SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                         AMENDMENT NO. 3 TO FORM 10-KSB

                 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, 2002

                            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)

                           CHAMPIONLYTE PRODUCTS, INC.

      2999 NE 191st Street, Penthouse 2, North Miami Beach, Florida 33180
              (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, 2002: $266,336

AGGREGATE MARKET VALUE OF THE VOTING COMMON STOCK HELD BY  NON-AFFILIATES OF THE
REGISTRANT AS OF JULY 6, 2004, WAS: 3,569,023


<PAGE>

NUMBER OF SHARES OF THE REGISTRANT'S COMMON STOCK OUTSTANDING AS OF JULY 6, 2004
IS: 33,768,545

TRANSFER AGENT AS OF JULY 6, 2004:

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

EXPLANATION  OF AMENDED  FILING:  THIS  AMENDMENT  NO. 3 TO FORM 10-KSB IS BEING
FILED  TO  INCLUDE  CHANGES  TO  VARIOUS   SECTIONS  OF  THIS  FILING  BASED  ON
CHAMPIONLYTE'S RESPONSE TO COMMENTS RECEIVED IN IT'S FORM SB-2 FILING.

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

BUSINESS - OUR COMPANY

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

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

On December 3, 1999, Meridian changed its name to Meridian USA Holdings, Inc. On
October 1, 2001, we changed our name to ChampionLyte Products, Inc.

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 no calories, no carbohydrates,
no sugar and no preservatives) with electrolyte  replacement without sugar, fat,
calories 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 chocolate flavored syrup
pursuant to a license agreement with Cumberland Packing Corp. for the use of the
Sweet 'N Low trademark for its syrup product.

<PAGE>

SUPPLY ARRANGEMENTS

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

CO-PACKING ARRANGEMENTS

We have not  finalized  agreements  with  co-packers  as of this  date as we are
researching  logistics and  geographic  areas to determine  where to set up long
term  co-packing  arrangements.  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  co-packers  are  responsible  for their own liability
insurance. The co-packer is paid according to the work they do for us.

Notwithstanding the above, we have identified and contracted with a co-packer in
Southern Florida for our initial  production run which commenced the week of May
27,  2003.  We will  continue  to  manufacture  and  bottle our  products  under
co-packing  arrangements.  We are currently  investigating  additional  regional
co-packing   facilities.   We  have   identified  and  approved  two  additional
facilities, one in Northern Florida and one in New York.

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.

We have already  commenced our first full  production run of all 5 flavors of 20
ounce 12 packs.  In addition,  we will produce 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.  We anticipate that we will
expand  into both the New York  production  facility  and the  northern  Florida
production  facility in the last quarter of 2003.  In  addition,  we expect that
further expansion will continue on a regional basis if sales volume increases.

SALES

Using a food broker 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.

In order to attain a solid foundation,  we will maximize our efforts towards the
South East 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,  Connecticut  (North East).  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 does take 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 4 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.

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, 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.

<PAGE>

Our  management  believes  that our products  and our network of brokers  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 us 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.

MARKETING

Internal marketing will be done through a broker network, 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 are in the process of  finalizing 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.

<PAGE>

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.  Upon default of the  promissory  note.  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.

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 alleges 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 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  1,175,000 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.

<PAGE>

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.

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 alleges 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  alleges 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 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.


<PAGE>

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 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 determining the validity of this claim.

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  September9,  2003,  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 2000.

YEAR     QUARTER            HIGH        LOW

2000      First            2.8125      1.4375
2000      Second           3.0625      1.0313
2000      Third            3.25        1.5
2000      Fourth           2.4375      1.5
2001      First            2.3125      1.375
2001      Second           2.07        0.51
2001      Third            1.48        0.52
2001      Fourth           1.05        0.51
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

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 2002 and have no
current intention to pay any dividends.

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


<PAGE>

Forward-Looking Statements

Forward-looking statements, based on management's current views and assumptions,
are made  throughout the  Management's  Discussion and Analysis and elsewhere in
this report to  stockholders.  These statements are subject to certain risks and
uncertainties  that  could  cause  actual  results  to  differ  materially  from
historical  results and those  presently  anticipated  or  projected.  Among the
factors  that may affect  operating  results are the  following:  success of our
change in focus, competitive environment, and general economic conditions.

Results of Operations (exclusive of discontinued operations)

Years Ended December 31,

                                                  2002                   2001
                                               ----------             ----------
Net Sales                                      $  266,336             $  368,631
Cost of Goods Sold                                165,909                360,754
Gross Profit                                      100,427                  7,877
Selling, General and
Administrative
Expenses                                        1,956,991              4,153,599

Revenues from operations  during the year ended December 31, 2002 were $266,336,
as compared to $368,631 for the year ended  December  31, 2001.  The decrease in
sales was due to the decline in our ability to market our products.

Selling,  general and  administrative  expenses  decreased to $1,956,991 for the
year ended  December  31,  2002 as  compared  to  $4,153,599  for the year ended
December  31,  2001.  This  decrease  is  almost  entirely  a result  of a large
reduction in marketing and advertising expenses.

                                                   Year Ended December 31,
Liquidity                                          2002                2001
----------                                     ------------        -------------
Net Cash (Used in)
    Provided by Operations                     $  (950,132)         $(3,410,540)
Working Capital (deficiency)                   $(1,016,803)         $   882,272

Net cash flows from operations increased from $(3,410,540) during the year ended
December 31, 2001 to $(950,132)  during the year ended  December 31, 2002.  This
decrease  is almost  entirely a result of a large  reduction  in  marketing  and
advertising  expenses.  Until our  restructuring is complete and working capital
improves,   we  have  significantly   reduced  our  spending  on  marketing  and
advertising.

Other income  (expense) for the year ended  December 31, 2002 "2002" as compared
to the year ended  December 31, 2001 "2001"  changed for the following  reasons:
investment  income  decreased  from $234,405 for 2001 to $11,732 for 2002 or 95%
due to less cash and  marketable  securities  on hand,  since over $5 million of
cash and  marketable  securities  were  utilized  over  the  last  years to fund
operations.  Gains on sale of investment securities for 2002 of $10,860 compared
to none for 2001 is the result of selling the remaining marketable securities on
hand from  2001.  Interest  expense  increased  mildly  from  $14,291 in 2001 to
$16,278 in 2002 or 14%. The increase in interest expense is primarily the result
of the  additional  short term  financing  obtained  from a related party during
2002.

We had a working  capital  deficit of  $1,016,803  as of  December  31,  2002 as
compared to a working  capital surplus of $882,272 as of December 31, 2001. This
decline  in  working  capital  deficit  is  due to our  continuing  losses  from
operations.

FUTURE OUTLOOK

We are  continuing to negotiate  with our creditors as well as  negotiating  the
settlement of  litigation,  particularly  with Sara Lee  Products.  Based on our
settlement  with  Sara  Lee  Products,  we  believe  that we will  enter  into a
licensing agreement with Sara Lee within the next thirty days for the use of the
Championlyte  name.  We  are  restructuring  our  corporate  structure,   moving
Championlyte  into  a  beverage  subsidiary.   We  have  also  reformulated  the
Championlyte  product by switching  flavor houses,  reducing  sweetener  levels,
adding flavor and taking out preservatives. On July 30, 2003, we re-launched the
new  version  with  additional  flavors.  All  of  these  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.


<PAGE>

CRITICAL ACCOUNTING POLICIES

The discussion and analysis of our financial condition and results of operations
are based upon our consolidated  financial statements,  which have been prepared
in accordance with accounting principles generally accepted in the united states
of america.  The preparation of these financial  statements  requires us to make
estimates  and  judgements  that  affect  the  reported  amount  of  assets  and
liabilities,  revenues and expenses, and related disclosure on contingent assets
and  liabilities  at the  date of our  financial  at the  date of our  financial
statements.  Actual  results may differ  from these  estimates  under  different
assumptions and conditions.

Critical  accounting  policies  are  defined  as those  that are  reflective  of
significant  judgments and  uncertainties,  and potentially result in materially
different  results under different  assumptions and conditions.  We believe that
our critical  accounting  policies are limited to those described  below.  For a
detailed  discussion on the application of these and other  accounting  policies
see our Note 3 to our consolidated financial statements.

Equity Issuances for Services

We account for all transactions  under which  employees,  officers and directors
receive  shares  of  stock  in  accordance  with the  provisions  of  Accounting
Principles  Board Opinion No.25  "Accounting for Stock Issued to Employees".  In
accordance  with  Statement of  Financial  Accounting  Standards  No. 123 ("SFAS
123"),  "Accounting  for Stock -Based  Compensation",  we adopted the  pro-forma
disclosure  requirements  of SFAS 123.  Accordingly,  no  compensation  has been
recognized  in the  results  of  operations  for  the  employees,  officers  and
directors stock option plan other than for those options issued to non-employees
for other  services.  Issuances  of stock to  employees  are  valued at the fair
market  value  at the time of  issuance  or  earned  by the  agreement  and then
expensed over the respective term of such agreement.

We account for non-employee  equity transactions in accordance with SFAS No. 123
and EITF 96-18. The valuing of such equity considers the fair value of the stock
at issuance or contract date,  the  volatility of the stock,  risk free rates of
return, the term for which services are to be rendered and the date upon earning
such equity. We may utilize the Black Scholes formula to arrive at the intrinsic
value of certain equity rights issued for services for non-employee issuances.

Accounting for Income Taxes

As part of the process of preparing our consolidated financial statements we are
required  to  estimate  our income  taxes.  Management  judgment  is required in
determining our provision of our deferred tax asset. We recorded a valuation for
the full deferred tax asset from our net operating losses carried forward due to
us not demonstrating any consistent profitable operations. In the event that the
actual  results  differ from these  estimates  or we adjust  these  estimates in
future periods we may need to adjust such valuation recorded.

ITEM 7. FINANCIAL STATEMENTS

The financial  statements of the Company,  together with the report of auditors,
are as follows:

<PAGE>

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

CHAMPIONLYTE PRODUCTS, INC. AND SUBSIDIARIES

Independent Auditors' Report...........................................F-2

Consolidated Balance Sheet.............................................F-3

Consolidated Statement of Operations...................................F-4

Consolidated Statement of Stockholders' Deficiency.....................F-5

Consolidated Statement of Cash Flows...................................F-6

Notes to Consolidated Financial Statements......................F-7 - F-20


<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 years ended December 31, 2002 and 2001.  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 audits.

We conducted our audit in accordance with auditing standards  generally accepted
in the United  States.  Those  standards  require  that we plan and  perform the
audits to obtain reasonable assurance about whether the financial statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of ChampionLyte Products, Inc. and
subsidiaries,  for the years ended December 31, 2002 and 2001 and the results of
their  operations  and their cash  flows for the years 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 1, 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 1. 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 PRODUCTS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                                DECEMBER 31, 2002

<TABLE>
<CAPTION>
                                     ASSETS
<S>                                                                             <C>
CURRENT ASSETS:
       CASH AND CASH EQUIVALENTS                                                $         71
       PREPAID EXPENSES                                                               10,825
                                                                                ------------
                           TOTAL CURRENT ASSETS                                       10,896
PROPERTY AND EQUIPMENT, NET                                                           27,284
                                                                                ------------
                                                                                $     38,180
                                                                                ============
                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
       ACCOUNTS PAYABLE                                                         $    610,969
       NET LIABILITIES OF DISCONTINUED OPERATIONS                                    116,730
       NOTES PAYABLE - RELATED PARTY                                                 140,000
       ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES                                160,000
                                                                                ------------
                       TOTAL CURRENT LIABILITIES                                   1,027,699
                                                                                ------------
SERIES II REDEEMABLE CONVERTIBLE PREFERRED STOCK, PAR VALUE $.01 - AUTHORIZED
       8,500 SHARES, 8,230 SHARES ISSUED AND OUTSTANDING (LIQUIDATION
       VALUE $8,230,000)                                                           8,229,727
COMMITMENTS AND CONTINGENCY                                                               --
STOCKHOLDERS' DEFICIENCY:
       SERIES I CONVERTIBLE PREFERRED STOCK,  PAR VALUE $1.00 - AUTHORIZED
            100,000 SHARES, 0 SHARES ISSUED AND OUTSTANDING                               --
       COMMON STOCK, PAR VALUE $.001 - AUTHORIZED 40,000,000 SHARES,
                                     ISSUED AND OUTSTANDING 7,559,399                  7,560
       ADDITIONAL PAID-IN CAPITAL                                                  4,979,550
       ACCUMULATED DEFICIT                                                       (14,206,355)
                                                                                ------------
                   TOTAL STOCKHOLDERS' DEFICIENCY                                 (9,219,245)
                                                                                ------------
                                                                                $     38,180
                                                                                ============
</TABLE>

                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                       F-3

<PAGE>

                  CHAMPIONLYTE PRODUCTS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                            YEARS ENDED DECEMBER 31,

                                                          2002          2001
                                                      -----------    -----------
NET SALES                                            $   266,336    $   368,631
COST OF GOODS SOLD                                       165,909        360,754
                                                      -----------    -----------
GROSS PROFIT                                             100,427          7,877
SELLING, GENERAL AND ADMINISTRATIVE                    1,956,991      4,153,599
                                                      -----------    -----------
LOSS FROM OPERATIONS                                  (1,856,564)    (4,145,722)
OTHER INCOME (EXPENSE):
  INVESTMENT INCOME                                       11,732        234,405
  INTEREST EXPENSE                                       (16,728)       (14,291)
  GAIN ON SALES OF INVESTMENT                             10,860             --
   EXPENSES RELATING TO CONVERSION OF NOTES TO
   SERIES II PREFERRED STOCK                                  --       (898,605)
                                                      -----------    -----------
OTHER EXPENSES, NET                                        5,863       (678,491)
                                                      -----------    -----------

NET LOSS FROM CONTINUING OPERATIONS BEFORE
 INCOME TAX EXPENSE                                   (1,850,700)    (4,824,213)
INCOME TAX EXPENSE                                            --             --
                                                      -----------    -----------
NET LOSS FROM CONTINUING OPERATIONS                   (1,850,700)    (4,824,213)
LOSS ON FROM DISCONTINUED OPERATIONS                    (476,910)      (744,949)
                                                      -----------    -----------
NET LOSS                                              (2,327,610)    (5,569,162)
SERIES II DEEMED PREFERRED DIVIDENDS                     411,500        399,965
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS            $(2,739,110)   $(5,969,127)
                                                     ===========    ===========
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE
LOSS FROM CONTINUING OPERATIONS AVAILABLE
TO SHAREHOLDERS                                      $     (0.30)   $     (0.81)
LOSS FROM DISCONTINUED OPERATIONS                          (0.06)         (0.12)
                                                      -----------    -----------
                                                     $     (0.36)   $     (0.93)
                                                     ===========    ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
  OUTSTANDING - BASIC AND DILUTED                      7,528,861      6,427,168
                                                     ===========    ===========
OTHER COMPREHENSIVE LOSS:
NET LOSS                                             $(2,327,610)   $(5,569,162)
UNREALIZED GAIN FROM MARKETABLE SECURITIES                    --         12,681
                                                      -----------    -----------
COMPREHENSIVE LOSS                                   $(2,327,610)   $(5,556,481)
                                                     ===========    ===========

                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                       F-4
<PAGE>

                  CHAMPIONLYTE PRODUCTS, INC. AND SUBSIDIARIES

               CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY

<TABLE>
<CAPTION>
                                                                                                       Series I
                                                                          Common Stock          Convertible Preferred Stock
                                                                    --------------------------   ----------------------
                                                                       Shares        Amount         Shares       Amount
                                                                    ----------      ----------   ----------  ----------
<S>                                                                  <C>            <C>               <C>    <C>
Balance, December 31, 2000                                           6,376,399      $    6,377        3,500  $    3,500
Issuance of common stock for services                                   15,000              15           --          --
Issuance of options for services                                            --              --           --          --
Effect of change in fair value of available-for-sale securities             --              --           --          --
Repurchase of shares in settlement with consultant                     (95,000)            (95)          --          --
Exercise of stock options                                               50,000              50           --          --
Conversion of Series I Preferred Stock                               1,155,000           1,155       (3,500)     (3,500)
Net loss                                                                    --              --           --          --
                                                                    ----------      ----------   ----------  ----------
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
                                                                    ----------      ----------   ----------  ----------
December 31, 2002                                                    7,559,399      $    7,560          $--         $--
                                                                    ==========      ==========   ==========  ==========
</TABLE>

<TABLE>
<CAPTION>
                                                                  Additional                         Unrealized
                                                                   Paid-in           Deferred      Gain on Certain
                                                                   Capital         Compensation      Investments
                                                                 -----------         ---------         --------
<S>                                                              <C>                 <C>               <C>
Balance, December 31, 2000                                       $ 4,590,150         $ (82,891)        $ 60,992
Issuance of common stock for services                                 23,260                --               --
Issuance of options for services                                     330,258            (8,711)              --
Effect of change in fair value of available-for-sale securities           --                --          (48,311)
Repurchase of shares in settlement with consultant                   (24,905)               --               --
Exercise of stock options                                              4,950                --               --
Conversion of Series I Preferred Stock                                 2,345                --               --
Net loss                                                                  --                --               --
                                                                 -----------         ---------         --------
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
                                                                 -----------         ---------         --------
December 31, 2002                                                $ 4,979,550              $--               $--
                                                                 ===========         =========         ========
</TABLE>

<TABLE>
<CAPTION>
                                                                                     Total
                                                                   Accumulated    Stockholders'
                                                                     Deficit       Deficiency
                                                                  ------------    ------------
<S>                                                                <C>             <C>
Balance, December 31, 2000                                         $(6,309,583)    $(1,731,455)
Issuance of common stock for services                                     --            23,275
Issuance of options for services                                          --           321,547
Effect of change in fair value of available-for-sale securities           --           (48,311)
Repurchase of shares in settlement with consultant                        --           (25,000)
Exercise of stock options                                                 --             5,000
Conversion of Series I Preferred Stock                                    --              --
Net loss                                                            (5,569,162)     (5,569,162)
                                                                  ------------    ------------
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)
                                                                  ------------    ------------
December 31, 2002                                                 $(14,206,355)    $(9,219,245)
                                                                  ============    ============
</TABLE>

See notes to consolidated financial statements.

                                       F-5


<PAGE>

                  CHAMPIONLYTE PRODUCTS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                          Years Ended December 31,
                                                                        ----------------------------
                                                                            2002            2001
                                                                        -----------      -----------
<S>                                                                     <C>              <C>
Cash flows from operating activities:
 Net loss                                                               $(2,327,610)     $(5,569,162)
 Adjustments to reconcile net loss to net cash
  used in operating activities:
   Net loss from discontinued operations                                    476,910          744,949
   Depreciation and amortization                                             23,712          343,424
   Write down or loss on disposal of equipment                              128,814               --
   Common stock and options issued for services                              53,550          344,822
   Amortization of debt discount                                                 --          635,442
 Changes in current assets and liabilities:
  Accounts receivable                                                        33,766          (20,750)
  Other receivable                                                          100,000               --
  Inventory                                                                      --           74,391
  Advances                                                                    2,115           (2,115)
  Prepaid expenses                                                           41,567            5,942
  Deposits                                                                   11,246               --
  Accounts payable                                                          445,769          151,712
  Accrued expenses and other current liabilities                             60,030         (119,195)
                                                                        -----------      -----------
Net cash used in operating activities of continuing operations             (950,132)      (3,410,540)
                                                                        -----------      -----------
Cash flows from investing activities:
  Proceeds from sale of marketable securities                               990,279        2,809,415
  Capital expenditures                                                           --          (85,042)
                                                                        -----------      -----------
Net cash used in investing activities of continuing operations              990,279        2,724,373
                                                                        -----------      -----------
Cash flows from financing activities:
  Exercise of stock options                                                      --            5,000
  Repurchase of shares for settlement of consulting agreement                    --          (25,000)
  Proceeds from loans and notes payable                                     140,000               --
  Principal payments on notes payable                                            --           (3,066)
                                                                        -----------      -----------
Net cash used in financing activities of continuing operations              140,000          (23,066)
                                                                        -----------      -----------
Net cash used in discontinued operations                                   (209,534)        (717,993)
                                                                        -----------      -----------
Net decrease in cash                                                        (29,387)      (1,427,226)
Cash, beginning of year                                                      29,458        1,456,684
                                                                        -----------      -----------
Cash, end of period                                                     $        71      $    29,458
                                                                        ===========      ===========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year:
 Interest expense                                                       $        --      $        --
                                                                        ===========      ===========
 Income taxes                                                           $        --      $        --
                                                                        ===========      ===========
Noncash investing and financing activities:
 Conversion of note payable to Series II preferred stock                $                $ 8,229,727
                                                                        ===========      ===========
 Issuance of warrants in conjunction with convertible notes payable     $        --      $ 1,357,922
                                                                        ===========      ===========
</TABLE>

See notes to consolidated financial statements

                                       F-6

<PAGE>

                           CHAMPIONLYTE PRODUCTS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2002 AND 2001

1. BUSINESS AND BASIS OF PRESENTATION:

                                    Business:

The  Company,   ChampionLyte,   Inc.   ("ChampionLyte"),   markets   sugar-free,
calorie-free, sports refresher beverage under the ChampionLyte brand name and up
to mid  December  2002 the  Company  sold  and  marketed  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.  On October 3, 2001, with
the  majority  consent  of  its  shareholders,  Meridian  changed  its  name  to
ChampionLyte Products,  Inc. (the "Company").  In December 2002, a 67% ownership
of Old Fashioned was  relinquished as part of a foreclosure  action on a $15,000
advance made to the Company in mid 2002. As a consequence of loosing  control of
such business the Company has decided to record the Old Fashioned syrup business
as a discontinued  business. The Company is currently reviewing the terms of the
agreements  relating to the  aforementioned  foreclosure of Old Fashioned and an
appropriate form of recourse action if any.

In  mid-December  2002,  the Series II Convertible  Preferred  Stock was sold to
another  investment firm. The new bond holders began to exercise their influence
over the Company in December 2002 and ultimately  replaced the management of the
Company in early 2003.

                             Basis of Presentation:

Since its inception,  the Company has incurred significant operating losses. The
Company has limited assets on hand and will be unable to sustain  operations for
a prolonged period of time. The Company will have to obtain  additional  capital
or generate additional revenue in order to continue  operations.  The Company is
actively  engaged in  pursuing  additional  sources  of  capital.  However,  the
Company's  management has indicated that if it is unable to  successfully  raise
additional  capital or it is unable to generate  additional  revenue in the near
future,  the Company may cease  operations.  These conditions raise  substantial
doubt about the Company's ability to continue as a going concern.

The financial  statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and  classification  of  liabilities  that may result  from the  outcome of this
uncertainty.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

                                       F-7

<PAGE>

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 make estimates and assumptions that affect the reported amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the  financial  statements  and the reported  amounts of revenue and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.

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.

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 the gain.

e.  Allowance  for  accounts   receivable-   The  Company  records  a  bad  debt
expense/allowance  based on specific receivable basis. All outstanding  accounts
receivable  accounts are reviewed for  collectibility  on an  individual  basis.
There is no accounts receivable at December 31, 2002.

f. Revenue  recognition  - Revenues are  recognized  as products are received by
customers.

g.  Inventory - Inventory is stated at lower of cost or market on the  first-in,
first-out method of inventory valuation. At December 31, 2002 the Company has no
inventory.

h.  Property  and  equipment  -  Property  and  equipment  is  stated  at  cost.
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.

i.  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.

j. Income taxes - Income taxes are  accounted  for under  Statement of Financial
Accounting  Standards No. 109,  "Accounting for Income Taxes," which is an asset
and liability  approach that requires the recognition of deferred tax assets and
liabilities  for the expected  future tax  consequences of events that have been
recognized in the Company's financial statements or tax returns.

                                       F-8

<PAGE>

k. Net loss per share - Basic earnings per share has been calculated  based upon
the weighted  average  number of common shares  outstanding.  Stock options have
been  excluded as common  stock  equivalents  in the diluted  earnings per share
because they are either antidilutive, or their effect is not material.

l. Fair value of financial  instruments - The carrying  amounts  reported in the
balance  sheet for cash,  receivables,  accounts  payable and  accrued  expenses
approximate fair value based on the short-term maturity of these instruments.

m. Licensing agreement - The licensing agreement is amortized on a straight-line
basis over ten years. Since Old Fashioned foreclosed upon in 2002, the licensing
agreement was relinquished as part of the foreclosure action.

n.  Advertising  costs -  Advertising  costs are  expensed  as  incurred.  Total
advertising  costs charged to operations  for the years ended  December 31, 2002
and 2001 amounted to $290,647 and $2,292,688, respectively.

o. Impairment of long-lived  assets - The Company reviews  long-lived assets for
impairment  whenever  circumstances  and situations change such that there is an
indication that the carrying amounts may not be recovered. At December 31, 2002,
the Company believes that there has been no impairment of its long-lived assets.

p.  Stock  options - The  Company  accounts  for all  transactions  under  which
employees, officers and directors receive shares of stock in accordance with the
provisions of Accounting  Principles Board Opinion No. 25, "Accounting for Stock
Issued to  Employees."  In  accordance  with  Statement of Financial  Accounting
Standards No. 123 ("SFAS 123"),  "Accounting for Stock-Based  Compensation," the
Company adopted the pro forma disclosure  requirements of SFAS 123. Accordingly,
no  compensation  has been  recognized  in the  results  of  operations  for the
employees, officers and directors stock option plan other than for those options
issued to non-employees for consulting services.

q.  Comprehensive  income - The  Company  has  adopted  Statement  of  Financial
Accounting  Standard No. 130 ("SFAS  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 of component of stockholders' deficiency.

r. Reclassifications

                                       F-9

<PAGE>

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

s. Recent accounting pronouncements

In June 2001,  the FASB issued SFAS No. 141,  "Business  Combination",  SFAS No.
142,  "Goodwill and Other Intangible  Assets" and SFAS No. 143,  "Accounting for
Asset  Retirement  Obligations".  SFAS No. 141  requires the use of the purchase
method of accounting and prohibits the use of the pooling-of-interest  method of
accounting  for business  combinations  initiated  after June 30, 2001.  It also
requires  that the  Company  recognize  acquired  intangible  assets  apart from
goodwill.  SFAS No. 142 requires,  among other things,  that companies no longer
amortize  goodwill,  but instead test goodwill for impairment at least annually.
In addition, SFAS No. 142 requires that the Company identify reporting units for
the purposes of assessing potential future impairments of goodwill, reassess the
useful  lives  of  other  existing  recognized   intangible  assets,  and  cease
amortization of intangible  assets with an indefinite  useful life. SFAS No. 143
establishes  accounting standards for recognition and measurement of a liability
for an asset  retirement  obligation and the associated  asset  retirement cost,
which will be  effective  for  financial  statements  issued  for  fiscal  years
beginning after June 15, 2002.

In August 2001, the FASB issued SFAS No. 144,  "Accounting for the Impairment or
Disposal of Long-Lived  Assets" which basically  further  clarifies SFAS No. 121
and methods of quantifying  potential  impairments or disposal of assets as well
as the related reporting of such impairments or disposals.

In June 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal Activities". This SFAS applies to costs associated with an
"exit  activity"  that does not involve an entity  newly  acquired in a business
combination  or with a disposal  activity  covered by SFAS No. 144.  These costs
include,  but are not limited to the following:  termination benefits associated
with involuntary terminations, terminating contracts that are not capital leases
and costs to consolidate facilities or relocate employees.  SFAS No. 146 will be
effective for exit or disposal activities initiated after December 31, 2002 with
early application encouraged.

During  2002,  the FASB  issued  SFAS No.  145,  147 and 148,  which were merely
amendments to existing SFAS's or other accounting pronouncements.

The adoption of SFAS No. 141,  SFAS No. 142, SFAS No. 143, SFAS No. 144 and SFAS
No. 146 is not  expected to have a material  effect on the  Company's  financial
position, results of operations and cash flows.

3. RESTATEMENT OF 2002 AND 2001 FINANCIAL STATEMENTS

We made certain  adjustments and  reclassifications  to financial  statements as
follows:

a. "Loss on  impairment of  inventory"  for the year ended  December 31, 2001 of
$139,575,  previously  reported  as a separate  component  of "Other  income and
expenses" has been reclassed to be a component of "Cost of Goods Sold."

b. "Loss on sale of  assets"  for the year ended  December  31,  2002 of $2,229,
previously  reported as a separate  component of "Other income and expenses" has
been  reclassed  to  be  included  as  a  component  of  "Selling,  General  and
Administrative expenses."

c.  "Repurchase of shares for  settlement of consulting  agreement" for the year
ended  December  31, 2001 of  $25,000,  previously  reported  as a component  of
investing  activity  in the  statement  of  cash  flows  was  reclassed  to be a
component of financing activity.

d. Additonal footnote disclosure was added to Note 4, "Discontinued Operations."

4. DISCONTINUED OPERATIONS

In December 2002, a 67% ownership of Old Fashioned was 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.  No value has been  recorded  for the 33%
minority  interest  in Old  Fashioned,  since  there  was no net  equity in such
business segment. In addition due to the

                                      F-10

<PAGE>

lack of control over the minority  share of Old  Fashioned,  lack of cooperation
with the successor management the Company and the Old Fashioned business segment
has not had profitable  operations in the last four years,  management  does not
expect  any  future  cash flows from such  minority  ownership  interest  in the
immediate future. The Company is currently reviewing the terms of the agreements
relating to the  aforementioned  foreclosure of Old Fashioned and an appropriate
form of recourse action if any.

The consolidated  financial  statements and related footnotes for the year ended
2001,  have been  restated,  where  applicable,  to  reflect  the Old  Fashioned
business segment as a discontinued operation.

Additional financial data on the discontinued operations is as follows;
--------------------------------------------------------------------------------
                                                         Year ended December 31,
--------------------------------------------------------------------------------
                                                           2002           2001
Net Sales from discontinued operations                 $ 685,554      $ 876,476
--------------------------------------------------------------------------------
Loss from operations of discontinued
operations  before income taxes                         (355,167)      (744,949)
--------------------------------------------------------------------------------
Loss  on  disposal  of  discontinued
operations  before income taxes                        $(121,733)     $      --
--------------------------------------------------------------------------------

The loss on disposal of discontinued  operations is  predominately  comprised of
the remaining recorded value of the licensing agreement for the right to use the
"Sweet `N Low"  Trademark  utilized  for  marketing  the  sugar-free,  fat-free,
cholesterol-free, chocolate, vanilla and strawberry flavored syrup products.

5. RELATED PARTY TRANSACTIONS

As of December  31, 2002 the Company had $160,000 of payables to a relative of a
former-officer  of the  Company.  During  2002,  the Company  entered into three
short-term loans with this individual.  Such notes were due thirty days from the
date of issuance of July and September 2002, respectively,  and bear interest at
10% for the first month and at the highest legal rate thereafter. As of December
31, 2002 no principal amounts on these notes have been repaid.

6. PROPERTY AND EQUIPMENT

                                      F-11

<PAGE>

Property and equipment consisted of the following:

                                                               December 31,
                                                        ------------------------
                                        Useful Life       2002             2001
                                        -----------     ----------     ---------
Office Furniture and Equipment              5 Years           --         80,280
Coolers                                     5 Years       34,199         34,199
Leasehold Improvements                      5 Years           --         25,873
Website                                     3 Years       11,017             --
Vehicles                                    5 Years           --        116,676
                                                        --------      ---------
                                                          45,216        257,028
Accumulated Depreciation                                 (17,932)       (77,218)
                                                        --------      ---------
                                                        $ 27,284      $ 179,810
                                                        ========      =========

Depreciation  expense was $10,512 and $49,602 for the years ended  December  31,
2002 and 2001, respectively.

7. NOTE PAYABLE

In May 2000,  the Company  entered into a note payable of $17,184,  the proceeds
for which were used to acquire a vehicle.  Such  borrowings  are  secured by the
vehicle  and  bears  interest  at  9%  per  annum,   payable  in  sixty  monthly
installments.  The  vehicle  was  returned  in the  fourth  quarter  of 2002 for
satisfaction of the note payable.

8. CONVERTIBLE NOTE PAYABLE

On June 16, 2000, the Company  entered into a convertible  debt agreement with a
bank. Such agreement  includes a convertible  note payable for $8,000,000.  This
note bears  interest at 5.00% per annum and is  automatically  converted on June
15, 2001. The note may be converted  prior to its mandatory  conversion  date by
either the Company or the note holder upon  satisfaction of certain  conditions.
The note is convertible into Series II Convertible  Preferred Stock at one share
for each $1,000 in debt,  including accrued  interest.  The Company received net
proceeds of $7,366,334 and recorded deferred financing costs of $602,666,  to be
amortized  over one year. In the event the Company is sold or  liquidated  while
any  principal  amount  of the note is  outstanding,  the note  will be due upon
demand, including accrued interest. On May 11, 2000, the Company received bridge
financing from the same note holders for $500,000, which debt was satisfied upon
issuance of the convertible  note. The Company has recorded  $31,000 in interest
expense related to the bridge financing.

Along with the convertible  note, the Company issued 698,948 warrants to acquire
shares of the Company's  common stock. The warrants are exercisable at $1.75 per
share and expire seven years from the date of issuance. The Company has recorded
these  warrants  as a  discount  to the  convertible  note for  $1,357,922.  The
discount was derived from the  Black-Scholes  option-pricing  model based on the
following  assumptions:  expected  stock  price  volatility  of 128%;  risk-free
interest rate of 5.70%; and an expected 7-year life. The discount

                                      F-12

<PAGE>

will be  amortized  as  interest  expense  over one year.  With  respect to such
discount,  the Company recorded  amortization expense of $735,540 for the period
ended December 31, 2000.

On January 8, 2001, the debt holder  converted its $8,000,000  convertible  note
along with  accrued  interest of  $229,727  into 8,230  shares of the  Company's
Series II Convertible  Preferred  Stock.  The Company  amortized  $622,382,  the
remaining  balance of the  discount  on such  note.  Additionally,  the  Company
expensed the balance of the  deferred  finance  charges of $276,223,  which were
attributable to the issuance of the convertible note.

As of December 31, 2002 and 2001, had the Company's board of directors  declared
dividends,  the Company would have accrued $411,500 and $399,965,  respectively,
in dividends on its Series II Convertible Preferred Stock. Such dividends accrue
at the rate of 5% per annum.

9. STOCKHOLDERS' DEFICIENCY

On January 11, 2001,  the Company  issued 3,810 options to acquire shares of the
Company's  common  stock  pursuant  to a one-year  consulting  agreement.  These
options  were  valued at $6,740 or  approximately  $1.77 per  option,  which was
imputed  using  the  Black-Scholes   option-pricing  model  with  the  following
assumptions: expected stock price volatility of 104%; risk-free interest rate of
5.70%;  and an expected life of one year.  The value of the options was recorded
as deferred compensation and will be amortized of the duration of the consulting
agreement.

        On April 16, 2001,  the Company  issued 50,000 options to acquire
        shares of the Company's  common stock pursuant to a member of its
        board of  directors.  Such options are  exercisable  at $0.10 per
        share. These

options  were  valued at $23,585  or  approximately  $0.47 per option  which was
imputed  using  the  Black-Scholes  option  pricing  model  with  the  following
assumptions: expected stock price volatility of 123%; risk-free interest rate of
5.00%; and an expected life of four years. The value of the options was recorded
as  compensation  as of December 31, 2001. On October 3, 2001,  such shares were
exercised the Company received proceeds of $5,000 in regard to this exercise.

In May 2001, the Company  purchased back from a consultant  95,000 shares of its
own common stock for $25,000. Such shares were placed into treasury and retired.
Additionally, the remaining term of the consultant's agreement was terminated at
the time of the repurchase of the shares.

In 2001,  the Company  issued 15,000 shares to members of its board of directors
and of its advisory board. Such shares were valued at an aggregate of $23,275 or
averaging $1.55 per share. Such amount was recorded as compensation.

During the year ended December 31, 2001,  the Company issued 285,000  options to
acquire  shares of its common stock to consultants  pursuant to agreements  with
terms ranging from  six-months to one-year.  The exercise price of these options
range from $0.50 to $1.75.

                                      F-13

<PAGE>

The Company valued the grant of these options at $217,042. Compensation is to be
expensed over the term of the  agreements.  As of December 31, 2001, the Company
has recorded  $206,650 in compensation  expense in relation to these  consulting
agreements.

Additionally,  the  Company has  recorded  $82,891 in  compensation  expense for
options issued in 2000 for which the services  performed in 2001; these expenses
were recorded as deferred compensation at December 31, 2000.

In April  2002,  25,000  options to purchase  the  Company's  common  stock were
exercised at $0.01 per share. The Company  received  proceeds from this exercise
of $250.

For the year ended  December  31,  2002,  the  Company  recognized  $141,602  in
compensation   expense  for  options   issued  under  terms  of  contracts   for
endorsements  contracts and professional  services.  Such contracts were entered
into during the year ended  December  31, 2001 and through the first  quarter of
this year.

On  January  31,  2002,  the  Company  entered  into  a  three-month  employment
agreement, expiring April 30, 2002, with its acting chief operating officer. The
executive  received  100,000  options to purchase  shares of common stock, at an
exercise  price of $0.10 per share.  The Company  valued these options using the
intrinsic  value  method under APB No. 25, or $0.50 per share and  expensed.  In
August 2002, 33,000 options were exercised by this former executive at $0.10 per
share,  the Company  received no proceeds from this exercise;  the proceeds were
offset  against  monies due from the Company  against the  exercise  price to be
paid.

The Company amortized the remaining portion of the unearned compensation,  since
the  applicable  personnel  no longer  perform  services  for the  Company as of
December 31, 2002.

10. CONVERTIBLE PREFERRED STOCK

                                    Series I:

The Company is authorized to issue  1,000,000  shares of preferred stock at .001
par value,  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  100,000  shares  of  convertible  preferred  stock as Series I. Each
outstanding  share of Series I Preferred Stock is convertible into 330 shares of
common  stock.  In December  2001 Series I Preferred  Stock was  converted  into
1,155,000 shares of the Company's common stock.

      Seires II:

        In September 1999, in connection  with the Cumberland  agreement,
        the Company has granted  warrants to purchase  385,000  shares of
        the

Company's  common  stock at an exercise  price equal to the greater of $2.50 per
share or 50% of the average  trading price for the  Company's  shares during the
twenty  days prior to the  exercise  of the  warrants.  The  warrants  expire on
December 31, 2008 and management has estimated the value of the warrants,  based
on the  Black-Scholes  option-pricing  model,  in order to  record  $176,000  of
deferred  licensing cost. The deferred  licensing cost were being amortized on a
straight-line  basis over ten years  from the date the  warrants  were  granted.
Amortization expense charged to operations for the years

                                      F-14

<PAGE>

ended  December  31, 2002 and 2001 was  approximately  $17,600 and  $17,600.  In
December 2002, the Company fully reserved against this asset,  since the license
agreement  was  relinquished  as part of the  foreclosure  of the Old  Fashioned
subsidiary.

On June 16, 2000, the Company amended its articles of incorporation to designate
Series II Convertible  Preferred  Stock  ("Series  II"). The Company  authorized
8,500  shares  of  Series  II stock,  $.01 par  value.  Series II stock  accrues
preferred  dividends  at 5% per  annum  and  each  share  is  convertible  in to
approximately  588  shares of the  Company's  common  stock  based  upon a $1.70
conversion  price  where each  Series II share  converts  into a $1,000  unit of
common  stock.  The  conversion  price may be adjusted one year from the date of
issuance.

The adjusted  conversion price would be 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 have the right of mandatory
redemption ten years from the date of issuance

11. STOCK OPTION PLAN

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  provides  the Board of  Directors  the right to grant  options  to
purchase up to a total of 100,000 share 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, 2002, 250,000 options have been granted under the 1999 Option Plan.
As of  December  31, 2002 and 2001,  511,810  non-plan  options  were issued and
outstanding.

For disclosure  purposes in accordance with SFAS No. 123, the fair value of each
stock  option  granted  is  estimated  on  the  date  of  the  grant  using  the
Black-Scholes   option-pricing   model  with  the   following   weighted-average
assumptions  used for stock options  granted  during the year ended December 31,
2002 and 2001: annual dividends of $0.00,  expected volatility of 150% and 128%,
risk-free  interest  rate of 2.82% and 5.0% and  expected  lives  varying on the
option agreement.

If the  Company  recognized  compensation  cost for the  vested  portion  of the
employee  stock option plan in  accordance  with SFAS No. 123, the Company's net
loss   available  to  common   shareholders   would  have  been   approximately,
($6,086,000)  and ($0.95) per share for the year ended December 31, 2001.  There
were no  additional  costs to  pro-forma  for the year ended  December 31, 2002,
since  compensation  expense was recorded for the options  issued and granted in
2002.

The following  tables  summarize the Company's  fixed stock options  activity at
December 31, 2001:

                                      F-15

<PAGE>

                     Employee and Director's Stock Options:

                                                          Weighted Average
                                              Shares       Exercise Price
                                              -------      -------------
Outstanding at December 31, 2000              200,000           1.00
    Granted                                   100,000            .86
    Exercised                                      --             --
    Expired or Cancelled                      (50,000)           .50
                                              -------          -----
Outstanding at December 31, 2001              250,000          $1.04
    Granted
    Exercised                                      --             --
    Expired or Cancelled
                                              -------          -----
Outstanding at December 31, 2002              250,000          $1.04
                                              =======          =====

Non-employee stock options:
                                                            Weighted Average
                                               Shares        Exercise Price
                                                --------     --------------
Outstanding at December 31, 2000               196,000            .71
    Granted                                    338,810           1.06
    Exercised                                  (50,000)           .10
    Expired or Cancelled                       (10,000)          2.27
                                               -------          -----
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
                                               =======          =====

Information,  at date of issuance,  regarding stock option grants during the two
years ended December 31, 2002 and 2001:

<TABLE>
<CAPTION>
                                                         Weighted-Average  Weighted-Average
                                               Shares       Exercise Price   Fair Value
                                              -------      --------------   ----------
<S>                                            <C>            <C>           <C>
Year ended December 31, 2001:
Exercise price exceeds market price            200,000        $ .98$         .93
Exercise price equals market price              50,000        $1.22$        1.22
Exercise price is less than market price       138,810        $ .45$        1.03

Year ended December 31, 2002:
Exercise price exceeds market price                 --           --           --
Exercise price equals market price                  --           --           --
Exercise price is less than market price       100,000        $ .10$         .50
</TABLE>

The following table summarizes  information about stock options  outstanding and
exercisable at December 31, 2002:

                                      F-16

<PAGE>

<TABLE>
<CAPTION>
                                                          Outstanding and exercisable
                                 ------------------------------------------------------------------------
                                 Weighted- Weighted
                                  Average Average
                                     Number            Remaining          Exercise            Number
                                   Outstanding       Life in Years          Price           Exercisable
                                 ----------------    --------------     -------------     ---------------
<S>                                   <C>                <C>               <C>                <C>
Range of exercise prices:
$.001 to $.50                         223,000            2.28               .40               223,000
$.51 to $1.00                         298,810            6.25               .95               298,100
$1.01 to $1.50                        240,000            5.75              1.40               240,000
</TABLE>

12. 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, 2002 and 2001, a valuation allowance for
the full amount of the  deferred  tax asset was  recorded  because of  operating
losses  incurred and the  uncertainties  as to the amount of taxable income that
would be generated in the future years.

The 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,
                                           --------------------------
                                               2002           2001
                                           -----------    -----------
Taxes benefit computed at statutory rate   $  (792,000)   $(1,488,000)
Losses for which no tax benefit realized       792,000      1,488,000
                                           -----------    -----------
Net income tax benefit                     $        --    $        --
                                           ===========    ===========

The Company has a net  operating  loss  carryforward  for tax purposes  totaling
approximately $10,300,000 at December 31, 2002 expiring through the year 2021.

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

                                                           December 31, 2002
                                                             -------------
Tax benefit of net operating loss carryforward               $  3,515,000
Valuation Allowance                                            (3,515,000)
                                                             -------------
Net deferred tax asset recorded                              $         --
                                                             =============


                                      F-17

<PAGE>

13. COMMITMENTS AND CONTINGENCY

                                  Commitments:

The Company  cancelled  all of its  operating  leases by the end of December 31,
2002. The Company  currently  rents and shares office space with a related party
on a month to month basis at $1,750 a month.

Rent expense for the years ended December 31, 2002 and 2001 totaled  $67,240 and
$81,475, respectively.

                              Supplier Agreements:

The  Company  entered  into a five year  exclusive  Supplier  Agreement  for the
production  of its isotonic  beverage.  This  Supplier  Agreement  automatically
renews  for two  successive  two  year  renewal  periods,  unless  either  party
terminates with at least 90 days written notice. The supplier has a quoted price
to produce such isotonic beverages within the Supplier  Agreement.  The Supplier
Agreement  does  allow  for  price  increases  based on the cost  change  in the
supplier's cost to produce such product.

                                  Contingency:

During 2001 a suit was filed against the Company  alleging that its  trademarked
corporate name,  ChampionLyte,  violated the plaintiff's trademark.  The Company
believes that there is no merit to this case and intends to defend its trademark
vigorously.

The Company is currently  reviewing the terms of the agreements  relating to the
aforementioned  foreclosure of Old Fashioned and an appropriate form of recourse
action if any.

14. SUBSEQUENT EVENTS - (UNAUDITED)

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 is
related  to the  current  Series  II  Preferred  stockholders.  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. The terms of the agreement are
as follows;  a monthly of $2,500 per month is due, the  financial  advisory firm
may at its discretion  accept shares of discounted  registered  stock in lieu of
cash,  the Company shall issue a warrant to purchase 2.99% of the fully stock of
the Company at 90% of the closing bid price on January 6, 2003, exercisable for

                                      F-18

<PAGE>

5  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 the Company and the reimbursement of out-of-pocket expenses not to
exceed $500 a month unless agreed upon by the Company.

In January 2003, the Company  entered into a funding  arrangement  for $250,000.
The funding  arrangement is from a related  entity by management  similar to the
financial  advisory firm and the holders of the Series II Convertible  Preferred
stock.  This  $250,000  financing  arrangement  is  secured  by a  Series A 6.5%
Convertible Promissory Note "Note". This Note is convertible in part or whole at
the  option  of the  holder  at 70% of the  average  of the  lowest of three day
trading  prices  during the five  trading days prior to the  conversion.  Within
thirty  days  of the  full  funding  of  this  Note  the  Company  shall  file a
registration  statement  to register  250% of the then shares to be issued as if
the Note was  converted.  The failure by the Company to obtain such an effective
registration within ninety days from the date of its initial filing, the Company
shall  pay a  penalty  equal  to 2% of the  outstanding  principal  and  accrued
interest.  The  beneficial  conversion  feature  attributed  to  this  financing
arrangement will be calculated and expensed ratably over twenty-four months upon
receipt of financing under this Note.

In January 2003, the Company engaged another 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 transactions  consummated within the subsequent twelve
months following the termination of this agreement the transaction may have fees
due and payable to the business  consulting  firm. The Company has agreed to pay
$25,000 upon signing of the engagement  letter or 400,000 shares of common stock
in lieu of cash.

The Company 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 shall issue shares
equal to $125,000  per month of its common  stock to the  Company.  These shares
shall be fully paid and  non-assessable  and shall bear no  restrictive  legend.
BEVI shall  register  these  shares  prior to each  issuance on form S-8 or some
other applicable registration form. The Company shall issue 50,000 shares of its
restricted  stock per month to BEVI under this  agreement.  These  shares  shall
carry a piggyback  registration right. The Company shall 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 shall be entitled to 50% of
the profits derived from distributing the other firms beverage product.  The net
economic effect of the revenues and expenses from this cross selling arrangement
shall be  recorded  as a cost or other  revenue  each  month and each  reporting
period.

The liability  insurance for the Company was  terminated in February  2003.  The
Company has yet to obtain comparable liability insurance coverage.

In February 2003, the Company registered  1,000,000 shares of common stock for a
2003 Stock  Incentive  Plan with a Form S-8. Upon issuance  these shares will be
recorded as compensation  and expensed,  accordingly.  Approximately  700,000 of
shares have been issued

                                      F-19

<PAGE>

under this Form S-8 in February  2003. An additional  100,000 shares were issued
pursuant to the Company's 1999 Stock Incentive Plan in February 2003.

In  February  2003,  the  holders  of the  Series  II,  converted  850 shares of
preferred stock for 500,000 shares of restricted common stock.

                                      F-20

<PAGE>

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

Our  accountant  is  Radin  Glass  &  Co.,  LLP  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 Roumbos
LLP 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 28, 2003,  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

Marshall Kanner       47       Interim Chief Operating Officer and
                               Director
Thad Kaplan           36       Director
Steven Field          57       Director
David Goldberg        39       Director

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

MARSHALL KANNER was elected as our Interim Chief Operating Officer, Director and
Chairman of our Board of Directors on January 7, 2003.  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.

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.

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

DAVID GOLDBERG was appointed to our Board of Directors on February 11, 2003. 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.

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.

<PAGE>

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.

ITEM 10. EXECUTIVE COMPENSATION

The following  information  relates to compensation  received by our officers in
1999, 2000, 2001 and 2002.

                           SUMMARY COMPENSATION TABLE

                                                     LONG-TERM COMPENSATION
                              ANNUAL COMPENSATION    RESTRICTED
SECURITIES
NAME AND PRINCIPAL                                   STOCK
UNDERLYING

POSITION                 YEAR   SALARY ($)  BONUS    AWARDS OPTIONS
--------                 ----  ----------   -----    ------ -------
Mark Streisfeld,         1999   $125,000   -1,500-   -0-      -0-
Former President         2000   $133,334   -0-       -0-   50,000
And Director             2001   $175,000   -1,500-   -0-   20,000
                         2002   $175,000   -0-       -0-      -0-

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following  table sets forth,  as of February 24, 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               1.20%
Steven Field                              66,500                  *
Marshall Kanner                          870,000               2.71%
Eli Greenstein (recently
  appointed) as a director                25,000                  *
Donna Bimbo                                    0                  *
Stedman Walker, Ltd. (2)               2,000,000               6.23%
Alan Posner                            1,690,291               5.27%
Mark Streisfeld(3)                     1,650,000               5.14%
Elaine Streisfeld (4)                  1,640,217               5.11%

All Executive Officers and Directors 1,440,188 4.49% as a Group (5 Persons)
* - Less Than One Percent

(1) Based on 32,081,803 shares issued and outstanding as of February 24, 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.

<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

(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 February 23, 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 February 23, 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)
---------------------  ---------------- ----------------  ----------------------
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 February 23, 2004


<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 February 23, 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 February 9, 2004,  we issued  1,412,007  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 90% 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.

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 shall vest on a
pro-rata basis in 30,000 share  increments  each month beginning with April 2003
through March 2004.


<PAGE>

                                     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 June 28,  2002  based on Item 5,  Other
Events.

                                   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: July 6, 2004


<PAGE>

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                                                        July 6, 2004
---------------------------   President, Principal Financial Officer,
    DAVID GOLDBERG            Principal Accounting Officer and Chairman
                              of the Board of Directors


/s/ Steven Field              Director                                    July 6, 2004
---------------------------
    STEVEN FIELD

/s/ Thad Kaplan               Director                                    July 6, 2004
---------------------------
    THAD KAPLAN
</TABLE>