ITEM
2.
MANA
GEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Business
Development
Melt,
Inc. (“Melt”, or the “Company”) Melt Inc. 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. is a wholly owned subsidiary (hereinafter referred to as Melt (CA)) of Melt Inc. and 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, 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 December 31, 2009 and 2008.
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 franchisees 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. Melt (FA)
sold forty-nine franchises of which nineteen were operating, seventeen agreements were terminated by the Company as a result of
the franchisee’s not securing retail space or other reasons, and thirteen closed their operations. Melt discontinued operations
in 2010.
On
June 27, 2018, the eight judicial District Court of Nevada appointed Custodian Ventures, LLC as custodian for Melt Inc., proper
notice having been given to the officers and directors of Melt, Inc. There was no opposition.
On
June 28, 2018, the Company filed a certificate of revival with the state of Nevada, appointing David Lazar as, President, Secretary,
Treasurer and Director.
On
July 3, 2018, the Company obtained a promissory note in amount of $68,305 from its custodian, Custodian Ventures, LLC, the managing
member being David Lazar. The note bears an interest of 3% and matures in 180 days from the date of issuance.
On
July 3, 2018, the Company issued 78,000,000 shares of common stock, with par value $0.001 for par value in cash and a promissory
note issued on that same day for $68,305, to Custodian Ventures, LLC. In addition, David Lazar thereafter, published all of the
missing filings with OTC Markets for the Company, so that it became current with Pink Sheets information. There was no party that
requested such services. Prior to July 3, 2018, neither Custodian Ventures, LLC, nor David Lazar, held any shares of capital stock
in the Company
On
July 11, 2018, the Company terminated its registration with the Securities and Exchange Commission.
On
August 13, 2018, the Company filed a Form 10-12G, which went effective on October 12, 2018.
The
Company’s current business objective is to seek a business combination with an operating company. We intend to use the Company’s
limited personnel and financial resources in connection with such activities. The Company will utilize its capital stock, debt
or a combination of capital stock and debt, in effecting a business combination. It may be expected that entering into a business
combination will involve the issuance of restricted shares of capital stock. The issuance of additional shares of our capital
stock:
● may significantly reduce the equity interest of our stockholders;
● will likely cause a change in control if a substantial number of our shares of capital stock are issued,
and most likely will also result in the resignation or removal of our present officer and director; and
● may adversely affect the prevailing market price for our common stock.
Similarly,
if we issued debt securities, it could result in:
● default and foreclosure on our assets if our operating revenues after a business combination were insufficient
to pay our debt obligations;
● acceleration of our obligations to repay the indebtedness even if we have made all principal and interest
payments when due if the debt security contained covenants that required the maintenance of certain financial ratios or reserves
and any such covenants were breached without a waiver or renegotiations of such covenants;
● our immediate payment of all principal and accrued interest, if any, if the debt security was payable on demand;
and
● our inability to obtain additional financing, if necessary, if the debt security contained covenants restricting
our ability to obtain additional financing while such security was outstanding.
Melt
has administrative offices located at 3445 Lawrence Ave., Oceanside, NY 11572. Mr. Lazar, our sole office and director, provides
the office on a rent-free basis.
Melt’s
fiscal year end is December 31.
Critical
accounting policies and estimates
Our
condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of these financial statements
requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, 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. We continually evaluate our estimates and judgments, our commitments to strategic alliance partners and the timing of
the achievement of collaboration milestones. We base our estimates and judgments on historical experience and other factors that
we believe to be reasonable under the circumstances. All estimates, whether or not deemed critical, affect reported amounts of
assets, liabilities, revenues and expenses, as well as disclosures of contingent assets and liabilities. These estimates and judgments
are also based on historical experience and other factors that are believed to be reasonable under the circumstances. Materially
different results can occur as circumstances change and additional information becomes known, even for estimates and judgments
that are not deemed critical.
Going
Concern
The
accompanying financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as
a going concern. The Company has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating
costs over an extended period of time. These conditions raise substantial doubt as to our ability to continue as a going concern.
Results
of Operations
For
the nine months ended September 31, 2018 compared to the year ended December 31, 2017
Revenue
For
the nine months ended September 30, 2018, the Company generated $0 in revenues. For the year ended December 31, 2017, the Company
generated $0 in revenues.
Expenses
For
the nine months ended September 30, 2018, we incurred operating expenses of $174,325. For the year ended December 31, 2017, we
incurred operating expenses in the amount of $0. The increase is due to increased accounting and legal fees associated with the
preparation and filing of the Company’s Form 10-12G with the Securities and Exchange Commission as well as non-cash related
party professional fees paid to the Company’s custodian, David Lazar.
Net
Loss
For
the nine months ended September 30, 2018 we incurred a net loss of $174,325. The increase is due to increased accounting and legal
fees incurred by the Company when preparing its Form 10-12G as well as non-cash related party professional fees paid to the Company’s
custodian, David Lazar.
For
the three months ended September 31, 2018 compared to the year ended December 31, 2017
Revenue
For
the three months ending September 30, 2018, the Company generated $0 in revenues. For the year ended December 31, 2017, the Company
generated $0 in revenues.
Expenses
For
the three months ended September 30, 2018, we incurred operating expenses of $163,130. For the year ended December 31, 2017, we
incurred operating expenses in the amount of $0. The increase is due to increased accounting and legal fees incurred by the Company
when preparing its Form 10-12G as well as non-cash related party professional fees paid to the Company’s custodian, David
Lazar.
Net
Loss
For
the three months ended September 30, 2018 we incurred a net loss of $163,130. We had net loss of $0 for the year ended December
31, 2017. The increase is due to increased accounting and legal fees incurred by the Company when preparing its Form 10-12G as
well as non-cash related party professional fees paid to the Company’s custodian, David Lazar.
Liquidity
and Capital Resources
As
of September 30, 2018, the Company has no business operations and no cash resources other than that provided by Management. We
are dependent upon interim funding provided by Management or an affiliated party to pay professional fees and expenses. Our Management
and an affiliated party have agreed to provide funding as may be required to pay for accounting fees and other administrative
expenses of the Company until the Company enters into a business combination. The Company would be unable to continue as a going
concern without interim financing provided by Management. As of September 30, 2018, we had $5,500 in cash. As of December 31,
2017, we had $0 in cash.
If
we require additional financing, we cannot predict whether equity or debt financing will become available at terms acceptable
to us, if at all. The Company depends upon services provided by Management and an affiliated party to fulfill its filing obligations
under the Exchange Act. At present, the Company has no financial resources to pay for such services.
The
Company does not currently engage in any business activities that provide cash flow. The costs of investigating and analyzing
business combinations, maintaining the filing of Exchange Act reports, the investigation, analyzing, and consummation of an acquisition
for an unlimited period of time will be paid from additional money contributed by David Lazar, our sole officer and director,
or an affiliated party.
During
the next 12 months we anticipate incurring costs related to:
●
filing of Exchange Act reports.
● franchise fees, registered agent fees, legal fees and accounting fees, and
● investigating, analyzing and consummating an acquisition or business combination.
We
estimate that these costs will be in the range of five to six thousand dollars per year, and that we will be able to meet these
costs as necessary, to be advanced/loaned to us by Management and/or an affiliated party.
On
September 30, 2018 and December 31, 2017, we have had $5,500 in current assets and $0 in current assets, respectively. As of September
30, 2018, we had $96,325 in liabilities and stockholders’ deficit, consisting of amounts due to related party. As of December
31, 2017, we had $0 in liabilities.
We
had a negative cash flow from operations of $96,325 during the nine months ended September 30, 2018. We financed our negative
cash flow from operations during the nine months ended September 30, 2018 through advances made by David Lazar.
We
had $0 cash flow from operations during the nine months ended September 30, 2017.
The
Company currently plans to satisfy its cash requirements for the next 12 months through borrowings from its CEO or companies affiliated
with its CEO and believes it can satisfy its cash requirements so long as it is able to obtain financing from these affiliated
parties. The Company expects that money borrowed will be used during the next 12 months to satisfy the Company’s operating costs,
professional fees and for general corporate purposes. There is no written funding agreement between the Company and Mr. Lazar,
our sole officer and director On July 3, 2018, the Company obtained a promissory note in amount of $68,305 from its custodian,
Custodian Ventures, LLC, the managing member being David Lazar. The note bears an interest of 3% and matures in 180 days from
the date of issuance. On July 3, 2018, the Company issued 78,000,000 shares of common stock, with par value $0.001 for par value
in cash and a promissory note issued on that same day for $68,305, to Custodian Ventures, LLC.
The
Company has only limited capital. Additional financing is necessary for the Company to continue as a going concern. Our independent
auditors have provided an unqualified audit opinion for the years ended December 31, 2017 and 2016 with an explanatory paragraph
on going concern.
Off-Balance
Sheet Arrangements
As
of September 30, 2018 and 2017, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation
S-K promulgated under the Securities Act of 1934.
Contractual
Obligations and Commitments
As
of September 30, 2018 and 2017, we did not have any contractual obligations.
Critical
Accounting Policies
Our
significant accounting policies are described in the notes to our financial statements for the six months ended September 30,
2018 and 2017, and are included elsewhere in this registration statement.