Galaxy Nutritional Foods Announces $2.7MM Note Conversion into Company Stock

ORLANDO, Fla., Nov. 21 /PRNewswire-FirstCall/ -- Galaxy Nutritional Foods, Inc. , a leading developer and marketer of cheese alternatives, organic dairy and other organic and natural food products, today reported the conversion of its $2,685,104.17 note payable (and all accrued interest thereon) into Company stock.

In a transaction concluded on November 19, 2008, the Company's former primary shareholder, Fred DeLuca, sold his $2.7 million convertible note (and all accrued interest thereon) as well as all of his 3,869,842 outstanding Company shares to Galaxy Partners, LLC effective November 18, 2008. Upon closing of this transaction, Galaxy Partners, LLC immediately converted the aforementioned $2.7 million convertible note (as well as all accrued interest thereon) at the conversion price of $0.35 into 9,941,278 shares of Company stock. Accordingly, the Company now has a total of 27,051,294 shares of Company stock outstanding. Therefore, with the shares obtained through conversion of the note (and all accrued interest thereon) as well as the direct purchase of all of Mr. DeLuca's outstanding Company shares, Galaxy Partners, LLC is now the majority shareholder of the Company holding 13,811,120 shares representing a 51.1% interest.

Simultaneous with the closing of this transaction, three representatives of Galaxy Partners, LLC were appointed to the Company's Board of Directors. The Company's three new directors are: Timothy S. Krieger, Michael D. Slyce and David B. Johnson. The Company's four former Directors will remain on the Board, which is now comprised of seven Directors.

"We are pleased to announce this transaction which removes a substantial short-term liability and greatly strengthens the Company's balance sheet. The elimination of this debt will allow us to utilize our operating cash flow more effectively as we focus on growing the Company. We look forward to working with our new majority shareholder, Galaxy Partners, LLC, as well as our new Directors. We appreciate the confidence which they have shown in the long-term outlook of our Company," stated Michael E. Broll, Chief Executive Officer of Galaxy Nutritional Foods, Inc.

About Galaxy Nutritional Foods, Inc.

Galaxy Nutritional Foods, Inc. develops and globally markets plant-based cheese alternatives, organic dairy and other organic and natural food products to grocery and natural foods retailers, mass merchandisers and foodservice accounts. Veggie, the leading brand in the grocery cheese alternative category and the Company's top selling product group, is primarily merchandised in the produce section and provides calcium and protein without cholesterol, saturated fat or trans-fat. Other popular brands include: Rice, Veggy, Vegan, Rice Vegan and Wholesome Valley. Galaxy Nutritional Foods, Inc. is dedicated to developing nutritious and delicious food products made with high quality natural ingredients that exceed the expectations of today's health conscious consumers. Galaxy is also committed to reducing its environmental impact as part of an Eat Green for Body & Earth(TM) program that offsets carbon emissions associated with product shipping and emphasizes the use of organic ingredients. For more information on Galaxy's products or green initiatives, visit www.galaxyfoods.com . Galaxy Nutritional Foods, Inc. is headquartered in Orlando, Florida, and its common stock is quoted on the OTC Bulletin Board under the symbol "GXYF".

Any statement of future expectations in this press release and all other statements regarding the future are "forward looking" statements within the meaning of the Private Securities Litigation Act of 1995. These forward looking statements are based on the Company's strategic plans and involve risks and uncertainties that may cause actual results to differ materially and adversely from these forward looking statements. Such risks and uncertainties include, without limitation: the Company's ability to execute its business strategy in a very competitive service and pricing environment; risks associated with the launch of new marketing campaigns; future costs and fluctuations in the price of goods sold (including in particular, casein); continued relations with and pricing dependence on third party suppliers; and other risks referenced from time to time in the Company's filings with the Securities and Exchange Commission, including without limitation, the Company's annual report on Form 10-K for the year ended March 31, 2008. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect unanticipated events or developments.

Galaxy Nutritional Foods, Inc.

CONTACT: Dawn M. Robert, Investor Relations, Galaxy Nutritional Foods,
Inc., +1-407-854-0433

Web site: http://www.galaxyfoods.com/