SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                 ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                         AMENDMENT NO. 1 TO FORM 10-KSB

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

                              FOR FISCAL YEAR ENDED
                                DECEMBER 31, 2004

                            COMMISSION FILE #0-28223

                           CHAMPIONLYTE HOLDINGS, INC.


             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                                     FLORIDA
         (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)

                                   65-0510294
                      (IRS EMPLOYER IDENTIFICATION NUMBER)

            3450 Park Central Blvd., N. Pompano Beach, Florida 33064
              (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES ) (ZIP CODE)

                                 (954) 465-9707
                (REGISTRANT'S TELEPHONE NO., INCLUDING AREA CODE)

              (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
                          IF CHANGED SINCE LAST REPORT)

        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                         COMMON STOCK, $0.001 PAR VALUE

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.

YES [X] NO [_]

CHECK IF THERE IS NO DISCLOSURE OF DELINQUENT FILERS IN RESPONSE TO ITEM 405 OF
REGULATION S-B NOT CONTAINED IN THIS FORM, AND NO DISCLOSURE WILL BE CONTAINED,
TO THE BEST OF THE REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-KSB OR ANY
AMENDMENT TO THIS FORM 10-KSB. ( )

REVENUES FOR YEAR ENDED DECEMBER 31, 2004: $690,511

AGGREGATE MARKET VALUE OF THE VOTING COMMON STOCK HELD BY NON-AFFILIATES OF THE
REGISTRANT AS OF APRIL 20, 2005, WAS:
$751,275

NUMBER OF SHARES OF THE REGISTRANT'S COMMON STOCK OUTSTANDING AS OF APRIL 20,
2005 IS: 36,106,110

TRANSFER AGENT AS OF APRIL 20, 2005:

<PAGE>

                         FLORIDA ATLANTIC STOCK TRANSFER
                               7130 NOB HILL ROAD
                             TAMARAC, FLORIDA 33321

EXPLANATION OF AMENDED FILING: THIS AMENDMENT NO. 1 TO FORM 10-KSB IS BEING
FILED TO INCLUDE CHANGES SOLELY TO ITEM 8A, CONTROLS AND PROCEDURES BASED ON
CHAMPIONLYTE'S RESPONSE TO COMMENTS RECEIVED IN ITS FORM SB-2 FILING.

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

BUSINESS - OUR COMPANY

We were incorporated as Meridian Holdings, Inc. ("Meridian") in Florida in
August 1994 for the purpose of merging, as the surviving entity, with a then
public "shell" entity, MHI Telecommunications, Inc. ("MHI Telecom"). MHI Telecom
was a Delaware corporation that had sold shares to the public pursuant to a
Regulation A exemption from registration during 1969 under its original
corporate name of Pilgrim Mills, Inc. From 1985 through August 1994, MHI Telecom
had not actively been engaged in any business operations.

In August 1994, the shareholders of MHI Telecom and Meridian approved a merger
of MHI Telecom into Meridian and a simultaneous 1 for 40 reverse stock split of
Meridian's outstanding shares. At the same time, the shareholders also
authorized Meridian to raise working capital through an appropriate financing,
and to acquire an operating business or otherwise engage in, or conduct, active
business operations. Through the end of 1998, Meridian did not engage in any
fund raising, other than the issuance of shares to certain shareholders in
exchange for services and the advancement of minimal funds on behalf of
Meridian.

On December 3, 1999, Meridian changed its name to Meridian USA Holdings, Inc. On
October 1, 2001, we changed our name to ChampionLyte Products, Inc. and on March
7, 2003 we changed our name to Championlyte Holdings, Inc.

In December 2002, a 67% ownership interest in Old Fashioned was relinquished as
part of a foreclosure action on a $15,000 advance made to us in November 2002.
As a consequence of losing control of such business, we recorded Old Fashioned
as a discontinued business. In July 2003, we entered into a Settlement Agreement
that returned the 67% ownership interest in Old Fashioned to us, which became
effective August 20, 2003 for $135,000. The acquisition was accounted for under
the purchase method of accounting.

On March 18, 2003, we amended our Articles of Incorporation to change the
authorized stock structure such that the common stock authorized was increased
from 40,000,000 to 200,000,000 shares, and our preferred stock authorized from
100,000 shares to 2,000,000 shares.

On March 25, 2003, we created a subsidiary, Championlyte Beverages, Inc., to
engage in the production and sale of the Championlyte products. On March 17,
2004, we created a subsidiary, Be-Lyte Foods, Inc., to engage in the production
and sale of low carbohydrate snacks. This subsidiary has been on hold until
financing is available.

In August 2004, we signed a $20M Standby Equity Distribution Agreement with
Cornell Capital Partners, L.P. This agreement was terminated in April 2005 and
shares issued to Cornell Capital Partners, L.P. were cancelled. The parties to
the agreement are in the process of signing a new agreement.

On April 11, 2005, David Goldberg loaned us an additional $53,058.16 for back
payroll tax liability.

In March 2005, we signed a non-binding letter of intent with Specialized
Services, Inc. ("SSI") whereby we would receive $500,000 and SSI would become
our wholly owned subsidiary.

PRODUCT OVERVIEW

We created a sugar, carbohydrate, and calorie free isotonic sports beverage. It
does so without any of the negative ingredients such as sugar, caffeine, or
carbonation. This reformulation has enabled us to produce a product without the
use of preservatives. Our product is delivered in five different flavor
beverages.

We recently reformulated the sports drink with the sweetener Splenda(R), the
trade name for Sucralose produced by McNeil Nutritionals, a Johnson & Johnson
company. We also switched flavor houses, reduced sweetener levels, added flavor
and took out preservatives. ChampionLyte(R) will continue to have no label
warnings. The products that currently dominate the market have between 33 and 38
grams of sugar and up to 150 calories in a 20 ounce bottle. ChampionLyte(R),
which is available in lemon-lime, orange, fruit punch, pink lemonade and blue
raspberry, is a "no guilt" sports drink meaning it provides electrolyte
replacement without sugar, fat, calories, preservatives or carbohydrates.

The major advantage of ChampionLyte(R) is that it replaces electrolytes,
especially after exercise, without the ingredients, which would cause weight
gain - particularly sugar. For example: if a man or woman runs on a treadmill
for 30 minutes they would burn about 150 calories. By drinking one of the
popular major brand sports drinks that contain 33 to 37 grams of sugar (that's
33 to 37 individual one-gram packs of sugar) after working out on the treadmill,
they would either cancel out the calories they just burned off, or actually gain
more calories than burned during the workout.

Our goal is to accelerate our sales efforts to a variety of outlets, both retail
and institutional, that have the capacity to put us in a cash-flow positive
situation as quickly and cost efficiently as possible.

The Old Fashioned Syrup Company manufactures and sells a sugar-free, fat-free
syrup in three flavors, chocolate, strawberry and vanilla. In October 2004, we
ceased production of the Old Fashioned Syrup Company in order to reformulate the
product.


                                       1
<PAGE>

SUPPLY ARRANGEMENTS

All raw materials for our products are purchased on an as needed basis to
fulfill orders. Terms are net 30 days for all suppliers. Each component is
purchased from different suppliers. As our inventory levels are depleted by
production, we place additional orders with suppliers to keep inventory on hand.

CO-PACKING ARRANGEMENTS

We have finalized agreements with co-packers as of this date and we are
researching logistics and geographics to determine where to set additional
co-packing arrangements. We commenced our first product run on May 27, 2003 and
continue to produce on a monthly basis. The two co-packers we currently work
with cover the southeast and northeast of the United States. As of December 31,
2004, we had $1 million of liability insurance and the co-packers are
responsible for their own liability insurance. The co-packer is paid according
to the work they do for us. Our liability insurance lapsed in early 2005.

We will continue to manufacture and bottle our products under co-packing
arrangements. We are currently investigating additional regional co-packing
facilities. This process involves us providing the co-packers with proprietary
concentrates, formulas, and labels for our products. This work is performed on a
per case basis cost.

We have chosen to operate through co-packing arrangements to enable us to
produce and deliver our products without the capital costs required to build
full-time production facilities. We need not pay employees during down-time in
production or to invest capital in inventory or equipment.

SALES

Using a distributor network, as well as our in-house sales team, we will utilize
our relationship with previous distributors to recapture lost business due to
lack of product availability to the market. We will aggressively seek new
distributors to expand our business both nationally and internationally.

In order to attain a solid foundation, we will maximize our efforts towards the
Southeast region of the United States. Once we have achieved this success, we
can then replicate this sales model into other areas such as New York, New
Jersey and Connecticut (Northeast). This approach will help us create the model
needed to move forward towards our anticipated national distribution of our
products.

Our product is distributed through a series of brokers and distributors. A
broker, for a fee, will find customers to purchase products from the
manufacturer. The broker will not take in product, but is merely a sales
conduit. The distributor takes possession of the product and is responsible for
payment of the product, whereby the broker, does not take possession of the
product, nor is he responsible for payment, as the customer will pay the
manufacturer directly. Our in-house sales team is composed of four people with
extensive sales backgrounds. Our advertising efforts will be kept to a minimum
until distribution is strengthened and our product is visible on shelves to
consumers. Our contracts with distributors are all volumetric/performance based
contracts.

TARGET CONSUMER

America's number one shopper is "Coach Mom" who buys for herself, her children,
and her parents which is three generations of consumers. For Championlyte, the
target consumer is the actual people involved in sports, and/or everyday outdoor
activities, as well as all who are concerned with calorie intake and those on
sugar restricted and/or weight loss diets. In addition, we have the diabetic
community with 17 million known diabetics.

Sugar free diet carbonated beverage sales have already escalated to 30% of total
carbonated beverage sales.

The Weston A. Price foundation has encouraged congress to call for a ban on the
sale of soft drinks and snack foods in school vending machines. Soft drinks
contain high levels of sugar or artificial sweeteners, caffeine and phosphoric
acid, that contribute to obesity, diabetes and poor bone health in growing
children. Therefore, we believe that we can supply a healthful alternative to
sugar laden beverages.

MARKET

Our customers are supermarket chains, convenience stores, drug chains and
independent and mass marketers. In addition, we believe that we will be able to
market our product to food service customers such as schools, hospitals,
prisons, gyms, and health food outlets. We are not dependent on one or a few
major customers.

Our management believes that our products and our network of distributors should
enable us to penetrate the retail and food service market. Through our food
brokers, we are attempting to place our product in multiple supermarket
locations, i.e. next to other sugared drink beverages, as well as health
sections, dietetic and diabetic sections.

Our research indicates that no products exist in the market with the same
qualities as Championlyte. Therefore, Championlyte would not destroy existing
marketplace. Our product would increase sales, not replace sales.


                                       2
<PAGE>

MARKETING

Internal marketing will be done using a grass roots philosophy, with on sight
sampling support, in store flyer programs, point of sales print and radio. In an
ongoing effort to continue marketing our product, we will be attending trade
shows and conventions, conducting in store promos and using collateral materials
such as posters, flyers, sell sheets, etc.

When it becomes financially feasible, we will bolster this marketing through
increased radio and print advertising. This will continue to support our grass
roots sales and marketing effort.

PRODUCTS AND PACKAGING

Our product is a 20 ounce pet bottle with locking caps which comes in cases of
12/20 ounce bottles per case. Pet is defined as polyethlyne terephthablote. It
is a certain type of plastic. The product is available in 5 flavors: lemon lime,
fruit punch, orange, pink lemonade and blue raspberry. A clear version of three
of the flavors has also been developed for a mass merchandiser. We anticipate
that in the future 32 ounce bottles will be produced. Multiple bottle sizes,
including 8 ounce bottles for multi-pack options and single serve food service
are in development. New retail and food service packaging applications are being
developed to expand sales and availability of the product and to increase sales
in all areas of the isotonic sports drink market.

NEW PRODUCT DEVELOPMENT

We are in the process of developing new flavors such as grape, kiwi strawberry,
peach tea and tropical citrus. Using natural fruit flavors, we are testing
multiple blends to create innovative and delicious alternatives to the standard
flavors now produced. The basis for expanding our product line is to watch for
trends and re-evaluating current flavor sales.

SARA LEE LICENSE AGREEMENT

We have finalized a license agreement with Sara Lee for the use of the "Champion
lyte" name. A lawsuit was commenced by Sara Lee against us. The details of the
lawsuit are contained in the "Legal Proceedings" section of this document. On
April 1, 2003, the parties to this case signed a settlement agreement. The
settlement agreement provides that we will assign the "Champion lyte" trademark
to Sara Lee and Sara Lee will grant us an exclusive license of the "Champion
lyte" trademark for sugar-free sports drinks only in the United States, Canada
and Mexico. The terms of the license agreement are for an initial term of five
(5) years and two renewal terms of (5) years each, subject to us meeting all
minimum sales and royalty requirements. If we meet all requirements after the
first 3 five year terms, the parties agree to negotiate in good faith for two
additional five year terms. Minimum calendar year sales are as follows:

2003 (measured from 4/1/03 to 3/31/04) - $500,000; 2004 - $750,000; 2005 -
$1,000,000; 2006 - $1,250,000; 2007 - $1,500,000; there will be renewal for the
second 5 years if sales in years 2005-2007 average at least $1,500,000; 2008 -
2,000,000; 2009; $2,500,000; 2010 - $3,000,000; 2011 - $3,500,000; 2012 -
4,000,000; there will be renewal for the third 5 years if sales in years
2010-2012 average at least $5,000,000; 2013 - $5,000,000, 2014 - $6,000,000;
2015 - $7,000,000; 2016 - $8,000,000; and 2017 - $9,000,000. The failure to meet
the minimum sales requirements in any year will result in termination of the
license agreement. The failure to meet average stated results will result in
non-renewal. The royalties for the license agreement are as follows: 3% on all
sales until sales reach $10,000,000 annually; 5% on all sales after sales reach
$10,000,000; and 6% on all sales after sales reach $15,000,000 annually.

OLD FASHIONED SYRUP COMPANY

On January 8, 1999, when we were called Meridian Holdings, Inc., we entered into
an acquisition agreement with the Old Fashioned Syrup Company, Inc. (The "Syrup
Company"), under which we issued 3,026,794 shares of our common stock to the
shareholders of the Syrup Company in a tax-free exchange of shares. At the same
time, we entered into a stock purchase agreement with one of our founders and
current directors whereby we purchased 100,000 shares of our common stock from
him for the sum of $50,000. The shares repurchased were retired by us.

The Syrup Company, which was incorporated in Florida in November 1996, was
founded by Alan Posner and Mark Streisfeld to manufacture and sell a sugar-free,
fat-free chocolate flavored syrup they had developed. Commencing in 1998, the
Syrup Company sold its syrup under its trademark the Old Fashioned Syrup
Company(R). Shortly prior to the acquisition by us, the Syrup Company entered
into a license agreement with Cumberland Packing Corp. For use of the Sweet 'n
Low trademark for its syrup product. The Syrup Company has two wholly-owned
subsidiaries, the Old Fashioned Egg Cream Company, Inc. and the Original Egg
Cream Company, Inc., both of which are Florida corporations.

On November 27, 2002, Alan Posner, our previous chief executive officer and
chairman of our board of directors entered into a promissory note with
Inglobalvest, Inc. in which we received $15,000 which was payable on December
13, 2002 at a 10% interest rate. The promissory note was entered into without
the approval of our board of directors and allowed Inglobalvest to receive a 66
2/3% interest in our wholly owned subsidiary, the Old Fashioned Syrup Company,
Inc. We subsequently defaulted on the promissory note on or about December 14,
2002 and Inglobalvest took the shares of the Syrup Company as well as the books
and records of the Syrup Company from our previous corporate counsel. The
issuance of the promissory note and subsequent release of the interest in the
Syrup Company may be deemed to be a breach of the terms of our outstanding
preferred stock and the terms of the security holder agreement attached to our
preferred stock. Such agreement did not allow us to incur indebtedness, the sale
of assets or the creation of liens on our assets without the consent of the
holders of our preferred stock.


                                       3
<PAGE>

Since we failed to receive the consent of US Bancorp., the holder of the
preferred stock at the time the promissory note was entered into, we may be in
default under the terms of our preferred stock. In addition, our new management
has been advised that we received offers from several potential investors to pay
this debt and avoid the default of the promissory note. On May 28, 2003 we filed
a complaint against Inglobalvest, Inc., Steve Sherb, Barry Patterson, Uche
Osuji, John Doe #1, Alan Posner and Christopher A. Valleau alleging the
fraudulent conveyance of our Old Fashioned Syrup Company, Inc. subsidiary. Such
complaint was filed in the circuit court of the 15th judicial circuit in and for
Palm Beach County, Florida and was for monetary damages, injunctive, declaratory
and equitable relief.

The suit alleged the defendants engaged in a fraudulent scheme to deprive us of
our principal asset and primary source of revenue for grossly inadequate
consideration (only $15,000) without notice of approval of our board of
directors, without notice and approval of U.S. Bancorp Investments, Inc. (the
holder of our preferred stock), as required by the terms of certain agreements
and our amended articles of incorporation, without notice and approval by the
shareholders at large as required by Florida statutes for sales of assets of a
corporation other than in the regular course of business and in violation of the
antifraud provisions of the Florida Securities Investor Protection Act.

On July 21, 2003, we reached a settlement with Inglobelvest, Inc., Steve Sherb,
Barry Patterson, Uche Osuji, John Doe #1 and Christopher A. Valleau. We are
still attempting to negotiate a settlement with Alan Posner. The settlement
agreement provided that Inglobelvest must deliver all shares of the Old
Fashioned Syrup Company ("OFSC"), as well as its books and records to our legal
counsel by August 20, 2003. In consideration for this, we paid Inglobalvest,
Inc. the sum of $135,000 as follows: $20,000 upon execution of the settlement
agreement and $115,000 on August 20, 2003. The $135,000 was based on the
settlement figure of $125,000 plus an additional $10,000 paid pursuant to the
section of the settlement agreement that allowed for a capital call to facilate
the capital requirements of the Old Fashioned Syrup Company. As part of the
settlement, we agreed to the following conditions: (i) Churchill Investments,
Inc., which provides factoring for us, has agreed to assign its UCC-1 financing
statement for the first $50,000 on our accounts receivable, equipment, inventory
and general intangibles which it currently holds as security; (ii) issue a
written statement which exculpates Inglobalvest, Inc., Steve Sherb, Barry
Patterson and Uche Osuji from any fraudulent acts in the complaint; (iii)
payment of $3,000 to Christopher A. Valleau in six equal monthly installments of
$500 each and Mr. Valleau will forfeit the balance of his unpaid salary and
retire all stock options.

On August 20, 2003, all terms of the settlement agreement were satisfied and we
reacquired the Old Fashioned Syrup Company.

On December 1, 2004 our license agreement with Cumberland Packing corporation
for use of their Sweet 'n Low trademark was amicably terminated. Cumberland
agreed to waive all of its rights to accrued and unpaid royalties in exchange
for our relinquishing all rights provided for by the license agreement.

We have currently reformulated the syrup and found a new co-packer. We are
currently awaiting financing to commence operations again.

BEVSYSTEMS INTERNATIONAL, INC.

We entered into a Strategic Marketing Agreement ("SMA") in January 2003 with
BevSystems International, Inc. ("BEVI"), another small publicly traded company
in the business of beverage products, whereby BEVI agreed to issue shares of its
common stock to us in an amount equal to $125,000 per month. We agreed to issue
50,000 shares of our restricted stock per month to BEVI under this agreement.
These shares carry piggyback registration rights, which do not have an
expiration date. We also agreed to pay BEVI up to $100,000 per month for
services rendered by BEVI relating to the use of their beverage knowledge and
distribution resources. Each entity was entitled to 50% of the profits derived
from distributing the other firm's beverage product. Such agreement has been
cancelled by the parties with no additional consideration due to either party.
The agreement was cancelled on May 20, 2003. Under the SMA, Bevsystems was
issued 50,000 shares of our common stock and we were issued 1,715,000 shares of
Bevsystems common stock, which we subsequently transferred to two consultants in
lieu of cash payment for services rendered. No money was exchanged pursuant to
the SMA.

COMPETITION

In the soft drink category, our leading competition account for more than 85% of
the entire market. These companies are substantially larger and better
established than we are. This allows them not only to commit more money to
marketing and advertising, but affords them access to greater shelf space and
prominence in food stores, which is a key to success in the food industry. We
believe that the ability to compete successfully with these companies is
dependent primarily upon our ability to produce a tasty, sugar-free alternative
to the existing sugared drinks and to persuade food retailers to carry our
products. We continue to refine the taste of our products. However, the
competition for shelf space in food retail establishments is extremely intense
and the ability to obtain such shelf space is essential to the potential success
of these products.

EMPLOYEES

As of December 31, 2004, we employed three people on a full-time basis. We will
employ additional people as we continue to implement our plan of operation. None
of our employees are covered by a collective bargaining agreement, and we
believe that our relationship with our employees is satisfactory.

ITEM 2. DESCRIPTION OF PROPERTY

As of December 31, 2004, we were subleasing approximately 1,000 square feet of
office space at 3450 Park Central Blvd., N. Pompano Beach, Florida. The lease is
for a 1 year period commencing November 1, 2003. We pay $2,000 a month. In March
2005, we were moved from our office. We intend to occupy temporary office space
in the future.


                                       4
<PAGE>

ITEM 3. LEGAL PROCEEDINGS

Championlyte Holdings, Inc. f/k/a Championlyte Products, Inc. v. Inglobalvest,
Inc., Steve Sherb, Barry Patterson, Uche Osuji, John Doe No. 1, Alan Posner and
Christopher A. Valleau, Case No. 502003CA005662AFXXOCAF (Florida Circuit Court
Palm Beach County). On or about May 28, 2003, we filed a complaint in the
Circuit Court for the Fifteenth Judicial Circuit of Palm Beach County, Florida
against the above-named defendants for monetary damages, injunctive, declaratory
and other equitable relief, and Demand for Jury Trial. The complaint alleges,
among other things, that Defendants Alan Posner, our former Chairman and Chief
Executive Officer, Christopher A. Valleau, our former principal financial
officer and Director, and the other defendants named above engaged in a
fraudulent scheme to deprive us of our controlling ownership interest in The Old
Fashioned Syrup Company, Inc. ("Syrup") for the grossly inadequate consideration
of $15,000. After filing the lawsuit, defendants, Inglobalvest, Inc., Steve
Sherb, Barry Patterson and Uche Osuji worked with us to achieve a mutually
satisfactory resolution of the dispute that resulted in us reclaiming control of
the Syrup company. As part of the settlement reached with Inglobalvest, and
Messrs. Sherb, Patterson and Osuji, the claims asserted against them were
dismissed, with prejudice, and we agreed that Inglobalvest, and Messrs. Sherb,
Patterson and Osuji should be considered fully exonerated from any fraudulent or
wrongful acts or liabilities in connection with the complaint. This statement
does not apply to Messrs. Valleau and Posner. While we have agreed, as part of
the settlement reached with Mr. Valleau, to dismiss the complaint against him,
without prejudice, the complaint against Mr. Posner is still pending. Posner has
asserted counterclaims against us for alleged conversion of securities and
breach of employment contract. We are currently engaged in ongoing settlement
negotiations with Posner to resolve all claims between the parties. We have
reached a verbal agreement with Posner, in principle wherein Posner shall
execute a stock assignment separate from certificate to transfer 800,000 shares
of the Championlyte shares to us and full general release and dismissal with
prejudice of our claims against Mr. Posner. A draft of a written settlement
agreement is currently being exchanged between the parties for execution.

Atico International USA, Inc. ("Atico") claims that we owe it a total of
approximately at least $160,873.68 pursuant to an agreement dated February 27,
2002. We believe that we may have counterclaims that are capable of assertion
against Atico which may operate as a set off to the claims of Atico. Although
litigation has been threatened by Atico, we have been engaged with Atico in good
faith settlement negotiations since in or about September 2003. Due to the
uncertainty, risks, and costs associated with a possible contentious litigation
proceeding, we are currently attempting to amicably resolve this dispute with
Atico in a share amount equivalent to a value of approximately $90,000.00. No
definitive settlement agreement has been reached with Atico at this time.

On October 16, 2003, Wainwright, Inc. ("Wainwright") obtained a Final Judgment
for $24,000.00 against us in Wainwright, Inc. v. ChampionLyte Products, Inc.
f/k/a Meridian USA Holdings, Inc., Case No. CA 03-01995 AD (Fla. Cir. Ct., Palm
Beach County). We have engaged in good faith settlement negotiations with
Wainwright in an attempt to compromise the Final Judgment. We settled the case
for $15,000 payable in monthly installments commencing on May 31, 2004 with the
final payment made on January 31, 2005. We have requested that Wainwright file a
Satisfaction of Judgment with the Circuit Court.

On July 1, 2003, we received a letter from the attorney for Diabetes Research
Institute Foundation, Inc. providing formal notice of termination of a license
agreement that The Old Fashioned Syrup Company entered into and claiming that we
owe the following pursuant to such license agreement: (i) an aggregate of
$30,000 in base royalties for 2001, 2002 and 2003; (ii) 0.25% of net sales in
2001; 0.50% of net sales in 2002, of all products using the mark "Diabetes
Research Institute," as well as late payment charges, which are at a rate of 3%
above prime rate. We negotiated a settlement of $17,000, payable in installments
of $1,500 per month. As of April 13, 2005, we presently still owe the sum of
$3,000.

On or about December 9, 2003, we were served with an Amended Complaint seeking
$3,282.30 in damages for alleged breach of contract in Read Exhibition Companies
v. ChampionLyte, Inc., Case No. 2003 CC-021380 (County Ct., Palm Beach County
Fla.). We negotiated a settlement which resulted in us agreeing to pay a total
of $3,282.30, in monthly installments of $1,641.15 each commencing on February
1, 2004 and concluding on March 1, 2004. We made all of the required payments
due under the settlement agreement and this action was dismissed, with
prejudice, on February 10, 2004.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

NONE.


                                       5
<PAGE>

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

On December 31, 2004, our transfer agent records indicated that there were 484
shareholders of record of our common stock owning 44,421,899 shares. Based on
information received from brokers and others in fiduciary capacities, we
estimate that the total number of shareholders of our common stock exceeds 500.
Our shares of common stock are currently traded on the OTC Electronic Bulletin
Board under the symbol "CPLY."

The following table sets forth the high and low bid prices for the common stock
since the first quarter of 2003.



YEAR     QUARTER                    HIGH             LOW

2003     First                      0.24             0.07
2003     Second                     0.53             0.065
2003     Third                      0.31             0.13
2003     Fourth                     0.30             0.12
2004     First                      0.225            0.136
2004     Second                     0.25             0.111
2004     Third                      0.13             0.06
2004     Fourth                     0.105            0.035

2005     First                      0.06             0.025



The above quotations reflect the inter-dealer prices without retail mark-up,
mark-down or commissions and may not represent actual transactions.

DIVIDENDS

We paid no dividends with respect to our common stock during 2004 and have no
current intention to pay any dividends.


                                       6
<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

Revenues from operations for the year ended December 31, 2004 were $690,511,
compared to $410,351 for the year ended December 31, 2003. The increase in sales
was due to our increased sales effort, as well as reformulating our product and
creating a new marketing and distribution system. We had nominal operations as
we were during the first six months of 2003 do to a restructuring which resulted
in limited sales. We did not begin shipping product until June 2003, when we
reformulated our products. The Company had lower then expected sales for the
year ended December 31 2004. This was mainly do to the Company ceasing the
distribution of its Old Fashioned Syrup in October 2004. The Company has formed
a new subsidiary called Be-Lyte Foods Inc., and is currently exploring products
in the low carbohydrate snacks market.

We reformulated our drink products by switching flavor houses, reducing
sweetener levels, adding flavor and taking out preservatives. Since we have
reformulated our product, we expect to increase sales in the future.

Our gross profit margin was 14% for the year ended December 31, 2004 compared to
18% for the year ended December 31, 2003. We shipped only limited products for
first six months of 2003 due to our restructuring. Our gross profit margin has
decreased as a result of increased transportation costs and an inability to take
advantage of manufacturer discounts.

Selling, general and administrative expenses decreased to $1,532,875 for the
year ended December 31, 2004 from $2,631,306 for the year ended December 31,
2003. The decrease in selling, general and administrative expenses is primarily
the result of decreased consulting and professional fees and of a reduction in
payroll expenses.

The net result of these efforts was to decrease the loss from operations before
other income (expense) to $1,434,908 for the year ended December 31, 2004
compared to $2,556,954 for the year ended December 31, 2003.

Gain on forgiveness of trade payables amounted to $34,809 for the year ended
December 31, 2004 compared to $363,877 for the year ended December 31, 2003.
This relates to several trade payables that were settled for reduced amounts
then had been previously recorded. We are still in negotiations with other
vendor's in attempts to settle our payables.

Interest and financing expense amounted to $634,205 for the year ended December
31, 2004 compared to $602,259 for the year ended December 31, 2003. Included in
interest expense for the year ended December 31, 2004 is $ 269,741 related to
the beneficial conversion feature of the convertible promissory notes and
warrants entered into by us and $364,464 in interest and financing expenses
related to various notes payable.

The net effect resulted in a net loss for the year ended December 31, 2004 of
$2,034,304 compared to a net loss of $2,898,192 for the year ended December 31,
2003.

Basic and diluted loss per share available to common shareholders was $.06 for
the year ended December 31, 2004 compared to $.15 for the year ended December
31, 2003.


                                       7
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Our available cash at December 31, 2004 was $0. We received financing through
notes payable of $740,490. Convertible notes at December 31, 2004, consist of
promissory notes to an investment fund, Advantage Fund I, LLC, and four
investment companies Alpha Capital AG, ("Alpha") Gamma Opportunity Capital
Partners, L.P. ("Gamma"), Latitude Asset Investments Corp. ("Latitude") and
Cornell Capital Partners, LLP. ("Cornell"). The promissory notes are currently
in default since December 31, 2004. As of today, none of the promissory note
holders have sent default notices or attempted to accelerate payment on the
promissory notes. Some of the owners of the investment fund are also
shareholders of the Company. The notes with Advantage were for funds to be
disbursed to satisfy our obligations as needed.

Detailed matters regarding the notes payable are as follows:

The note with Advantage was originated in January 2003. It bears interest at a
rate of 6.5% per annum and is convertible into shares of our common stock with a
conversion price per share equal to the lesser of the average of the lowest of
three day trading prices during the five trading days immediately prior to the
conversion date multiplied by .70 or, the average of the lowest of three day
trading prices during the five trading dates immediately prior to the funding
dates. The note is convertible, in whole or in part, at any time after the
issuance of the note. The convertible note with Advantage is $1,250,000 and is
due December 31, 2004.

Advantage is the holder of a Series A Convertible Note from the Company that has
been amended at various times from January 7, 2003 to March 2004 for the full
amount of $1,250,000. Of such amount $50,000 was previously sold by Advantage to
an independent third party. In August 2004, Advantage sold a total of $400,000
worth of such convertible note to Cornell. Upon receipt of the funds, Advantage
immediately reinvested $165,000 into the Company. In consideration for the
$165,000 the Company issued a convertible promissory note dated August 5, 2004.
Pursuant to this Note, the Company issued 165,000 shares of the class of its
Preferred Stock known as Series III Preferred Stock, par value $1.00 which has
the same rights and privileges as the Company's Series IV Preferred Stock in
consideration for the satisfaction of the note.

In June 2004, the Company received $50,000 from Triple Crown Consulting, Inc.,
and entered into a $50,000 Series B 6.5% Convertible Promissory Note. The note
provides the holder with the right at any time to convert into common stock of
the Company as follows: The Conversion Price per share shall be equal to the
lesser of (1) the average of the lowest of three-day trading prices during the
five trading days immediately prior to the Conversion Date multiplied by .70, or
(2) the average of the lowest of three-day trading prices during the five
trading days immediately prior to the funding date(s).

The Company has promissory notes with two unrelated third parties, Alpha and
Gamma representing the $250,000 assigned to them. The notes mature on December
31, 2004 and bear interest at a rate of 6.5% per annum. The notes are
convertible into shares of the Company's common stock at a conversion price
equal to the lesser of (1) the average of the lowest of the three day trading
price during the five trading days immediately prior to the conversion date,
multiplied by .80%, or (2) the average of the lowest of three day trading prices
during the five trading days immediately prior to the funding date. During the
quarter ended March 31, 2004, Alpha exercised the conversion of $12,500 of its
note for 178,571 shares of the Company's common stock. Towards the end of July
2004 Alpha requested the conversion of $10,000 of its note for 142,857 shares of
the Company's common stock.

In June 2004 amounts owed to an individual note holder, Joan Ann Forniero,
aggregating $30,000 plus $2,238 of accrued interest were converted into 302,251
shares of common stock.

At December 31, 2004 amounts owed to Advantage and Cornell amounted to $470,002
and $368,169, respectively. Triple Crown Consulting, Inc. aggregated $50,000,
Alpha and Gamma aggregated $227,500 and amounts owed to Latitude aggregated
$135,000. Accrued interest of $50,203, $10,296 and $14,592 due to the investment
funds, Triple Crown Consulting, Inc., and Alpha and Gamma, respectively, is
included in accrued expenses in the accompanying consolidated balance sheet.


                                       8
<PAGE>

The note with Latitude for $135,000 was originated on August 15, 2003 in order
to fund the acquisition of Old Fashioned. The note matures on October 14, 2004,
but was subsequently extended to January 15, 2004 and bears interest at a rate
of 6.0% per year. If the note is still outstanding after six months from the
origination date, then at the option of the holder, the principal plus accrued
interest may be converted into 51% of the issued and outstanding common stock of
Old Fashioned. In addition, until the note is paid in full, the holder is
entitled to 15% of Old Fashioned's cash flow, defined as net income, plus
depreciation and interest minus capital expenditures. As of December 31, 2004 no
payments have been made to Latitude, no amounts related to the cash flow
provision were due and the note holder had not converted principal in to common
stock of Old Fashioned. In January 2005, Latitude holders of Convertible
promissory notes had $135,000 promissory notes converted into 5,500,000 shares
of the Company's common stock.

At December 31, 2004 no amounts were due to the financial services company,
Churchill Investments, Inc. At this time, the Old Fashioned Syrup Company and
the Company each have $500,000 available based on the above facilities.

On August 9, 2004, the Company entered into a Standby Equity Distribution
Agreement with Cornell. Pursuant to the Standby Equity Distribution Agreement,
the Company may, at our discretion, periodically issue and sell shares of our
common stock for a total purchase price of $15 million. If the Company requests
advances under the Standby Equity Distribution Agreement, Cornell will purchase
shares of common stock of the Company for 98% of the lowest volume weighted
average price on the Over-the-Counter Bulletin Board or other principal market
on which our common stock is traded for the 5 days immediately following the
advance notice date. Cornell will retain 5% of each advance under the Standby
Equity Distribution Agreement. The Company may not request advances in excess of
a total of $15 million. The maximum of each advance is equal to $400,000. In
connection with the Standby Equity Distribution Agreement, the Company issued
8,315,789 shares of our common stock valued at $790,000 to Cornell as a
commitment fee and we issued 105,263 shares of our common stock valued at
$10,000 to Newbridge Securities as a placement agent fee. Such amounts have been
recorded as deferred offering fees on the consolidated balance sheet at December
31, 2004. The Agreement with Cornell was terminated on April 15, 2005 and the
8,315,789 shares were cancelled.

At this time, we are actively seeking additional sources of capital that will
enable us to achieve the long-term objectives of nationally marketing the
product lines and new distribution system. There can be no assurance that this
additional funding will become available. Should such funding not become
available we may have to cease operations and liquidate.


                                       9
<PAGE>

CONVERSION OF NOTES PAYABLE

In March 2004, Alpha, a holder of a convertible promissory note, had $12,500 of
its promissory note converted into 178,571 shares of the Company's common stock.

In June 2004, an individual, Joan Ann Forniero, holding a $30,000 convertible
promissory note requested that the full note and interest payable of $2,238 be
converted into 302,251 shares of common stock in accordance with the notes
provisions.

In July 2004, Alpha converted an additional $10,000 of its note for 142,857
shares of the Company's common stock.

In August 2004, Cornell, holders of convertible promissory notes, had $11,831 of
its promissory notes converted into 188,686 shares of the Company's common
stock.

In December 2004, Cornell, holders of convertible promissory notes, converted
$20,000 of its promissory notes into 422,466 shares of our common stock.

FUTURE OUTLOOK

We have finalized our corporate restructure moving Championlyte into a beverage
susidiary. We have taken all steps to improve our products and reduce costs by
switching flavor houses, reducing sweetener levels, adding additional flavors
and removing the preservatives. We reformulated the new product on July 30,
2003. We will continue to focus on the trends of the industry and continue to be
innovative to grow our business. These additional changes will require
additional financing for us and there can be no assurances that we will obtain
any of the additional financing needed to accomplish our plans. If we are unable
to secure additional financing to complete our restructuring and implement our
plans, we may be forced to cease operations.

CRITICAL ACCOUNTING POLICIES

We have identified the policies outlined below as critical to our business
operations and an understanding of our results of operations. The list is not
intended to be a comprehensive list of all of our accounting policies. In many
cases, the accounting treatment of a particular transaction is specifically
dictated by accounting principles generally accepted in the United States, with
no need for management's judgment in their application. The impact and any
associated risks related to these policies on our business operations is
discussed throughout Management's Discussion and Analysis or Plan of Operations
where such policies affect our reported and expected financial results. For a
detailed discussion on the application of these and other accounting policies,
see the Notes to the December 31, 2004 Financial Statements. Note that our
preparation of the financial statements requires us to make estimates and
assumptions that affect the reported amount of assets, liabilities, revenues and
expenses, and related disclosure of contingent assets and liabilities. Certain
of the estimates and assumptions required to be made relate to matters that are
inherently uncertain as they pertain to future events. While management believes
that the estimates and assumptions used were the most appropriate, actual
results could differ significantly from those estimates under different
assumptions and conditions. The following is a description of those accounting
policies believed by management to require subjective and complex judgments
which could potentially affect reported results.

REVENUE RECOGNITION AND ACCOUNTS RECEIVABLE

Revenue is recognized on sales of products when the customer receives title to
the goods, generally upon delivery. Revenue is recorded on a gross basis, since
the Company is responsible for fulfillment, including the acceptability of the
products and services ordered by the customer. Management believes that adequate
controls are in place to ensure compliance with sales arrangements, a
substantial history of such performance has been established and historical
returns and allowance have not been significant. If actual sales returns and
allowances exceed historical amounts, the Company's sales would be adversely
affected.

Accounts receivable are recorded at the outstanding amounts net of the allowance
for doubtful accounts. Estimates are used in determining the Company's allowance
for doubtful accounts based on historical collections experience, current
economic trends and a percentage of its accounts receivable by aging category.
In determining these percentages, the Company looks at historical write-offs of
its receivables. The Company also looks at the credit quality of its customer
base as well as changes in its credit policies. The Company continuously
monitors collections and payments from its customers. While credit losses have
historically been within expectations and the provisions established, the
Company cannot guarantee that it will continue to experience the same credit
loss rates that it has in the past. The Company's net income is directly
affected by management's estimate of the collectibility of accounts receivable.


                                       10
<PAGE>

PROVISION FOR SLOW MOVING OBSOLETE INVENTORY

The Company values inventory at the lower of cost or market, cost being
determined on a first-in, first-out basis. The Company writes down its inventory
for estimated unmarketable inventory or obsolescence equal to the difference
between the cost of inventory and the estimated market value based on
assumptions about future demand and market conditions. If actual market
conditions are less favorable then those projected by management, additional
inventory write-downs may be required.

LONG-LIVED ASSETS

On a periodic basis, management assesses whether there are any indicators that
the value of its long-lived assets may be impaired. An asset's value is
considered impaired only if management's estimate of current and projected
operating cash flows (undiscounted and without interest charges) of the asset
over its remaining useful life is less than the net carrying value of the asset.
Such cash flow projections consider factors such as expected future operating
income, trends and prospects, as well as the effects of demand, competition and
other factors. To the extent impairment has occurred, the carrying amount of the
asset would be written down to an amount to reflect the fair value of the asset.

The Company is required to make subjective assessments as to whether there are
impairments in the value of its long-lived assets and other investments. The
Company's net income is directly affected by management's estimate of
impairments. In determining impairment, if any, the Company has adopted SFAS No.
144.


                                       11
<PAGE>

ITEM 7. FINANCIAL STATEMENTS

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                                      INDEX
                           DECEMBER 31, 2004 and 2003

                                   Page Number




INDEPENDENT AUDITORS' REPORTS                                          F-1

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheets at December 31, 2004                       F-2

Consolidated Statement of Operations
 for the years ended December 31, 2004 and 2003                        F-3

Consolidated Statement of Changes in Stockholders' Deficiency
 for the years ended December 31, 2004 and 2003                        F-4

 Consolidated Statement of Cash Flows
  for the years ended December 31, 2004 and 2003                       F-5

 Notes to Consolidated Financial Statements                        F-7 to F-22

<PAGE>

                          INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Shareholders of:
ChampionLyte Holdings, Inc. and Subsidiaries Pompano Beach, FL

We have audited the accompanying consolidated balance sheet of ChampionLyte
Holdings, Inc. and Subsidiaries (the "Company") as of December 31, 2004 and the
related statement of operations, stockholders' deficiency, and cash flows for
the years ended December 31, 2004 and 2003. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly we express no opinion. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects the financial position of ChampionLyte
Holdings, Inc. and Subsidiaries as of December 31, 2004, and the results of
their operations and their cash flows for the years then ended December 31, 2004
and 2003 in conformity with accounting principles generally accepted in the
United States of America.

The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has experienced recurring losses and has a
working capital deficiency, which raises substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 3. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

MASSELLA & ASSOCIATES, CPA, PLLC

Syosset, New York
April 15, 2005


                                      F-1
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2004

                                     ASSETS



Current assets:

      Accounts receivable, net                                      $     9,553
      Inventory                                                          57,464
                                                                    -----------
           Total current assets                                          67,017

Property and equipment, net                                                  --
                                                                    -----------

           Total assets                                             $    67,017
                                                                    ===========

            LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities:

      Cash overdraft                                                $    11,277
      Accounts payable                                                  582,940
      Due to officer                                                      8,088
      Convertible notes payable                                       1,250,672
      Payroll taxes payable                                              74,509
      Accrued expenses and other current liabilities                    421,741
                                                                    -----------
           Total current liabilities                                  2,349,227
                                                                    -----------

Series II redeemable convertible preferred stock, par value
    $.01 - authorized 8,500 shares, 0 shares
    issued and outstanding (liquidation value $0)                            --
                                                                    -----------

Commitments and contingencies

Stockholders' deficiency:

      Series I convertible preferred stock, par value $1.00 --
            authorized 100,000 shares, 0
            shares issued and outstanding                                    --
      Series III convertible preferred stock,  par value $1.00
            -- authorized 500,000 shares, 165,000 shares
            issued and outstanding (liquidated value of $165,000)       165,000
      Series IV convertible preferred stock,  par value $1.00
            -- authorized 250,000 shares, 100,000 shares
            issued and outstanding  (liquidation value $100,000)        100,000
      Common stock, par value $.001 - authorized 200,000,000 shares,
           44,421,899 shares issued and outstanding                      44,422
      Additional paid-in capital                                     17,410,588
      Unearned services                                                 (34,119)
      Deferred compensation                                             (29,250)
      Deferred offering costs                                          (800,000)
      Accumulated deficit                                           (19,138,851)
                                                                    -----------

           Total stockholders' deficiency                            (2,282,210)
                                                                    -----------

           Total liabilities and stockholders' deficiency           $    67,017
                                                                    ===========



The accompanying notes and independent auditors' report should be read in
conjunction with the financial statements.


                                      F-2
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS



                                                      Years Ended December 31,
                                                   ----------------------------
                                                        2004           2003
                                                   ------------    ------------
Net sales                                          $    690,511    $    410,351

Cost of goods sold                                      592,544         335,999
                                                   ------------    ------------

Gross profit                                             97,967          74,352

Selling, general and administrative                   1,532,875       2,631,306
                                                   ------------    ------------

Loss from operations                                 (1,434,908)     (2,556,954)

Other income (expenses):

Licensing revenue                                            --         157,900
Gain on forgiveness of trade payables                    34,809         363,877
Loss on impairment of intangibles                            --        (233,154)
Loss on disposal of fixed assets                             --         (15,815)
Interest and financing expense                         (634,205)       (602,259)
Other income (expenses)                                      --         (11,787)
                                                   ------------    ------------


Other income (expenses), net                           (599,396)       (341,238)
                                                   ------------    ------------

Net loss from continuing operations
 before income tax expense                           (2,034,304)     (2,898,192)
Income tax expense                                           --              --
                                                   ------------    ------------
Net loss                                           $ (2,034,304)   $ (2,898,192)
                                                   ============    ============


Basic and diluted earnings (loss) per share        $      (0.06)   $      (0.15)
                                                   ============    ============

Weighted average number of common shares
  outstanding - basic and diluted                    36,028,793      19,824,491
                                                   ============    ============



The accompanying notes and independent auditors' report should be read in
conjunction with the financial statements.


                                      F-3
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
               CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY


<TABLE>
<CAPTION>
                                                                                              Series II           Series III
                                                                                              Convertible         Convertible
                                                                     Common Stock          Preferred Stock      Preferred Stock
                                                                 ---------------------  ---------------------- ------------------
                                                                   Shares     Amount      Shares      Amount    Shares    Amount
                                                                 -----------  --------  ----------  ---------- --------  --------
<S>                                                              <S>          <C>       <C>         <C>        <C>       <C>
December 31, 2002                                                 7,559,399   $ 7,560           -   $       -        -   $     -

Conversion of Series II redeemable convertible preferred stock    5,453,915     5,454           -           -        -         -

Issuance of shares for services rendered                         11,506,585    11,506           -           -        -         -

Issuance of shares for settlements of amounts due                 1,751,125     1,751           -           -        -         -

Issuance of shares for compensation                               2,187,665     2,188           -           -        -         -

Issuance of shares to directors                                     550,000       550           -           -        -         -

Issuance of shares in consideration of convertible note payable     400,000       400           -           -        -         -

Conversion of convertible notes payable to common stock           1,412,122     1,412           -           -        -         -

Exercise of options                                                  50,834        51           -           -        -         -

Issuance of options for services                                          -         -           -           -        -         -

Beneficial conversion feature of convertible notes payable                -         -           -           -        -         -

Amortization of unearned services                                         -         -           -           -        -         -

Amortization of deferred compensation                                     -         -           -           -        -         -

Warrants issued for services rendered                                     -         -           -           -        -         -

Warrants issued in settlement of amounts due                              -         -           -           -        -         -

Conversion of convertible notes payable to preferred stock                -         -           -           -        -         -

Net loss                                                                  -         -           -           -        -         -
                                                                 -----------  --------  ----------  ---------- --------  --------

Balance December 31, 2003                                        30,871,645    30,872           -           -        -         -

Issuance of shares for services rendered                            787,863       788           -           -        -         -

Issuance of shares to directors                                     150,000       150           -           -        -         -

Conversion of convertible notes payable to common stock           1,419,041     1,419           -           -        -         -

Election to repay loan advances from chief executive officer      1,000,000     1,000           -           -        -         -

Beneficial conversion feature of convertible notes payable                -         -           -           -        -         -

Common stock issued for commitment fees                           8,421,052     8,421           -           -        -         -

Common stock issued for accrued expenses payable                  1,266,500     1,266           -           -        -         -

Issuance of options and warrants for services                             -         -           -           -        -         -

Common stock issued for compensation                                163,888       164           -           -        -         -

Cashless exercise of warrants                                       342,160       342           -           -        -         -

Conversion of convertible notes payable to preferred stock                -         -           -           -  165,000   165,000

Amortization of unearned services                                         -         -           -           -        -         -

Amortization of deferred compensation                                     -         -           -           -        -         -

Net loss                                                                  -         -           -           -        -         -

                                                                 -----------  --------  ----------  ---------- --------  --------
Balance December 31, 2004                                        44,421,899   $44,422           -   $       -  165,000  $165,000
                                                                 ===========  ========  ==========  ========== ========  ========
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                       Series IV
                                                                      Convertible
                                                                    Preferred Stock      Additional
                                                                  --------------------     Paid-in     Deferred     Unearned
                                                                   Shares     Amount       Capital   Compensation   Services
                                                                  ---------  ----------  -----------  -----------  ----------
<S>                                                               <S>        <C>         <C>          <C>          <C>
December 31, 2002                                                        -   $       -   $4,979,550   $        -   $       -

Conversion of Series II redeemable convertible preferred stock           -           -    8,224,273            -           -

Issuance of shares for services rendered                                 -           -    1,100,393            -    (820,348)

Issuance of shares for settlements of amounts due                        -           -      315,660            -           -

Issuance of shares for compensation                                      -           -      201,271     (123,750)          -

Issuance of shares to directors                                          -           -       79,450            -           -

Issuance of shares in consideration of convertible note payable          -           -       61,600            -           -

Conversion of convertible notes payable to common stock                  -           -      210,407            -           -

Exercise of options                                                      -           -        3,283            -           -

Issuance of options for services                                         -           -      108,500     (108,500)          -

Beneficial conversion feature of convertible notes payable               -           -      267,648            -           -

Amortization of unearned services                                        -           -            -            -     666,548

Amortization of deferred compensation                                    -           -            -      125,275           -

Warrants issued for services rendered                                    -           -      150,671            -           -

Warrants issued in settlement of amounts due                             -           -        4,000            -           -

Conversion of convertible notes payable to preferred stock         100,000     100,000            -            -           -

Net loss                                                                 -           -            -            -           -
                                                                  ---------  ----------  -----------  -----------  ----------

Balance December 31, 2003                                          100,000     100,000   15,706,706     (106,975)   (153,800)

Issuance of shares for services rendered                                 -           -      164,245            -    (108,191)

Issuance of shares to directors                                          -           -       31,350            -           -

Conversion of convertible notes payable to common stock                  -           -      128,900            -           -

Election to repay loan advances from chief executive officer             -           -       69,000            -           -

Beneficial conversion feature of convertible notes payable               -           -      313,067            -           -

Common stock issued for commitment fees                                  -           -      791,579            -           -

Common stock issued for accrued expenses payable                         -           -      202,281            -           -

Issuance of options and warrants for services                            -           -       26,000      (14,000)          -

Common stock issued for compensation                                     -           -       24,836            -           -

Cashless exercise of warrants                                            -           -      (47,376)           -           -

Conversion of convertible notes payable to preferred stock               -           -            -            -           -

Amortization of unearned services                                        -           -            -            -     227,872

Amortization of deferred compensation                                    -           -            -       91,725           -

Net loss                                                                 -           -            -            -           -

                                                                  ---------  ----------  -----------  -----------  ----------
Balance December 31, 2004                                          100,000   $ 100,000   $17,410,588  $  (29,250)  $ (34,119)
                                                                  =========  ==========  ===========  ===========  ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                                                   Deferred                     Total
                                                                   Offering   Accumulated    Stockholders'
                                                                    Costs       Deficit       Deficiency
                                                                  ----------  -----------    -----------
<S>                                                                <C>        <C>           <C>
December 31, 2002                                                  $         $(14,206,355)  $(9,219,245)

Conversion of Series II redeemable convertible preferred stock                         -      8,229,727

Issuance of shares for services rendered                                               -        291,551

Issuance of shares for settlements of amounts due                                      -        317,411

Issuance of shares for compensation                                                    -         79,709

Issuance of shares to directors                                                        -         80,000

Issuance of shares in consideration of convertible note payable                        -         62,000

Conversion of convertible notes payable to common stock                                -        211,819

Exercise of options                                                                    -          3,334

Issuance of options for services                                                       -              -

Beneficial conversion feature of convertible notes payable                             -        267,648

Amortization of unearned services                                                      -        666,548

Amortization of deferred compensation                                                  -        125,275

Warrants issued for services rendered                                                  -        150,671

Warrants issued in settlement of amounts due                                           -          4,000

Conversion of convertible notes payable to preferred stock                             -        100,000

Net loss                                                                      (2,898,192)    (2,898,192)
                                                                  ----------  -----------    -----------

Balance December 31, 2003                                                 -   (17,104,547)   (1,527,744)

Issuance of shares for services rendered                                  -            -         56,842

Issuance of shares to directors                                           -            -         31,500

Conversion of convertible notes payable to common stock                   -            -        130,319

Election to repay loan advances from chief executive officer              -            -         70,000


Beneficial conversion feature of convertible notes payable                -            -        313,067

Common stock issued for commitment fees                            (800,000)           -              -

Common stock issued for accrued expenses payable                          -            -        203,547

Issuance of options and warrants for services                             -            -         12,000

Common stock issued for compensation                                      -            -         25,000

Cashless exercise of warrants                                             -            -        (47,034)

Conversion of convertible notes payable to preferred stock                -            -        165,000

Amortization of unearned services                                         -            -        227,872

Amortization of deferred compensation                                     -            -         91,725

Net loss                                                                  -   (2,034,304)    (2,034,304)

                                                                  ---------- -------------   ------------
Balance December 31, 2004                                         $(800,000) $(19,138,851)   $(2,282,210)
                                                                  ========== =============   ============
</TABLE>



The accompanying notes and independent auditors' report should be read in
conjunction with the financial statements.


                                      F-4
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                               Years Ended December 31,
                                                                             ----------------------------
                                                                                 2004            2003
                                                                             ------------    ------------
Cash flows from operating activities:

<S>                                                                          <C>             <C>
     Net loss                                                                $ (2,034,304)   $ (2,898,192)
     Adjustments to reconcile net loss to net cash
        (used in) provided by operating activities:
           Depreciation and amortization                                              957          58,365
           Financing cost related to beneficial conversion value                  269,741              --
           Change in allowance for bad debts                                       54,245              --
           Loss on disposal of equipment                                               --          15,815
           Impairment charges for intangibles                                          --         233,154
           Common stock, options and warrants issued for services and                  --              --
                financing expenses                                                452,220       1,809,225
     Changes in operating assets and liabilities:
        Decrease (Increase) in accounts receivable                                 35,779         (63,959)
        (Increase) in inventory                                                    (9,957)        (47,507)
        (Increase) in prepaid expenses                                                 25          (4,750)
        Increase in cash overdraft                                                 11,277              --
        (Decrease) in accounts payable                                              4,953        (150,514)
        Increase in accrued expenses and other current liabilities                391,760          87,222
        Decrease in due to factor                                                      --         (23,369)
        Increase in payroll taxes payable                                           1,965          72,544
                                                                             ------------    ------------
Net cash (used in) provided by operating activities                              (821,339)       (911,966)
                                                                             ------------    ------------

CASH FLOWS FORM INVESTING ACTIVITIES
     Cash paid for acquisition of Old Fashioned                                        --        (135,000)
                                                                             ------------    ------------
Cash flows from financing activities:

     Proceeds from notes payable                                                       --         549,264
     Operating expenses paid through convertible notes                            740,490         500,392
     Advances from related party                                                   78,088              --
                                                                             ------------    ------------
Net cash provided by financing activities                                         818,578       1,049,656
                                                                             ------------    ------------

Net (decrease) increase in cash                                                    (2,761)          2,690

Cash, beginning of period                                                           2,761              71
                                                                             ------------    ------------

Cash, end of period                                                          $         --    $      2,761
                                                                             ============    ============

Supplemental Disclosure of Cash Flow Information:

Cash paid during the year:

     Interest expense                                                        $         --    $         --
                                                                             ============    ============
     Income taxes                                                            $         --    $         --
                                                                             ============    ============

Noncash investing and financing activities:

     Conversion of redeemable convertible preferred stock to common stock    $         --    $  8,229,727
                                                                             ============    ============
     Issuance of common stock for settlements of amounts due                 $    155,000         299,109
                                                                             ============    ============
     Assets derived through proceeds from notes payable                      $         --         (35,546)
                                                                             ============    ============
     Conversion of convertible notes payable to Series III Preferred Stock   $    165,000    $         --
                                                                             ============    ============
     Conversion of convertible notes payable to Series IV Preferred Stock    $         --    $    100,000
                                                                             ============    ============
     Issuance of common stock for services to be provided                    $    254,565    $    820,348
                                                                             ============    ============
     Issuance of options for services to be provided                         $     37,465    $    232,250
                                                                             ============    ============
     Issuance of common stock due to options exercised                       $         --    $      3,334
                                                                             ============    ============
     Conversion of convertible notes payable to common stock                 $    130,319    $    148,273
                                                                             ============    ============
     Stcok issued for deferred offering cost                                 $    800,000    $         --
                                                                             ============    ============
</TABLE>

The accompanying notes and independent auditors' report should be read in
conjunction with the financial statements.


                                      F-5
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

NOTE 1 - ORGANIZATION, HISTORY AND NATURE OF BUSINESS

Championlyte Holdings, Inc. (the "Company") markets sugar-free, calorie-free,
sports refresher beverages under the ChampionLyte brand name as well as
sugar-free, fat-free, cholesterol-free, flavored syrups through its subsidiary,
The Old Fashioned Syrup Company, Inc. ("Old Fashioned"). Both of these products
are sold to retailers and food service customers throughout the United States.

In December 2002, a 67% ownership interest in Old Fashioned was relinquished as
part of a foreclosure action on a $15,000 advance made to the Company in
November 2002. As a consequence of losing control of such business the Company
recorded Old Fashioned as a discontinued business. In July 2003, the Company
entered into a Settlement Agreement that returned the 67% ownership interest in
Old Fashioned to the Company, which became effective August 20, 2003 for
$135,000. The acquisition was accounted for under the purchase method of
accounting (see Note 5).

On March 18, 2003, the Company amended its Articles of Incorporation to change
the authorized stock structure such that the common stock authorized was
increased from 40,000,000 to 200,000,000 shares, and it's preferred stock
authorized from 100,000 shares to 2,000,000 shares.

On March 25, 2003, the Company created a subsidiary, Championlyte Beverages,
Inc., to engage in the production and sale of the Championlyte products.

On March 17, 2004, the Company created a subsidiary, Be-Lyte Foods, Inc., to
engage In the production and sale of low carbohydrate snacks.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Principles of consolidation - The consolidated financial statements include
the accounts of the Company and its subsidiaries. All material intercompany
transactions have been eliminated.

b. Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to use judgment in making estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues and expenses and related
disclosure of contingent assets and liabilities. Certain of the estimates and
assumptions required to be made relate to matters that are inherently uncertain
as they pertain to future events. While management believes that the estimates
and assumptions used were the most appropriate, actual results could differ
significantly from those estimates under different assumptions and conditions.

c. Cash and cash equivalents - The Company considers all highly liquid temporary
cash investments with an original maturity of three months or less when
purchased, to be cash equivalents. There were no cash equivalents at December
31, 2004.

d. Accounts Receivable - Accounts receivable are recorded at the outstanding
amounts net of the allowance for doubtful accounts. Estimates are used in
determining the Company's allowance for doubtful accounts based on historical
collections experience, current economic trends and a percentage of its accounts
receivable by aging category. In determining these percentages, the Company
looks at historical write-offs of its receivables. The Company also looks at the
credit quality of its customer base as well as changes in its credit policies.
The Company continuously monitors collections and payments from its customers.
While credit losses have historically been within expectations and the
provisions established, the Company cannot guarantee that it will continue to
experience the same credit loss rates that it has in the past.

e. Inventory - The Company values inventory at the lower of cost or market, cost
being determined on a first-in, first-out basis. The Company writes down its
inventory for estimated unmarketable inventory or obsolescence equal to the
difference between the cost of inventory and the estimated market value based on
assumptions about future demand and market conditions. If actual market
conditions are less favorable then those projected by management, additional
inventory write-downs may be required. At December 31, 2004, inventory consisted
of finished goods.

f. Property and equipment - Property and equipment is stated at cost, less
accumulated depreciation and amortization. Expenditures for maintenance and
repairs are charged to operations as incurred. Depreciation of property and
equipment is computed using the straight-line method over the estimated useful
lives of the assets. Leasehold improvements are depreciated over the life of the
appropriate lease.


                                      F-6
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

g. Intangible assets - Intangible assets consisted of goodwill and a license
agreement. The capitalized costs of the assets were based on their current
market value at the time of the acquisition. Goodwill was not amortized. The
license agreement was amortized on a straight-line basis over ten years.
Goodwill valuations have historically been calculated using an income approach
based on the present value of future cash flows of each reporting unit. This
approach includes many assumptions related to future growth rates, discount
factors, future tax rates, etc. Changes in economic and operating conditions
impacting these assumptions could result in a goodwill impairment in future
periods.

h. Revenue recognition - Revenue is recognized according to the terms of the
sale arrangement, which is customarily when the customer receives title to the
goods, generally upon delivery. Revenue is recorded on a gross basis, since the
Company is responsible for fulfillment, including the acceptability of the
products and services ordered by the customer. Management believes that adequate
controls are in place to ensure compliance with sale arrangements, a substantial
history of such performance has been established and historical returns and
allowance have not been significant. If actual sales returns and allowances
exceed historical amounts, the Company's sales would be adversely affected.

i. Advertising costs - Advertising costs are expensed as incurred. Total
advertising costs charged to operations for the years ended December 31, 2004
and 2003 amounted to $43,920 and $201,838, respectively.

j. Shipping and handling costs - Pursuant to EITF 00-10, "Accounting for
Shipping and Handling Fees and Costs," shipping and handling costs incurred by
the Company are included in cost of sales. For the years ended December 31, 2004
and 2003, shipping and handling costs were $64,619 and $33,165, respectively.
The Company does not currently bill customers for shipping and handling costs.

k. Income taxes - Deferred income taxes are determined on the liability method
in accordance with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("SFAS No. 109"). Under SFAS No. 109, deferred tax
assets and liabilities are determined based on the difference between the tax
basis of an asset or liability and its reported amount in the consolidated
financial statements using enacted tax rates. Future tax benefits attributable
to these differences are recognized to the extent that realization of such
benefits is more likely than not.

l. Net loss per share - Basic earnings (loss) per share is computed as net
income (loss) divided by the weighted average number of common shares
outstanding for the period. Diluted earnings (loss) per share reflects the
potential dilution that could occur from common stock issuable through stock
based compensation including stock options, restrictive stock awards, warrants
and other convertible securities.

m. Concentration of risk - Credit losses, if any, have been provided for in the
financial statements and are based on management's expectations. The Company's
accounts receivable are subject to potential concentrations of credit risk. The
Company does not believe that it is subject to any unusual or significant risks,
in the normal course of business.

n. Fair value of financial instruments - The carrying amounts reported in the
balance sheet for cash, receivables, inventory, accounts payable, accrued
expenses and debt approximate fair value based on the short-term maturity of
these instruments or interest rates that approximate market.

o. Long-Lived Assets - On a periodic basis, the Company assesses whether there
are any indicators that the value of its long-lived assets may be impaired. An
asset's value is considered impaired only if the Company's estimate of current
and projected operating cash flows (undiscounted and without interest charges)
of the asset over its remaining useful life is less than the net carrying value
of the asset. Such cash flow projections consider factors such as expected
future operating income, business plans, trends and prospects, as well as the
effects of demand, competition and other factors. To the extent impairment has
occurred, the carrying amount of the asset would be written down to an amount to
reflect the fair value of the asset.

p. Stock-based compensation - The Company adopted the fair value recognition
provisions of Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" (SFAS No. 123), prospectively for all awards
granted, modified, or settled during the year ended December 31, 2002. The
prospective method is one of the adoption methods provided for under SFAS No.
148, " Accounting for Stock-Based Compensation - Transition and Disclosure"
(SFAS No. 148) issued in December 2002. SFAS No. 123 requires that compensation
cost for all stock awards be calculated and recognized over the service period
(generally equal to the vesting period). This compensation cost is determined
using option pricing models intended to estimate the fair value of the awards at
the grant date. Similar to Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB No. 25), the alternative method
of accounting, under SFAS No. 123, an offsetting increase to stockholders'
equity is recorded equal to the amount of compensation expense charged. Earnings
per share dilution is recognized as well.


                                      F-7
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

q. Comprehensive income - The Company has adopted Statement of Financial
Accounting Standard No. 130 ("SFAS No. 130"), "Reporting Comprehensive Income",
which establishes standards for reporting and display of comprehensive income,
its components and accumulated balances. Comprehensive income is defined to
include all changes in equity except those resulting from investments by owners
and distributions to owners. Among other disclosures, SFAS No. 130 requires that
all items that are required to be recognized under current accounting standards
as a component of comprehensive income be reported in a financial statement that
is displayed with the same prominence as other financial statements.
Comprehensive income is displayed in the statement of stockholders' deficiency
and in the balance sheet as a component of stockholders' deficiency.

r. Product liability - Accruals for product liability claims are recorded, on an
undiscounted basis, when it is probable that a liability has been incurred and
the amount of the liability can be reasonably estimated based on existing
information. The accruals are adjusted periodically as additional information
becomes available. Receivables for insurance recoveries related to product
liability related claims are recorded, on an undiscounted basis, when it is
probable that a recovery will be realized. At December 31, 2004, there were no
product liability accruals necessary.

NOTE 3 - GOING CONCERN

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates continuity of
operations, realization of assets, and liquidation of liabilities in the normal
course of business. The Company has incurred operating losses, negative cash
flows from operating activities, negative working capital and has a
stockholders' deficit. At December 31, 2004, the Company's accumulated deficit
was $19,138,851 and its working capital deficiency was $2,282,210. For the years
ended December 31, 2004 and 2003, the Company had a net loss of $2,034,304 and
$2,898,192, respectively. In addition, the Company is in default of all it's
debt obligations.

The Company is aggressively attempting to increase revenues in order to mitigate
future losses. Management is seeking to raise additional capital and to
renegotiate certain liabilities in order to alleviate the working capital
deficiency. However, there can be no assurance that it will be able to increase
revenues or to raise additional capital.

These factors raise substantial doubt about the Company's ability to continue as
a going concern. The financial statements do not include adjustments relating to
the recoverability and realization of assets and classification of liabilities
that might be necessary should the Company be unable to continue in operation.

NOTE 4 - NEW ACCOUNTING PRONOUNCEMENTS

The Company does not believe that any recently issued, but not yet effective,
accounting standards would have a material effect on the accompanying financial
statements.

NOTE 5 - REACQUISITION OF OLD FASHIONED

In December 2002, the Company had 67% of its ownership of Old Fashioned
relinquished as part of a foreclosure action on a $15,000 advance made to the
Company in November 2002, which matured on December 14, 2002. The remaining 33%
minority interest in Old Fashioned was recorded as having no value since there
was no net equity in such business. In addition, due to the lack of control over
the minority share of Old Fashioned, lack of cooperation with the successor
management, the Company and the Old Fashioned business have not had profitable
operations in the last four years, management did not expect any future cash
flows from such minority ownership interest in the immediate future.


                                      F-8
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

On May 28, 2003, the Company filed a complaint against certain parties alleging
the fraudulent conveyance of the Company's interest in Old Fashioned. The
complaint filed was for monetary damages, injunctive declaratory and equitable
relief. The lawsuit further claimed that the Company has suffered irreparable
damage and the Company was seeking to rescind the sale of the securities in Old
Fashioned to InGlobalVest and restore the Company, Old Fashioned and
InGlobalVest to their respective positions prior to the time the transaction was
entered. On July 21, 2003, the Company reached a settlement with all but one of
the defendants in this matter.

Pursuant to the terms of a Settlement Agreement, InGlobalVest agreed to deliver
any and all stock certificates in Old Fashioned as well as all books and records
to the Company's counsel by August 20, 2003. In addition, InGlobalVest agreed to
appoint a representative to assist in the change in control and management and
agreed to enter into a non-interference agreement with the Company with respect
to Old Fashioned. InGlobalVest has warranted and represented to the Company that
the financial conditions depicted in the books and records tendered to the
Company on July 15, 2003 were true, accurate and complete as of that date to the
best of InGlobalVest's knowledge and that no known liabilities were omitted from
disclosure in such records. In consideration for the return of Old Fashioned,
the Company agreed to pay InGlobalVest $135,000.

On August 20, 2003, the Settlement Agreement was executed and the Company
acquired the common stock of Old Fashioned for $135,000, plus transaction fees
of $75,617, making Old Fashioned a wholly-owned subsidiary of the Company. The
acquisition was accounted for under the purchase method of accounting.
Accordingly, the Company recorded the assets purchased and the liabilities
assumed based upon their estimated fair values at the date of the acquisition.
The excess of the purchase price over the fair value of the net assets acquired
amounted to $133,421, which has been allocated to goodwill. The acquisition cost
was allocated as follows:

Historical book value of net assets acquired $ 77,196 Excess of the purchase
price over the fair value of the net assets 133,421
$210,617

The operating results of Old Fashioned have been included in the consolidated
statements of operations from the acquisition date (August 20, 2003). The
Company's unaudited proforma results for the twelve months ended December 31,
2003 assuming the merger occurred on January 1, 2003 is as follows:



                                2003

Net sales                   $    410,351
                            ============
Net loss                    $ (2,898,192)
                            ============
Basic loss per share        $       (.15)
                            ============
Weighted average shares       19,824,491



These unaudited proforma results have been prepared for comparative purposes
only and do not purport to be indicative of the results of operations that
actually would have resulted had the merger been in effect January 1, 2003 or
the future results of operations.

NOTE 6 - ACCOUNTS RECEIVABLE

Accounts receivable, net consists of the following components at December 31,
2004:



Trade receivables                         $ 68,801
Less: Allowance for doubtful accounts      (59,248)
                                          ---------
                                          $  9,553
                                          =========



There was a $54,248 increase in the Company's allowance for doubtful accounts
during the year ended December 31, 2004, which has been recorded as a bad debt
expense.

NOTE 7 - INTANGIBLE ASSETS

Intangible assets consisted of goodwill and a license agreement. The capitalized
costs of the assets were based on their current market value at the time of the
acquisition of Old Fashioned. Goodwill was not amortized. The licensing
agreement was amortized on a straight-line basis over ten years.

                                   IMPAIRMENT

Subsequent to the acquisition of Old Fashioned, the Company performed its annual
assessment of its long-lived assets to determine whether there were any
indicators that the value of its intangible assets may be impaired. Based upon
management's estimate of current and projected operating cash flows
(undiscounted and without interest charges) of the intangible assets over its
remaining useful lives, it was determined that the assets of Old Fashioned as a
reporting unit were impaired. Based upon the assessment, the Company recorded a
one-time non-cash charge of $233,154 to write off the carrying value of $133,421
for goodwill and $99,733 for the license agreement during the year ended
December 31, 2003. Management's evaluation reflects that Old Fashioned is not
currently producing and has not produced significant revenues to sustain its
cost of operations. The impairment charge also reflects the fact that Old
Fashioned is not currently in compliance with the provision of its license
agreement. As such, the license agreement is subject to termination. In
addition, the Company's lack of working capital may not enable it to support Old
Fashioned cash flows in the future.


                                      F-9
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

                                LICENSE AGREEMENT

In connection with the acquisition of Old Fashioned, the Company reacquired a
ten year license agreement, effective January 20, 1999, and as amended in
September 1999, with Cumberland Packing Corp. ("Cumberland") for the right to
use their "Sweet 'N Low" trademark in order to market Old Fashioned's
sugar-free, fat-free, cholesterol-free chocolate, vanilla and strawberry
flavored syrup products. The license agreement had an initial term of ten years,
expiring December 31, 2008. The Company had the right to renew the agreement for
two additional seven-year terms, so long as the Company was not in default under
the agreement. The agreement contains minimum royalties and minimum advertising
capital requirements during each year of term as determined on a calendar year
basis.

Cumberland and the Company agreed on an immediate termination of the amended
license agreement. The termination was amicable and Cumberland agreed to waive
its rights to any accrued or unpaid royalties from the Company. As a result of
the license termination, no royalties were owed as of December 31, 2004 or
included in accrued expenses in the accompanying consolidated balance sheet. The
Company is currently reformulating its syrup to accommodate for this termination
and plans to recommence Old Fashioned operations.

NOTE 8 - PROPERTY AND EQUIPMENT

The property and equipment consists of the following:



                                   Useful life

Website                              3 years    $   11,017
Less: accumulated depreciation                     (11,017)
                                                ----------
                                                $        0
                                                ==========



Total depreciation expense for the years ended December 31, 2004 and 2003 was
$956 and $3,672, respectively.

During the year ended December 31, 2003, the Company disposed of coolers that
were no longer in use. These assets had a net book value of $15,815 at December
31, 2003. The loss on disposal of assets for $15,815 is included in other income
(expense) on the accompanying consolidated statements of operations for the year
ended December 31, 2003.

NOTE 9 - CONVERTIBLE NOTES PAYABLE

Convertible notes at December 31, 2004, consist of promissory notes to five
entities. Some of the owners of the entities are also shareholders of the
Company. A note exists Advantage Fund, LLC ("Advantage") was originated in
January 2003. It bears interest at a rate of 6.5% per annum and is convertible
into shares of the Company's common stock with a conversion price per share
equal to the lesser of the average of the lowest of three day trading prices
during the five trading days immediately prior to the conversion date multiplied
by .70 or, the average of the lowest of three day trading prices during the five
trading dates immediately prior to the funding dates. The note is convertible,
in whole or in part, at any time after the issuance of the note. In July 2003,
the Company amended its convertible note with the Advantage by increasing the
amount of the note to $350,000 and extending the maturity date of the note to
December 31, 2004. All other terms of the note remained unchanged. The note was
further amended in October 2003 increasing the convertible note amount to
$400,000 and extending the date by which the withdrawn registration statement
filed with the SEC needed to become effective. The note was further amended in
May 2004 increasing the convertible note amount to $1,250,000 and the investment
fund has agreed to waive any penalties for not meeting the required date for the
registration statement to be declared effective. This is no longer applicable
since the registration statement has been withdrawn. As of December 31, 2004 the
promissory note is in default. The Company has not been notified of any actions
related to this default from Advantage.

In August 2004, Advantage sold a total of $400,000 worth of such Convertible
Note to Cornell Capital Partners, LLP ("Cornell"). Upon receipt of the funds,
Advantage immediately reinvested $165,000 into the Company. In consideration for
th $165,000 the Company issued a convertible promissory note dated August, 2004.
Subsequently, the Company and Advantage agreed to exchange the $165,000 note for
165,000 shares of the class of its Preferred Stock known as Series III Preferred
Stock, par value $1.00 which has the same rights and privileges as the Company's
Series IV Preferred Stock in consideration for the satisfaction of the note.

During the year ended December 31, 2004, Advantage funded the Company and the
note increased by $405,490. (See Note 13). During the year ended December 31,
2004, Cornell elected to convert $31,831 of its promissory notes into 611,152
shares of the Company's common stock.


                                      F-10
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

The Company has promissory notes with two unrelated third parties ("Alpha and
Gamma"), representing the $250,000 assigned to them. The notes mature on
December 31, 2004 and bear interest at a rate of 6.5% per annum. The notes are
convertible into shares of the Company's common stock at a conversion price
equal to the lesser of (1) the average of the lowest of the three day trading
price during the five trading days immediately prior to the conversion date,
multiplied by .80%, or (2) the average of the lowest of three day trading prices
during the five trading days immediately prior to the funding date. During the
quarter ended March 31, 2004, Alpha converted $12,500 of its note into 178,571
shares of the Company's common stock. In July 2004, Alpha converted $10,000 of
its note for 142,857 shares of the Company's common stock. As of December 31,
2004 the promissory note is in default. The Company has not been notified of any
action related to this default by either Alpha or Gamma.

Pursuant to the terms of the notes, the Company was to have filed a registration
statement with the SEC on or before February 6, 2003 that was required to have
been declared effective on or before April 6, 2003 and remain effective until
the maturity date of the notes. Since the Company defaulted on this provision of
the notes, the holders may accelerate the due date of the notes. In October
2003, in order to induce the Advantage, Alpha and Gamma to forego from
exercising their rights to accelerate the due date of the notes and as security
for the repayment of the notes, the Company entered into a Security Agreement
with a collateral agent, on behalf of the holders' granting the collateral agent
a security interest in the Company's inventory, equipment and fixtures.
Advantage, Alpha and Gamma agreed to forebear for 180 days from October 16, 2003
the exercise of any of their rights under the notes with respect to the
non-registration, so long as the Company is not in default under the provisions
of the Security Agreement and the other provisions of the notes. Thereafter, the
Company had decided to withdraw its Registration Statement and requested that
Alpha and Gamma waive any penalties provided that the Company's counsel shall
issue shares applicable to Rule 144 opinion letters. This was agreed to by the
parties.

In June 2004, amounts owed to an individual note holder aggregating $30,000 plus
$2,238 of accrued interest were converted into 302,251 shares of common stock.

In June 2004, the Company received $50,000 from Triple Crown Consulting, Inc.,
and entered into a $50,000 Series B 6.5% Convertible Promissory Note. The note
provides the holder with the right at any time to convert into common stock of
the Company as follows: The Conversion Price per share shall be equal to the
lesser of (1) the average of the lowest of three-day trading prices during the
five trading days immediately prior to the Conversion Date multiplied by .70, or
(2) the average of the lowest of three-day trading prices during the five
trading days immediately prior to the funding date(s).

At December 31, 2004, amounts owed to Advantage aggregated $470,002, Cornell
Capital aggregated $368,169, Triple Crown Consulting, Inc. aggregated $50,000,
Alpha and Gamma aggregated $228,500 and amounts owed to Latitude Asset
Investment Corp. ("Latitude") aggregated $135,000. Accrued interest of $50,203,
$10,296 and $14,592 due to Advantage, Triple Crown Consulting, Inc. and Alpha
and Gamma, respectively, is included in accrued expenses in the accompanying
consolidated balance sheet.

The beneficial conversion feature of the above convertible notes for the year
ended December 31, 2004 amounted to $313,067 and is included in interest and
financing expense in the accompanying consolidated statements of operations.

A note with Latitude for $135,000, was originated on August 15, 2003 in order to
fund the acquisition of Old Fashioned (see NOTE 5). The note matured on October
14, 2004 but was subsequently extended until January 15, 2005 and bears interest
at a rate of 6.0% per year. If the note is still outstanding after six months
from the origination date, then, at the option of the holder, the principal plus
accrued interest may be converted into 51% of the issued and outstanding common
stock of Old Fashioned. As of December 31, 2004 the promissory note is in
default. The Company has not been notified of any action related to the default
by Latitude.

The note holder has not executed this provision. In addition, until the note is
paid in full, the holder is entitled to 15% of Old Fashioned's cash flow,
defined as net income, plus depreciation and interest minus capital
expenditures. To date, no payments have been made to Latitude and no amounts
related to the cash flow provision were due. In connection with this note, Old
Fashioned entered into a security agreement with the Latitude whereby it pledged
all assets and all issued and outstanding shares of its common stock as
collateral. Furthermore, in consideration for the $135,000 note to Old
Fashioned, the Company agreed to issue a total of 1,400,000 shares of its common
stock to Latitude over the term of the note. In the event that the note is paid
in full prior to the maturity date of the note, the balance of the shares will
be returned to the Company. For the year ended December 31, 2004, the Company
has recorded $31,000 as interest and financing expense related to this agreement
and at December 31, 2004, the balance due on the note is $135,000. During the
year ended December 31, 2004 and 2003, the Company issued 1,000,000 and 400,000,
shares respectively to Latitude related to this provision which are valued at
$.155 per share. The issuance of these shares has been recorded as interest and
financing expenses.


                                      F-11
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

In January 2005, Latitude holders of convertible promissory notes had $135,000
in promissory notes converted into 5,500,000 shares of the Company's common
stock.

NOTE 10 - FACTORING

On August 20, 2003, Old Fashioned entered into an agreement with a financial
services company that has common management with the financial advisory firm
(see Note 13) for the factoring of accounts receivable and purchase order
financing services. The agreement states no limitation on the volume with a
total facility available of $500,000. The discount schedule related to the
factored receivables is as follows: 0-45 days, 4 points; 46-60 days, an
additional 2 points; 61-75 days, an additional 2 points, and an additional 2
points for each succeeding 15 days. The agreement bears an indefinite term and
provides for a security interest in the Company's accounts receivables and
general intangibles.

On July 1, 2003, the Company entered into an agreement with a financial services
company that has common management with the financial advisory firm (see Note
13) for the factoring of accounts receivable and purchase order financing
services. The agreement states no limitation on the volume with a total facility
available of $500,000. The discount schedule related to the factored receivables
is as follows: 0-45 days, 4 points; 46-60 days, an additional 2 points; 61-75
days, an additional 2 points, and an additional 2 points for each succeeding 15
days. The agreement bears an indefinite term and provides for a security
interest in the Company's accounts receivables and general intangibles.

At December 31, 2004, no amounts were due to the financial services company.

NOTE 11 - ACCRUED EXPENSES

Accrued expenses consist of the following at December 31, 2004:



Salaries              $ 68,774
Interest               119,840
Royalties               31,875
Other                  201,252

                      --------
                      $421,741
                      ========



NOTE 12 - COMMITMENTS AND CONTINGENCIES

                                OPERATING LEASES

Prior to November 2003, the Company rented and shared office space with the
financial advisory firm on a month-to-month basis at $1,750 per month. In
November 2003, the Company entered into a new lease agreement and relocated
their office space. The new Agreement requires rental payments of $2,000 per
month beginning November 2003 for a period of one year. Total rent expense for
the years ended December 31, 2004 and 2003 were $23,900 respectively. In March
2005, the Company was moved from this office space and is currently seeking
temporary office space.

                                LACK OF INSURANCE

The Company has not maintained any workman's compensation and disability
insurance as of December 31, 2004. Although the Company is not aware of any
claims resulting from periods of non-coverage, there is no assurance that none
exist. The Company currently does not have product liability insurance. Although
the Company is not aware of any claims resulting from periods of non-coverage,
there is no assurance that none exist.

                                  PAYROLL TAXES

As of December 31, 2004, the Company owes approximately $74,509 of payroll taxes
and related estimated penalties and interest. Although the Company has not
entered into any formal repayment agreements with the respective tax
authorities, management plans to make payment as funds become available.

                          CONCENTRATION OF CREDIT RISK

For the year ended December 31, 2004, the Company had two customers whose sales
represented 8% and 18% respectively, of the Company's net sales. Another
customer accounted for more than 10% of the Company's accounts receivable at
December 31, 2004. During the year ended December 31, 2004, all sales generated
by the Company were from customers located within the United States and all
assets held by the Company were located within the United States.


                                      F-12
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

Two co-packers currently produce all of the Company's products. If any of these
co-packers were to terminate or fail to renew the Company's contract, or have
difficulties in producing beverages for the Company, the ability to produce
products may be temporarily negatively affected.

                                   SETTLEMENTS

During the year ended December 31, 2004 and subsequent to such, various vendors,
consultants and professionals have filed actions against the Company. The
unsettled claims aggregate approximately $258,784. The Company has included
approximately $254,284 in accounts payable at December 31, 2004 as a contingency
related to these unsettled claims, actions and judgments based on the Company's
and Counsel's assessment and the remaining $4,500 is included in accrued
expenses. During the year ended December 31, 2004, the Company made cash
payments of approximately $90,810 in settlement of certain actions.

During the year ended December 31, 2004, the Company entered into settlement
agreements with certain vendors. In connection with these settlement agreements,
the Company is required to pay approximately $ in cash.

During 2001, a suit was filed against the Company alleging that its trademark
corporate name, ChampionLyte, violated the plaintiff's trademark. A settlement
agreement was entered into April 1, 2003 between the Company and the plaintiff.
The terms included granting the Company an exclusive license to use the
ChampionLyte mark in connection with the sugar-free drinks in the United States,
Mexico and Canada. A licensing agreement providing this mark was established for
an initial five-year term, with two additional five-year terms at the Company's
option. It does require a royalty of three percent until sales reach $10,000,000
annually. The royalty then increases to five percent on all sales after sales
reach $10,000,000 annually and six percent on all sales after sales reach
$15,000,000 annually. The minimum required sales per year is as follows:

2003 - $500,000 (measured from 4/1/03 to 3/31/04) 2004 - $750,000
2005 - $1,000,000
2006 - $1,250,000
2007 - $1,500,000

(renewal for second five years if sales in years 2005-07 average at least
$1,500,000)
2008 - $2,000,000
2009 - $2,500,000
2010 - $3,000,000
2011 - $3,500,000
2012 - $4,000,000

(renewal for third five years if sales in years 2010-12 average at least
$5,000,000)
2013 - $5,000,000
2014 - $6,000,000
2015 - $7,000,000
2016 - $8,000,000
2017 - $9,000,000

Royalties owed as of December 31, 2004 of $31,875 are included in accrued
expenses in the accompanying consolidated balance sheet.

In addition to the aforementioned, the Company is party to various legal
proceedings generally incidental to its business as is the case with other
companies in the same industry.

NOTE 13 - STOCKHOLDERS' DEFICIENCY

                           CONVERTIBLE PREFERRED STOCK

On September 12, 2003, the Company amended its articles of incorporation to
authorize the increase in preferred stock from 1,000,000 to 2,000,000 shares and
to increase the par value to $1.00, except for 8,500 shares of Series II which
have a par value of $.01, the terms of which may be determined at the time of
issuance by the Board of Directors without further action by the shareholders.

The Company has designated the preferred stock into the following Series':


                                      F-13
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

(i) Series I: 100,000 shares of convertible preferred stock. Each outstanding
share of Series I Preferred Stock was convertible into 330 shares of common
stock. In December 2001 the Series I Preferred Stock was converted into
1,155,000 shares of the Company's common stock.

(ii) Series II: On June 16, 2000, the Company amended its articles of
incorporation to designate Series II Convertible Preferred Stock ("Series II").
The Series II preferred dividends entitled the holder to a preferred dividend
based upon 5% per annum of the liquidation value. Initially the holder could
convert each preferred share into the Company's common stock based upon a $1.70
conversion price. The conversion price could be adjusted one year from the date
of issuance. Subsequent to the one-year period, the holder could convert the
preferred shares into common stock of the Company at a conversion price of the
lower of $1.70 or the average of the closing prices of the common stock for the
ten-day period ending one year from the date of issuance. Additionally, these
shares had the right of mandatory redemption ten years from the date of
issuance.

During the quarter ended June 30, 2003, the holders of the Series II preferred
stock waived all preferred dividends due and in the future, and agreed to a
fixed conversion price of $1.50 to convert to common stock. During the year
ended December 31, 2003, all holders of the Series II redeemable convertible
preferred stock exercised their option and converted 8,229 shares of preferred
stock into 5,453,915 shares of common stock pursuant to the preferred stock
covenants.

(iii) Series III: On September 12, 2003, the Company amended its articles of
incorporation and created 500,000 shares of Blank Check Series III Preferred
Stock ("Series III"), $1.00 par value.

The Series III preferred stock may be issued in one or more series, and each
series will be so designated as to distinguish the shares thereof from the
shares of all other series. The Board of Directors has express authority to fix,
before the issuance of any shares of a particular series, the number,
designation, and relative rights, preferences and limitations of the shares of
such series. At December 31, 2004, there were 165,000 shares of Series III
preferred stock issued and outstanding. These originated due to a conversion of
a $165,000 convertible note payable to Advantage (see Note 9).

(iv) Series IV: On September 12, 2003, the Company amended its articles of
incorporation and created 250,000 shares of Series IV Convertible Preferred
Stock ("Series IV"), $1.00 par value. Each share of the Series IV preferred
stock is convertible into one share of the Company's common stock. Each holder
of the Series IV preferred stock has twenty times that number of votes on all
matters submitted to shareholders that is equal to the number of shares of
common stock into which such holder's shares of Series IV preferred stock are
then convertible. In addition, the holders of the Series IV preferred stock are
entitled to receive noncumulative cash dividends at an annual dividend rate as
determined by the Board of Directors. The Series IV preferred stock has a
liquidation price of $1.00 per share in the event of any liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary. The
Company intends to amend its articles of incorporation such that the Series IV
preferred stock will be convertible into the Company's common stock at a
conversion price equal to the lesser of (1) the average of the lowest of
three-day trading prices during the five trading days immediately prior to the
conversion date multiplied by .70%, or (2) the average of the lowest of
three-day trading prices during the five trading days immediately prior to the
funding date(s).

During the year ended December 31, 2003, the Company entered into two agreements
with Triple Crown Consulting, Inc., a partner in Advantage, whereby the Company
agreed to exchange two $50,000 Series B Convertible Promissory Notes between
Triple Crown Consulting, Inc. and the Company for funding operations of the
Company. During the year ended December 31, 2003, the convertible notes were
exchanged for 100,000 shares of Series IV preferred stock, valued at $100,000.

The rights, preferences, and privileges of the Series III Preferred Stock are
relative to those of the Series IV Preferred Stock, par Value $1.00, designated
to Triple Crown Consulting, Inc. At the option of Advantage, each outstanding
share of Series III Preferred Stock is convertible into one share of common
stock.

                               MARKETING AGREEMENT

On January 20, 2003, the Company entered into a Strategic Marketing Agreement
("SMA") with BevSystems International, Inc. ("BEVI"), another small publicly
traded company in the business of beverage products, whereby BEVI agreed to
issue shares equal to $125,000 per month of its common stock to the Company.


                                      F-14
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

These shares were to be fully paid and non-assessable and bear no restrictive
legend. BEVI was to register these shares prior to each issuance on Form S-8 or
some other applicable registration form. The Company was to issue 50,000 shares
of its restricted stock per month to BEVI under this agreement. These shares
were to carry piggyback registration rights. The Company was also to pay BEVI up
to $100,000 per month for services rendered by BEVI relating to the use of their
beverage knowledge and distribution resources. Each entity was entitled to 50%
of the profits derived from distributing the other firm's beverage product. The
net economic effect of the revenues and expenses from this cross-selling
arrangement was to be recorded as a cost or other revenue each month and each
reporting period. In February 2003, 50,000 shares of the Company's common stock
were issued at a value of eleven cents per share, resulting in an expense of
$5,500 to the Company. In connection with the agreement, the Company received
1,715,000 shares of BEVI common stock, valued at $157,900, which is recorded as
licensing revenue in the accompanying statement of operations. The Company
transferred these shares to two consultants in lieu of cash payment for services
rendered, valued at $157,900, which is recorded as consulting expense in the
accompanying statement of operations. On May 20, 2003, the Company and BEVI
mutually agreed to terminate this agreement.

                         ISSUANCE OF STOCK FOR SERVICES

In January 2003, the Company retained a financial advisory firm as a business
consultant to assist in a variety of areas relating to financial, strategic and
related development growth of the Company. This financial advisory firm has
common management with the current Series II Preferred stockholders in that some
of the members of the financial advisory firm are also holders of the Series II
Preferred Shares. The term of the engagement is six months and shall
automatically renew on a month-to-month basis, subject to termination by either
party with a twenty-four month follow on period, whereby transactions
consummated within the subsequent twenty-four months following the termination
of this agreement may have fees due and payable to the financial advisory firm.
The terms of the agreement, were amended in April 2003 and are as follows; (i) a
monthly payment of $10,000 per month is due the financial advisory firm, which
at its discretion may accept shares of discounted registered stock in lieu of
cash, (ii) the Company shall issue a warrant to purchase 2.99% or 526,400 shares
of common stock of the Company at 70% of the closing bid price exercisable for
five years, (iii) various sliding scale compensation amounts for equity and debt
financings consummated from an introduction by the financial advisory firm,
sliding scale compensation amounts due for a merger or acquisition candidate
introduced to the Company and (iv) the reimbursement of out-of-pocket expenses
not to exceed $500 a month unless agreed upon by the Company. In April 2003, the
agreement was further amended to extend the term of the agreement for a period
of twelve months from the original January 2003 contract date. During the year
ended December 31, 2003, the fair value of the warrant using the Black-Scholes
Option Pricing Model was $115,808 and has been recorded as consulting expense.
The agreement also contained full ratchet anti-dilution provisions. In
connection with the anti-dilution provisions of the agreement, the firm was
issued 526,400 shares of the Company's common stock valued at $36,848. The firm
subsequently agreed to waive the anti-dilution provision of the agreement going
forward. In February 2004, the financial advisory firm elected to exercise the
cashless exercise provision of the warrants. Based upon this provision, the
financial advisory firm exercised the right to receive 526,400 shares of common
stock, but received 342,160 shares due to the cashless provision. Upon the
exercise of the warrant, the Company measured the beneficial conversion value of
the warrant and determined that a reversal of consulting expense of $47,376 was
recorded. During the year ended December 31, 2003, in accordance with the
contract, the firm was also compensated $13,560 for equity and debt financings,
which has been recorded as a financing expense. During the year ended December
31, 2004 and 2003, the financial advisory firm has been paid $120,000 for its
management fees.

In January 2003, the Company engaged a business consulting firm to assist in a
variety of areas relating to strategic and related development growth of the
Company. The term of the engagement is twelve months with a twelve month follow
on period, whereby fees may be due and payable to the business consulting firm
for transactions consummated within the subsequent twelve months following the
termination of the agreement. The Company issued 400,000 shares of common stock,
valued at $44,000, in lieu of cash compensation. The agreement was subsequently
amended on April 15, 2003 to extend the term of the contract for one year from
the date of amendment. In consideration for the additional services to be
provided, the Company issued an additional 1,000,000 shares of the Company's
common stock, valued at $90,000. During the year ended December 31, 2003, the
Company expensed $104,000 related to these agreements.

In February 2003, the Company entered into an agreement with an individual who
is an employee of a shareholder. The agreement is for a term of one year and, as
compensation, the Company has issued 125,000 shares of the Company's common
stock, valued at $13,750 per share, in consideration for consulting services
provided and to be provided. During the year ended December 31, 2003, the
Company expensed $13,750 related to this agreement.

In March 2003, the Company entered into an agreement wherein the Company agreed
to issue 300,000 shares of the Company's common stock at a market value of
$21,000, for legal services provided and to be provided. As of December 31,
2003, all 300,000 shares have been issued and the Company expensed $21,000.


                                      F-15
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

In April 2003, the Company contracted the services of a consultant in order to
facilitate the introduction of professional athletes to the Company in order for
the athletes to act as spokespeople and sponsors for the Company's products. The
term of the agreement is for a period of twelve months. In consideration for the
consultant's services, the Company has issued warrants to purchase 150,000
shares of the Company's common stock with an exercise price of $0.12 per share,
which expire two years from the date of issuance. The fair value of the warrants
using the Black-Scholes Option Pricing Model was $19,500 and is being amortized
to consulting expense over the term of the agreement. Additionally, the
consultant shall receive 10% of any compensation given to spokespersons or
sponsors that were introduced to the Company through the consultant to be paid
in the same form as payment is made to the spokesperson/sponsor. In May 2003,
the consultant introduced the Company to three professional athletes with whom
the Company entered into agreements with (see below). The consultant received
15,000 shares of the Company's common stock as compensation for the
introductions in accordance with the above described agreement, valued at
$3,450. As of December 31, 2003, the consultant is owed an additional 15,000
shares of the Company's common stock. The additional shares owed, valued at
$2,850, are included in accrued expenses in the accompanying consolidated
balance sheet. During the year ended December 31, 2003, the Company expensed
$12,646 related to the agreement.

In April 2003, the Company entered into an agreement with a consultant for
business planning services. The term of the agreement is for a one-year period.
As consideration for the consultant's services to be rendered the Company issued
2,000,000 shares of the Company's common stock valued at $160,000. During the
years ended December 31, 2004 and 2003, the Company expensed $40,000 and
$120,000, respectively, related to this agreement.

In April 2003, the Company entered into an agreement with a consultant for
corporate planning and business strategies services for a period of one year. In
exchange for the services to be rendered, the consultant received 1,000,000
shares of the Company's common stock valued at $70,000. During the years ended
December 31, 2004 and 2003, the Company expensed $17,500 and $52,500,
respectively, related to this agreement.

In April 2003, the Company entered into an agreement with a consultant for
investor relations services for a period of one year. In exchange for the
services to be rendered, the consultant was to receive 1,000,000 shares of the
Company's common stock valued at $160,000. The agreement was terminated in
August 2003 and the shares reverted back to the Company, therefore the Company
recorded no expense related to this agreement.

In April 2003, the Company entered into an agreement with a consultant for
dissemination of information services for a period of thirteen months. In
exchange for the services to be rendered, the consultant received 600,000 shares
of the Company's common stock valued at $48,000. This resulted in the Company
expensing $48,000 related to this agreement for the year ended December 31,
2003.

In April 2003, the Company entered into an agreement with a consultant for
business planning services for a one-year period. In exchange for the services
to be rendered, the consultant received 500,000 shares of the Company's common
stock valued at $80,000. During the year ended December 31, 2004 and 2003, the
Company expensed $26,667 and $53,333, respectively, related to this agreement.

In April 2003, the Company issued 460,000 shares of the Company's common stock
valued at $17,101 for consideration of past employment services of a key
employee. Additionally, the individual, who is remaining in a consulting
capacity, was issued an additional 360,000 shares of the Company's common stock
valued at $25,200 per share for future services. The additional shares will vest
in 30,000 share increments per month through March 2004. During the years ended
December 31, 2004 and 2003, the Company expensed $6,300 and $18,900,
respectively.

In April 2003, the Company entered into an agreement with a consultant for
marketing services under the 1934 Exchange Act for a period of one year. In
exchange for the services to be rendered, the consultant received 1,000,000
shares of the Company's common stock valued at $90,000, which was
non-refundable. During the year ended December 31, 2003, the Company expensed
$90,000 related to this agreement.

In April 2003, the Company's Board of Directors passed a resolution to
compensate its directors and a certain officer 150,000 shares of the common
stock on a quarterly basis. During the year ended December 31, 2004 and 2003,
the Company issued 150,000 and 550,000 shares, respectively, of its common stock
as compensation for services provided by its directors and the officer. As of
December 31, 2004, the directors and officer are owed an additional 1,193,376
shares of the Company's common stock. The additional shares owed, valued at
$103,250, are included in accrued expenses in the accompanying consolidated
balance sheet. The Company expensed $77,000 and $101,000, related to these
issuances during the year ended December 31, 2004 and 2003, respectively.

In May 2003, the Company entered into agreements with three professional
athletes to provide endorsement services to the Company. The terms of the
agreements are for a period of one year. As consideration for the future
services, each party received 50,000 shares of the Company's common stock valued
at $11,500 for each party. As of December 31, 2004, each party is owed an
additional shares of the Company's common stock. The additional shares owed,
valued at $9,500 for each party, are included in accrued expenses in the
accompanying consolidated balance sheet. During the years ended December 31,
2004 and 2003 the Company expensed $23,751 and $39,249, respectively, related to
these agreements.


                                      F-16
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

In June 2003, the Company issued 10,000 shares of its common stock in lieu of
cash payment for consulting services provided. The shares were valued at $2,800
and were fully expensed during the year ended December 31, 2003.

In July 2003, the Company entered into a one-year advertising agreement with an
advertising firm for services to be provided beginning August 1, 2003. The
Company agreed to an annual fee of $50,000 to be paid in the Company's common
stock. During the year ended December 31, 2003, the Company issued the
advertising firm 185,185 shares of its common stock as payment for the annual
fee. During the year ended December 31, 2004 and 2003, the Company expensed
$33,333 and $16,667, respectively, related to this agreement.

During the year ended December 31, 2003, the Company issued 1,325,000 shares of
its common stock to two consultants in lieu of cash payment for consulting
service provided. The shares were valued at $214,750 and were fully expensed
during the year ended December 31, 2003.

In January 2004, the Company entered into an agreement wherein the Company
agreed to issue 200,000 shares of the Company's common stock at a market value
of $37,000 for legal services provided and to be provided. As of December 31,
2004 all 200,000 shares have been issued and during year ended December 31, 2004
the Company expensed $13,119 related to this agreement.

In January 2004, the Company entered into a twelve-month agreement wherein the
Company agreed to issue 250,000 shares of the Company's common stock with a
market value of $48,750 for printing services provided and to be provided. In
addition, the Company agreed to issue warrants to purchase 800,000 shares of the
Company's common stock. The terms of the warrants are as follows: (1) 400,000
warrants are exercisable at $0.25 per share and are callable by the Company at
$0.75 and (2) 400,000 warrants are exercisable at $0.30 per share and are
callable by the Company at $1.20 per share. The shares underlying the warrants
are restricted. The warrants have a term of twelve months. The fair value of the
800,000 warrants using the Black-Scholes Option Pricing Model is $12,000 and is
being recorded to selling, general and administrative expenses over the term of
the agreement. During the year ended December 31, 2004 the Company expensed
$27,961 related to the agreement.

In January 2004, the Company entered into a twelve-month agreement with an
individual for marketing services to be provided. The individual is to be
compensated $2,000 per month, to be paid in shares of the Company's common
stock. During the year ended December 31, 2004, the Company issued 221,213
shares of its common stock valued at $26,000 for full settlement of amounts owed
to this individual for services and future services in accordance with a new
contract. During the year ended December 31, 2004 the Company expensed $22,000
related to this agreement.

In February 2004, the Company issued 33,000 shares of its common stock valued at
$5,940 for consulting services provided by an individual during the year ended
December 31, 2004.

In April 2004, the Company issued 100,000 shares of its common stock valued at
$14,500 in full settlement of amounts owed to a former employee for services
previously rendered.

In May 2004, the Company issued 150,000 shares of its common stock valued at
$26,375 for accounting services provided by an individual, which were expensed
during the year ended December 31, 2004.

In May 2004, the Company inadvertently issued 623,958 shares of common stock to
a former related third party in error. The Company has subsequently received
these shares back in August 2004.

In May 2004, the Company issued 200,000 shares of its common stock valued at
$42,000 in accordance with its agreement with a director as an additional
incentive to become a director. The term of his directorship began January 1,
2004 and is for a 24-month term. During the year ended December 31, 2004 the
Company has expensed $21,000 for services rendered and $21,000 is recorded as
unearned services at December 31, 2004

In July 2004, the Company issued 1,000,000 shares of its common stock to its
President and CEO in satisfaction of $70,000 of loans to the Company.

                         ISSUANCE AND EXCHANGE AGREEMENT

In April 2003, the Company entered into an agreement with a corporation, which
is under the ownership of shareholders of the Company. The shareholders of the
corporation agreed to convert their convertible preferred stock into 1,500,000
shares of the Company's common stock valued at $105,000. The issuance of these
shares to the corporation will be used to fulfill past obligations of the
Company, which required compensation in the form of unrestricted shares of
common stock. The issuance of these shares resulted in the Company expensing
$105,000 in consulting fees during the year ended December 31, 2003.


                                      F-17
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

                         COMMON STOCK PURCHASE AGREEMENT

In April 2003, a $1,000,000 Common Stock Purchase Agreement was entered into
between the Company and an investment fund that has common management with the
financial advisory firm ("the Purchaser"). The Agreement is for an aggregate
installment payment purchase price of $1,000,000. The Purchaser intends on
purchasing this common stock at $.07 per share in 20 equal installments of
$50,000 each. In addition to the purchased stock, the Company shall deliver to
the designated escrow agent 200% of the number of shares being purchased with
each $50,000 installment. To date there have been no purchases.

                    ISSUANCE OF STOCK FOR SETTLEMENT OF DEBT

On March 27, 2003, the Company entered into an agreement to repay a relative of
an employee in the amount of $140,000 in four equal installments with $35,000 of
the Company's common stock based on a 20% reduction to the then average closing
price of the common stock for the three trading days prior to the issuance date
of such common stock. The Company, at its option, may repay such indebtedness
with cash for a 20% premium to the face value of such quarterly payments due.
During the year ended December 31, 2003, the Company issued 998,094 shares of
its common stock as payment on the first three installments. The Company has
recorded $26,250 as interest expense related to the note. On July 2, 2003, the
Company amended the settlement agreement whereby the individual agreed to
conform to Rule 144 leakage limitations on the timing and amount of shares that
can be sold in the public market per quarter. As a result, the Company issued an
additional 413,958 shares of its common stock valued at $124,187. The Company
has recorded such amount as interest and financing expense.

In April 2003, the Company entered into an agreement to settle amounts owed for
services related to a prior contract and agreed to issue 200,000 shares of it's
common stock, valued at $16,000, in satisfaction of the remaining debt. In
addition, the Company issued warrants to purchase 50,000 shares of the Company's
common stock at an exercise price of $0.10 per share. The warrants have a term
of two years. The fair value of the warrants of $4,000 was calculated using the
Black-Scholes Option Pricing Model and was accounted for as additional paid-in
capital and interest and financing expense during the year ended December 31,
2003.

In April 2003, the Company entered into an agreement with a creditor wherein the
debt owed of $42,224 was settled by the issuance of 114,118 restricted shares of
the Company's common stock as full settlement of the debt.

During the year ended December 31, 2003, the Company issued an additional 25,000
shares of its common stock valued at $3,750 for settlement of past payables.

                   ISSUANCE OF STOCK RELATED TO CAPITAL RAISE

On August 9, 2004, the Company entered into a Standby Equity Distribution
Agreement with Cornell. Pursuant to the Standby Equity Distribution Agreement,
the Company may, at it's discretion, periodically issue and sell shares of our
common stock for a total purchase price of $15 million. If the Company requests
advances under the Standby Equity Distribution Agreement, Cornell will purchase
shares of common stock of the Company for 98% of the lowest volume weighted
average price on the Over-the-Counter Bulletin Board or other principal market
on which the Company common stock is traded for the 5 days immediately following
the advance notice date. Cornell will retain 5% of each advance under the
Standby Equity Distribution Agreement. The Company may not request advances in
excess of a total of $15 million. The maximum of each advance is equal to
$400,000. In connection with the Standby Equity Distribution Agreement, the
Company issued 8,315,789 shares of it's common stock valued at $790,000 to
Cornell as a commitment fee and we issued 105,263 shares of our common stock
valued at $10,000 to Newbridge Securities as a placement agent fee. Such amounts
have been recorded as deferred offering costs on the consolidated balance sheet
at December 31, 2004. In April 2005, the Company and Cornell agreed to terminate
this agreement and all related shares of common stock are to be returned to the
Company.

                           CONVERSION OF NOTES PAYABLE

In March 2004, Alpha, a holder of convertible promissory notes, had $12,500 of
its promissory notes converted into 178,571 shares of the Company's common
stock.

In June 2004, an individual holding a $30,000 convertible promissory note had
the full note and interest payable of $2,238 converted into 302,251 shares of
common stock in accordance with the notes provisions.

In July 2004, Alpha converted an additional $10,000 of its note for 142,857
shares of the Company's common stock.


                                      F-18
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

In August 2004, Cornell, holders of convertible promissory notes, had $11,831 of
its promissory notes converted into 188,686 shares of the Company's common
stock.

In December 2004, Cornell, holders of convertible promissory notes, had $20,000
of its promissory notes converted into 422,466 shares of the Company's common
stock.

                                  LEGAL MATTERS

In January 2004, the Senior Vice President ("SVP") of the Company was
terminated. Subsequently the SVP's counsel has submitted a letter requesting
that the SVP is owed $140,000 for the remainder of the term of his employment
agreement which was alleged to be an additional two years. The Company and
counsel believe the employment agreement is terminable at will by either party
and have offered to settle this matter for two months base salary.

NOTE 14 - STOCK OPTION PLANS

                              STOCK INCENTIVE PLANS

In August 1999, the Company's stockholders approved the adoption of an Incentive
Stock Option Plan ("1999 Option Plan"), which allows the Board of Directors to
grant options to employees and members of the Board of Directors. The 1999
Option Plan provided the Board of Directors the right to grant options to
purchase up to a total of 100,000 shares of the Company's common stock. On
August 17, 2000, with the approval of the shareholders of the Company, the
number of shares available under the 1999 Option Plan was increased to
1,000,000. As of December 31, 2004, 220,000 options were outstanding under the
1999 Option Plan. During the year ended December 31, 2004, the Company issued
400,000 shares of its common stock under non-plan options in lieu of granting
options. As of December 31, 2004, 1,289,810 non-plan options were outstanding.

The following information summarizes the Company's stock option activity at
December 31, 2004:



Stock Options Plans:

                                                             Weighted
                                                              Average
                                                             Exercise
                                  Options Price
                                               --------      --------
          Outstanding at December 31, 2002      317,500         $1.07
                   Granted                           --            --
                   Exercised                    (17,500)         .001
                   Expired or cancelled         (80,000)          .70
                                               --------      --------

          Outstanding at December 31, 2003      220,000          1.07
                   Granted                           --            --
                   Exercised                         --            --
                   Expired or cancelled              --            --
                                               --------      --------

          Outstanding at December 31, 2004      220,000      $   1.07
                                               ========      ========


                                      F-19
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003



Non-plan stock options:
                                                             Weighted
                                                             Average
                                                             Exercise
                                                Options       Price
                                                --------     ---------
          Outstanding at December 31, 2002       659,810     $    1.00
                   Granted                       450,000           .22
                   Exercised                    (166,334)          .40
                   Expired or cancelled          (53,666)          .08
                                                --------     ---------

          Outstanding at December 31, 2003       889,810     $     .61

                   Granted                       400,000           .14
                   Exercised                          --            --
                   Expired or cancelled               --            --
                                               ---------      --------
          Outstanding at December 31, 2004     1,289,810           .46
                                               =========      ========



The following table summarizes information about stock options outstanding and
exercisable at December 31, 2004:



                                          Outstanding and exercisable
                         ------------------------------------------------------
                                         Weighted
                                          Average      Weighted
                                         Remaining     Average
                            Number         Life        Exercise      Number
                     Outstanding in Years Price Exercisable
                         -------------- ------------  ----------- -------------

Range of exercise price:
     $.001 to $.50           1,026,000     1.81          .32         1,026,000
     $.51 to $1.00             243,810     5.13          .92           243,810
     $1.01 to $1.50            240,000     6.00          1.43          240,000
                         --------------                           -------------
                             1,509,810                               1,509,810
                         ==============                           =============



In February 2003, the Company's shareholders approved the adoption of the 2003
Stock Incentive Plan ("2003 Plan"). In May 2003, the Company's shareholders
approved the adoption of the 2003 Stock Incentive Plan #2 ("2003 Plan #2"). In
August 2003, the Company's shareholders approved the adoption of the 2003 Stock
Incentive Plan #3 ("2003 Plan #3"). In September 2003, the Company's
shareholders approved the adoption of the 2003 Stock Incentive Plan #4 ("2003
Plan #4"). The plans allow the Board of Directors to grant awards to employees,
directors, independent contractors or agents of the Company. Awards may include,
but are not limited to, stock options, stock appreciation rights, warrants,
dividend equivalents, stock awards, restricted stock, phantom stock, performance
shares or other securities or rights that the Board of Directors determines to
be consistent with the objectives and limitations of the plans. The 2003 Plan,
the 2003 Plan #2, the 2003 Plan #3 and the 2003 Plan #4 provide the Board of
Directors the right to grant awards up to a total of 1,000,000 shares, 1,500,000
shares, 2,750,000 shares and 2,000,000 shares, respectively, of the Company's
common stock. In addition, the plans provide the Board of Directors the ability
to determine the type, size, terms and vesting periods of the awards under the
plans. As of December 31, 2004, 1,000,000 shares, 1,500,000 shares, 2,600,000
shares and 0 shares of the Company's common stock were issued under the 2003
Plan, 2003 Plan #2, 2003 Plan #3 and 2003 Plan #4, respectively.

NOTE 15 - INCOME TAXES

The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). SFAS 109 requires
the recognition of deferred tax assets and liabilities for both the expected
impact of differences between the financial statements and tax basis of assets
and liabilities, and for the expected future tax benefit to be derived from tax
loss and tax credit carryforwards. SFAS 109 additionally requires the
establishment of a valuation allowance to reflect the likelihood of realization
of deferred tax assets. At December 31, 2004 a valuation allowance for the full
amount of the deferred tax asset was recorded because of operating losses
incurred and the uncertainties as to the amount of taxable income that would be
generated in the future years.

The Company has a net operating loss carry-forward for tax purposes totaling
approximately $13,000,000 at December 31, 2004 expiring through the year 2004.


                                      F-20
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

NOTE 15 - INCOME TAXES - (cont'd)

The tax effects of temporary differences, loss carry-forwards and the valuation
allowance that give rise to deferred income tax assets at December 31, 2004 are
as follows:



Temporary differences:
      Fair value of warrants and options           $   262,000
      Net operating losses                           4,475,000
      Less valuation allowance                      (4,737,000)
                                                   -----------
        Deferred tax assets                        $        --
                                                   ===========



The reconciliation of the effective income tax rate to the federal statutory
rate for the years ended December 31, 2004 and 2003 is as follows:


Federal income tax rate                             34.0
Change in valuation allowance on net operating
  loss carry-forwards                              (34.0)
                                                  ------
Effective income tax rate                            0.0%
                                                  ======



NOTE 16 - RELATED PARTY TRANSACTIONS

                             GRANT OF STOCK OPTIONS

During the year ended December 31, 2003, the President of the Company was
granted options pursuant to the June 2003 two year employment agreement to
purchase 300,000 shares of the Company's common stock which are separated as
follows: 100,000 options are exercisable at $0.25 per share and 200,000 options
are exercisable at $0.19 per share. The employment agreement entitles the
President, as long as he is employed with the Company, to purchase 100,000
shares of the Company's common stock for each 90-day period through the term of
the employment agreement. All options will have a term of two years. The options
are exercisable at a price equal to 100% of the closing price of the stock as of
the grant date. The options become fully exercisable on the date of grant.
During the year ended December 31, 2003 the fair value of the options using the
Black-Scholes Option Pricing Model was $69,000 and is being amortized to
compensation expense over the term of the employment agreement of which, during
the years ended December 31, 2004 and 2003, the Company expensed $38,857 and
$13,952 related to these options.

During the year ended December 31, 2004, the President of the Company was
granted options pursuant to the June 2003 two year employment agreement to
purchase 100,000 shares of the Company's common stock at an exercise price of
$0.10 per share. In addition, the President was previously granted options to
purchase 400,000 shares of the Company's common stock, each option is separated
in 100,000 increments and are exercisable at $.19, $.14, $.10 and $.12 per
share. The options become fully exercisable on the date of grant. The fair value
of the options using the Black-Scholes Option Pricing Model was $77,000 and is
being amortized to compensation expense over the term of the employment
agreement. During the year ended December 31, 2004, the Company expensed $6,866
respectively related to these options.

In March 2003, the former President of ChampionLyte Beverages, Inc., as
consideration for entering into an employment agreement, was granted 50,000
options to purchase shares of the Company's common stock at $0.10 per share.
Since the employee continued employment with the Company for a period of 90 days
following the execution of the agreement, the employee was granted 100,000
additional options to purchase shares of the Company's common stock at $0.33 per
share. The options carry a term of two years and became fully exercisable on the
date of grant. The fair value of the options using the Black-Scholes Option
Pricing Model was $39,500 and is being amortized to compensation expense over
the term of the employment agreement. During the year ended December 31, 2004
and 2003, the Company expensed $21,250 and $12,323 related to these options.

                              EMPLOYMENT AGREEMENTS

In April 2003, the Company entered into a formal employment agreement with a
shareholder of the Company and a key officer of the Company's subsidiary,
ChampionLyte Beverages, Inc. The term of the agreement is for a period of two
years with a base salary of $96,000 for the period beginning on the date of the
agreement through June 14, 2003, $108,000 for the period beginning on June 15,
2003 through September 14, 2004, and $120,000 for the period beginning September
15, 2004 through March 14, 2005. The employee is entitled to bonuses as follows:
an annual bonus equal to 3% of the Company's annual net pre-tax profits, a
personal performance commission based on sales made as a direct result of the
employees efforts equal to 1% of gross sales, payable on a quarterly basis.


                                      F-21
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

RELATED PARTY TRANSACTIONS

                              EMPLOYMENT AGREEMENTS

In March 2003, the former President of ChampionLyte Beverages, Inc., as
consideration for entering into an employment agreement, was granted 50,000
options to purchase shares of the Company's common stock at $0.10 per share.
Since the employee continued employment with the Company for a period of 90 days
following the execution of this agreement, the employee was granted 100,000
additional options to purchase shares of the Company's common stock at $0.33 per
share. The options carry a term of two years and become fully exercisable on the
date of grant. The fair market value of the options using the Black-Scholes
Option Pricing Model was $39,500 and is being amortized to compensation expense
over the term of the employment agreement. Effective September 14, 2004, the
Company terminated its President and Secretary of Championlyte Beverages, Inc.,
our wholly-owned subsidiary.

In April 2003, the Company's Board of Directors passed a resolution to
compensate its directors and certain officer's 150,000 shares of common stock on
a quarterly basis. In February 2004, this was amended to 175,000 shares of the
Company's common stock to reflect the addition of a new member to the Company's
Board of Directors. The Board of Directors also includes the President of the
Company.

In April 2003, the Company amended its employment agreement with its SVP,
whereby the SVP was granted 150,000 shares of the Company's common stock, valued
at $11,250 for past services provided, and 1,650,000 shares of the Company's
common stock valued at $123,750 for services to be provided over ten months
beginning April 2003. During the year ended December 31, 2004, the Company
expensed $24,750 related to this agreement. In April 2004, the Company and the
SVP mutually terminated their relationship. In accordance with the settlement
agreement, the Company issued the SVP 100,000 shares of its common stock, valued
at $14,500, in full satisfaction of any obligations due to him in April 2004. In
addition, the Company was indebted to the SVP in the amount of $44,333. In April
2003, the Company and the SVP entered into an agreement whereby the remaining
debt would be settled through the issuance of common stock in lieu of cash
payments. Monthly issuances valued at $6,333 would be given to the SVP until the
debt has been satisfied. During the year ended December 31, 2003, the Company
issued 237,915 shares of common stock valued at $44,333 in full settlement of
the debt.

In June 2003, the Company entered into formal employment agreements with the
President of the Company. The agreement is for a term of two years. The base
salary for the executive is $3,500 per month paid in the Company's common stock
in the first year, and $4,000 per month payable in the Company's common stock in
the second year. Should the agreement be renewed, the base salary will increase
at a rate of 10% per annum. The employee is also entitled to commissions based
on sales made as a direct result of the employee's efforts in amounts equal to
1% of gross sales payable on a quarterly basis.

During the year ended December 31, 2004 and 2003 the Company issued 63,888 and
149,750 shares of common stock, respectively, related to the agreement and at
December 31, 2004, the President is owed 468,375 shares of common stock valued
at $35,000 for compensation, which is included in accrued expenses in the
accompanying consolidated balance sheet.

In April 2003, the Company's Board of Directors passed a resolution to
compensate its directors and certain officer's 150,000 shares of common stock on
a quarterly basis. The Board of Directors also includes the President of the
Company.


                                      F-22
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

               SETTLEMENT AGREEMENT FOR REPAYMENT OF NOTES PAYABLE

On March 27, 2003, the Company entered into an agreement to repay a relative of
an employee in the amount of $140,000 in four equal installments with $35,000 of
the Company's common stock based on a 20% reduction to the then average closing
price of the common stock for the three trading days prior to the issuance date
of such common stock. The Company at its option may repay such indebtedness with
cash for a 20% premium to the face value of such quarterly payments due. During
the year ended December 31, 2004 and 2003, the Company issued 184,120 and
998,094 shares of its common stock, respectively, as payment on the
installments. The Company has recorded $87,250 and $26,250 as interest expense
related to the note during the years ended December 31, 2004 and 2003,
respectively. On July 2, 2003, the Company amended the settlement agreement
whereby the individual agreed to conform to Rule 144 leakage limitations on the
timing and amount of shares that can be sold in the public market per quarter.
As a result, the Company issued an additional 413,958 shares of its common stock
valued at $124,187 during the year ended December 31, 2003. The Company has
recorded such amount as interest and financing expense.

NOTE 16 - SUBSEQUENT EVENTS

In January 2005, the Company issued 747,044 of common stock to Gamma for the
conversion of $25,000 of its promissory notes as requested in December 2004. The
conversion has been recorded in January 2005.

In January 2005, Cornell, holders of convertible promissory notes, had $10,000
of its promissory notes converted into 332,226 shares of the Company's common
stock.

In January 2005, Latitude, holders of convertible promissory notes, had $135,000
promissory notes converted into 5,500,000 shares of the Company's common stock.

In April 2005, the Company and Cornell agreed to terminate the Standby Equity
Distribution Agreement and all related shares of common stock are to be returned
to the Company.


                                      F-23
<PAGE>

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Our accountant is Massella & Associates, CPA, PLLC independent certified public
accountants. At no time has there been any disagreements with such accountants
regarding any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure.

a) Previous Independent Auditors:

(i) On June 25, 2003, Radin Glass & Co, LLP was dismissed as our independent
auditor and Massella Roumbos LLP (now known as Massella & Associates, CPA, PLLC
was appointed as our new independent auditor.

(ii) During the two most recent fiscal years and interim period subsequent to
December 31, 2002, there have been no disagreements with Radin Glass & Co., LLP
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure.

(iii) Radin Glass & Co, LLP 's report on the financial statements for the year
ended December 31, 2002 contained no adverse opinion or disclaimer of opinion
and was not qualified or modified as to audit scope or accounting principles but
included an explanatory paragraph reflecting an uncertainty because the
realization of a major portion of our assets was dependent upon our ability to
meet our future financing requirements and the success of future operations.
These factors raised substantial doubt about our ability to continue as a going
concern.

(iv) Radin Glass & Co, LLP furnish us with a letter addressed to the SEC stating
that it agrees with the above statements. A copy of the letter to the SEC dated
June 25, 2003, was filed as an Exhibit to our Form 8-K filed on August 13, 2003
(SEC File No. 000-28223).

(v) During the two most recent fiscal years and the interim period subsequent to
December 31, 2002, there have been no reportable events with Radin Glass & Co.,
LLP as set forth in Item 304(a)(i)(v) of Regulation S-K.

(b) New Independent Accountants:

(i) We engaged, Massella Roumbos LLP (now known as Massella & Associates, CPA,
PLLC as our new independent auditors as of June 25, 2003. Prior to such date, we
did not consult with Massella Roumbos LLP regarding (i) the application of
accounting principles, (ii) the type of audit opinion that might be rendered by
Massella Roumbos LLP, or (iii) any other matter that was the subject of a
disagreement between us and our former auditor as described in Item
304(a)(1)(iv) of Regulation S-B.


                                       12
<PAGE>

ITEM 8A. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

David Goldberg, our principal executive officer and principal financial officer
evaluated the effectiveness of our disclosure controls and procedures (as
defined in rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended) as of the end of the period covered by thisreport (the
Evaluation Date). Based on that evaluation, our principal executive officer and
principal financial officer concluded that, as of the Evaluation Date, the
disclosure controls and procedures are effective in ensuring that all material
information required to be disclosed by us, including our consolidated
subsidiaries, in reports that we file or submit under the Exchange Act, is (i)
recorded, processed, summarized and reported on a timely basis in accordance
with applicable Commission rules and regulations; (ii) accumulated and
communicated to our management, including our principal executive officer and
principal financial officer and other persons that perform similar functions, if
any, to allow us to make timely decisions regarding required disclosure in our
periodic filings. Although our principal executive officer and principal
financial officer believes our existing disclosure controls and procedures are
adequate to enable us to comply with our disclosure obligations, we intend to
formalize and document the procedures already in place and establish a
disclosure committee.

Changes in internal controls

David Goldberg, our principal executive officer and principal financial officer
has indicated that there were no changes in our internal controls or other
factors that could affect such controls during the quarterly period ending
December 31, 2004, and there were no such control actions taken during the
quarterly period ending December 31, 2004.


                                       13
<PAGE>

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS: COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT

Our directors and officers, as of December 31, 2004, are set forth below. The
directors hold office for their respective term and until their successors are
duly elected and qualified. Vacancies in the existing board are filled by a
majority vote of the remaining directors. The officers serve at the will of the
board of directors.



NAME                 AGE        DIRECTOR/POSITION

David Goldberg       42         President, Principal Financial Officer,
                                Principal Accounting Officer and Chairman
                                of the Board of Directors; CEO, Championlyte
                                Beverages, Inc. our subsidiary

Steven Field         57         Director

Thad Kaplan          36         Director

Marshall Kanner(2)   48         Director

Eli Greenstein (1)   62         Director



(1) Eli Greenstein resigned as a director on March 29, 2005.
(2) Marshall Kanner resigned as a director on August 31, 2004, prior to our year
end. Therefore, we have deleted his biographical information.

The following is a biographical summary of our directors and officers:

DAVID GOLDBERG was appointed to our Board of Directors on February 11, 2003 and
was appointed as our President on April 14, 2003. He was recently appointed our
Principal Financial Officer and Principal Accounting Officer. He devotes his
full time to Championlyte. He is also the CEO of Championlyte Beverages, Inc.,
our subsidiary.

Mr. Goldberg has fifteen years of sales and marketing experience in the real
estate and property management industry. From November 1999 to present, Mr.
Goldberg has been the Vice President of marketing, sales and distribution for
All Star Packaging, a packaging company in the poultry and egg industry. From
May 1996 to May 2000, Mr. Goldberg was property manager and leasing agent of
Camco Inc. In such capacity, he managed and directed all operations of Camco
Inc.'s one million square foot retail industrial portfolio. He also oversaw
management of various residential communities and ran the company's daily
operations. From August 1995 to May 2000, he was the principal owner of Gold's
Gym Fitness & Health Center in Middletown, New York. Mr. Goldberg holds a
Bachelor of Science degree in Business Administration from the State University
of Delhi, New York.

THAD KAPLAN was appointed to our Board of Directors on January 7, 2003. Mr.
Kaplan is currently an independent food & beverage industry consultant. From
1997 to 2002, Mr. Kaplan was the owner of BS Holdings, Inc., a food and beverage
industry holding company. BS Holdings acquired a food service business in 1997
that was primarily in the wholesale baking business. He sold the business during
the second quarter of 2002. Prior to owning BS Holdings, Mr. Kaplan was the
purchaser and manager for an independent supermarket chain in Middletown, New
York. Mr. Kaplan's responsibilities included purchasing decisions, management of
employees, marketing and profit and loss responsibility. Mr. Kaplan holds an
Associates degree from Sullivan County Community College, New York with studies
in Food Service, Restaurant Management and the Culinary Arts.

STEVEN FIELD was appointed to our Board of Directors on February 11, 2003. Mr.
Field has manufacturing and management experience. He is experienced in
reorganization situations. Mr. Field's last position from June 2000 until
September 2001 was with Security Plastics, a 43 year-old company seeking
bankruptcy protection under Chapter 11. Security Plastics was in the plastic
injection molding business. It filed for bankruptcy in September 2001. Mr. Field
was engaged as the Acting Chief Operating Officer and Assistant to the
President, assisting in the design and guiding the company through a
reorganization.

From 1993 to 1998 he was employed by Serta Mattress Co. as the Director, Vice
President of Manufacturing. His position with Serta was to consolidate the
operations from 25 manufacturing locations to 17, while increasing productivity
and bringing outsourced products in-house. He was involved in the packaging and
sale of the company to a Triarc Group Subsidiary. He has sales and marketing
experience and uses his accounting background to assist in analysis of financial
information and decision-making processes. Mr. Field has a Bachelor of Science
degree in Accounting and has taken graduate level courses in manufacturing,
management and processes as well as various seminars.

Since Mr. Field left Serta Mattress Co., he has been semi-retired, excluding his
positions set forth above.


                                       14
<PAGE>

MARSHALL KANNER was elected as our Interim Chief Operating Officer, Director and
Chairman of our Board of Directors on January 7, 2003. He resigned as Interim
Chief Operating Officer and Chairman on April 14, 2003 but remains one of our
directors. Mr. Kanner's career of over 20 years covers corporate development,
corporate finance, mergers & acquisitions, strategic planning, strategic
alliances, corporate restructuring, management consulting, venture financing,
and forming entrepreneurial ventures in numerous industries. His experience
includes construction, apparel, transportation, financial consulting, insurance,
real estate brokerage, logistics and technology and internet development. Mr.
Kanner served as Chief Operating Officer and Vice President of Business
Development for MyCity Holdings, Corp., an internet technology development and
infrastructure company from January 1997 until March 2002. From April 2002 until
the present, he currently serves as a principal and Managing Director of BK
Generalli, LLC, a financial consulting company based in Miami, Florida. Mr.
Kanner earned his Bachelor of Science Degree in Economics from the University of
Florida in 1977.

ELI GREENSTEIN was appointed to our board of directors on December 22, 2003. In
May 2000, Mr. Greenstein founded Alldiet, Inc., a Great Neck, New York and Boca
Raton, Florida based food and beverage brokerage firm that sells and markets
sugar-free, low-carbohydrate products to health food and natural product
retailers and distributors, drug stores, supermarket chains and diet plans. Mr.
Greenstein had been retired prior to opening Alldiet, Inc. after he sold Double
G Foods, a food distribution business, in 1992. Eli Greenstein resigned as a
director on March 29, 2005.

The Directors named above will serve until the next annual meeting of our
shareholders in the year 2005. Directors will be elected for one year terms at
each annual shareholder's meeting. Officers hold their positions at the
appointment of the Board of Directors.

CERTAIN LEGAL PROCEEDINGS

No director, nominee for director, or executive officer of the Company has
appeared as a party in any legal proceeding material to an evaluation of his
ability or integrity during the past five years.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

We have not filed Form 5's for the year ending December 31, 2004.

ITEM 10. EXECUTIVE COMPENSATION

The following table sets forth information concerning annual and long-term
compensation, on an annualized basis for the 2004 fiscal year, for our Chief
Executive Officer and for each of our other executive officers (the "Named
Executive Officers") whose compensation on an annualized basis is anticipated to
exceed $100,000 during fiscal 2004.

                           SUMMARY COMPENSATION TABLE


<TABLE>
<CAPTION>
                                        ANNUAL COMPENSATION                                 LONG TERM  COMPENSATION
                                                                              OTHER         RESTRICTED  SECURITIES        ALL
NAME AND PRINCIPAL                      FISCAL     ANNUAL                     ANNUAL          STOCK     UNDERLYING        OTHER
POSITION                                 YEAR      SALARY       BONUS      COMPENSATION       AWARDS  OPTIONS/SARS(#)  COMPENSATION
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>      <C>            <C>        <C>               <C>       <C>              <C>
David Goldberg, President,               2003        (1)          (1)       $  42,000           -0-      200,000           (1)(3)
Principal Financial Officer              2004    $  48,000        (1)         Options           -0-          -0-           (1)(3)
And Principal Accounting Officer

Donna Bimbo, President                   2003    $ 120,000(2)     (2)           (2)             -0-      150,000           (2)
Championlyte Beverage, Inc.(2)           2004    $  86,538        (2)           (2)             -0-          -0-           (2)

Mr. Goldberg and Ms. Bimbo were not employed by us prior to January 1, 2003

Mark Streisfeld,
Former President                         2000    $ 133,334          -0-           -0-           -0-       50,000
And Director                             2001    $ 175,000        1,500           -0-           -0-       20,000
                                         2002    $ 175,000          -0-           -0-           -0-          -0-
Marshall Kanner                          2003    $     -0-          -0-        25,000           -0-          -0-
Former Interim Chief Operating
Officer and Director
</TABLE>



(1) Effective June 1, 2003, we entered into a two year employment agreement with
our President, Principal Financial Officer and Principal Accounting Officer,
David Goldberg. Pursuant to such agreement, Mr. Goldberg is to receive the
following consideration for his services:

(i) $3,500 per month of our common stock in the first year; (ii) $4,000 per
month of our common stock in the second year;

(iii) Within thirty days of execution of this agreement, Mr Goldberg will
receive 100,000 options to purchase our common stock with a term of two years at
a price equal to $.25 per share; (iv) If Mr. Goldberg is employed with us for
180 days from the effective date of the Agreement, he shall receive options to
purchase an additional 100,000 shares of our common stock and each 90 day period
thereafter, he will receive additional options to purchase 100,000 shares of our
common stock at an exercise price of 100% of our closing stock price as of such
date. The term of each of these options is two years. (v) Mr. Goldberg will also
receive a personal performance commission based on sales made as a direct result
of his own efforts, equal to 1% of our Gross Sales, payable on a quarterly
basis.


                                       15
<PAGE>

(2) On August 15, 2004, Ms. Bimbo's employment agreement was terminated for
non-performance.

Effective April 16, 2003, our wholly owned subsidiary, ChampionLyte Beverages,
Inc. entered into a two-year employment agreement with Ms. Bimbo. The employment
agreement provided for the following compensation:

(i) Annual base salary of: $96,000 pro-rated for the period April 16, 2003-June
14, 2003; (ii) Annual base salary of: $108,000 pro-rated for the period June 14,
2003-September 14, 2003; (iii) Annual base salary of: $120,000 pro-rated for the
period September 15, 2003-April 15, 2005; If the employment agreement is renewed
on or before March 14, 2005, the base salary shall be no Less than $132,000 per
annum. Pursuant to the employment agreement, Ms. Bimbo shall be entitled to the
following bonuses:

(i) Option Bonus: 50,000 options to purchase our common stock for a term of 2
years at a price equal to $.10 per share. If Ms. Bimbo is employed for 90 days
from execution of the agreement, which she has been, she is entitled to 100,000
additional options to purchase shares of our stock at an exercise price equal to
100% of our closing stock price 90 days after the effective date of her
employment agreement. On such date, July 15, 2003, our closing stock price was
$.33. The options have a 2 year term and piggyback registration rights. (ii)
Stock Bonus: (a) annual bonus equal to 3% of ChampionLyte Beverages annual net
pre-tax profits as reported on its annual report. The initial bonus is payable
on March 31, 2004; (b) personal performance commission based on sales made as a
direct result of Ms. Bimbo's efforts, equal to 1% of Gross Sales, payable on a
quarterly basis; (c) override commission of sales personnel reporting to Ms.
Bimbo equal to 1/2% of Gross Sales, payable on a quarterly basis.

(3) Mr. Goldberg received 113,888 and 225,000 shares respectively during 2004
and 2003 based on his position as our Chairman of the Board of Directors.

STOCK OPTIONS

The following table sets forth information with respect to stock options granted
to our named executive officers during fiscal year 2004:

                        OPTION/SAR GRANTS IN FISCAL 2004
                               (INDIVIDUAL GRANTS)


<TABLE>
<CAPTION>
                        NUMBER OF              % OF TOTAL OPTIONS/SARs
                   SECURITIES UNDERLYING         GRANTED TO EMPLOYEES        EXERCISE        EXPIRATION
NAME               OPTIONs/SARs GRANTED          IN FISCAL YEAR 2004           PRICE            DATE
<S>                <C>                         <C>                           <C>           <C>
David Goldberg            400,000                         100%                   (1)       June 30, 2005
</TABLE>



(1) The exercise prices range between $.10 and $.19 per share.

The following table sets forth information as to the number of shares of common
stock underlying unexercised stock options and the value of unexercised
in-the-money stock options projected at the 2003 fiscal year end: None

DIRECTORS COMPENSATION

Each director is compensated 25,000 shares per quarter. In addition, the
Chairman of the Board of Directors (presently, David Goldberg) is compensated an
additional 50,000 shares per quarter.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of December 31, 2004, certain information
with respect to the beneficial ownership of the common stock by (1) each person
known by us to beneficially own more than 5% of our outstanding shares, (2) each
of our directors, (3) each named executive officer and (4) all of our executive
officers and directors as a group. Except as otherwise indicated, each person
listed below has sole voting and investment power with respect to the shares of
common stock set forth opposite such person's name.


                                       16
<PAGE>

Name and Address of              Amount and Nature of   Percent of
Beneficial Owner                 Beneficial Ownership   Outstanding Shares(1)
                                 ---------------------  ---------------------
Thad Kaplan                               95,000                  *
David Goldberg                         1,393,638                3.86%
Steven Field                              73,600                  *
Eli Greenstein                           395,000                  *
All Executive Officers and
Directors as a Group                   1,957,238               15.42%


* - Less Than One Percent

(1) Based on 36,106,110 shares issued and outstanding as of April 20, 2005

SERIES I CONVERTIBLE PREFERRED STOCK



                       Number of
                       Shares of        Percent of        Number of Shares of
                       Series I         Series I          Common Stock Into
                       Convertible      Convertible       Which Series I
                       Preferred Stock  Preferred Stock   Convertible Preferred
                       Beneficially     Beneficially      Stock are
Name of Shareholder    Owned(1)         Owned             Convertible(2)
--------------------- ---------------- ----------------   ----------------------



None

NONE

(1) Unless otherwise indicated, the persons or entities identified in these
tables have sole voting and investment power with respect to all shares shown as
beneficially held by them, subject to community property laws where applicable.

(2) As of December 31, 2004

SERIES II CONVERTIBLE PREFERRED STOCK



                       Number of
                       Shares of        Percent of        Number of Shares of
                       Series II        Series II         Common Stock Into
                       Convertible      Convertible       Which Series II
                       Preferred Stock  Preferred Stock   Convertible Preferred
                       Beneficially     Beneficially      Stock are
Name of Shareholder    Owned(1)         Owned             Convertible(2)
---------------------  ---------------- ----------------  ----------------------



NONE

(1) Unless otherwise indicated, the persons or entities identified in these
tables have sole voting and investment power with respect to all shares shown as
beneficially held by them, subject to community property laws where applicable.

(2) As of December 31, 2004


                                       17
<PAGE>

SERIES III CONVERTIBLE PREFERRED STOCK



                       Number of
                       Shares of        Percent of        Number of Shares of
                       Series III       Series III        Common Stock Into
                       Convertible      Convertible       Which Series III
                       Preferred Stock  Preferred Stock   Convertible Preferred
                       Beneficially     Beneficially      Stock are
Name of Shareholder    Owned(1)         Owned             Convertible(2)
---------------------  ---------------  ---------------   ----------------------
Advantage Fund I, LLC      165,000           100%            165,000



(1) Unless otherwise indicated, the persons or entities identified in these
tables have sole voting and investment power with respect to all shares shown as
beneficially held by them, subject to community property laws where applicable.

(2) As of December 31, 2004

SERIES IV CONVERTIBLE PREFERRED STOCK



                       Number of
                       Shares of        Percent of        Number of Shares of
                       Series II        Series II         Common Stock Into
                       Convertible      Convertible       Which Series II
                       Preferred Stock  Preferred Stock   Convertible Preferred
                       Beneficially     Beneficially      Stock are
Name of Shareholder    Owned(1)         Owned             Convertible(2)
---------------------  ---------------- ----------------  ----------------------
Triple Crown
Consulting, Inc. (3)   100,000           100%              100,000



(1) Unless otherwise indicated, the persons or entities identified in these
tables have sole voting and investment power with respect to all shares shown as
beneficially held by them, subject to community property laws where applicable.

(2) As of December 31, 2004

(3) Benjamin Kaplan is the owner of Triple Crown Consulting, Inc.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

In January 2003, we retained a financial advisory firm, Knightsbridge Holdings,
LLC as a business consultant to assist in a variety of areas relating to our
financial, strategic and related development growth. The term of the engagement
is six months and shall automatically renew on a month-to-month basis, subject
to termination by either party with a twenty-four month follow on period,
whereby transactions consummated within the subsequent twenty-four months
following the termination of this agreement the transaction may have fees due
and payable to the financial advisory firm. In April 2003, the agreement was
amended to extend the term of the agreement for a period of 12 months from
January 6, 2003. The terms of the agreement, as amended in April 2003, are as
follows: a monthly payment of $7,500 per month as of April 1, 2003; a monthly
retainer of $10,000 per month as of September 1, 2003. We shall issue a warrant
to purchase 2.99% or 526,400 shares of our common stock at 80% of the closing
bid price on January 6, 2003, exercisable for five years, various sliding scale
compensation amounts for equity and debt financings consummated from an
introduction by the financial advisory firm, sliding scale compensation amounts
due for a merger or acquisition candidate introduced to us and the reimbursement
of out-of-pocket expenses not to exceed $500 a month unless agreed upon by us.
The sliding scale compensation is as follows: Equity Financing: (i) up to
$250,000: $10,000 minimum fee; (ii) $250,001-500,000: $20,000 fee; (iii)$500,001
- $5,000,000: 8% of consideration; and (iv) $5,000,000 plus: $400,000 plus 1.5%
of consideration in excess of $5,000,000. Debt Financing: (i) up to $250,000:
$20,000 fee; (ii) $250,001-500,000: $30,000 fee; (iii)$500,001 - $5,000,000: 6%
of consideration; and (iii) $5,000,000 plus: $300,000 plus 3% of consideration
in excess of $5,000,000. For any securities issued by or to us, 5% consideration
in kind. For any merger or acquisition transaction, the compensation is as
follows: (i) up to $500,000: $30,000 minimum fee; (ii) $500,001 - $5,000,000: 5%
of consideration; and (iii) $5,000,000 plus: $250,000 plus 3% of consideration
in excess of $5,000,000. If the entity was not introduced by Knightsbridge,
Knightsbridge shall only receive 50% of such compensation. The agreement also
contained full rachet anti-dilution provisions. In connection with such
provision , we issued 526,400 shares of our common stock. Knightsbridge has now
waived such anti-dilution provisions.

In January 2003, we originated a promissory note with the Advantage Fund I, LLC,
that has common management with Knightsbridge Holdings, LLC. The note was
amended on July 2003 and October 16, 2003 increasing the maximum borrowing
amount to $350,000, and $400,000, respectively, and extending the maturity date
to December 31, 2004. On October 20, 2003, $200,000 of the promissory note was
assigned to Alpha Capital Aktiengesellschaft, a non-related third party. On
November 3, 2003, $50,000 of the promissory note was assigned to Gamma
Opportunity Partners, L.P., a non-related third party.

In April 2003, our Board of Directors passed a resolution to compensate our
directors and officers an amount equal to 150,000 shares of our common stock on
a quarterly basis.


                                       18
<PAGE>

In April 2003, we entered into a $1,000,000 Common Stock Purchase Agreement with
an investment fund, the Advantage Fund I, LLC, that has common management with
the financial advisory firm, Knightsbridge Holdings, LLC, ("the Purchaser"). The
sale is for an aggregate installment payment purchase price of $1,000,000. The
purchase price of the common stock is $.07 per share. The Purchaser is required
to purchase the common stock in 20 equal installments of $50,000 each. In
addition to the purchased stock, we shall deliver to the designated escrow agent
200% of the number of shares being purchased with each $50,000 installment.

On April 4, 2003, Marshall Kanner resigned as our Chairman of our Board of
Directors and Interim Chief Operating Officer and accepted the position of
non-executive Vice Chairman and member of our Board of Directors. We authorized
the issuance of 820,000 shares of our common stock in recognition of his past
service and future services. Accordingly, we accrued salary compensation of
$32,200 using the stock market and future services value of $.07 per share. Part
of the issuance of the 820,000 shares included the issuance of 360,000 shares of
our common stock to Mr. Kanner for future services. These shares vestes on a
pro-rata basis in 30,000 share increments each month beginning with April 2003
through March 2004.

                                     PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this report:

1. Financial statements; see index to financial statement and schedules in Item
7 herein.

2. Financial statement schedules; see index to financial statements and
schedules in Item 7 herein.

3. Exhibits:

3.1(a) Certificate of Incorporation (1)

3.1(b) Articles of Amendment to Articles of Incorporation (1)

3.1(c) Articles of Incorporation of Championlyte Beverages, Inc. (1)

3.2 By-Laws(1)

4.1 2003 Stock Incentive Plan #4 (1)

10.1 Agreement between Knightsbridge Holdings, LLC doing business as
Knightsbridge Capital and us dated January 6, 2003 and amendment dated April 7,
2003 (1)

10.2 Advantage Fund I, LLC $250,000 Promissory Note dated January 2003;
amendment dated July 3, 2003 (increase to $350,000); amendment dated October 16,
2003 (increase to $400,000); $200,000 Assignment to Alpha Capital
Aktiengesellschaft; Gamma Opportunity $50,000 Promissory Note dated November 3,
2003; Alpha Capital $200,000 Promissory Note dated October 20, 2003; $50,000
Assignment to Gamma Opportunity Capital Partners, L.P. (1)

10.3 Triple Crown Consulting Promissory Notes each in the amount of $50,000
dated April 15, 2003 and June 30, 2003; and Series IV Preferred Stock Letters
dated April 18, 2003 and July 2, 2003 (1)

10.4 Dave Goldberg Employment Agreement effective June 1, 2003 (1)

10.5 Donna Bimbo Employment Agreement with Championlyte Beverages, Inc (our
wholly owned subsidiary) effective March 15, 2003 (1)

10.6 Settlement Agreement with Sara Lee Corporation effective April 1, 2003 (1)

10.7 License Agreement with Sara Lee Global Finance, L.L.C. effective April 1,
2003 (not fully executed) (1)

10.8 Strategic Marketing Agreement between BevSystems International, Inc. and us
dated January 20, 2003 (1)


                                       19
<PAGE>

10.9 Inglobalvest, Inc. Lawsuit Settlement Agreement (1)

10.10 Latitude Investment Corp. $135,000 Promissory Note dated August 15, 2003
(1)

10.11 Churchill Investments, Inc. Financing Agreement dated June 30, 2003 with
Championlyte Beverages, Inc. (1)

10.12 Churchill Investments, Inc. Financing Agreement dated August 20, 2003 with
the Old Fashioned Syrup Company (1)

14.1 Code of Ethics

21.1 Subsidiaries of ChampionLyte Holdings, Inc. (1)

(1) Incorporated by reference to Championlyte's SB-2 Registration Statement (SEC
File No. 333-105956).

(a) Reports on Form 8-K.

A Form 8-K was filed with the SEC on November 3, 2004 based on Item 8.01,
announcing Joseph Butler as Vice President of our subsidiary, Championlyte
Beverages, Inc.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

AUDIT FEES AND AUDIT

For our fiscal years ended December 31, 2004, we were billed approximately
$40,000 and $53,000 respectively, for professional services rendered for the
audit and review of our financial statements included in our periodic and other
reports filed with the Securities and Exchange Commission for our year ended
December 31, 2004.

TAX FEES

For our fiscal year ended December 31, 2004, we were billed $2,500, respectively
for professional services rendered for tax compliance, tax advice, and tax
planning.

ALL OTHER FEES

We incurred other fees related to services rendered by our principal accountants
for the fiscal year ended December 31, 2004 as follows:

Reviews of Form 8-K and Form SB-2 filings and amendments - $9,000.


                                       20
<PAGE>

                                   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, there unto duly authorized.

                           CHAMPIONLYTE HOLDINGS, INC.





                                   By: /s/ David Goldberg(1)
                                       -------------------------------
                                       DAVID GOLDBERG
                                       President, Principal Financial Officer,
                                       Principal Accounting Officer and Chairman
                                       of the Board of Directors

Dated: July 6, 2005



Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.



<TABLE>
<CAPTION>
Name                         TITLE                                                   DATE
----                         -----                                                   ----
<S>                          <C>                                                   <C>
/s/ David Goldberg(2)                                                              July 6, 2005
---------------------------  President, Principal Financial Officer,
     DAVID GOLDBERG          Principal Accounting Officer and Chairman
                             of the Board of Directors

/s/ Steven Field(3)          Director                                              July 6, 2005
---------------------------
    STEVEN FIELD

/s/ Thad Kaplan(4)           Director                                              July 6, 2005
--------------------------
    THAD KAPLAN
</TABLE>


                                       21