AUDIT COMMITTEE CHARTER
                              GALAXY FOODS COMPANY

     The Audit  Committee  shall consist of at least three and no more than six,
independent,  non-executive  board  members.  The committee  through its members
shall have:  (1)  sufficient  knowledge to understand  the business in which the
company operates;  (2) the ability to read and understand  fundamental financial
statements,  including a company balance sheet,  income statement,  statement of
cash flows and key performance  measures;  and (3) the ability to understand key
business and financial  risks and related  controls and control  processes.  The
committee  shall  have  access to legal,  accounting  or other  advisors  at the
committee's  sole  discretion.  The company will establish a budget available to
the committee for this purpose.

At least one member of the committee,  preferably the chair,  should be literate
in  business  and  financial  reporting  and  control,  including  knowledge  of
regulatory  requirements,   and  should  have  past  experience  in  finance  or
accounting or other  comparable  experience or  background  (including,  without
limitation,  professional  certification  in finance,  accounting  or comparable
financial  management   expertise   consistent  with  regulatory   requirements.
Committee  appointments  shall  be  approved  annually  by the full  board  upon
recommendation of the nominating or governance committee as appropriate.

Each  member  of the  committee  will  be free of any  relationship  that  would
interfere  with the  individual  exercise of  independent  judgment and shall be
determined by the board to be "independent" under the rules of AMEX, the SEC and
the  Sarbanes-Oxley  Act of 2002. Each member of the audit committee is entitled
to additional compensation above that approved for service on the board only for
assigned tasks beyond those normally  considered part of the committee's  normal
duties.

                              OPERATING PRINCIPLES

The  committee  shall  fulfill  its  responsibilities  within the context of the
following overriding principles:

     A.   Communications
          --------------
          Members of the committee shall, to the extent appropriate, maintain an
          open avenue of contact  throughout  the year with  senior  management,
          other  committee  chairs and key  management  advisors  (external  and
          internal  auditors),  as  applicable,  to strengthen  the  committee's
          knowledge of relevant current and prospective business issues.

     B.   Annual Plan
          -----------
          The  committee,  together  with input from  management,  and other key
          individuals,  shall  develop an annual plan that is  responsive to the
          "primary committee  responsibilities" detailed herein. The annual plan
          shall be reviewed and approved by the full board

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     C.   Meetings and Agenda
          -------------------
          The committee shall meet at least quarterly. Additional meetings shall
          be scheduled as considered necessary by the committee. At least one of
          the meetings shall be in person.

          The  committee's  meeting  agenda shall be the  responsibility  of the
          chair with input from committee  members and the board. The chair will
          request  senior  management,  and  key  management  advisors  and,  on
          occasion, others with relevant matters, to participate in the process.
          Specifically,  the  committee  may request at any time that members of
          board not on the audit  committee,  management,  counsel,  external or
          internal auditors, or others with relevant information  participate in
          the  committee's  meetings  in  order  to  carry  out the  committee's
          responsibilities.  It is  also  understood  that  either  external  or
          internal auditors or counsel may, at any time,  request a meeting with
          the  committee  or the  committee  chair  with or  without  management
          attendance.

          The  committee  will meet in  executive  session  with only  committee
          members  present at least once annually and  separately  with both the
          internal and external  auditors.  The committee  should also meet with
          the top management  individually at least once a year. In addition, it
          is understood  that either internal or external  auditors,  or counsel
          may request a meeting  with the  committee at any time with or without
          management in attendance.

          The  committee may also exclude from its meetings any persons it deems
          appropriate in order to carry out its responsibilities.

          In addition,  the committee  shall meet quarterly with the independent
          auditors  and  management  to  discuss  the annual  audited  financial
          statements  and  quarterly  financial  statements  including  Galaxy's
          disclosure  under  "Management  Discussion  and  Analysis of Financial
          Condition and Results of Operations."

     D.   Expectations,   Information   Requirements   and  Access  to  External
          ----------------------------------------------------------------------
          Resources
          ---------
          The committee shall communicate committee expectations and the nature,
          timing  and  extent  of  committee  information  needs to  management,
          internal auditors and external parties,  including  external auditors.
          Written materials,  including key performance  indicators and measures
          related to key business and  financial  risks,  shall be received from
          management,  auditors  and  others  at least  one week in  advance  of
          meeting  dates.  Meeting  conduct will assume  committee  members have
          reviewed  written  materials in  sufficient  depth to  participate  in
          committee/board dialogue.

          The  committee  shall be  authorized  to access  internal and external
          resources,  as required,  to carry out its responsibilities  including
          the  authority to obtain  advice and  assistance  from outside  legal,
          accounting or other advisors at the sole  discretion of the committee.
          Galaxy shall provide appropriate funding, as

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          determined  by the  committee,  for  compensation  to the  independent
          auditor  and to any  advisors  that the  audit  committee  chooses  to
          engage.

     E.   Reporting to the Board of Directors

          The committee, through the committee chair, shall report periodically,
          as deemed necessary, but at least semiannually,  to the full board. In
          addition,  summarized  minutes  from  committee  meetings,  separately
          identifying  monitoring activities from approvals,  shall be available
          to each board member at least one week prior to the  subsequent  board
          of directors meeting.

     F.   Self-Assessment
          ---------------
          The  committee  shall  annually  review,  discuss  and  assess its own
          performance  as well as its role and  responsibilities,  seeking input
          from senior  management,  the full board and  others.  Changes in role
          and/or  responsibilities,  if any,  shall be  recommended  to the full
          board for approval.

     G.   Ethical and Legal Compliance
          ----------------------------

          The Audit  Committee  shall make  available  the  minutes of all audit
          committee meetings to the board of directors.

          The Committee  will  investigate  any matter  brought to its attention
          within  the  scope of its  duties  with the  power to  retain  outside
          counsel,  accountants or others if, in the committee's judgment, it is
          deemed necessary.

                           COMMITTEE RESPONSIBILITIES

          The  committee  shall  carry out the duties and  responsibilities  set
          forth below.  These functions serve as a guide with the  understanding
          that the committee may determine to carry out additional functions and
          adopt  additional  policies and  procedures as appropriate in light of
          changing  legislative,  regulatory,  legal and other  conditions.  The
          committee  shall also carry out any other duties and  responsibilities
          delegated  to it by  the  board  from  time  to  time  related  to the
          responsibilities  of the  committee  outlined  in  this  charter.  The
          committee  may  perform  any  functions  it  deems  appropriate  under
          applicable  law,  rules  or  regulations,  Galaxy's  by-laws,  and the
          resolutions or other directives of the board,  including review of any
          certification  required  in  accordance  with  applicable  law  or SEC
          regulations.

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          The  committee  shall be given  full  access to the  board,  corporate
          executives,  employees,  internal audit group, independent counsel and
          the  independent  accountants  as  necessary  to  carry  out  the  its
          responsibilities.  While acting within the scope of this charter,  the
          committee  will  have  all  the  authority  of the  board,  except  as
          otherwise limited by applicable law.


          Non-with-standing  the above,  the  committee is not  responsible  for
          certifying Galaxy's financial statements or guaranteeing the auditor's
          report.   The  fundamental   responsibility   for  Galaxy's  financial
          statements and  disclosures  rests with management and the independent
          auditors.  It is  also  the  responsibility  of  the  CEO  and  senior
          management  rather  than that of the  committee  to assess  and manage
          Galaxy's exposure to risk.

A.   Financial Reporting
     -------------------

     1.   Review,  assess and  discuss  with  management  the annual and interim
          financial  statements  before they are released to the public or filed
          with the SEC.

     2.   Review and assess the key financial  statement issues and risks, their
          impact or  potential  effect on reported  financial  information,  the
          processes  used  by  management  to  address  such  matters,   related
          auditors' views, and the basis for audit conclusions.

     3.   Approve changes in important accounting principles and the application
          thereof in both interim and annual financial reports.

     4.   Advise  financial  management and the external  auditors that they are
          expected to provide a timely analysis of significant current financial
          reporting issues and practices.

     5.   Review other relevant reports and financial  information  submitted by
          Galaxy to any  government  body, or the public,  including  management
          certifications as required by the Sarbanes-Oxley Act of 2002 (Sections
          302 and 906) and relevant reports rendered by the independent auditors
          or summaries of these reports.

     6.   Recommend  to the board  whether the  financial  statements  should be
          included in the Annual Report on Form 10-K.

     7.   Review earnings press releases with management,  including a review of
          "pro-forma" or "adjusted" non-GAAP information.

     8.   Discuss  with  management  the  financial   information  and  earnings
          guidance  provided to analysts and rating agencies.  These discussions
          may be on general

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          terms (i.e. discussion of the types of information to be disclosed and
          the type of presentation to be made).

B.   Risks and Controls
     ------------------

     1.   Review and assess the company's business and financial risk management
          process, including the adequacy of the overall control environment and
          controls in selected areas representing significant risk.

     2.   Review  and assess  the  company's  system of  internal  controls  for
          detecting   accounting  and  financial  reporting  errors,  fraud  and
          defalcations,  legal violations,  and noncompliance with the corporate
          code of conduct. As part of the review and assessment process,  review
          the related findings and  recommendations of the external and internal
          auditors, together with management's responses.

     3.   Review  with legal  counsel  any  regulatory  matters  that may have a
          material impact on the financial statements.

     4.   Review the results of the annual  audits of  directors'  and officers'
          expense accounts and management  perquisites  prepared by the internal
          auditors.

C.   External and Internal Auditors
     ------------------------------

     1.   Have the sole  authority to hire,  determine the  compensation  of and
          oversee the work of the external auditors.

     2.   Instruct the external  auditors that they are responsible to the board
          of  directors  and  the  audit  committee  as  representatives  of the
          shareholders.  Confirm  that the  external  auditors  will  report all
          relevant issues to the committee.

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     3.   Review the  performance of the internal  auditors and the  independent
          auditors if the circumstances warrant.

     4.   Obtain  a  formal  written   statement  from  the  external   auditors
          consistent  with standards set by the  Independence  Standards  Board.
          Additionally, discuss with the auditors and consider any relationships
          or  non-audit   services   that  may  affect  their   objectivity   or
          independence.  Receive all  compensation  requests  from the  external
          auditors as well as all bids for audit services.

     5.   Consider,  in  consultation  with the external and internal  auditors,
          their  audit  scopes  and plans to ensure  completeness  of  coverage,
          reduction  of  redundant  efforts  and  the  effective  use  of  audit
          resources.

     6.   Review  and  approve  requests  for  any  consulting  services  to  be
          performed by the external auditors,  and be advised of any other study
          undertaken  at the request of  management  that is beyond the scope of
          the audit engagement letter.

     7.   Review with  management  and the external  auditors the results of the
          annual  audits  and  related  comments  in  consultation   with  other
          committees  as  deemed  appropriate,  including  any  difficulties  or
          disputes with management,  any significant changes in the audit plans,
          the rationale behind  adoptions and changes in accounting  principles,
          and accounting estimates requiring significant judgments.

     8.   Provide a medium for the  external  auditors to discuss with the audit
          committee   their   judgments   about  the   quality,   not  just  the
          acceptability,  of  accounting  principles  and  financial  disclosure
          practices used or proposed to be adopted by the company.

     9.   Approve any changes in the directors of the internal audit function.

     10.  Instruct the internal  auditors that they are responsible to the board
          of directors through the committee.

     11.  Review with the  internal  auditors  any changes in the scope of their
          plans.

     12.  Review with the internal  auditors the results of their  monitoring of
          compliance with the company's code of conduct.

     13.  Establish  procedures  for the  receipt,  retention  and  treatment of
          complaints  concerning  questionable  internal  accounting controls or
          audit matters including those complaints that involve confidential and
          anonymous submissions by employees.

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     14.  Establish clear hiring  policies for employees or former  employees of
          the independent auditor

D.   Other
     -----

     1.   Review and update the committee's charter.

     2.   Review and update the company's code of conduct.

     3.   Review and approve all  significant  conflicts of interest and related
          party transactions.

     4.   Conduct  or  authorize  investigations  into any  matters  within  the
          committee's scope of responsibilities. The committee will be empowered
          to retain  independent  counsel and other  professionals  to assist in
          conducting any  investigation  and Galaxy shall pay all costs and fees
          incurred by the committee in connection with this retention.