UNITED STATES
                  SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C. 20549

                             FORM 10-KSB

[X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934

               For the fiscal year ended June 30, 2002

                                  OR

[ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
        SECURITIES AND EXCHANGE ACT OF 1934

                 Commission file number: No.000-31355

                       GALAXY SPECIALTIES, INC.
            (Name of small business issuer in its charter)

        NEVADA                              81-0438093
(State of incorporation)          (I. R. S. Employer Identification No.)

#149, 369 EAST 900 SOUTH, SALT LAKE CITY, UTAH                84111
(Address of principal executive offices)                    (Zip code)

Issuer's telephone number:  (801) 323-2395

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  Common Stock

Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file
such reports) and (2) has been subject to such filing requirements
for the past 90 days.
Yes [X]  No [  ]

Check if disclosure of delinquent filers in response to item 405 of
Regulation S-B is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB. [X]

State issuer's revenue for its most recent fiscal year: None

As of August 30, 2002, the registrant had 17,000,000 shares of
common stock outstanding.  Since the registrant does not have an
active trading market, a market value of the voting stock held by
non-affiliates cannot be determined.

Documents incorporated by reference: None.

Transitional Small Business Disclosure Format (check one): Yes [ ]No [X]

<PAGE>

                          TABLE OF CONTENTS

                                PART I

ITEM 1.  DESCRIPTION OF BUSINESS . . . . . . . . . . . . . . . . . . 3
ITEM 2.  DESCRIPTION OF PROPERTY . . . . . . . . . . . . . . . . . . 7
ITEM 3.  LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . 7
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . 7

                               PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. . 7
ITEM 6.  PLAN OF OPERATIONS. . . . . . . . . . . . . . . . . . . . . 7
ITEM 7.  FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . 8
ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE  . . . . . . . . . . . 19

                               PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS; COMPLIANCE WITH SECTION
         16(A).. . . . . . . . . . . . . . . . . . . . . . . . . . .19
ITEM 10. EXECUTIVE COMPENSATION  . . . . . . . . . . . . . . . . . .19
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT  . . . . . . . . . . . . . . . . . . . . . . . .20
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . 20
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K. . . . . . . . . . . . . .21






                                   2


<PAGE>

                      FORWARD LOOKING STATEMENTS

        In this annual report references to "Galaxy," "we," "us,"
and "our" refer to Galaxy Specialties, Inc..

        This annual report contains certain forward-looking
statements and any statements contained in this annual report that
are not statements of historical fact may be deemed to be
forward-looking statements.  Without limiting the foregoing, words
such as "may," "will," "expect," "believe," "anticipate," "estimate"
or "continue" or comparable terminology are intended to identify
forward-looking statements.  These statements by their nature
involve substantial risks and uncertainties, and actual results may
differ materially depending on a variety of factors, many of which
are not within Galaxy's control.  These factors include but are not
limited to economic conditions generally and in the industries in
which Galaxy may participate, competition within Galaxy's chosen
industry and failure by Galaxy to successfully develop business
relationships.
                                PART I

                   ITEM 1: DESCRIPTION OF BUSINESS

HISTORICAL DEVELOPMENT

        Galaxy Specialties, Inc. was incorporated in the state of
Nevada on May 22, 1999.  On June 5, 2000, Galaxy merged with Hystar
Aerospace Marketing Corporation of Montana ("Hystar"), solely for
the purpose of changing Hysar's domicile from Montana to Nevada.  As
a result, Galaxy became the wholly-owned subsidiary of Hystar's
parent corporation, VIP Worldnet, Inc.  We are a development stage
company and have suffered losses since our inception.  Our
independent auditors have expressed doubt that we can continue as a
going concern unless we obtain financing.

OUR PLAN

        Our business plan is to seek, investigate, and, if
warranted, acquire an interest in a business opportunity.  Our
acquisition of a business opportunity may be made by merger,
exchange of stock, or otherwise.  We have very limited sources of
capital, and we probably will only be able to take advantage of one
business opportunity. At the present time we have not identified any
business opportunity that we plan to pursue, nor have we reached any
preliminary or definitive agreements or understandings with any
person concerning an acquisition or merger.

         Based on current economic and regulatory conditions,
management believes that it is possible, if not probable, for a
company like ours, without many assets or liabilities, to negotiate
a merger or acquisition with a viable private company.  The
opportunity arises principally because of the high legal and
accounting fees and the length of time associated with the
registration process of "going public".  However, should any of
these conditions change, it is very possible that there would be
little or no economic value for anyone taking over control of
Galaxy.

        Our search for a business opportunity will not be limited to
any particular geographical area or industry, including both U.S.
and international companies.  Our management has unrestricted
discretion in seeking and participating in a business opportunity,
subject to the availability of such opportunities, economic
conditions and other factors.  Our management believes that
companies who desire a public market to enhance liquidity for
current stockholders, or plan to acquire additional assets through
issuance of securities rather than for cash will be potential merger
or acquisition candidates.

        The selection of a business opportunity in which to
participate is complex and extremely risky and will be made by
management in the exercise of its business judgement.  There is no
assurance that we will be able to identify and acquire any business
opportunity which will ultimately prove to be beneficial to us and
our stockholders.  Should a merger or acquisition prove
unsuccessful, it is possible management may decide not to pursue
further acquisition activities and management may abandon its
activities and we may become dormant or be dissolved.


                                3
<PAGE>

        Our activities are subject to several significant risks
which arise primarily as a result of the fact that we have no
specific business and may acquire or participate in a business
opportunity based on the decision of management which will, in all
probability, act without consent, vote, or approval of our
stockholders.

        In the event we merge or acquire a business opportunity, the
successor company will be subject to our reporting obligations.
This is commonly referred to as a "back door registration."  A back
door registration occurs when a non-reporting company becomes the
successor of a reporting company by merger, consolidation, exchange
of securities, acquisition of assets or otherwise.  Pursuant to
Securities and Exchange Commission ("SEC") regulations, this type of
event requires the successor company to provide in an 8-K current
report with the same kind of information that would appear in a
registration statement, including audited and pro forma financial
statements.  Accordingly, we may incur additional expense to conduct
due diligence and present the required information for the business
opportunity in any report.  Also, the SEC may elect to conduct a
full review of the successor company and may issue substantive
comments on the sufficiency of disclosure related to the business
opportunity.

        It is possible that the range of business opportunities that
might be available for consideration by us could be limited by
impact of the SEC regulations regarding purchase and sale of "penny
stock."  Our common stock is not publicly traded at this time and we
cannot assure that a market will develop or that a stockholder ever
will be able to liquidate his investments without considerable
delay, if at all.  If a market develops, our shares will likely be
subject to the rules of the Penny Stock Suitability Reform Act of
1990. The liquidity of penny stock is affected by specific
disclosure procedures required by this Act to be followed by all
broker-dealers, including but not limited to, determining the
suitability of the stock for a particular customer, and obtaining a
written agreement from the customer to purchase the stock.  This
rule may affect the ability of broker-dealers to sell our securities
and may affect the ability of purchasers to sell our securities in
any market.

INVESTIGATION AND SELECTION OF BUSINESS OPPORTUNITIES

        We anticipate that business opportunities will come to our
attention from various sources, including our officers and
directors, our stockholders, professional advisors, such as
attorneys and accountants, securities broker-dealers, investment
banking firms, venture capitalists, members of the financial
community and others who may present unsolicited proposals.
Management expects that prior personal and business relationships
may lead to contacts for business opportunities; however, we have
not entered into any direct or indirect negotiations at the time of
this filing with any person, corporation or other entity regarding
any possible business reorganization involving Galaxy.

        Our management will analyze the business opportunities;
however, none of our management are professional business analysts.
Our management has had limited experience with mergers and
acquisitions of business opportunities and has not been involved
with an initial public offering.  Our management has been
involved with one prior acquisition of a business opportunity as
directors and officers of IDI Global, Inc., formerly, Bennion
Corporation, a blank check reporting company.  The acquisition was
structured as a forward triangular merger which was completed in
March 2002 after the stock-for stock exchange was completed.  Mrs.
Ball and Ms. Marino resigned as officers and directors of IDI Global
upon consummation of the acquisition.

        Certain conflicts of interest exist or may develop between
Galaxy and our officers and directors.  Our management has other
business interests to which they currently devote attention, which
include their primary employment and management of other blank check
reporting companies.  They may be expected to continue to devote
their attention to these other business interests although
management time should be devoted to our business.  As a result,
conflicts of interest may arise that can be resolved only through
their exercise of judgement in a manner which is consistent with
their fiduciary duties to us.  In particular, our officers and
directors are directors of other blank check companies with a
structure and a business plan which is identical to ours and, they


                                4
<PAGE>

may, in the future, be involved with other blank check companies.
In the process of negotiations for an acquisition or merger or
determination of consulting fees related to investigation of a
business opportunity, our principal stockholders and management may
consider their own personal pecuniary benefit or the interests of
other blank check companies they are affiliated with rather than the
best interests of Galaxy's other stockholders.

        We presently do not foresee entering into a merger or
acquisition transaction with any business with which our officers or
directors are currently affiliated. We may acquire or merge with
companies of which our management's  affiliates or associates have a
direct or indirect ownership interest.  If we determine in the
future that a transaction with an affiliate would be in our best
interest we are permitted by Nevada law to enter into such a
transaction if:

        (1)      The material facts regarding the relationship or
interest of the affiliate in the contract or transaction are
disclosed or are known to the Board of Directors.  The board
authorizes the contract or transaction by the affirmative vote of a
majority of the disinterested directors, even though the
disinterested directors constitute less than a quorum; or

        (2)      The material facts regarding the relationship or
interest of the affiliate in the contract transaction are disclosed
or are known to the stockholders entitled to vote on the
transaction, and the contract or transaction is specifically
approved by vote of the stockholders; or

        (3) The contract or transaction is fair to us at the time it
is authorized, approved or ratified by the Board of Directors or the
stockholders.

        A decision to participate in a specific business opportunity
may be made upon our management's analysis of the quality of the
other company's management and personnel, the anticipated
acceptability of the business opportunity's new products or
marketing concept, the merit of its technological changes, the
perceived benefit that it will derive from becoming a publicly held
entity, and numerous other factors which are difficult, if not
impossible, to analyze through the application of any objective
criteria.  In many instances, we anticipate that the historical
operations of a specific business opportunity may not necessarily be
indicative of the potential for the future because of the possible
need to shift marketing approaches substantially, expand
significantly, change product emphasis, change or substantially
augment management, or make other changes.  We will be dependent
upon the owners of a business opportunity to identify any such
problems which may exist and to implement, or be primarily
responsible for the implementation of, required changes.

        In our analysis of a business opportunity we anticipate that
we will consider, among other things, the following factors:

        (1)   Potential for growth and profitability, indicated by
new technology, anticipated market expansion, or new products;

        (2)   Our perception of how any particular business
opportunity will be received by the investment community and by our
stockholders;

        (3)   Whether, following the business combination, the
financial condition of the business opportunity would be, or would
have a significant prospect in the foreseeable future of becoming
sufficient to enable our securities to qualify for listing on a
exchange or on a national automated securities quotation system,
such as NASDAQ.

        (4)   Capital requirements and anticipated availability of
required funds, to be provided by us or from operations, through the
sale of additional securities, through joint ventures or similar
arrangements, or from other sources;

                                5
<PAGE>


        (5)   The extent to which the business opportunity can be
advanced;

        (6)   Competitive position as compared to other companies of
similar size and experience within the industry segment as well as
within the industry as a whole;

        (7)   Strength and diversity of existing management, or
management prospect that are scheduled for recruitment;

        (8)   The cost of our participation as compared to the
perceived tangible and intangible values and potential; and

        (9)   The accessibility of required management expertise,
personnel, raw materials, services, professional assistance, and
other required items.

        No one of the factors described above will be controlling in
the selection of a business opportunity.  Management will attempt to
analyze all factors appropriate to each opportunity and make a
determination based upon reasonable investigative measures and
available data. Potentially available business opportunities may
occur in many different industries and at various stages of
development.  Thus, the task of comparative investigation and
analysis of such business opportunities will be extremely difficult
and complex. Potential investors must recognize that, because of our
limited capital available for investigation and management's limited
experience in business analysis, we may not discover or adequately
evaluate adverse facts about the opportunity to be acquired.

FORM OF ACQUISITION

        We cannot predict the manner in which we may participate in
a business opportunity. Specific business opportunities will be
reviewed as well as our needs and desires and those of the promoters
of the opportunity.  The legal structure or method deemed by
management to be suitable will be selected based upon management's
review of the business opportunity and our relative negotiating
strength. Such method may include, but is not limited to, leases,
purchase and sale agreements, licenses, joint ventures and other
contractual arrangements. We may act directly or indirectly through
an interest in a partnership, corporation or other forms of
organization.  We may agree to merge, consolidate or reorganize with
other corporations or forms of business organization. In addition,
our present management and stockholders most likely will not have
control of a majority of our voting shares following a merger or
reorganization transaction. As part of such a transaction, our
existing directors may resign and new directors may be appointed
without any vote by our stockholders.

        We likely will achieve our participation in a business
opportunity through the issuance of common stock or other
securities.  Although the terms of any such transaction cannot be
predicted, it should be noted that issuance of additional shares
might also may be done simultaneously with a sale or transfer of
shares representing a controlling interest by current principal
stockholders.

COMPETITION

        We expect to encounter substantial competition in our effort
to locate attractive opportunities.  Business development companies,
venture capital partnerships and corporations, venture capital
affiliates of large industrial and financial companies, small
investment companies, and wealthy individuals will be our primary
competition. Many of these entities will have significantly greater
experience, resources and managerial capabilities than we do and
will be in a better position than we are to obtain access to
attractive business opportunities.  We also will experience
competition from other public "blank check" companies, many of which
may have more funds available.

                                6
<PAGE>

EMPLOYEES

        We currently have no employees.  Our management expects to
confer with consultants, attorneys and accountants as necessary.  We
do not anticipate a need to engage any full-time employees so long
as we are seeking and evaluating business opportunities.


                  ITEM 2: DESCRIPTION OF PROPERTIES

        We do not currently own or lease any property.  We use
office space in the office of a stockholder at no cost.  Until we
pursue a viable business opportunity and recognize income, we will
not seek independent office space.

                      ITEM 3: LEGAL PROCEEDINGS

    We are not a party to any proceedings or threatened proceedings
as of the date of this filing.


     ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        We have not submitted a matter to a vote of our shareholders
during the fourth quarter of the 2002 fiscal year.


                               PART II

ITEM 5: MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

        Our common stock is not listed on any market and we do not
have an established public trading market.  We have approximately 86
stockholders of record. We do not have any outstanding options or
warrants to purchase our common shares.  We have not declared
dividends on our common stock and do not anticipate paying dividends
on our common stock in the foreseeable future.   Also, we do not
have any securities authorized for issuance under any equity
compensation plan.

RECENT SALES OF UNREGISTERED SECURITIES

        We have not sold any securities without registration within
the past three years.


                      ITEM 6: PLAN OF OPERATIONS

        We have no assets and have experienced losses from
inception.  For the fiscal year ended June 30, 2002, we had no cash
on hand and total current liabilities of $28,000.  The $28,000 note
payable is owed to a related party for accounting and legal fees
incurred during the fiscal year ended June 30, 2000 which were paid
on our behalf by that related party.

        We have no commitments for capital expenditures for the next
twelve months.  During the next twelve months we believe that our
current cash needs can be met by loans from our directors, officers
and shareholders based on understandings we have with these persons.
 These understandings are not written agreements and therefore these
persons are not obligated to provide funds.  We may repay these
loans, costs of services and advancements with cash, if available,
or we may convert them into common stock.

        Our management intends to actively seek business
opportunities during the next twelve months and if we

                                7
<PAGE>

obtain abusiness opportunity, it may be necessary to raise additional
capital.  Management anticipates that additional capital may be
provided by future loans or private placements of our common stock.
We expect that any private placement of stock will be issued
pursuant to exemptions provided by federal and state securities
laws.  The purchasers and manner of issuance will be determined
according to our financial needs and the available exemptions.  We
also note that if we issue more shares of our common stock our
shareholders may experience dilution in the value per share of their
common stock.


                     ITEM 7: FINANCIAL STATEMENTS













                                8
<PAGE>

                     Galaxy Specialties, Inc.

                       Financial Statements

                      June 30, 2002 and 2001




<PAGE> 9









                             CONTENTS


Independent Auditor's Report ..........................................3

Balance Sheets ........................................................4

Statements of Operations ..............................................5

Statements of Stockholders' Equity ....................................6

Statements of Cash Flows ..............................................7

Notes to the Financial Statements .....................................8


<PAGE>  10




                           CHISHOLM & ASSOCIATES
A Professional         Certified Public Accountants       Office (801)292-8756
Corporation                  P.O. Box 540216                Fax (801) 292-8809
                       North Salt Lake, Utah 84054

______________________________________________________________________________




                   INDEPENDENT AUDITOR'S REPORT



To the Board of Directors and Stockholders
of Galaxy Specialties, Inc.:

We have audited the accompanying balance sheets of Galaxy Specialties, Inc. (a
development stage company) as of June 30, 2002 and the related statements of
operations, stockholders' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based on
our audit.  The financial statements of Galaxy Specialties, Inc. for the year
ended June 30, 2001 and from inception on March 7, 1986 through June 30, 2001
were audited by other auditors whose report dated July 25, 2001 expressed an
unqualified opinion.

We conducted our audit in accordance with generally accepted auditing
standards in the United States of America.  Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Galaxy Specialties, Inc.  (a
development stage company) as of June 30, 2002 and the results of its
operations and cash flows for the year then ended in conformity with generally
accepted accounting principles in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.  The Company has suffered recurring
losses from operations which raises substantial doubt about its ability to
continue as a going concern.  Management's plans in regard to these matters
are described in Note 2.  The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.


/s/ Chisholm & Associates

Chisholm & Associates
North Salt Lake, Utah
September 17, 2002

<PAGE> 11


                     Galaxy Specialties, Inc.
                  (A Development Stage Company)
                          Balance Sheets


                              ASSETS


                                                             June 30
                                                   ---------------------------
                                                        2002          2001
                                                   ------------- -------------
CURRENT ASSETS

Cash                                               $          -  $          -
                                                   ------------- -------------


  TOTAL ASSETS                                     $          -  $          -
                                                   ============= =============



               LIABILITIES AND STOCKHOLDERS' EQUITY


CURRENT LIABILITIES

Accounts Payable - related party                   $     28,000  $     28,000
                                                   ------------- -------------

  Total Liabilities                                      28,000        28,000
                                                   ------------- -------------

STOCKHOLDERS' EQUITY

Common Stock, $.001 par value; 20,000,000
  shares authorized; 17,000,000 shares
  issued and outstanding                                 17,000        17,000

Deficit Accumulated during the development stage        (45,000)      (45,000)
                                                   ------------- -------------

  Total Stockholders' Equity (deficit)                  (28,000)      (28,000)
                                                   ------------- -------------

  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $          -  $          -
                                                   ============= =============












The accompanying notes are an integral part of these financial statements.

                               -4-


<PAGE> 12



                     Galaxy Specialties, Inc.
                  (A Development Stage Company)
                     Statement of Operations

                                                              From
                                     For the Years Ended      Inception on
                                           June 30            March 7, 1986
                                      2002       2001         to June 30, 2002
                                 ------------- -------------- --------------

REVENUES                         $          -  $           -  $           -
                                 ------------- -------------- --------------
EXPENSES

  General & Administrative                  -              -         45,000
                                 ------------- -------------- --------------

    TOTAL EXPENSES                          -              -         45,000
                                 ------------- -------------- --------------

NET INCOME (LOSS)                $          -  $           -  $     (45,000)
                                 ============= ============== ==============

NET LOSS PER SHARE               $       0.00  $        0.00  $       (0.00)
                                 ============= ============== ==============
WEIGHTED AVERAGE SHARES
  OUTSTANDING                      17,000,000     17,000,000     17,000,000
                                 ============= ============== ==============





The accompanying notes are an integral part of these financial statements

                               -5-

<PAGE> 13

                     Galaxy Specialties, Inc.
                  (A Development Stage Company)
                Statements of Stockholders' Equity
      From Inception on March 7, 1986 through June 30, 2002

                                                                 Deficit
                                                                 Accumulated
                                 Common Stock        Additional  During the
                            -----------------------  Paid in     Development
                              Shares       Amount    Capital     Stage
                            ------------ ----------- ----------- -------------
Issuance of shares for
marketing rights             17,000,000  $   17,000  $        -  $          -

Net (loss) for the year
ended June 30, 1986                   -           -           -        (3,400)

Net (loss) for the year
ended June 30, 1987                   -           -           -        (3,400)

Net (loss) for the year
ended June 30, 1988                   -           -           -        (3,400)

Net (loss) for the year
ended June 30, 1989                   -           -           -        (3,400)

Net (loss) for the year
ended June 30, 1990                   -           -           -        (3,400)

Net (loss) for the year
ended June 30, 1991                   -           -           -             -

Net (loss) for the year
ended June 30, 1992                   -           -           -             -

Net (loss) for the year
ended June 30, 1993                   -           -           -             -
                            ------------ ----------- ----------- -------------

Balance - June 30, 1993      17,000,000      17,000           -       (17,000)

Net (loss) for the year
ended June 30, 1994                   -           -           -             -
                            ------------ ----------- ----------- -------------

Balance - June 30, 1994      17,000,000      17,000           -       (17,000)

Net (loss) for the year
ended June 30, 1995                   -           -           -             -
                            ------------ ----------- ----------- -------------

Balance - June 30, 1995      17,000,000      17,000           -       (17,000)

Net (loss) for the year
ended June 30, 1996                   -           -           -             -
                            ------------ ----------- ----------- -------------

Balance - June 30, 1996      17,000,000      17,000           -       (17,000)

Net (loss) for the year
ended June 30, 1997                   -           -           -             -
                            ------------ ----------- ----------- -------------

Balance - June 30, 1997      17,000,000      17,000           -       (17,000)

Net (loss) for the year
ended June 30, 1998                   -           -           -             -
                            ------------ ----------- ----------- -------------

Balance - June 30, 1998      17,000,100      17,000           -       (17,000)

Net (loss) for the year
ended June 30, 1999                   -           -           -             -
                            ------------ ----------- ----------- -------------

Balance - June 30, 1999      17,000,000      17,000           -       (17,000)

Net (loss) for the year
ended June 30, 2000                   -           -           -       (28,000)
                            ------------ ----------- ----------- -------------

Balance - June 30, 2000      17,000,000      17,000           -       (45,000)

Net (loss) for the year
ended June 30, 2001                   -           -           -             -
                            ------------ ----------- ----------- -------------

Balance - June 30, 2001      17,000,000      17,000           -       (45,000)

Net (loss) for the year
ended June 30, 2002                   -           -           -             -
                            ------------ ----------- ----------- -------------

Balance - June 30, 2002      17,000,000  $   17,000  $        -  $    (45,000)
                            ============ =========== =========== =============







The accompanying notes are an integral part of these financial statements

                               -6-
<PAGE> 14


                     Galaxy Specialties, Inc.
                  (A Development Stage Company)
                     Statement of Cash Flows


                                                                From
                                         For the years ended    Inception on
                                               June 30          March 7, 1986
                                       ------------------------ Through
                                           2002        2001     June 30, 2002
                                       ----------- ------------ --------------
Cash Flows from Operating Activities
  Net Loss                             $        -  $         -  $     (45,000)
  Less  Non-cash Items:
  Depreciation & Amortization                   -            -         17,000
  Increase  in Accounts Payable                 -            -         28,000
                                       ----------- ------------ --------------
  Net Cash Provided (Used) by
  Operating Activities                          -            -              -
                                       ----------- ------------ --------------

Cash Flows from Investing Activities            -            -              -
                                       ----------- ------------ --------------
  Net Cash Provided (Used) by
  Investing Activities                          -            -              -
                                       ----------- ------------ --------------

Cash Flows from Financing Activities            -            -              -
                                       ----------- ------------ --------------
  Net Cash Provided (Used) by
  Financing Activities                          -            -              -
                                       ----------- ------------ --------------

Increase (Decrease) in Cash                     -            -              -

Cash and Cash Equivalents at
Beginning of Period                             -            -              -
                                       ----------- ------------ --------------
Cash and Cash Equivalents at
End of Period                          $        -  $         -  $           -
                                       =========== ============ ==============

Supplemental Cash Flow Information:
  Stock issued for marketing rights    $        -  $         -  $      17,000

  Cash Paid For:
    Interest                           $        -  $         -  $           -
    Income Taxes                       $        -  $         -  $           -

The accompanying notes are an integral part of these financial statements

                               -7-


<PAGE> 15



                    Galaxy Specialties, Inc.
                  (A Development Stage Company)
                Notes to the Financial Statements
                     June 30, 2002 and 2001

NOTE 1 - Summary of Significant Accounting Policies

      a.    Organization & Consolidation Policy

Galaxy Specialties, Inc. (the Company), a Nevada corporation, was incorporated
May 22, 2000.   On June 5, 2000  the Company merged with Hystar Aerospace
Marketing Corporation of Montana, Inc. (Hystar).  The Company is the surviving
corporation.

Hystar Aerospace Marketing Corporation of Montana, was incorporated March 7,
1986 to lease, sell, and market airships and the Burkett Mill, a waste milling
device, which rights were acquired from VIP Worldnet, Inc. initially the only
shareholder.  The technology to further develop the airship and the mill  by
the parent company proved to be prohibitive, and shortly after the acquisition
of the marketing rights further activity ceased.  Hystar has been inactive
since that date.

The merger was recorded under the pooling of interests method of accounting.
Each share of the Company remained outstanding as one fully paid and non-
assessable share of capital stock of the surviving corporation, and each share
of Hystar  was converted into one fully paid and non-assessable share of
capital stock of the surviving corporation.

The Company incurred no revenue, expenses and had neither assets nor
liabilities on its balance sheet from the date of its inception to the date of
the merger.  Therefore, the accompanying financial statements present the
financial condition and results of operations of Hystar from its inception
through the merger date and of the surviving entity, the Company, as of the
merger date.

      b.      Recognition of Revenue

The Company recognizes income and expense on the accrual basis of accounting.

      c.      Earnings (Loss) Per Share

The computation of earnings (loss) per share of common stock is based on the
weighted average number of shares outstanding at the date of the financial
statements.





                               -8-

<PAGE> 16

                    Galaxy Specialties, Inc.
                  (A Development Stage Company)
                Notes to the Financial Statements
                     June 30, 2002 and 2001

NOTE 1 - Summary of Significant Accounting Policies (continued)

      c.   Earning (Loss) Per Share (continued)

                                       Income (loss)    Shares      Per Share
                                       (Numerator)   (Denominator)   Amount
                                       -------------- ------------- ----------

For the year ended June 30, 2002:
 Basic EPS
  Income (loss) to common stockholders $           -   17,000,000   $    (.00)
                                       ============== ============= ==========
 Basic EPS
  Income (loss) to common stockholders $           -   17,000,000   $    (.00)
                                       ============== ============= ==========
From inception on March 7, 1986 to
June 30, 2002:
 Basic EPS
  Income (loss) to common stockholders $     (45,000)  17,000,000   $    (.00)
                                       ============== ============= ==========

      d.  Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three
months or less to be cash equivalents.

      e.  Provision for Income Taxes

No provision for income taxes have been recorded due to net operating loss
carryforwards totaling approximately $45,000 that will be offset against future
taxable income.  These NOL carryforwards began to expire in the year 2001.  No
tax benefit has been reported in the financial statements because the Company
believes there is a 50% or greater chance the carryforward will expire unused.

Deferred tax asset and the valuation account is as follows as June 30, 2002 and
2001:

                                                     June 30,
                                                2002           2001
                                              -----------  -----------
     Deferred tax asset:
        NOL carryforward                      $   15,000   $   15,000
        Valuation allowance                     ( 15,000)    ( 15,000)
                                              -----------  -----------

                                              $       -    $        -
                                              ===========  ===========


                               -9-

<PAGE> 17

                    Galaxy Specialties, Inc.
                  (A Development Stage Company)
                Notes to the Financial Statements
                     June 30, 2002 and 2001

NOTE 1 - Summary of Significant Accounting Policies (continued)

      f.  Use of estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

NOTE 2 - Going Concern

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.  The Company has no assets and has
had recurring operating losses for the past several years and is dependent upon
financing to continue operations.  The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.  It is
management's plan to find an operating company to merge with, thus creating
necessary operating revenue.

NOTE 3 - Stockholders' Equity

In 1986, the Company issued 17,000,000 shares of common stock for the marketing
rights to an airship and a waste milling device.  The value of this issuance
was $17,000.

During 2000, the Company issued 100 shares of stock in the formation of Galaxy
Specialties, Inc. (NV), and subsequently canceled these shares.

NOTE 4 - Related Party Transactions

During the year ended June 30, 2000, the Company incurred $28,000 of
professional fees payable to professionals affiliated with Mutual Ventures
Corp., now called First Equity Holdings Corp.  An officer of the Company is
also an employee of First Equity Holdings Corp.

NOTE 5 - Development Stage Company

The Company is a development stage company as defined in Financial Accounting
Standards Board Statement No. 7.  It is concentrating substantially all of its
efforts in raising capital and searching for a business operation with which
to merge, or assets to acquire, in order to generate significant operations.






                              -10-

<PAGE> 18


        ITEM 8: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

        As previously reported in our quarterly report on Form
10-QSB for the period ended September 30, 2001, on October 30, 2001,
we requested and received the resignation of our then independent
auditors, Smith & Company, Certified Public Accountants, and then we
engaged Chisholm & Associates, Certified Public Accountants, as our
independent auditors, on the same date.


                               PART III

ITEM 9: DIRECTORS AND EXECUTIVE OFFICERS; COMPLIANCE WITH SECTION 16(A)
                DIRECTORS AND EXECUTIVE OFFICERS

        Our executive officers and directors and their respective
ages, positions and term of office are set forth below, along with
biographical information for each.  Our bylaws require two directors
who serve until our next annual meeting or until each is replaced by
a qualified director.  Our executive officers are chosen by our
Board of Directors and serve at its discretion.  There are no
existing family relationships between or among any of our executive
officers or directors.

Name             Age      Position Held               Director Since
--------------   ----     --------------              --------------
M. Jeanne Ball    44      President and Director      June 5, 2000
April L. Marino   28      Secretary/Treasurer
                          and Director                June 5, 2000

        M. Jeanne Ball   For over 20 years Ms. Ball has worked as
a legal secretary.  For the past six years she has worked as an
independent contractor performing duties of a legal secretary.  She
is a director of Skinovation Pharmaceutical Incorporated and Wings &
Things, Inc., which are blank check reporting companies.

        April L. Marino   Ms. Marino is employed as a administrative
assistant by First Equity Holdings Corp. formerly  Mutual Ventures
Corporation.  She has been an employee of that company since
December 1997.  She is a director of Pinecrest Services, Inc. and
Libra Alliance Corporation, which are blank check reporting companies.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

    Section 16(a) of the Securities Exchange Act of 1934 requires
our directors, executive officers and persons who own more than five
percent of a registered class of our equity securities, to file with
the Securities and Exchange Commission initial reports of ownership
and reports of changes in ownership of common stock and our other
equity securities.  Officers, directors and greater than ten-percent
beneficial owners are required by SEC regulations to furnish us with
copies of all Section 16(a) reports they file.  Based upon review of
the copies of such forms furnished to us during the fiscal year
ended June 30, 2002, and representations to us that no Forms 5 were
required, we believe no reports were required to be filed during
fiscal year 2002.


                   ITEM 10: EXECUTIVE COMPENSATION

        Our named executive officers have not received any cash
compensation, bonuses, stock appreciation rights, long term
compensation, stock awards or long-term incentive rights from us
during the past three fiscal years.  Mrs. Ball who acts in a
capacity similar to Chief Executive Officer has not received any
compensation during fiscal year 2002.  We do not have any standard
arrangement for compensation of our directors for any services
provided as director, including services for committee participation
or for special assignments.  In addition, we have not entered into
employment contracts with our executive officers and their
compensation, if any, will be determined at the discretion of our
Board of Directors.


                               19
<PAGE>

ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        The following table sets forth the beneficial ownership of
our outstanding common stock of each person or group known by us to
own beneficially more than 5% of our outstanding common stock, and
ownership of our management.  Beneficial ownership is determined in
accordance with the rules of the SEC and generally includes voting
or investment power with respect to securities.  Except as indicated
by footnote, the persons named in the table below have sole voting
power and investment power with respect to all shares of common
stock shown as beneficially owned by them.  The percentage of
beneficial ownership is based on 17,000,000 shares of common stock
outstanding as of August 30, 2002.

                      CERTAIN BENEFICIAL OWNERS

                                    Common Stock Beneficially Owned
                                    --------------------------------
Name and Address of                 Number of Shares of
Beneficial Owners                   Common Stock          Percentage of Class
-----------------                   -------------------   -------------------
VIP Worldnet, Inc.                  15,036,621*               88.5%
154 E.  Ford Avenue
Salt Lake City, Utah 84115

        * VIP Worldnet, Inc. holds 15,000,000 shares and its
directors and officers beneficially own the following shares of our
common stock: Joanne Clinger, President, owns 28,597 shares and
Wayne Reichman, Secretary, owns 8,024 shares.

                              MANAGEMENT

                                    Common Stock Beneficially Owned
                                    -------------------------------
Name and Address of                 Number of Shares
Beneficial Owners                   Common Stock       Percentage of Class
---------------------               ---------------    ------------------
M. Jeanne Ball                      200                Less than 1 %
968 Bloomsburg Cove
Murray, Utah 84123

April L. Marino                     400                Less than 1%
402 East Maxwell Lane
Salt Lake City, Utah 84115

All directors and executive         600                Less than 1%
officers as a group


       ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        We have not engaged in any transactions in excess of $60,000
during the past two years involving our executive officers,
directors, more than 5% stockholders or immediate family members of
such persons.

PARENT COMPANY

        VIP Worldnet, Inc. is our parent company and beneficially
owns 15,036,621 shares of our common stock, which represent 88.5 %
of our issued and outstanding shares.

                               20
<PAGE>



              ITEM 13: EXHIBITS AND REPORTS ON FORM 8-K

EXHIBITS

Exhibit
Number      Description
------      ------------
3.1     Articles of Incorporation, as amended

3.3     Bylaws of  Galaxy  (Incorporated by reference to exhibit 3.3
        Form 10-SB, filed August 21, 2000.)

REPORTS ON FORM 8-K

        None.




                              SIGNATURES


            In accordance with Section 13 or 15(d) of the Exchange
Act, the registrant caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.





Date  9/23/02              Galaxy Specialties, Inc.


                                 /S/ M. Jeanne Ball
                           By: _______________________________________
                                 M. Jeanne Ball
                                 President,  Principal Financial
                                 Officer and Director


            In accordance with the Exchange Act this report has been
signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.






Date 9/25/02                By: /s/ April L. Marino
                               ______________________________________
                                  April L. Marino,
                                  Secretary/Treasurer and Director


              PRINCIPAL EXECUTIVE OFFICER CERTIFICATION

I, M. Jeanne Ball, certify that:

1.      I have reviewed this annual report on Form 10-KSB of Galaxy
        Specialties, Inc.;

2.      Based on my knowledge, this annual report does not contain
        any untrue statement of a material fact or omit to state a
        material fact necessary to make the statement made, in light
        of the circumstances under which statements were made, not
        misleading with respect to the period covered by this annual
        report;

3.      Based on my knowledge, the financial statements, and other
        financial information included in this annual report, fairly
        present in all material respects the financial condition,
        results of operations and cash flows of the registrant as
        of, and for, the periods presented in this annual report.




Date: 9/23/02              /s/ M. Jeanne Ball
                           ____________________________________
                           M. Jeanne Ball,
                           Principal Executive Officer


                               22
<PAGE>


              PRINCIPAL FINANCIAL OFFICER CERTIFICATION

I, M. Jeanne Ball, certify that:

1.      I have reviewed this annual report on Form 10-KSB of Galaxy
        Specialties, Inc.;

2.      Based on my knowledge, this annual report does not contain
        any untrue statement of a material fact or omit to state a
        material fact necessary to make the statement made, in light
        of the circumstances under which statements were made, not
        misleading with respect to the period covered by this annual
        report;

3.      Based on my knowledge, the financial statements, and other
        financial information included in this annual report, fairly
        present in all material respects the financial condition,
        results of operations and cash flows of the registrant as
        of, and for, the periods presented in this annual report.




Date: 9/23/02              /s/ M. Jeanne Ball
                           ____________________________________
                           M. Jeanne Ball,
                           Principal Financial Officer


                               23