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ChampionLyte fights for Syrup Company

04-Jun-2003

The drama continues at ChampionLyte Holdings which announces this week that it has filed a lawsuit against former company chairman and CEO Alan Posner, former chief financial officer Chris Valleau and New York-based InGlobalVest, for the fraudulent conveyance of the firm's Old Fashioned Syrup Company subsidiary.

The suit claims the defendants engaged "in a fraudulent scheme to deprive ChampionLyte of its principal asset and primary source of revenue for grossly inadequate consideration (only $15,000) without notice of approval of the Board of Directors of ChampionLyte, without notice and approval of U.S. Bancorp Investments, (the holder of ChampionLyte's preferred stock) as required by the terms of certain agreements..., without notice and approval by the shareholders at large..."

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 ChampionLyte of its ownership and control of ChampionLyte's 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 with Cumberland Farms for the rights to name Sweet'N Low worth hundreds of thousands of dollars."

Prior to the time it was taken away from the company, The Old Fashioned Syrup Company was generating nearly $1 million in annual revenues, according to ChampionLyte, representing approximately 90 per cent of the company's total sales. The subsidiary makes Sweet'N Low brand sugar-free syrups, sold in more than 20,000 retail outlets.

ChampionLyte Holdings, which sells and distributes the sugar-free sports drink ChampionLyte, also claims that Posner and Valleau "used the pretext of an imminent payment due to a licensee of the Syrup Company (Cumberland Farms) as a reason to obtain a short-term convertible loan...used to disguise the sale of a majority interest in the Syrup Company for a mere $15,000."

ChampionLyte is seeking to rescind the sale of the securities in the Syrup Company to InGlobalVest and restore ChampionLyte, the Syrup Company and InGlobalVest to "their respective positions prior to the time the Sham Loan transaction was entered. This would effectively restore ChampionLyte's 100 per cent ownership interest in the Syrup Company."

"We firmly believe the Syrup Company belongs to our company and its assets, the revenues it generates and its established chains of distribution will greatly assist in the ongoing restructuring of the new ChampionLyte Holdings," said president David Goldberg.