continuing operations amounted to $71,660 or 11.9% of sales and $57,698 or 12.3% of sales for the same period last year. During the period, one franchise owned stores opened in Glendale, CA.  Also during the period, one franchise owned store closed in Valencia, CA. LIQUIDITY AND CAPITAL RESOURCES At March 31, 2007 we had $343,670 cash on hand and negative working capital of $904,669.  As of March 31, 2007 our total current assets were $1,546,050, and our total assets were $1,846,094. At March 31, 2007 our total liabilities were $2,450,719, of which all were considered to be current. For the three months ended March 31, 2007, net cash used by operating activities was $207,741 compared to $34,866 for the same period last year.  Net cash used by investing activities was $3,819 compared to cash used by investing activities $5,225 for same period last year.  Net cash used by financing activities was $0 compared to ($24,000) for the same period last year. Presently, we have insufficient revenue and cash flow to support our growth plan.  Management is in the process of raising an additional $2,500,000 in capital.  We believe this will be enough capital for our 2007 and 2008 growth plan. There are no assurances that we will be able to obtain further funds required for our continued operations.  We are pursuing various financing alternatives to meet our immediate and long-term financial requirements.  There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms.  If we are not able to obtain the additional financing on a timely basis, we will not be able to proceed with our expansion program at the level anticipated. FUTURE OPERATIONS Immediate Objectives Our primary objective for the 12 month period ending March 31, 2008 will be to expand our franchise program into 5 new states, and secure new retail locations in all states that we operate. We also plan on expanding our marketing program with the intention of creating some brand awareness and thus increasing sales at our franchise owned stores. To this extent we have hired a marketing firm out of CA.  We also plan on introducing additional products into our stores during the second half of 2007. Retail Locations Our business plan for the12 month period ending March 31, 2008, envisions opening 16 new franchise stores and no corporate owned stores for a total of 16 operating stores.  The stores will range from kiosks of approximately 180 square feet to sit down gelaterias of up to 1,200 square feet. Cash Requirements Presently, our cash is sufficient to fund our normal operating expenses, however we will require additional capital to fund the cost of opening new corporate owned stores.  Management projects that we will require at least $1,250,000 to fund our proposed capital expansion program over the next twelve months. We have signed retail leases for new stores that the we plan to award to franchisees, if our company is not able to find franchisees for these committed leases we will be required to raise additional funds to build out and operate the stores until they can be sold to interested franchisees.      - 15 -   APPLICATION OF 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. RISK FACTORS Much of the information included in this quarterly 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 during the development of our new business operations.  Prospective investors should consider carefully the risk factors set out below. RISKS RELATED TO OUR BUSINESS We have only 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 confectionery 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 mark "Melt-gelato italiano" has 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 diversions 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 significant liabilities to third parties, require
expenditure of significant resources to develop non-infringing trade name and trade marks, any of which could have a material adverse effect on our business, operating results and financial condition.      - 16 -   The establishment and maintenance of brand identity of our Melt brand gelato products 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 corporate and 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 deserts), and the introductions of new products will affect the market acceptance of our business. We believe that establishing and maintaining 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 desert 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 confectionery 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. 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 competitors may be able to respond more quickly to new or changing opportunities, product and customer requirements than us 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     - 17 -   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 and their affiliate, in the aggregate, beneficially own26.91%of issued and outstanding shares of our common stock.  As a result, they 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 one of our principal shareholders (specifically Glynis Sive, the wife of Clive Barwin) 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.  We do currently maintain comprehensive liability and property insurance.  However there can be no assurance that we have coverage sufficient to satisfy potential claims.  We do not carry any business interruption insurance.  Should uninsured losses occur, any purchasers of our common stock could lose their entire investment. 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 National Association of Securities Dealers.  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.      - 18 -   Our stock is a penny stock.  Trading of our stock may be restricted by the SECs penny stock regulations and the NADSD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, the NASD 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, the NASD believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers.  The NASD 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. OTHER RISKS One of our directors and officers resides outside the United States, making it difficult for investors to enforce within the United States any judgments obtained against this director and officer. One director and officer is a national and/or resident of a country other than the United States, and all or a substantial portion of such persons assets are located outside the United States.  As a result, it may be difficult for investors to enforce within the United States any judgments obtained against this director, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.  Consequently, you may be effectively prevented from pursuing remedies under U.S. federal securities laws against them. Item3.Controls and Procedures. As required by Rule 13a-15 under the Exchange Act, as at March 31, 2007 (being the end of the period covered by this quarterly report on Form 10-QSB) we have carried out an evaluation of the effectiveness of the design and operation of our company's disclosure controls and procedures.  This evaluation was carried out under the supervision and with the participation of our company's management, including our company's president and chief executive officer.  Based upon that evaluation, our company's president and chief executive officer concluded that our company's disclosure controls and procedures are effective as at the end of the period covered by this report.     - 19 -   There have been no changes in our company's internal controls or in other factors, which could significantly affect internal controls subsequent to the date we carried out our evaluation. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our company's reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our company's reports filed under the Exchange Act is accumulated and communicated to management, including our company's president and chief executive officer as appropriate, to allow timely decisions regarding required disclosure.  PART II-OTHER INFORMATION Item1.
        Legal Proceedings. On March 20, 2007, we filed for arbitration against a Florida franchisee seeking payment of past due obligations.  We believe that the franchisee owes over $181,000.  No discovery has been initiated and as such no reasonable assessment of outcome is possible. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest. Item 2.
        Unregistered Sales of Equity Securities and Use of Proceeds. On April 19, 2007, we issued 90,000 shares to a U.S. person in consideration for investor relations services provided to our company. We issued all of the 90,000 shares to one U.S. person (as that term is defined in Regulation S of the Securities Act of 1933) relying on the exemptions from registration provided by Section 4(2) of the Securities Act of 1933 and upon Rule 506 of Regulation D of the Securities Act of 1933. Item 3.
        Defaults Upon Senior Securities. None. Item 4.
        Submission of Matters to a Vote of Security Holders. None. Item 5.
        Other Information. None. Item6.
        Exhibits. Exhibits required by Item 601 of Regulation S-B Exhibit  Number
        Description(3)
        (i) Articles of Incorporation; and (ii) Bylaws3.1
        Articles of Incorporation (incorporated by reference from our Form SB-2 Registration Statement, filed on October 2, 2003).       - 20 -    3.2
        Bylaws (incorporated by reference from our Form SB-2 Registration Statement, filed on October 2, 2003).(10)
        Material Contracts10.1
        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 BarwinErrol BromeLance RosenbergCecil 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).(14)
        Code of Ethics14.1
        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 issuerMelt (California) Inc.Melt Franchising LLC(31)
        Rule 13a-14(a)/15d-14(a) Certifications31.1
        Certification under Sarbanes-Oxley Act of 200231.2
        Certification under Sarbanes-Oxley Act of 2002(32)
        Section 1350 Certifications32.1
        Certification under Sarbanes-Oxley Act of 200232.2
        Certification under Sarbanes-Oxley Act of 2002      - 21 -    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.  By:/s/ Clive Barwin Clive Barwin, President, CEO, Secretary and Director (Principal Executive Officer)  Date: May 10, 2007  By:/s/ Scott M. Miller Scott M. Miller, Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)  Date: May 10, 2007