Galaxy Nutritional Foods, Inc. (fka GXYF)

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

Nov 21, 2008 16:08:00 (ET)

ORLANDO, Fla., Nov 21, 2008 /PRNewswire-FirstCall via COMTEX/ -- Galaxy Nutritional Foods, Inc. (GXYF, Trade ), 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.