SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                         AMENDMENT NO. 1 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)

       2999 NE 191ST STREET, PENTHOUSE 2, NORTH MIAMI BEACH, FLORIDA 33180
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES )(ZIP CODE)


                                  (866) 438-5983
               (REGISTRANT'S TELEPHONE NO., INCLUDING AREA CODE)

                           CHAMPIONLYTE PRODUCTS, INC.


   (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 [ ]

<PAGE>

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 SEPTEMBER 22, 2003, WAS: $3,887,765

NUMBER OF SHARES OF THE  REGISTRANT'S  COMMON STOCK  OUTSTANDING AS OF
SEPTEMBER 22,

2003 IS: 28,824,749

TRANSFER AGENT AS OF SEPTEMBER 22, 2003:


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


<PAGE>

PART I

ITEM 1.  DESCRIPTION OF BUSINESS

BUSINESS - OUR COMPANY

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

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

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

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.

<PAGE>

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.

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.

<PAGE>

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

Championlyte communicates premium or an upscale product. 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.

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

<PAGE>

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;

<PAGE>

and 2017 - $9,000,000. The failure to meet the minimum sales requirements in any
year will result in termination of the license agreement. The failure to meet
average stated results will result in non-renewal. The royalties for the license
agreement are as follows: 3% on all sales until sales reach $10,000,000
annually; 5% on all sales after sales reach $10,000,000; and 6% on all sales
after sales reach $15,000,000 annually.

OLD FASHIONED SYRUP COMPANY

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

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

On November 27, 2002, Alan Posner, our previous chief executive officer and
chairman of our board of directors entered into a promissory note with
Inglobalvest, inc. In which we received $15,000 which was payable on December
13, 2002 at a 10% interest rate. The promissory note was entered into without
the approval of our board of directors and allowed Inglobalvest to receive a 66
2/3% interest in our wholly owned subsidiary, the Old

<PAGE>

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.

We have settled this lawsuit. The terms of the settlement are as follows: (i) we
paid Inglobalvest, Inc. the sum of $125,000 as follows: $20,000 upon execution
of the settlement agreement; (ii) assignment of a promissory note and UCC-1 in
the amount of $50,000; (iii) the remaining balance paid by August 20, 2003; (iv)
payment of $3,000 to Christopher A. Valleau in six equal monthly installments of
$500 each; (v) on or before August 19, 2003, Inglobalvest delivered all stock
certificates for the Old Fashioned Syrup Company to us and entered into a
non-interference agreement with us relating to 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. Upon cancellation, Bevsystems had
issued 50,000 shares of its common stock. No money was exchanged pursuant to
the SMA.

<PAGE>

COMPETITION

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

EMPLOYEES

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

<PAGE>

ITEM 2. DESCRIPTION OF PROPERTY

We presently sublease approximately 800 square feet of space at 2999 NE 191st
Street, Penthouse 2, North Miami Beach, Florida on a month to month basis for
$1,750 per month. We sublease our office space from Knightsbridge Holdings LLC
(a financial advisory firm) that we have retained as a business consultant. Our
space is part of a larger office space that is also subleased to an investment
fund, Advantage Fund I, LLC, and political lobbyist.

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.

<PAGE>

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
$125,000 as follows: $20,000 upon execution of the settlement agreement and
$105,000 by no later than August 20,2003.

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

<PAGE>

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.

<PAGE>

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

Forward-Looking Statements
--------------------------

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.

Liquidity
------------------------

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

<PAGE>

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 was primarily due to the decrease in marketing and advertising
expenses. 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 were utilized over the last
years to fund operations. Gains on sale of investment 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.

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.

<PAGE>

ITEM 7. FINANCIAL STATEMENTS

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

                   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)
                                                 -----------    -----------

<PAGE>

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:

<TABLE>
<CAPTION>
                                                                         December 31,
                                                                 ----------------------------
                                              Useful Life           2002             2001
                                            -----------------    -----------     ------------
<S>                                             <C>              <C>             <C>
          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          319,528
          Accumulated Depreciation                                  (17,932)        (139,718)
                                                                 -----------     ------------
                                                                 $   27,284      $   179,810
                                                                 ===========     ============
</TABLE>

         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.


<PAGE>

PART III

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


Our directors and officers, as of September 22, 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

David Goldberg        41       President, Principal Financial Officer,
                               Principal Accounting Officer and Chairman
                               of the Board of Directors
Marshall Kanner       48       Former Interim Chief Operating Officer and
                               Director
Thad Kaplan           36       Director
Steven Field          57       Director
Donna Bimbo           44       President, Championlyte
                               Beverages, Inc., our
                               Subsidiary

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

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

MARSHALL KANNER was elected as our Interim Chief Operating Officer, Director and
Chairman of our Board of Directors on January 7, 2003. He resigned as Interim
Chief Operating Officer and Chairman on April 14, 2003 but remains one of our
directors. Mr. Kanner's career of over 20 years covers corporate development,
corporate finance, mergers & acquisitions, strategic planning, strategic
alliances, corporate restructuring, management consulting, venture financing,
and forming entrepreneurial ventures in numerous industries. He possesses
executive leadership skills and experience in operations, finance, due
diligence, corporate strategic planning, sales, marketing, branding,
fulfillment, business development and logistics. His experience includes
construction, apparel, transportation, financial consulting, insurance, real
estate brokerage, logistics and technology and Internet development. Mr. Kanner
served as Chief Operating Officer and Vice President of Business Development for
MyCity Holdings, Corp., an internet technology

<PAGE>

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. In addition, Mr. Field served as a member of The
Triarc Group's advisory committee during 1998 only. The Triarc Group is based In
Westchester, New York. Mr. Field consulted and directed management of Triarc in
various manufacturing operations within their bottling and distribution of Royal
Crown Cola, Snapple Drinks, and smaller bottling operations.

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.

Donna Bimbo was appointed as president of our subsidiary, Championlyte Beverage,
Inc., on April 16, 2003. She devotes her full time to Championlyte Beverage,
Inc. Prior to her employment with us, she had been the Director of International
Business for Snapple Beverage Group in White Plains, New York (owned by the
triarc companies) from january 1992 until february 2003. In such capacity, she
has been responsible for the development of new business as well as the
maintenance of the established business base. She assisted in the creation of
policies and procedures for snapple's worldwide operations and was involved in
all legal aspects of the worldwide business such as trademarks and negotiation
of contracts. She was the sole Triarc Companies representative on the
acquisition team for the purchase of Snapple and assisted in the establishment
of new business in 26 countries.

Prior to working in such position, she was the Senior Manager of International
Business at Snapple Beverage Corporation in East Meadow, New York since December
1992. Her responsibilities included the management of all activities including
all rate negotiations, overseeing all phases of import/export business, FDA
regulations and business terms and tariffs.

She received a Bachelor of Arts degree from Kean College of New Jersey in 1980

<PAGE>

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

The Directors named above will serve until the next annual meeting of our
shareholders in the year 2003. Directors will be elected for one year terms at
each annual shareholder's meeting. Officers hold their positions at the
appointment of the Board of Directors.

CERTAIN LEGAL PROCEEDINGS

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

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-

<PAGE>

Marshall Kanner           2003    $-0-         -0-          25,000      -0-
Interim Chief Operating
Officer and Director

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

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

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

  (iii) Within thirty days of execution of this agreement, Mr Goldberg will
        receive 100,000 warrants to purchase our common stock with a term of
        two years at a price equal to $.25 per share;

  (iv)  If Mr. Goldberg is employed with us for 180 days from the effective
        date of the Agreement, he shall receive warrants to purchase an
        additional 100,000 shares of our common stock and each 90 day period
        thereafter, he will receive additional warrants to purchase 100,000
        shares of our common stock at an exercise price of 100% of our closing
        stock price as of such date. The term of each of these warrants is two
        years.

  (v)   Mr. Goldberg will also receive a personal performance commission based
        on sales made as a direct result of his own efforts, equal to 1% of
        our Gross Sales, payable on a quarterly basis.

<PAGE>

      Effective March 15, 2003, our wholly owned subsidiary, Championlyte
      Beverages, Inc. entered into a two year employment agreement with Ms.
      Bimbo. The employment agreement provides for the following compensation:

      (i)   annual base salary of: $96,000 pro-rated for the period March 15,
            2003-June 14, 2003;

      (ii)  annual base salary of: $108,000 pro-rated for the period June 14,
            2003-September 14, 2003;

      (iii) annual base salary of: $120,000 pro- rated for the period September
            15, 2003- March 14, 2005;

      if the employment agreement is renewed on or before March 14, 2005, the
      base salary shall be no less than $132,000 per annum.

      Pursuant to the employment agreement, Ms. Bimbo shall be entitled to the
      following bonuses:

      (i)   Warrant bonus: 50,000 warrants to purchase our common stock for a
            term of 2 years at a price equal to $.10 Per share. If Ms. Bimbo is
            employed for 90 days from execution of the agreement, which she has
            been, she is entitled to 100,000 additional shares of our stock at
            an exercise price equal to 100% of our closing stock price on the
            date of issuance. The warrants have a 2 year term and piggyback
            registration rights.

      (Ii)  Stock bonus: (a) annual bonus equal to 3% of Championlyte Beverages
            annual net pre-tax profits as reported on its annual report. The
            initial bonus is payable on march 31, 2004; (b) personal performance
            commission based on sales made as a direct result of Ms. Bimbo's
            efforts, equal to 1% of gross sales, payable on a quarterly basis;
            (c) override commission of sales personnel reporting to Ms. Bimbo
            equal to 1/2% of gross sales, payable on a quarterly basis.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


<PAGE>

The following table sets forth, as of September 22, 2003, 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                               25,000                  *
David Goldberg                           160,000                  *
Steven Field                              25,000                  *
Marshall Kanner                          845,000               2.93%
Donna Bimbo                                    0                  *
Stedman Walker, Ltd. (2)               2,000,000               6.94%
Beverage Acquisitions Ltd.(3)          1,500,000               5.20%
Championlyte Asset Acquisition Corp    1,500,000               5.20%
Alan Posner                            1,690,291               5.86%
Mark Streisfeld                        1,840,000               6.38%
All Executive Officers and Directors   1,055,000               3.66%
as a Group (4 Persons)
* - Less Than One Percent

(1) Based on 28,824,749 shares issued and outstanding as of September 22, 2003.

(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) James Dale Davidson is a representative of Beverage Acquisitions Ltd. and
has investment control of Beverage Acquisitions Ltd.

(4) Robert Press is a representative of Championlyte Asset Acquisition Corp.;
however, investment control is shared by a number of its shareholders.

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

<PAGE>

                       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 September 22, 2003


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)
---------------------  ---------------- ----------------  ----------------------
Championlyte Asset         395               100%                 (3)
Acquisition Corp.(4)

(5% beneficial owner)

(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 September 22, 2003

(3) Each series II Convertible Preferred Stock is convertible into common stock
at the rate of one share of common stock for each $1.70 of the purchase price of
the preferred stock plus the 5% cumulative dividend at the time of conversion
into common stock.

(4) Robert Press is a representative of Championlyte Asset Acquisition Corp.;
however investment control is shared by a number of its shareholders.

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 September 22, 2003

SERIES IV CONVERTIBLE PREFERRED STOCK

<PAGE>

                       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 September 22, 2003

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

<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

We presently sublease approximately 800 square feet of office space located at
2999 ne 191st street, Penthouse 2, North Miami Beach, Florida on a month to
month basis for $1,750 per month. We sublease our office space from
Knightsbridge Holdings LLC (a financial advisory firm) that we have retained as
a business consultant. Our space is part of a larger office space that is also
subleased to an investment fund and political lobbyist.

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.

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. 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.The financial advisory firm may, at its discretion, accept shares of
discounted registered stock in lieu of cash. We shall issue a warrant to
purchase 2.99% or 526,400 shares of our common stock at 80% of the closing bid
price on January 6, 2003, exercisable for five years, various sliding scale
compensation amounts for equity and debt financings consummated from an
introduction by the financial advisory firm, sliding scale compensation amounts
due for a merger or acquisition candidate introduced to us and the reimbursement
of out-of-pocket expenses not to exceed $500 a month unless agreed upon by us.
The sliding scale compensation is as follows: Equity Financing: (i) up to
$250,000: $10,000 minimum fee; (ii) $250,001-500,000: $20,000 fee; (iii)$500,001
- $5,000,000: 8% of consideration; and (iv) $5,000,000 plus: $400,000 plus 1.5%
of consideration in excess of $5,000,000. Debt Financing: (i) up to $250,000:
$20,000 fee; (ii) $250,001-500,000: $30,000 fee; (iii)$500,001 - $5,000,000: 6%
of consideration; and (iii) $5,000,000 plus: $300,000 plus 3% of consideration
in excess of $5,000,000. For any securities issued by or to us, 5% consideration
in kind. For any merger or acquisition transaction, the compensation is as
follows: (i) up to $500,000: $30,000 minimum fee; (ii) $500,001 - $5,000,000: 5%
of consideration; and (iii) $5,000,000 plus: $250,000 plus 3% of consideration
in excess of $5,000,000.

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 in July 2003 extending the maturity date to December 31, 2004.

In April 2003, our Board of Directors passed a resolution to compensate our
directors and officers an amount equal to $7,500 converted into shares of our
common stock on a

<PAGE>

monthly 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. There
is no requirement of the Purchaser to purchase a minimum amount of shares. The
purchase price of the common stock is to be calculated based upon the closing
price of the common stock on the date that it is placed in escrow. The Purchaser
intends on purchasing this common stock in 40 equal installments of $25,000
each. There is no time frame as to when the $25,000 installment payments have to
be made. In addition to the purchased stock, we shall deliver to the designated
escrow agent 200% of the number of shares being purchased with each $25,000
installment. Upon resale of such common shares purchased if the Purchaser does
not yield a 30% return on the investment then the Purchaser shall be entitled to
utilize the excess escrowed shares to yield the 30% return on the investment by
the Purchaser. All escrowed shares not utilized to generate the 30% return shall
be returned to our treasury.

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 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: September 29, 2003


         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.

         Name                         TITLE                            DATE
                                      -----                            ----

         /s/ David Goldberg                              September 29, 2003
         ---------------------------  President, Principal Financial Officer,
                                      Principal Accounting Officer and Chairman
                                      of the Board of Directors
             DAVID GOLDBERG


         /s/ Steven Field              Director           September 29, 2003
         ---------------------------
             STEVEN FIELD


         /s/ Thad Kaplan               Director           September 29, 2003


<PAGE>


         ---------------------------
             THAD KAPLAN


         /s/  Marshall Kanner            Director        September 29, 2003
         ---------------------------
             MARSHALL KANNER

<PAGE>


                                CERTIFICATION OF
           PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
                                   PURSUANT TO
                             18 U.S.C. SECTION 1350,
                    AS ADOPTED PURSUANT TO SECTION 906 OF THE
                           SARBANES-OXLEY ACT OF 2002

         I, David Goldberg certify that:

         1.   I have reviewed this annual report Amendment No. 1 to Form 10-KSB
              of Championlyte Holdings, Inc.

         2.   Based on my knowledge, this quarterly report does not contain any
              untrue statement of a material fact or omit to state a material
              fact necessary to make the statements made, in light of the
              circumstances under which such statements were made, not
              misleading with respect to the period covered by this quarterly
              report;

         3.   Based on my knowledge, the financial statements, and other
              financial information included in this quarterly report, fairly
              present in all material respects the financial condition, results
              of operations and cash flows of the registrant as of, and for, the
              periods presented in this quarterly report;

         4.   I am responsible for establishing and maintaining disclosure
              controls and procedures (as defined in Exchange Act Rules
              13a-14 and 15d-14) for the registrant and have:

              a)   designed such disclosure controls and procedures to ensure
                   that material information relating to the registrant,
                   including its consolidated subsidiaries, is made known to us
                   by others within those entities, particularly during the
                   period in which this quarterly report is being prepared;

              b)   evaluated the effectiveness of the registrant's disclosure
                   controls and procedures as of a date with 90 days prior to
                   the filing date of this quarterly report (the "Evaluation
                   Date"); and

              c)   presented in this quarterly report our conclusions about
                   effectiveness of the disclosure controls and procedures based
                   on our evaluation as of the Evaluation Date;

         5.   I have disclosed, based on our most recent evaluation, to the
              registrant's auditors and the audit committee of registrant's
              board of directors (or persons performing the equivalent
              functions):

              a)   all significant deficiencies in the design or operation of
                   internal controls which could adversely affect the
                   registrant's ability to record, process, summarize and report
                   financial data and have identified for the registrant's
                   auditors and material weakness in internal controls; and

              b)   any fraud, whether or not material, that involves management
                   or other employees who have a significant role in the
                   registrant's internal controls; and

<PAGE>

         6.   I have indicated in this quarterly report whether there were
              significant changes in internal controls or in other factors that
              could significantly affect internal controls subsequent to the
              date of our most recent evaluation, including any corrective
              actions with regard to significant deficiencies and material
              weaknesses.


         Dated:     September 29, 2003


<PAGE>


                             /s/ David Goldberg
                             --------------------------------------
                             Principal Executive Officer and
                             Principal Financial Officer

<PAGE>

    CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
                       PURSUANT TO 18 U.S.C. SECTION 1350

              In connection with the accompanying annual report on Amendment
     No. 1 to Form 10-KSB of Championlyte Holdings, Inc. for the period
     ended December 31, 2002, David Goldberg, Principal Executive Officer
     and Principal Financial Officer of Championlyte Holdings, Inc. hereby
     certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
     Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my
     knowledge and belief, that:

     1. Such amended Annual Report on Form 10-KSB for the period ended December
     31, 2002, fully complies with the requirements of section 13(a) or 15(d) of
     the Securities Exchange Act of 1934; and

     2. The information contained in such Annual Report on Amendment No. 1 to
     Form 10-KSB for the period ended December 31, 2002, fairly presents, in all
     material respects, the financial condition and results of operations of
     Championlyte Holdings, Inc.

          A signed original of this writeen statement required by Section 906
     has been provided to Championlyte Holdings, Inc. and will be retained by it
     and furnished to the Securities and Exchange Commission or its staff upon
     request.


              CHAMPIONLYTE  HOLDINGS,  INC.

         Dated:  September 29,  2003

         By: David Goldberg
         -------------------------------------
         Principal  Executive Officer and
         Principal  Financial  Officer