December 1999 Insight:

Galaxy Nutritional Foods ANNOUNCES SALES INCREASE OF 39% AND EARNINGS PER SHARE IMPROVEMENT OF 60% IN SECOND FISCAL QUARTER...

Galaxy Nutritional Foods (AMEX: GXY) is pleased to report that sales for its second fiscal quarter ended September 30, 1999 rose 39% to $10,521,630 compared to $7,583,838 in the like period for the previous year. Driven by strength in gross margins, net income rose to $784,720. Gross margins for the quarter increased to 36% as compared to 31% for the same quarter last year. This resulted in a spurt in earnings per share to $0.08, a 60% improvement over last year's EPS of $0.05.

Were it not for the effects of Hurricane Floyd, which adversely impacted this year's second quarter results, the Company's sales and earnings would have been greater than reported. Nevertheless, per share earnings of $0.15 for the half exceeded the $0.14 EPS recorded for the entire 1999 fiscal year.

The Company continues to increase sales, as mass-market acceptance of soy-based dairy alternatives has become a mega-trend in the retail industry. Consumers now understand the importance of a diet low in fat and high in nutritious foods from the plant kingdom. In addition to increasing sales, the Company has improved efficiencies through longer production runs, automated systems and savings on bulk rate material purchases. The Company expects to file its form 10-Q for the quarter ended September 30, 1999 on or about November 12, 1999.

Galaxy's President and CEO, Angelo Morini, commented, "We are excited about the continued growth in the Company's sales and bottom line profits. Our growth is the result of many years of hard work and a gradual process of educating the public about the benefits of dairy and meat alternatives". Stated Morini, "This month, the FDA released a health claim stating a diet rich in soy products can reduce the risk of heart disease. Our Veggie line of products is made from soy and helps consumers fill their daily requirement of soy protein. We are expanding our Veggie line to include such items as Veggie shreds and yogurts, not to mention the introduction of new flavors of our popular slices."

GALAXY SHINES AT PMA...

This year's Produce Manufacturers Association exhibition, in Atlanta, was a huge success for Galaxy. With its newly redesigned island booth and a wide variety of recently introduced Veggie products, Galaxy made quite a statement at the exhibit. Galaxy's Corporate Executive Chef, Susan Harman, prepared a variety of delicious gourmet menu items made with Veggie products and visitors were positively surprised at the wonderful tastes. The exhibit provided excellent opportunities for sales representatives from Galaxy to meet with brokers and generate new business leads. Everyone at the show was excited about the possibilities that the Veggie product line can offer and the endless marketing opportunities that exist for produce departments nationwide. PMA was a great place for Galaxy to showcase its leadership position in producing innovative, plant based dairy alternatives.

GALAXY'S PRESIDENT PRESENTS AWARD AT THE AMERICAN DIETETIC ASSOCIATION EXPO...

Galaxy made a great impression at the American Dietetic Association expo this year in Atlanta, Georgia. Galaxy was excited to sponsor a breakfast for Nutrition Entrepreneurs, a practice group of the ADA consisting of an elite group of nutritionists and dieticians who have utilized their specialties in dietetics in non-traditional ways. Alongside Galaxy, Eggland's Best, Inc., known for its healthy egg product line, also contributed products to the breakfast. Galaxy's flagship Veggie products and Eggland's Best healthy eggs were served for breakfast.

Angelo S. Morini, Galaxy's President & CEO and a true entrepreneur himself, addressed attendees at the breakfast with his own personal biography. In addition, he presented the award for Entrepreneur of the Year.
Galaxy's staff nutritionist, Dr. Susan Mitchell, is a member of NE and has been instrumental in maintaining Galaxy's alliance with the group. We look forward to a successful partnership with the American Dietetic Association and Nutrition Entrepreneurs.

FDA'S SOY HEALTH CLAIM GIVES Galaxy Nutritional Foods™ VEGGIE™ PRODUCTS BIG BOOST...

Galaxy is excited about The Food and Drug Administration's health claim approved October 26, correlating the consumption of soy protein with reducing the risks of heart disease. The Company anticipates that the FDA announcement will further advance Galaxy's already popular line of soy-based dairy alternatives by increasing consumer awareness of soy foods.

According to the FDA, for a food to qualify for the health claim each serving must provide 6.25 grams of soy protein, or one-fourth of the recommended 25 grams of soy protein per day, in order to reduce the risks of heart disease. An example of the FDA's announcement states "25 grams of soy protein per day, as part of a diet low in saturated fat and cholesterol, may reduce the risk of heart disease. A serving of Veggie Milk provides 9 grams of soy protein."

The introduction of several new products including Veggie Milk™, Veggie Yogurt™, The Ultimate Smoothie™ and Veggie Soy Protein Powder™, strategically positions Galaxy with the FDA's new health claim. Galaxy's Veggie Milk™, recently introduced as the world's most nutritious milk, exceeds the proposed health claim by providing 9 grams of soy protein per 8 oz. serving. In addition, Veggie Milk™ is saturated fat free, cholesterol free, lactose free and contains a significant amount of calcium. Galaxy's entire line of Veggie products, including Veggie Slices™, Veggie Butter™, Veggie Yogurt™ and Veggie Shreds™, offer consumers an incredibly nutritious and great tasting way to incorporate soy protein in any diet.

Angelo S. Morini, Galaxy's President & CEO states, "It is important that consumers are aware of the foods that may help prevent cardiovascular disease as well as reduce the risks of certain forms of cancer and prevent the symptoms of menopause. Our Veggie products provide many of these health benefits, which are associated with soy consumption, while being saturated fat free, lactose free and cholesterol free. Galaxy is proud to be a leader in producing soy based products and a major contributor to the fight against heart disease."

VEGGIE™ STARS ON FOX...

The FDA's recent health claim linking the consumption of soy protein to reduced risks of heart disease has put Galaxy on center stage. On November 1, Orlando's Fox News affiliate, channel 35, visited Galaxy's new Veggie Culinary School reporting on the significant benefits of soy-based products. Galaxy's staff nutritionist, Dr. Susan Mitchell, PhD, RD, CNS, who was interviewed by Fox's news reporter about the benefits of soy, was delighted to acquaint viewers with the wonderful advantages of going " Veggie". Dr. Mitchell stated, "In your body, it (soy) gives your body a punch". In addition, Dr. Mitchell mentioned the effects soy has on strenghtening the body's immune system and creating an overall balance in the body.

You too can experience the goodness of Veggie by looking in your grocer's produce section. See you there!!

NORTH AMERICA'S FAVORITE...

October found Soyco Foods in a whirlwind of activity as the product line headed to Toronto for the Canadian Health Food Association's annual Expo East and then on to Baltimore for the U.S. Natural Products Expo East. Natural products retailers, from across North America, attended the expositions searching for new and innovative products. Galaxy's all-natural product line, Soyco, was just what they were looking for.

Several thousand attendees were on hand at the CHFA Expo where they sampled Soyco Foods products and shared their customers' enthusiasm for the product line. The retailers were quick to report their exceptional sales success resulting from the sale of the Soyco product line. The Canadian market has seen substantial growth over the past year with the introduction of bilingual Canadian packaging for several of Galaxy's top selling American products. As the Canadian marketplace continues to ripen for expansion for Soyco Foods, Galaxy continues to structure its sales representation to provide specialized brokers in each Canadian providence.

In Baltimore, a much larger show than CHFA, over 20,000 individuals were in attendance. A majority of the key natural product store chains, including top distributors, stopped by to sample Galaxy's newest flavors of Wholesome Valley Organic slices. The new flavors include Mozzarella, Pepper Jack and Swiss. Galaxy was also proud to present the full product line of The Ultimate Smoothie, Ultimate Smoothie Bars and the brand new Veggie Blast product line formulated for children. Response was extremely favorable to these new items, which should be in national distribution by the beginning of next year. The nutraceutical line of products, specifically, will enable the Soyco Foods distribution channel to post significant gains for the remainder of the fiscal year.

Looking ahead, Galaxy's Soyco staff is already deep into the planning stages for the largest health food show of the year, Natural Products Expo West, scheduled for March 2000 in Anaheim,California.

CONGRATULATIONS...

Galaxy is pleased to announce the appointment of P. Dan Kreitzer to
Vice President of Engineering. For 18 years, Dan has given outstanding service to the Company and upheld the highest level of integrity and loyalty in his job. Dan's outstanding performance has been instrumental in continuously improving the Company's manufacturing operations throughout his tenure.
Galaxy would like to extend its appreciation to Dan and his wife, Carol, for the support they have given the Company over the years.

Thank you for the years of hard work and dedication!!

QUOTE OF THE MONTH...

Behold, I do not give lectures or a little charity. When I give, I give myself.

Walt Whitman