Toast the walnuts by heating a non-stick skillet over medium-high heat. Add the walnuts, stirring frequently for about 5 minutes until golden brown and fragrant.

In a mixing bowl, combine the softened cream cheese and shredded sharp cheddar cheese. Beat together until smooth and well blended.

Fold in the diced green apple and nutmeg, then drizzle in the caramel sauce, mixing until evenly distributed.

With clean hands, form the mixture into a ball shape and place it onto a serving platter.

Roll the cheese ball in the toasted walnuts, pressing lightly to ensure they stick.

Warm the caramel sauce in the microwave for 10-15 seconds, then drizzle generously over the coated cheese ball.

Serve at room temperature with crackers and enjoy!