June 17, 1998
Orlando, FL

Contact: Tracy Rushwin
(407) 855-5500, extension 105

GALAXY FOODS ANNOUNCES A PROFIT FOR FISCAL 1998

ORLANDO, FLORIDA (June 17, 1998) - Galaxy Foods Company (NASDAQ: GALX), makers of healthy cheese and dairy-related products, today announced net profits of $377,523 for the fiscal year ended March 31, 1998, compared with a loss of $2,736,660 for the prior fiscal year. This represents the first year of profitability for the Company since relocating their plant to Orlando, Florida in 1991. The Company also announced gross shipments of $22.5 million, with $20.6 in net sales, after all selling discounts and allowances, an increase of 20%. This increase in sales is accompanied by a dramatic improvement in gross margins, from 9% for the year ended March 31, 1997 to 26% for the year ended March 31, 1998, an increase of 189%.

Angelo S. Morini, Galaxy's president stated, "Fiscal 1998 marks an important milestone in Galaxy's history and a major step in our long-term strategy. The Company's focus over the past year has been to increase margins by focusing our selling efforts on higher margin business and by reducing overhead costs. We have previously reported that sales volume of approximately $20 million represents the breakeven point for this state-of-the-art facility. When we relocated to Orlando, we decided to build a plant with the capacity to accommodate our expected growth, this plant has a capacity to produce $350 million in annual sales. As a result of this decision, the last seven years have been a rebuilding process to grow our customer base to a level to cover the fixed costs for our high production facility. Now that we have reached this level of sales, we expect our profits to increase dramatically as the Company continues to grow. Our short-term goal is to continue to report gross margins of approximately 26% and to increase sales to $1 million per week in the near future. At this level, we believe we can report net profits of 12% to 15%."

Morini further stated, "We have reported increasing profits for the first three quarters of this fiscal year with reduced profits in the fourth quarter. This is a result of additional marketing and promotional efforts during this quarter. The media promotion of the health benefits of plant-based foods, such as our popular soy-based Veggie line of products, is very powerful at this time. It is important for us to capitalize on this growing trend and educate the public about our products. In addition, we have invested our time into developing and fine-tuning our foodservice business to promote our new Pullman/ribbon slice products. We consider these investments in advertising and product development to be the keys to bringing our Company to the next plateau."

Galaxy Foods Company is the inventor and originator of a new, healthier and better way to make cheese and dairy-related products. Our products are primarily low or no fat (no saturated fat), have no cholesterol and no lactose and contain more vitamins and minerals than conventional cheese. Galaxy brand names include formägg, Soyco, Soymage, Veggie Slices, Wholesome Valley, and Lite Bakery. For more information, contact Tracy Rushwin at (407) 855-5500, extension 105.