August 6, 1998
Orlando, FL

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

GALAXY FOODS REPORTS FIFTH CONSECUTIVE QUARTER OF PROFITABILITY

ORLANDO, FLORIDA (August 6, 1998) - Galaxy Foods Company (NASDAQ: GALX), makers of healthy cheese and dairy-related products, today announced final results for its quarter ended June 30, 1998. Preliminary results were announced on July 22, 1998. The Company reported net profits of $147,484 for the three months ended June 30, 1998, compared to net profits of $23,121 for the same period in the previous year. This marks the fifth consecutive quarter of profitability for Galaxy. The Company also announced net sales of $5.8 million for the three months as compared to sales of $5.9 million for the same quarter one year ago. As reported in the Company’s July 22nd release, sales did not increase because the Company eliminated approximately $2 million in unprofitable foodservice business and replaced the business during the past four quarters with higher profit margin healthy cheese product sales. Gross margins for the quarter ended June 30, 1998 were 24.8%, a substantial improvement over gross margins of 18.9% for the same quarter last year.

Angelo S. Morini, Galaxy’s president stated, “We will continue our efforts to increase gross margin and net profits by focusing on higher margin business. With our fifth quarter of profitability, we feel confident these trends will continue. The future of the Company looks very bright as an increasing number of consumers become aware of the health benefits of vegetable based products, such as Galaxy’s Veggie brand. We anticipate strong growth in sales for the second quarter in fiscal 1999 and consistently improving gross margin percentages.”

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. You may also obtain more information from our site on the World Wide Web at http://www.galaxyfoods.com (best viewed through Netscape Navigator).