SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

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

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

                              FOR FISCAL YEAR ENDED
                                DECEMBER 31, 2003

                            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)

                                 (866) 438-5983
                (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, 2003: $410,351

AGGREGATE MARKET VALUE OF THE VOTING COMMON STOCK HELD BY NON-AFFILIATES OF THE
REGISTRANT AS OF MARCH 29, 2004, WAS: $4,669,228

NUMBER OF SHARES OF THE REGISTRANT'S COMMON STOCK OUTSTANDING AS OF MARCH 29,
2004 IS: 32,568,374

TRANSFER AGENT AS OF MARCH 29, 2004:

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

<PAGE>


                                     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.

Our new management has significantly reduced overhead, including the downsizing
and moving of our corporate headquarters and is currently negotiating with our
various creditors. Until our working capital improves, we have significantly
reduced our spending on marketing and advertising, as well as budgeting
additional cost cutting measures to ensure that our working capital may be
sufficient to continue to carry out our business plan. We continue to expect to
be able to maintain operations as we attempt to cut expenses and negotiate with
our creditors.

PRODUCT OVERVIEW

We created a sugar, carbohydrate, and calorie free isotonic sports beverage. The
product is a sports drink that provides the electrolytes needed for replacement
after exercise, work or any sport. 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.
ChampionLyte(R) is currently available at a limited number of the nation's
mass-market retail locations as well as a limited number of governmental
institutions.

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.

We recently reacquired the Old Fashioned Syrup Company. The Old Fashioned Syrup
Company manufactures and sells a sugar-free, fat-free syrup in three flavors,
chocolate, strawberry and vanilla, pursuant to a license agreement with
Cumberland Packing Corp. for the use of the Sweet 'N Low trademark for its syrup
product.

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. We have $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.


                                       1
<PAGE>



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.

We have already commenced our first full production run of all 5 flavors of 20
ounce 12 packs. In addition, we have produced 3 flavors of clear products for a
mass merchandiser. Subsequent runs are being scheduled based upon sufficient
inventory as well as new distributors being signed. In addition, we expect that
further expansion will continue on a regional basis if sales volume increases
both on an international and national level.

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.

PRIVATE LABEL/LICENSING

Private label opportunities have already presented themselves and others are
being sought out. A private label opportunity is when another party wants to
produce our product, but distribute it under another name. In addition, we are
in the process of pursuing licensing opportunities both domestically and in the
foreign markets.


                                       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. In addition, in response to
inquiries by national corporate accounts in the diet and health industries, we
have completed research and development on flavors devoid of coloring which we
started to ship on July 30, 2003.

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.

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

We employ four 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

We presently sublease 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.


                                       4
<PAGE>



ITEM 3. LEGAL PROCEEDINGS

Sara Lee Global Finance LLC v. Championlyte Products, Inc., et, al. In November
2001, Sara Lee Global Finance, LLC ("Sara Lee") commenced an action in United
States District Court for the Middle District of North Carolina (Civil Asction
No. 1:01CV01053) against us seeking to enjoin us from infringing Sara Lee's
"Champion" trademark used by Sara Lee's Champion Athleticwear division.
Simultaneously, Sara Lee commenced a proceeding in the U.S. Patent & Trademark
Office to cancel our trademark registration for the mark ChampionLyte. Sara Lee
claimed that our use of the ChampionLyte trademark for our dietary refresher
drink infringed Sara Lee's Champion trademark used for various sporting goods
and clothing. On April 1, 2003, the parties to this case signed a settlement
agreement. In addition to the above- referenced case being dismissed, the case
before the United States Patent and Trademark Office was cancelled - TTAB
Cancellation No. 92032691. The settlement agreement provides that we will assign
the ChampionLyte trademark to Sara Lee and Sara Lee will grant us an exclusive
license of the Championlyte 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 licenses 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.

Champion Performance Products, Inc. d/b/a Champion Nutrition v. ChampionLyte,
Inc. In August 2002, Champion Performance Products commenced the above
referenced cancellation proceeding in the U.S. Patent and Trademark Office
against ChampionLyte, Inc., in which the petitioner seeks to cancel our
registration for our Champion Lyte trademark. As part of the settlement with
Sara Lee in the action above, this case was cancelled in the United States
Patent and Trademark office, TTAB Cancellation No. 92040440.

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. 2003 CA 005662AF. On May 28, 2003, we commenced
an action against the above named defendants in the Circuit Court of the 15th
Judicial Circuit in and for Palm Beach County, Florida alleging the fraudulent
conveyance of our Old Fashioned Syrup Company, Inc. subsidiary. Alan Posner is
our former officer, director and employee.

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. The suit
further alleged that Posner, acting in concert with Valleau, by and through
InGlobalVest and its representatives devised a fraudulent plan to improperly and
unlawfully strip us of our ownership and control of our valuable, wholly-owned
subsidiary, the Syrup Company, as well as other valuable property, equipment and
assets that were owned by the Syrup Company including long-term licensing
agreements, specifically Cumberland Farms for the rights to name Sweet'N Low(R)
worth hundreds of thousands of dollars.

On July 21, 2003, we reached a settlement with Inglobalvest, 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 provides that Inglobalvest must deliver all stock certificates in 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 by no later than August 20,2003. The total
payment of $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 facilitate 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. To date,
we paid the full settlement amount. On August 20, 2003, all terms of the
settlement agreement were satisfied and we reacquired the Old Fashioned Syrup
Company.

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 are presently negotiating a settlement of this claim.

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, the Company and Atico have been engaged
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 by offering Atico securities of the Company registered
pursuant to a Form SB-2 Registration Statement in an amount equivalent to a
value of approximately $90,000.00. No definitive settlement agreement has been
reached with Atico at this time.

On or about July 20, 2003, Crook Printing Service, Inc. ("Crooks") filed a
Complaint against us asking $7,047.94 in damages for alleged goods sold and/or
services rendered by Crooks to us in Crooks Printing Service, Inc. v.
ChampionLyte, Inc., Case No. 03003740 (County Ct., Broward County, Fla.). We
filed a Motion to Dismiss, and eventually settled the case for $6,400.00 payable
in four equal monthly installments of $1,600.00 commencing on October 1, 2003.
We paid all the required payments due under the Settlement Agreement and the
Complaint was dismissed with prejudice on February 5, 2004.

On October 16, 2003, Wainwright, Inc. ("Wainwright") obtained a Final Judgement
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 Judgement. However, all
settlement proposals have been summarily rejected by Wainwright, and we will
have to pay the Judgement or be subject to various execution precedures by
Wainwright.

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.

On or about January 7, 2004, Mark Streisfeld ("Streisfeld"), our former
employee, officer and director, by and through his attorney, transmitted a
demand letter to us requesting that we pay him a total of at least $140,000.00
in alleged salary owed to Mr. Streisfeld under an Employment Agreement with us.
Specifically, Streisfeld contended that his Employment Agreement was for a term
of three years commencing on January 6, 2003. We believe that Streisfeld's
employment agreement is terminable at will by either party, and that Streisfeld
would be entitled to receive a severance equivalent of two months base salary;
provided, however, that he executes a release in favor of us. We memoralized the
foregoing positions in a letter to counsel for Streisfeld dated January 9, 2004.
To date, Streisfeld has failed to tender the required release to trigger our
obligation to pay him the severance described above.

                                       5
<PAGE>



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

NONE

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

On March 30, 2004, our transfer agent records indicated that there were
approximately 500 shareholders of record of our common stock. 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."

From inception until December 13, 1999, the shares traded under the symbol MDHG.
On December 13, 1999, we changed our trading symbol to MUSD in connection with
the change of our name to Meridian USA Holdings, Inc. In connection with the
name change to ChampionLyte Products, Inc., we changed our trading symbol to
CPLY. The following table sets forth the high and low bid prices for the common
stock since the first quarter of 2002.


            YEAR     QUARTER                    HIGH             LOW

            2002     First                      0.85             0.40
            2002     Second                     0.70             0.35
            2002     Third                      0.45             0.12
            2002     Fourth                     0.45             0.04
            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 (to March 29, 2004)  0.22             0.13


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 2003 and have no
current intention to pay any dividends.


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

FORWARD-LOOKING STATEMENTS

Certain statements in this report on Form 10-KSB and other statements made by
the Company or its representatives that are not strictly historical facts are
"forward-looking" statements within the meaning of the Private Securities
Litigation Reform Act of 1995 that should be considered as subject to the many
risks and uncertainties that exist in the Company's operations and business
environment. The forward-looking statements are based on current expectations
and involve a number of known and unknown risks and uncertainties that could
cause the actual results, performance and/or achievements of the Company to
differ materially from any future results, performance or achievements,
expressed or implied, by the forward-looking statements, and that in light of
the significant uncertainities inherent in forward-looking statements the
inclusion of such statements should not be regarded as a representation by the
Company or any other person that the objectives or plans of the Company will be
achieved. The Company also assumes no obligation to publicly update or revise
its forward-looking statements or to advise of changes in the assumptions and
factors on which they are based. Among the factors that may affect operating
results are the following: success of our change in focus, competitive
environment, and general economic conditions.



                                       6
<PAGE>



RESULTS OF OPERATIONS

Years Ended December 31,

                            2003          2002
                         ----------   ----------
Net Sales                $  410,351     $951,890
Cost of Goods Sold       $  335,999     $734,539
Gross Profit             $   74,352     $217,351
Selling, General and
Administrative
Expenses                 $2,631,306   $2,550,825



Revenues from operations during the year ended December 31, 2003 were $410,351
as compared to $951,890 for the year ended December 31, 2002. For the year ended
December 31 2003, the Company recorded a one-time licensing revenue of $157,900
which is included in other income. The decrease in sales was due to our
restructuring, including but not limited to, our whole management team as well
as reformulating our product and creating a new marketing and distribution
system. We had nominal operations during the first six months of the year and
did not begin shipping product until June 2003. We were reformulating our
product and ceased distribution of the product until reformulation was complete.
We reformulated our product 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. We also re-acquired the
Old Fashioned Syrup Company in August 2003. The operations of Old Fashioned
Syrup Company have been included in our operating results for the year ended
December 31, 2002 and the period August 20, 2003 (re-acquisition) to December
31, 2003.

Our gross profit margin went from 22% for this year ended December 31, 2002 to
18% for the year ended December 31, 2003. The reduction in our gross profit
margin was a direct result of us reformulating our products.

Selling, general and administrative expenses increased from $2,550,825, for the
year ended December 31, 2002 to $2,631,306 for the year ended December 31, 2003.
The increase in selling, general and administrative expenses is primarily the
result of increased consulting fees related to our increased sales and marketing
efforts, as well as increased professional fees. These increases were primarily
offset by decreases in salary and salary related expenses as well as decreases
in advertising, marketing, rent and bad debt expenses.

The net result of these efforts was to increase the loss from operations before
other income (expense)of $2,333,474 for the year ended December 31, 2002 to a
loss of $2,556,954 for the year ended December 31, 2003.

Gain on forgiveness of trade payables amounted to $363,877 for the year ended
December 31, 2003 compared to $0 for the year ended December 31, 2002. This
relates to several trade payables that were settled for reduced amounts then had
been previously recorded. The Company is still in negotiations with other
vendor's in attempts to settle their payables.

Loss on impairment of intangibles amounted to $233,154 for the year ended
December 31, 2003 compared to $0 for the year ended December 31, 2002. This
resulted from the impairment of licensing agreements and goodwill acquired in
the re-acquisition of the Old Fashion Syrup Company. As of December 31, 2003 the
Company deemed these intangibles impaired and elected to expense the entire
value of them.

Loss on disposal of fixed assets amounted to $15,815 as of December 31, 2003
compared to $0 for the year ended December 31, 2002. This related to several
coolers that are no longer useable by the Company.

Interest and financing expense amounted to $602,259 for the year ended December
31, 2003 versus $16,728 for the year ended December 31, 2002. Included in
interest expense for the year ended December 31, 2003 is $267,648 related to the
beneficial conversion feature of the convertible promissory notes entered into
by the Company and $294,264 in interest and financing expenses related to
various notes payable.


                                       7
<PAGE>



On August 20, 2003, we reacquired the Old Fashioned Syrup Company by completing
the terms of the settlement agreement to settle a lawsuit to receive all of the
shares of the Old Fashioned Syrup Company which historically represented up to
90% of our revenues. Pursuant to the terms of the settlement agreement, we paid
$135,000 and other consideration for the delivery of all of the outstanding
shares in the Old Fashioned Syrup Company. We agreed to this amount in
consideration for the loans made to Old Fashioned Syrup Company by the
defendants in the lawsuit, the initial loan to us, as well as the restructuring
efforts undertaken by the defendants during their tenure of management. The Old
Fashioned Syrup Company manufactures and sells a sugar-free, fat-free flavored
syrup pursuant to a license agreement with Cumberland Packing Corp. for use of
the Sweet 'N Low trademark for its syrup product. Since this agreement is
finalized, we will have additional revenues as well as expenses from such
business operations. As a result of the reacquisition, we reclassified our 2002
results of operations for the Old Fashioned Syrup Company from discontinued
operations to continuing operations.

In addition, on April 1, 2003 a settlement agreement was entered into for a
lawsuit filed against us in 2001 alleging that our trademark corporate name,
ChampionLyte, violated the plaintiff's trademark. The terms of the settlement
included granting us 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 our option. It requires 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 net effect of reducing costs and renegotiating payables resulted in a net
loss for the year ended December 31, 2003 of $2,898,192 to a net loss of
$2,739,110 for the year ended December 31, 2002.

Basic and diluted earnings per share available to common shareholders was $(.36)
for the year ended December 31, 2002 compared to $(.15) for the year ended
December 31, 2003.

We have recently reached a verbal settlement, which will be memorialized in
writing, with Velda Farms, LLC. Velda Farms agreed that it would dispose of the
balance of the products/ingredients and hard packaging that it was holding
without any liability to Championlyte. Furthermore, the $143,000 debt to Velda
Farms is to be extinguished.

LIQUIDITY AND CAPITAL RESOURCES

Our available cash at December 31, 2003 was $2,761.  We received financing
through notes payable of $1,049,656, of which $135,000 was used for the
reacquisition of the Old Fashioned Syrup Company and $911,966 was used for our
operating activities.

Convertible notes at December 31, 2003, consist of promissory notes to an
individual, an investment fund and three investment companies. Some of the
owners of the investment fund are also shareholders of the company. The notes
with the individual and the investment fund were for funds to be disbursed to
satisfy obligations of the Company as needed.

Detailed matters regarding the notes payable are as follows:

The note with the individual was originated in April 2003 and the note with the
investment fund was originated in January 2003. Both bear interest at a rate of
6.5% per annum and are 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 notes are convertible, in whole or in part, at any time after the
issuance of the notes. The convertible note with the investment fund is $400,000
and is due December 31, 2004. During the year ended December 31, 2003, $148,273
of the funds borrowed under the note to the investment fund was converted into
1,412,122 shares of our common stock. In October and November 2003, the
investment fund assigned $250,000 of the principal amount of the note to two
unrelated third parties.

At December 31, 2003, amounts owed to the individual note holder aggregated
$30,000, amounts owed to the investment fund aggregated $344,512 and amounts
owed to two unrelated noteholders aggregated $250,000.

The note with the third investment company, 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 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, 2003, no payments have been made
to the investment company and no amounts related to the cash flow provision were
due.

On August 20, 2003, Old Fashioned entered into an agreement with a financial
services company that has common management with the financial advisory firm 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 our
accounts receivables and general intangibles.

On July 1, 2003, we entered into an agreement with a financial services company
that has common management with the financial advisory firm 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 our accounts
receivables and general intangibles.

At December 31, 2003, no amounts were due to the financial services company. At
this time, the Old Fashioned Syrup Company and us each have $500,000 available
based on the above facilities.

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.


                                       8
<PAGE>



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, 2003 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.

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.


                                       9
<PAGE>
ITEM 7. FINANCIAL STATEMENTS

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

<TABLE>
<CAPTION>
                                                                                            Page Number
                                                                                            -----------
<S>                                                                                         <C>
INDEPENDENT AUDITORS' REPORTS                                                               F-1 to F-2

CONSOLIDATED FINANCIAL STATEMENTS

         Consolidated Balance Sheet at December 31, 2003                                        F-3

         Consolidated Statement of Operations
           for the years ended December 31, 2003 and 2002                                       F-4

         Consolidated Statement of Changes in Stockholders' Deficiency
           for the years ended December 31, 2003 and 2002                                       F-5

         Consolidated Statement of Cash Flows
           for the years ended December 31, 2003 and 2002                                       F-6

         Notes to Consolidated Financial Statements                                         F-7 to F-22
</TABLE>


<PAGE>

                          INDEPENDENT AUDITOR'S REPORT


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

We have audited the accompanying consolidated balance sheet of ChampionLyte
Holdings, Inc. and Subsidiaries (the "Company") as of December 31, 2003 and the
related consolidated statements of operations, stockholders' deficiency, and
cash flows for the year then ended. These consolidated 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 audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. 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 audit provides 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, 2003, and the results of
their operations and their cash flows for the year then ended 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
consolidated financial statements, the Company has suffered recurring
consolidated losses from operations, negative cash flows from operating
activities, negative working capital and has a stockholders' deficit. These
conditions raise 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 consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

The consolidated financial statements for the year ended December 31, 2002 were
audited by another independent auditor whose report was dated March 20, 2003.

MASSELLA & ASSOCIATES, CPA, PLLC

Syosset, New York
March 26, 2004


                                      F-2


<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors
ChampionLyte Products, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of ChampionLyte
Products, Inc. (formerly known as Meridian USA Holdings, Inc.) and subsidiaries
as of December 31, 2002, and the related statements of operations, stockholders'
deficiency and cash flows for the year ended December 31, 2002. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. 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 audit provides a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ChampionLyte Products, Inc. and
subsidiaries, for the year ended December 31, 2002 and the results of their
operations and their cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that
ChampionLyte Products, Inc. will continue as a going concern. As more fully
described in Note 3, the Company has incurred recurring operating losses and
will have to obtain additional capital to sustain operations. These conditions
raise substantial doubt about the Company's 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 to reflect the
possible effects on the recoverability and classification of assets or the
amounts and classification of liabilities that may result from the outcome of
this uncertainty.

                                                /s/ Radin Glass & Co., LLP
                                                    Radin Glass & Co., LLP
                                                    Certified Public Accountants

New York, New York
March 20, 2003


                                      F-2
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2003

<TABLE>
<CAPTION>

                                  ASSETS

Current assets:
<S>                                                                                        <C>
     Cash and cash equivalents                                                             $           2,761
     Accounts receivable, net                                                                         99,577
     Inventory                                                                                        47,507
     Prepaid expenses and other current assets                                                            25
                                                                                              ---------------
        Total current assets                                                                         149,870

Property and equipment, net                                                                              957
                                                                                              ---------------

        Total assets                                                                       $         150,827
                                                                                              ===============

             LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities:
     Accounts payable                                                                      $         577,987
     Notes payable - related party                                                                    35,000
     Convertible notes payable                                                                       759,512
     Payroll taxes payable                                                                            72,544
     Accrued expenses and other current liabilities                                                  233,528
                                                                                              ---------------
        Total current liabilities                                                                  1,678,571
                                                                                              ---------------

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

Commitments and contingencies (Note 12)

Stockholders' deficiency:
     Series I convertible preferred stock,  par value $1.00  -  authorized
          100,000 shares, 0 shares issued and outstanding                                                  -
     Series III blank check preferred stock,  par value $1.00  -  authorized
          500,000 shares, 0 shares issued and outstanding                                                  -
     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,
        30,871,645 shares issued and outstanding                                                      30,872
     Additional paid-in capital                                                                   15,706,706
     Unearned services                                                                              (153,800)
     Deferred compensation                                                                          (106,975)
     Accumulated deficit                                                                         (17,104,547)
                                                                                              ---------------
        Total stockholders' deficiency                                                            (1,527,744)
                                                                                              ---------------

        Total liabilities and stockholders' deficiency                                        $      150,827
                                                                                              ===============
</TABLE>

                 See notes to consolidated financial statements

                                       F-3

<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                     Years Ended December 31,
                                                                  ------------------------------
                                                                      2003             2002
                                                                  ------------      ------------
<S>                                                               <C>               <C>
Net sales                                                         $    410,351      $    951,890

Cost of goods sold                                                     335,999           734,539
                                                                  ------------      ------------

Gross profit                                                            74,352           217,351

Selling, general and administrative                                  2,631,306         2,550,825
                                                                  ------------      ------------

Loss from operations                                                (2,556,954)       (2,333,474)

Other income (expenses):

Licensing revenue                                                      157,900                --
Gain on forgiveness of trade payables                                  363,877                --
Loss on impairment of intangibles                                     (233,154)               --
Loss on disposal of fixed assets                                       (15,815)               --
Interest and financing expense                                        (602,259)          (16,728)
Other income (expense)                                                 (11,787)               --
Investment income                                                           --            11,732
Gain on sale of investments                                                 --            10,860
                                                                  ------------      ------------

Other income (expenses), net                                          (341,238)            5,864
                                                                  ------------      ------------

Net loss from continuing operations before income tax expense       (2,898,192)       (2,327,610)
Income tax expense                                                          --                --
                                                                  ------------      ------------
Net loss                                                          $ (2,898,192)     $ (2,327,610)
                                                                  ------------      ------------
Series II deemed preferred dividends                                        --          (411,500)
                                                                  ------------      ------------
Net loss available to common shareholders                         $ (2,898,192)     $ (2,739,110)
                                                                  ============      ============
Basic and Diluted Earnings (Loss) Per share                       $      (0.15)     $      (0.36)
                                                                  ============      ============

Weighted average number of common shares
  outstanding - basic and diluted                                   19,824,491         7,528,861
                                                                  ============      ============
</TABLE>

                 See notes to consolidated financial statements

                                      F-4

<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                          Series IV
                                                                           Common Stock          Convertible Preferred Stock
                                                                    -------------------------     -------------------------
                                                                      Shares         Amount         Shares         Amount
                                                                    ----------     ----------     ----------     ----------
<S>                                                                 <C>            <C>            <C>            <C>
Balance at December 31, 2001                                         7,501,399     $    7,502             --     $       --

Issuance of options for services                                            --             --             --             --

Amortization of deferred compensation                                       --             --             --             --

Effect of change in fair value of available-for-sale securities             --             --             --             --

Exercise of options                                                     58,000             58             --             --

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

Balance at 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 for directors' fees                                 550,000            550             --             --

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

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

Exercise of stock options                                               50,834             51             --             --

Issuance of stock 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                  --             --        100,000        100,000

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

Balance at December 31, 2003                                        30,871,645     $   30,872        100,000     $  100,000
                                                                    ==========     ==========     ==========     ==========
</TABLE>

<TABLE>
<CAPTION>
                                                                    Additional                                         Unrealized
                                                                      Paid-in        Deferred         Unearned      Gain on Certain
                                                                      Capital      Compensation       Services        Investments
                                                                    -----------     -----------      -----------      -----------
<S>                                                                 <C>             <C>              <C>              <C>
Balance at December 31, 2001                                        $ 4,926,058     $   (91,602)     $        --      $    12,681

Issuance of options for services                                         50,000         (33,333)              --               --

Amortization of deferred compensation                                        --         124,935               --               --

Effect of change in fair value of available-for-sale securities              --              --               --          (12,681)

Exercise of options                                                       3,492              --               --               --

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

Balance at 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 for directors fees                                    79,450              --               --               --

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

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

Exercise of stock options                                                 3,283              --               --               --

Issuance of stock 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                   --              --               --               --

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

Balance at December 31, 2003                                        $15,706,706     $  (106,975)     $  (153,800)     $        --
                                                                    ===========     ===========      ===========      ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                                         Total
                                                                    Accumulated       Stockholders'
                                                                      Deficit          Deficiency
                                                                    ------------      ------------
<S>                                                                 <C>               <C>
Balance at December 31, 2001                                        $(11,878,745)     $ (7,024,106)

Issuance of options for services                                              --            16,667

Amortization of deferred compensation                                         --           124,935

Effect of change in fair value of available-for-sale securities               --           (12,681)

Exercise of options                                                           --             3,550

Net loss                                                              (2,327,610)       (2,327,610)
                                                                    ------------      ------------

Balance at 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 for directors fees                                         --            80,000

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

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

Exercise of stock options                                                     --             3,334

Issuance of stock 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 at December 31, 2003                                        $(17,104,547)     $ (1,527,744)
                                                                    ============      ============
</TABLE>

                 See notes to consolidated financial statements.

                                       F-5

<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                           Years Ended December 31,
                                                                                         ----------------------------
                                                                                            2003              2002
                                                                                         -----------      -----------
<S>                                                                                     <C>               <C>
Cash flows from operating activities:
    Net loss                                                                             $(2,898,192)     $(2,327,610)
    Adjustments to reconcile net loss to net cash
       used in operating activities:
          Depreciation and amortization                                                       58,365           23,712
          Loss on disposal of equipment                                                       15,815          128,814
          Impairment charges for intangibles                                                 233,154               --
          Common stock, options and warrants issued for services and financing             1,809,225           53,550
    Changes in operating assets and liabilities:

       (Increase) decrease in accounts receivable                                            (63,959)          33,766
       Decrease in other receivables                                                              --          100,000
       Increase in inventory                                                                 (47,507)              --
       Increase in advances                                                                       --            2,115
       (Increase) decrease in prepaid expenses and other current assets                       (4,750)          41,567
       Increase in deposits                                                                       --           11,246
       (Decrease) increase in accounts payable                                              (150,514)         713,144
       Decrease in due to factor                                                             (23,369)              --
       Increase in payroll taxes payable                                                      72,544               --
       Increase in accrued expenses and other current liabilities                             87,222           60,030
                                                                                         -----------      -----------
Net cash used in operating activities                                                       (911,966)      (1,159,666)
                                                                                         -----------      -----------

Cash flows from investing activities:
       Cash paid for acquisition of Old Fashioned                                           (135,000)              --
       Proceeds from sale of marketable securities                                                --          990,279
                                                                                         -----------      -----------
Net cash (used in) provided by investing activities                                         (135,000)         990,279
                                                                                         -----------      -----------

Cash flows from financing activities:
       Proceeds from notes payable                                                           549,264               --
       Operating expenses paid through convertible notes payable                             500,392               --
       Proceeds from related party loans                                                          --          140,000
                                                                                         -----------      -----------
Net cash provided by financing activities                                                  1,049,656          140,000
                                                                                         -----------      -----------

Net increase (decrease) in cash                                                                2,690          (29,387)

Cash, beginning of year                                                                           71           29,458
                                                                                         -----------      -----------

Cash, end of year                                                                        $     2,761      $        71
                                                                                         ===========      ===========

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                              $   299,109      $        --
                                                                                         ===========      ===========
    Assets derived through proceeds from notes payable                                   $   (35,546)     $        --
                                                                                         ===========      ===========
    Conversion of convertible notes to Series IV Preferred Stock                         $   100,000      $        --
                                                                                         ===========      ===========
    Issuance of common stock for services to be provided                                 $   820,348      $        --
                                                                                         ===========      ===========
    Issuance of options for services to be provided                                      $   232,250      $        --
                                                                                         ===========      ===========
    Issuance of common stock due to options exercised                                    $     3,334      $        --
                                                                                         ===========      ===========
    Conversion of convertible notes payable to common stock                              $   148,273      $        --
                                                                                         ===========      ===========
</TABLE>

                 See notes to consolidated financial statements

                                       F-6

<PAGE>


                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


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.


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, 2003.

d. Marketable securities - Investments in marketable securities are classified
as available-for-sale and are recorded at fair value with any unrealized holding
gains or losses included in accumulated other comprehensive income (loss), which
is a component of stockholders' deficiency. During 2002 all marketable
securities were sold at a gain.

e. 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.

f. 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, 2003, inventory of
$47,507 consisted of finished goods.

g. 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.

h. 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.


                                      F-7
<PAGE>


                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


i. 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.

j. Advertising costs - Advertising costs are expensed as incurred. Total
advertising costs charged to operations for the years ended December 31, 2003
and 2002 amounted to $201,838 and $290,647, respectively.

k. 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, 2003
and 2002, shipping and handling costs were $33,165 and $106,145, respectively.
The Company does not currently bill customers for shipping and handling costs.

l. 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.

m. 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.

n. 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.

o. 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.

p. 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.

q. 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-8
<PAGE>


                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


r. 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.

s. 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, 2003, there were no
product liability accruals necessary.

t. Reclassifications - Certain amounts in the prior year financial statements
have been reclassified to conform to the current year presentation.


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, 2003, the Company's accumulated deficit
was $17,104,547 and its working capital deficiency was $1,528,701. For the years
ended December 31, 2003 and 2002, the Company had a net loss of $2,898,192 and
$2,327,610, respectively.

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 - RECENT ACCOUNTING PRONOUNCEMENTS

In April 2002, the Financial Accounting Standards Board ("FASB") issued SFAS No.
145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections" ("SFAS No. 145"). This statement
eliminates the requirement to report gains and losses from extinguishment of
debt as extraordinary unless they meet the criteria of APB Opinion 30. SFAS No.
145 also requires sale-leaseback accounting for certain lease modifications that
have economic effects that are similar to sale-leaseback transactions. The
changes related to lease accounting are effective for transactions occurring
after May 15, 2002 and the changes related to debt extinguishment are effective
for fiscal years beginning after May 15, 2002. The adoption of SFAS No. 145 did
not have a material impact on the Company's financial position or results of
operations.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities" ("SFAS No. 146"). SFAS No. 146 nullifies
Emerging Issues Task Force Issue No. 94-3 and requires that a liability for a
cost associated with an exit or disposal activity be recognized when the
liability is incurred. This statement also establishes that fair value is the
objective for initial measurement of the liability. SFAS No. 146 did not have a
material impact on the Company's financial position or results of operations.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure, an amendment of FASB Statement No.
123" ("SFAS No. 148"). SFAS No. 148 amends SFAS No. 123, "Accounting for
Stock-Based Compensation," to provide alternative methods of transition for an
entity that voluntarily changes to the fair value based method of accounting for
stock-based employee compensation. It also amends the disclosure provisions of
that Statement to require prominent disclosure about the effects on reported net
income of an entity's accounting policy decisions with respect to stock-based
employee compensation. During the quarter ended June 30, 2003, the Company
adopted a fair value method of accounting for stock-based compensation. The
adoption of SFAS No. 148 did not have a material impact on the Company's
financial position or results of operations.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity" ("SFAS No.
150"). SFAS No. 150 is effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003, except for mandatorily
redeemable financial instruments of nonpublic entities. The adoption of SFAS No.
150 is not expected to have a material impact on the Company's financial
position or results of operations.

During fiscal 2003, the Company adopted FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees" (FIN No. 45"). FIN No. 45
requires increased disclosure of guarantees, including those for which
likelihood of payment is remote, and product warranty information. FIN No. 45
also requires that guarantors recognize a liability for certain types of
guarantees equal to the fair value of the guarantee upon its issuance. The
adoption of FIN No. 45 did not have a material impact on the Company's financial
position or results of operations.

In December 2003, the Securities and Exchange Commission ("SEC") issued Staff
Accountant Bulletin No. 104, "Revenue Recognition" ("SAB No. 104"), which
codifies, revises and rescinds certain sections on SAB No. 101, "Revenue
Recognition," in order to make this interpretive guidance consistent with
current authoritative accounting and auditing guidance and SEC rules and
regulations. The changes noted in SAB No. 104 did not have a material effect on
the Company's financial position or results of operations.

                                      F-9
<PAGE>


                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


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.

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 and 2002 assuming the merger occurred on January 1, 2003 and 2002,
respectively, is as follows:

                                           2003             2002
           Net sales                   $    777,554     $    951,890
                                       ============     ============
           Net loss                    $ (3,050,606)    $ (2,327,610)
                                       ============     ============
           Basic loss per share        $       (.15)    $       (.31)
                                       ============     ============
           Weighted average shares       19,824,491        7,528,861
                                       ============     ============


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
2002, or the future results of operations.

As a result of the acquisition of Old Fashioned in 2003, the results of
operations for Old Fashioned for the year ended December 31, 2002, previously
reported in discontinued operations, has been reclassified and included in loss
from continuing operations.


NOTE 6 - ACCOUNTS RECEIVABLE

Accounts receivable, net consists of the following components at December 31,
2003:

              Trade receivables                         $ 104,577
              Less: Allowance for doubtful accounts        (5,000)
                                                        ---------
                                                        $  99,577
                                                        =========


                                      F-10
<PAGE>


                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


There was a $5,000 increase in the Company's allowance for doubtful accounts
during the year ended December 31, 2003.

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. 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.


                                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 has an initial term of ten years,
expiring December 31, 2008. The Company has the right to renew the agreement for
two additional seven-year terms, so long as the Company is 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. As of December 31, 2003, the Company has not met the minimum advertising
capital requirement under the agreement. As such, Cumberland has the right to
terminate the license.

Amortization expense related to the license agreement amounted to $5,864 for the
year ended December 31, 2003.

In September 1999, the agreement was amended to delete a provision under which
Cumberland had been granted a right to either match any offer to sell the
Company's shares or receive 10% of the proceeds from any such sale. In lieu
thereof, the Company granted Cumberland warrants to purchase 350,000 shares of
the Company's common stock at an exercise price per share equal to the greater
of $2.50, or 50% of the average closing trading price during the 20 day period
prior to the exercise. The warrants expire December 31, 2008. The fair value of
the warrants using the Black-Scholes Option Pricing Model was $176,000 and was
recorded as licensing agreement. The warrant agreement contains anti-dilution
provisions, such that the number of warrants issuable to Cumberland would result
in Cumberland obtaining shares of the Company's common stock constituting
6.2893% of the Company's common stock and common stock equivalents outstanding
as of the date of exercise of the warrant. As a result of the change in
ownership of Old Fashioned in December 2002, the Company does not believe it is
subject to the anti-dilution provisions contained in the warrant.


NOTE 8 - PROPERTY AND EQUIPMENT

The property and equipment consists of the following:

                                                  Useful life

               Website                              3 years    $   11,017
               Less: accumulated depreciation                     (10,061)
                                                               ------------
                                                               $      956
                                                               ============


Total depreciation expense for the years ended December 31, 2003 and 2002 was
$10,512.

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 $15,815 is included in other income (expense)
on the accompanying consolidated statements of operations for the year ended
December 31, 2003.


                                      F-11
<PAGE>


                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


NOTE 9 - CONVERTIBLE NOTES PAYABLE

Convertible notes at December 31, 2003, consist of promissory notes to an
individual, an investment fund and three investment companies. Some of the
owners of the investment fund are also shareholders of the company. The notes
with the individual and the investment fund were for funds to be disbursed to
satisfy obligations of the Company as needed.

The note with the individual was originated in April 2003 and the note with the
investment fund was originated in January 2003. Both bear interest at a rate of
6.5% per annum and are 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 notes are convertible, in whole or in part, at any time after
the issuance of the notes. In July 2003, the Company amended its convertible
note with the investment fund 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 current registration statement filed with the SEC needs to become
effective. During the year ended December 31, 2003, $148,273 of the funds
borrowed under the note to the investment fund was converted into 1,412,122
shares of the Company's common stock. In October and November 2003, the
investment fund assigned $250,000 of the principal amount of the note to two
unrelated third parties ("Alpha" and "Gamma"). In connection with the
assignment, all security granted by the Company to the investment fund, Alpha
and Gamma will be securitized proportionately based on each party's respective
interest in the note.

New convertible promissory notes were executed between the Company and 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.

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 investment fund, 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. The
investment fund, Alpha and Gamma agreed to forebear for 180 days from October
20, 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.

At December 31, 2003, amounts owed to the individual note holder aggregated
$30,000, amounts owed to the investment fund aggregated $344,512 and amounts
owed to two unrelated noteholders aggregated $250,000. Accrued interest of
$1,300, $14,273 and $2,708 due to the individual, investment fund and investment
companies, 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, 2003 amounted to $267,648 and is included in interest and
financing expense in the accompanying consolidated statements of operations.

The note with the third investment company, for $135,000, was originated on
August 15, 2003 in order to fund the acquisition of Old Fashioned (see note 5).
The note matures on October 14, 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, 2003, no payments
have been made to the investment company 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 investment company 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 the
investment company over the term of the note. Such shares will be held in escrow
and 100,000 shares per month will be disbursed until the note is paid in full.
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. The shares have
been valued at $0.155 per share. As of December 31, 2003, the Company has
recorded $62,000 as interest and financing expense related to this agreement and
the investment company was issued 400,000 shares of the Company's common stock.
Accrued interest of $3,037 is included in accrued expenses in the accompanying
consolidated balance sheet.


                                      F-12
<PAGE>



                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


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, 2003, no amounts were due to the financial services company.

NOTE 11 - ACCRUED EXPENSES

Accrued expenses consist of the following at December 31, 2003:

                         Professional fees     $ 63,830
                         Salaries                52,754
                         Interest                21,318
                         Royalties               21,250
                         Other                   74,376
                                               --------
                                               $233,528
                                               ========


NOTE 12 - COMMITMENTS AND CONTINGENCIES

                                OPERATING LEASES

The Company has canceled all operating leases as of December 31, 2002. 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, 2003 and
2002 were $23,900, and $67,240, respectively.


                                LACK OF INSURANCE

The Company has not maintained any workman's compensation and disability
insurance as of December 31, 2003. 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, 2003, the Company owes approximately $73,000 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, 2003, the Company had two customers whose sales
represented 17.0% and 10.6%, respectively, of the Company's net sales. Another
customer accounted for more than 10% of the Company's accounts receivable at
December 31, 2003. During the year ended December 31, 2003, 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.

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.


                                      F-13
<PAGE>


                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


                                   SETTLEMENTS

During the year ended December 31, 2003 and subsequent to such, various vendors,
consultants and professionals have filed actions against the Company. The
unsettled claims aggregate approximately $351,000. The Company has included
approximately $253,000 in accounts payable at December 31, 2003 as a contingency
related to these unsettled claims, actions and judgments based on the Company's
and Counsel's assessment. During the year ended December 31, 2003, the Company
issued 25,000 shares of its common stock valued at approximately $3,750 and made
cash payments of approximately $66,000 in settlement of certain actions.

Subsequent to the year ended December 31, 2003, the Company entered into
settlement agreements with certain vendors. In connection with these settlement
agreements, the Company is required to pay approximately $70,000 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, 2003 of $11,250 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:

(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.


                                      F-14
<PAGE>


                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


(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, 2003, there were no Series III preferred stock
issued and outstanding.

(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 the investment fund, 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.


                              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.
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 80% 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, in accordance with the warrant the firm exercised
their right to purchase 342,160 shares of the Company's common stock. 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.


                                      F-15
<PAGE>


                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


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.

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
year ended December 31, 2003, the Company expensed $120,000 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 year ended
December 31, 2003, the Company expensed $52,500 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.


                                      F-16
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


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, 2003, the Company
expensed $53,333 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 year ended
December 31, 2003, the Company expensed $18,900.

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, 2003, the Company
issued 550,000 shares of its common stock as compensation for services provided
by its directors and the officer. As of December 31, 2003, the directors and
officer are owed an additional 150,000 shares of the Company's common stock. The
additional shares owed, valued at $21,000, are included in accrued expenses in
the accompanying consolidated balance sheet. The Company expensed $101,000
related to these issuances during the year ended December 31, 2003.

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, 2003, each party is owed an
additional 50,000 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 consolidate balance sheet. During the year ended December 31, 2003
the Company expensed $39,249 related to these agreements.

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, 2003, the Company expensed $16,667
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.


                        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.


                        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.


                                      F-17
<PAGE>


                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


                    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.


NOTE 14 - STOCK OPTION PLANS


                           ISSUANCE OF STOCK OPTIONS

In February 2002, the Company entered into a formal employment agreement with a
key employee of the Company. The agreement terminated on April 30, 2002. The
employee, however, qualified to participate in the Company's 1999 Incentive
Stock Option Plan and received an option to purchase 100,000 shares of the
Company's common stock at $0.10 per share. The employee became fully vested
during fiscal 2002. The employee had previously been issued 33,000 shares
relating to this agreement and exercised 33,334 in May 2003. The remaining
33,666 options expired unexercised.


                             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, 2003, 220,000 options were outstanding under the
1999 Option Plan. During the year ended December 31, 2003, the Company issued
438,787 shares of its common stock under the 1999 Stock Option Plan in lieu of
granting options. As of December 31, 2003, 889,810 non-plan options were
outstanding.

The following information summarizes the Company's stock option activity at
December 31, 2003:

Employee and Director's Stock Options:

                                                              Weighted
                                                              Average
                                                             Exercise
                                                Options        Price
                                               --------      --------
          Outstanding at December 31, 2001      267,500      $    .98
                   Granted                           --            --
                   Exercised                         --            --
                   Expired or cancelled              --            --
                                               --------      --------

          Outstanding at December 31, 2002      267,500           .98
                   Granted                           --            --
                   Exercised                    (17,500)         .001
                   Expired or cancelled         (30,000)          .87
                                               --------      --------

          Outstanding at December 31, 2003      220,000      $   1.07
                                               ========      ========


                                      F-18
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


Non-employee stock options:
---------------------------
                                                             Weighted
                                                              Average
                                                             Exercise
                                                Options       Price
                                               --------      --------
          Outstanding at December 31, 2001      474,810      $    .99
                   Granted                      100,000           .10
                   Exercised                    (58,000)          .06
                   Expired or cancelled          (5,000)         1.00
                                               --------      --------

          Outstanding at December 31, 2002      511,810           .98
                   Granted                      450,000           .22
                   Exercised                    (33,334)          .10
                   Expired or cancelled         (38,666)          .04
                                               --------      --------

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

The following table summarizes information about stock options outstanding and
exercisable at December 31, 2003:

<TABLE>
<CAPTION>
                                                Outstanding and exercisable
                               --------------------------------------------------------------
                                                  Weighted
                                                   Average        Weighted
                                                  Remaining       Average
                                  Number            Life          Exercise         Number
                                Outstanding       in Years         Price        Exercisable
                               --------------    ------------    -----------    -------------
<S>                            <C>               <C>             <C>            <C>
Range of exercise price:
     $.001 to $.50                   626,000        1.73            .30              626,000
     $.51 to $1.00                   243,810        6.43            .96              243,810
     $1.01 to $1.50                  240,000        4.50            1.46             240,000
                               --------------                                   -------------
                                   1,109,810                                       1,109,810
                               ==============                                   =============
</TABLE>



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, 2003, 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, 2003 and 2002, 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.


                                      F-19
<PAGE>


                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


The provision (benefit) for income taxes differs from the amounts computed by
applying the statutory federal income tax rate to income (loss) before provision
for income taxes is as follows:


                                                        December 31,
                                                  ------------------------
                                                     2003           2002
                                                  ---------      ---------
     Taxes benefit computed at statutory rate     $(254,000)     $(792,000)
     Losses for which no tax benefit realized       254,000        792,000
                                                  ---------      ---------
     Net income tax benefit                       $      --      $      --
                                                  =========      =========

The Company has a net operating loss carryforward for tax purposes totaling
approximately $11,365,000 at December 31, 2003 expiring through the year 2018.

Listed below are the tax effects of the items related to the Company's net tax
asset:

                                                         December 31, 2003
                                                         -----------------
        Tax benefit of net operating loss carryforwards     $ 3,994,000
        Valuation allowance                                  (3,994,000)
                                                            -----------
        Net deferred tax asset recorded                     $        --
                                                            ===========

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 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. 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. During the year ended December 31, 2003, the Company expensed $13,952
related to these options.

In March 2003, the 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, 2003, the
Company expensed $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.

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.

In April 2003, the Company amended its employment agreement with its Senior Vice
President of Sales ("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, 2003, the Company expensed $110,250 related to this agreement. 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.


                                      F-20
<PAGE>

                  CHAMPIONLYTE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


In June 2003, the Company entered into formal employment agreements with a key
officer/shareholder, 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, 2003, the Company issued 149,750 shares of
its common stock as compensation.


               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, 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.


NOTE 17 - SUBSEQUENT EVENTS


                                 STOCK ISSUANCES

In January 2004, the Company issued 250,000 shares of its common stock in full
settlement of amounts owed to a vendor for services previously rendered.

In February 2004, the financial advisory firm exercised their right, under the
warrant, to purchase 342,160 shares of the Company's common stock.

In February 2004, the Company issued 204,110 shares of its common stock in
settlement of amounts due, the Company issued 200,000 shares of its common stock
in consideration of its convertible note payable with the investment company,
63,888 shares of its common stock to the President of the Company for
compensation, issued 150,000 shares of its common stock as compensation for
services provided by its directors, and issued 33,000 shares of its common stock
for web design services provided.

In March 2004, Alpha exercised and received 178,571 shares of the Company's
common stock related to their convertible note payable. In March 2004, the
Company issued 275,000 shares of the Company's common stock to legal counsel and
another professional.


                                  LEGAL MATTERS

In January 2004, the 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.


                                      F-21

<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. On June 25, 2003, Radin Glass & Co.,
LLP was dismissed as our independent auditor and we appointed Massella &
Associates, CPA, PLLC as our new independent auditor.

                                    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 March 29, 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      48         Director

Eli Greenstein       62         Director

Donna Bimbo          44         President and Secretary, ChampionLyte
                                Beverages, Inc., our subsidiary


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.


                                       11
<PAGE>


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 varied manufacturing and management experience. He has experience in
"turn around" situations, increasing profitability and bringing profitability to
a company. 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 many 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.

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. He possesses
executive leadership skills and experience in operations, finance, due
diligence, corporate strategic planning, sales, marketing, branding,
fulfillment, business development and logistics. 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 frim that sells and markets
sugar-free, low-carbohydrate products to health food and natural product
retailers and distributors, drug store , supermarket chains and major diet
plans. Mr. Greenstein had been retired prior to opening Alldiet, Inc. after he
sold Double G Foods, a food distribution business, in 1992.

DONNA BIMBO was appointed as President and Secretary of our subsidiary,
Championlyte Beverage, Inc., on April 16, 2003. She devotes her full time to
Championlyte Beverage, Inc. Prior to her employment with us, she had been the
Director of International Business for Snapple Beverage Group and the Triarc
Group, both based in White Plains, New York from January 1992 until February
2003. The Triarc Group manufactures and distributes Royal Crown Cola and other
small bottling products. Specifically, she worked for Snapple from 1992 through
1995. She then worked for Triarc from 1995 through 1997. In 1997 Triarc bought
Snapple and she assumed her previous position with Snapple. In 2001, Cadbury
Schweppes bought Snapple. In such capacity, she has been responsible for the
development of new business as well as the maintenance of the established
business base. She assisted in the creation of policies and procedures for
Snapple's worldwide operations and was involved in all legal aspects of the
worldwide business such as trademarks and negotiation of contracts. She assisted
in the establishment of new business in 26 countries. Prior to working in such
position, she was the Senior Manager of International Business at Snapple
Beverage Corporation in East Meadow, New York since December 1992. Her
responsibilities included the management of all activities including all rate
negotiations, overseeing all phases of import/export business, FDA regulations
and business terms and tariffs.

She received a Bachelor of Arts degree from Kean College of New Jersey in 1980
and attended the International Business Courses held at the World Trade
Institute in New York from 1984 to 1986. Ms. Bimbo was the guest speaker at the
BWN Summit on Globalization in Washington, DC in 2002. She spoke at Temple
University in June 2003 on Global Trends and Opportunities.


                                       12
<PAGE>


The Directors named above will serve until the next annual meeting of our
shareholders in the year 2003. 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, 2003.

ITEM 10. EXECUTIVE COMPENSATION

The following table sets forth information concerning annual and long-term
compensation, on an annualized basis for the 2003 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 2003.

<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE

                                        ANNUAL COMPENSATION                              LONG TERM COMPENSATION
                                                                                            RESTRICTED SECURITIES
NAME AND PRINCIPAL                      FISCAL     ANNUAL       STOCK       UNDERLYING        OPTIONS   ALL OTHER
POSITION                                 YEAR      SALARY       BONUS      COMPENSATION       AWARDS  (NO. OF SHARES) COMPENSATION
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>      <C>           <C>         <C>                <C>     <C>             <C>
David Goldberg, President,               2003        (1)          (1)       $  42,000           -0-      200,000           (1)
Principal Financial Officer
And Principal Accounting Officer

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

(2) Effective April 16, 2003, our wholly owned subsidiary, ChampionLyte
Beverages, Inc. entered into a two year employment agreement with Ms. Bimbo. The
employment agreement provides 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:


                                       13
<PAGE>


(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.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of March 29, 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.


Name and Address of              Amount and Nature of   Percent of
Beneficial Owner                 Beneficial Ownership   Outstanding Shares(1)
                                 ---------------------  ---------------------
Thad Kaplan                               95,000                  *
David Goldberg                           383,688               1.18%
Steven Field                              66,500                  *
Marshall Kanner                          870,000               2.67%
Eli Greenstein (recently
  appointed as a director)                24,999                  *
Donna Bimbo                                    0                  *
Stedman Walker, Ltd. (2)               2,000,000               6.14%
Alan Posner                            1,690,291               5.19%
Mark Streisfeld(3)                     1,650,000               5.07%
Elaine Streisfeld (4)                  1,640,217               5.04%
All Executive Officers and Directors   1,440,188               4.49%
  as a Group (5 Persons)


* - Less Than One Percent

(1) Based on 32,568,374 shares issued and outstanding as of March 30, 2004.

(2) Little Cobbler Corp. Doing business as Stedman Walker, Ltd. Raymond Bloom is
a representative of Stedman Walker, Ltd. and has investment control of Stedman
Walker, Ltd.

(3) Championlyte Asset Acquisition Corp. has assigned 750,000 of its shares to
Mark Streisfeld. This amount is not included in the above ownership amount. If
it were, Mr. Streisfeld would own 7.48% of the outstanding shares.

(4) Includes shares also held by Stanley Streisfeld, Elaine Streisfeld's
husband. Elaine and Stanley Streisfeld are Mark Streisfeld's parents.



                                       14
<PAGE>


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 March 30, 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 March 30, 2004


SERIES III 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)
---------------------  ---------------- ----------------  ----------------------




(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 March 30, 2004



                                       15
<PAGE>


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 March 30, 2004

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


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

As of December 31, 2002, we had $140,000 of payables to Elaine Streisfeld, the
mother of one of our former officers, Mark Streisfeld. During 2002, we entered
into three short-term loans with this individual. Such notes were due thirty
days from the dates of issuance of July and September 2002, respectively. On
March 27, 2003, we entered into an agreement to repay such indebtedness of
$140,000 in four equal installments with $35,000 of common stock based on a 20%
reduction to the then average closing price of the common stock for three
trading days prior to the issuance date of such common stock for the quarter. We
may at our option repay such indebtedness on a quarterly basis with cash for a
20% premium to the face value of such quarterly payment due.

As of March 29, 2004, we issued 1,412,052 shares of our common stock to Ms.
Streisfeld. This represents repayment of $105,000 of the amount owed. Based on a
final payment of $35,000 due on January 1, 2004, we have agreed to issue Ms.
Streisfeld an additional 210,000 shares of our common stock.

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.

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.



                                       16
<PAGE>


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: None

(a) Reports on Form 8-K.

A Form 8-K was filed with the SEC on September 19, 2003 based on Item 2,
Acquisition of Assets and amendment to this Form 8-K was filed on November 7,
2003.


ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

For the Company's fiscal years ended December 31, 2003 and December 31, 2002, we
were billed approximately $64,291 and $27,500, 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, 2003.

Tax Fees

For the Company's fiscal year ended December 31, 2003 and December 31, 2002, we
were billed $4,800 and $-0-, respectively for professional services
rendered for tax compliance, tax advice, and tax planning.

All Other Fees

The Company incurred other fees related to services rendered by our
principal accountants for the fiscal year ended December 31, 2003 as follows:

Reviews of Form 8-K and Form SB-2 filings and amendments - $36,465


                                       17
<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
                            -----------------------------------
                            DAVID GOLDBERG
                            President, Principal Financial Officer,
                            Principal Accounting Officer and Chairman
                            of the Board of Directors

Dated: March 30, 2004


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                                                              March 30, 2004
---------------------------  President, Principal Financial Officer,
     DAVID GOLDBERG          Principal Accounting Officer and Chairman
                             of the Board of Directors


/s/ Steven Field              Director                                          March 30, 2004
---------------------------
    STEVEN FIELD


/s/ Thad Kaplan               Director                                          March 30, 2004
--------------------------
    THAD KAPLAN


/s/ Eli Greenstein            Director                                          March 30, 2004
---------------------------
   ELI GREENSTEIN


                              Director
---------------------------
    MARSHALL KANNER
</TABLE>



                                       18