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

                                   FORM 10-QSB
                                   (Mark One)

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

For the quarterly period ended    December 31,  2000
                               ----------------------------

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

For the transition period from ________________ to _______________

Commission File No. 000-31355
                    ------------------------

                            GALAXY SPECIALITIES, INC.
        (Exact name of Small Business Issuer as specified in its charter)

         NEVADA                             81-0438093
------------------------------------        --------------------------
(State or other jurisdiction of             (I.R.S. Employer
incorporation or organization)               Identification Number)

#584, 3353 South Main Street
Salt Lake City, Utah                             84115
----------------------------------------         --------------------------
(Address of principal executive offices)             (Zip Code)


Issuer's telephone number, including area code     (801) 323-2395
                                               ------------------------------

         Indicate  by check mark  whether  the Issuer (1) has filed all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the preceding 12 months (or for such shorter  period that the Issuer
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days. [X] Yes [ ] No

         Indicate  the  number of  shares  outstanding  of each of the  Issuer's
classes of common stock, as of the latest practicable date.

                  Class                      Outstanding as of February 7, 2001
------------------------------------         ----------------------------------
$.001 PAR VALUE CLASS A COMMON STOCK                  17,000,000 SHARES


<PAGE>



                         PART 1 - FINANCIAL INFORMATION

Item 1.  Financial Statements.

BASIS OF REPRESENTATION

General

         The accompanying  unaudited financial  statements have been prepared in
accordance with the instructions to Form 10-QSB and,  therefore,  do not include
all information and footnotes necessary for a complete presentation of financial
position, results of operations,  cash flows, and stockholders' equity (deficit)
in conformity with generally accepted accounting  principles.  In the opinion of
management,  all adjustments considered necessary for a fair presentation of the
results of operations and financial  position have been  included,  and all such
adjustments  are of a normal  recurring  nature.  Operating  results for the six
months ended  December 31, 2000, are not  necessarily  indicative of the results
that can be expected for the year ending June 30, 2001.

                                       2


<PAGE>



                            GALAXY SPECIALTIES, INC.
                          (A Development Stage Company)
                                 BALANCE SHEETS




<TABLE>
<CAPTION>
                                                                              December 31,         June 30,
                                                                                  2000                2000
                                                                           ------------------  -----------------
         ASSETS                                                                (Unaudited)          (Audited)
         ------
CURRENT ASSETS
<S>                                                                        <C>                 <C>
   Cash in bank                                                            $                0  $               0
                                                                           ------------------  -----------------

                                                                           $                0  $               0
                                                                           ==================  =================

     LIABILITIES & EQUITY (DEFICIT)
CURRENT LIABILITIES
   Accounts payable - related party (Note 4)                               $           28,000  $          28,000
                                                                           ------------------  -----------------

                                                TOTAL CURRENT LIABILITIES              28,000             28,000

STOCKHOLDERS' EQUITY (DEFICIT)
     Common Stock $.001 par value:
     Authorized - 20,000,000 shares
     Issued and outstanding 17,000,000 shares                                          17,000             17,000
     Deficit accumulated during the development stage                                 (45,000)           (45,000)
                                                                           ------------------  -----------------

                                     TOTAL STOCKHOLDERS' EQUITY (DEFICIT)             (28,000)           (28,000)
                                                                           ------------------  -----------------

                                                                           $                0  $               0
                                                                           ==================  =================
</TABLE>

See Notes to Financial Statements.
                                       3


<PAGE>



                            GALAXY SPECIALTIES, INC.
                          (A Development Stage Company)
                            STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                                      3/7/86
                                           Three Months Ended                       Six Months Ended                 (Date of
                                              December 31,                            December 31,                 inception) to
                                        2000                1999                2000               1999             12/31/2000
                                 ------------------  ------------------  -----------------   -----------------  ------------------
<S>                              <C>                 <C>                 <C>                 <C>                <C>
Net sales                        $                0  $                0  $               0   $               0  $                0
Cost of sales                                     0                   0                  0                   0                   0
                                 ------------------  ------------------  -----------------   -----------------  ------------------

                GROSS PROFIT                      0                   0                  0                   0                   0

General & administrative
   expenses                                       0                   0                  0                   0              45,000
                                 ------------------  ------------------  -----------------   -----------------  ------------------

                    NET LOSS     $                0  $                0  $               0   $               0  $          (45,000)
                                 ==================  ==================  =================   =================  ==================

BASIC AND DILUTED
   (LOSS) PER COMMON
   SHARE
Net income (loss) per
   weighted average share        $             .000  $            (.000) $            .000   $          (.000)
                                 ==================  ==================  =================   =================

Weighted average number of
   common shares used to
   compute net income (loss)
   per weighted  average share           17,000,000          17,000,000         17,000,000          17,000,000
                                 ==================  ==================  =================   =================
</TABLE>



See Notes to Financial Statements.
                                       4


<PAGE>



GALAXY SPECIALTIES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)

<TABLE>
<CAPTION>
                                                                                                                      3/7/86
                                           Three Months Ended                       Six Months Ended                 (Date of
                                               December 31                            December 31,                 inception) to
                                        2000                1999                2000               1999             12/31/2000
                                 ------------------  ------------------  -----------------   -----------------  ------------------
OPERATING ACTIVITIES
<S>                              <C>                 <C>                 <C>                 <C>                <C>
Net income (loss)                $                0  $                0  $               0   $               0  $          (45,000)
Adjustments to reconcile net
   income (loss) to cash used
   by operating activities:
     Amortization                                 0                   0                  0                   0              17,000
     Accounts payable
       related party                              0                   0                  0                   0              28,000
                                 ------------------  ------------------  -----------------   -----------------  ------------------

               NET CASH USED BY
           OPERATING ACTIVITIES                   0                   0                  0                   0                   0

INVESTING ACTIVITIES
Organization costs                                0                   0                  0                   0             (17,000)
                                 ------------------  ------------------  -----------------   -----------------  ------------------

           NET CASH REQUIRED BY
           INVESTING ACTIVITIES                   0                   0                  0                   0             (17,000)

FINANCING ACTIVITIES
Proceeds from sale of
   common stock                                   0                   0                  0                   0              17,000
                                 ------------------  ------------------  -----------------   -----------------  ------------------

           NET CASH PROVIDED BY
           FINANCING ACTIVITIES                   0                   0                  0                   0              17,000
                                 ------------------  ------------------  -----------------   -----------------  ------------------

           INCREASE IN CASH AND
               CASH EQUIVALENTS                   0                   0                  0                   0                   0

Cash and cash equivalents
   at beginning of period                         0                   0                  0                   0                   0
                                 ------------------  ------------------  -----------------   -----------------  ------------------

                    CASH & CASH
                 EQUIVALENTS AT
                  END OF PERIOD  $                0  $                0  $               0   $               0  $                0
                                 ==================  ==================  =================   =================  ==================
</TABLE>




See Notes to Financial Statements.
                                       5


<PAGE>



                            GALAXY SPECIALTIES, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 2000


NOTE 1:           SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

     a.  Basis of Presentation

         The accompanying  financial statements have been prepared in accordance
         with  generally  accepted  accounting  principles  ("GAAP") for interim
         financial  information.  Accordingly,  they do not  include  all of the
         information  and  footnotes  required by  generally  accepted  auditing
         principles for complete financial  statements.  The unaudited financial
         statements should, therefore, be read in conjunction with the financial
         statements  and notes  thereto in the Report on Form  10-SB12G  for the
         year ended June 30, 2000. In the opinion of management, all adjustments
         (consisting of normal and recurring  adjustments)  considered necessary
         for a fair presentation,  have been included. The results of operations
         for the three month period ended December 31, 2000 are not  necessarily
         indicative  of the results that may be expected  for the entire  fiscal
         year.

     b.  Organization & Consolidation Policy

         Galaxy  Specialties,  Inc. (the  Company),  a Nevada  corporation,  was
         incorporated  on 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.

         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.

     c.  Recognition of Revenue

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

     d.  Net Loss Per Common Share

         Basic and diluted  loss per common  share is  computed by dividing  net
         loss available to common shareholders by the weighted average number of
         common shares outstanding during the periods presented.

     e.  Cash and Cash Equivalents

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

                                       6


<PAGE>



                            GALAXY SPECIALTIES, INC.
                          (A Development Stage Company)
                    NOTES TO FINANCIAL STATEMENTS (continued)
                                December 31, 2000


NOTE 1:           SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (continued)

     f.  Provision for Income Taxes

         The Company  records the income tax effect of  transactions in the same
         year that the  transactions  enter  into the  determination  of income,
         regardless of when the  transactions  are  recognized for tax purposes.
         Tax credits are  recorded in the year  realized.  Since the Company has
         not yet realized income as of the date of this report, no provision for
         income taxes has been made.

         In February,  1992, the Financial  Accounting  Standards  Board adopted
         Statement of Financial  Accounting  Standards No. 109,  Accounting  for
         Income Taxes, which supersedes substantially all existing authoritative
         literature for  accounting  for income taxes and requires  deferred tax
         balances  to be  adjusted to reflect the tax rates in effect when those
         amounts are expected to become payable or refundable. The Statement was
         applied in the  Company's  financial  statements  for the  fiscal  year
         commencing July 1, 1992.

         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 begin 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 carryforwards will expire unused.

     g.  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  statement  and the reported  amounts of revenues
         and expenses during the reporting  period.  Actual results could differ
         from those estimates.

     h.  Dividend Policy

         The  Company  has not yet  adopted  any  policy  regarding  payment  of
         dividends.

     i.  Organization Costs

         The Company amortized its organization costs over a five year period.

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:           CAPITALIZATION

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

                                       7

<PAGE>



                            GALAXY SPECIALTIES, INC.
                          (A Development Stage Company)
                    NOTES TO FINANCIAL STATEMENTS (continued)
                                December 31, 2000


NOTE 4:           RELATED PARTY TRANSACTIONS

     During  the year ended  June 30,  2000,  the  Company  incurred  $28,000 of
     professional  fees  payable  to Mutual  Ventures  Corp.  An  officer of the
     Company is also an employee of Mutual Ventures 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.


                                       8

<PAGE>



Item 2.  Management's  Discussion  and Analysis of Financial  Condition  and
         Results of Operations

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

Forward Looking Statements

     This Form 10-QSB contains  certain  forward-looking  statements  within the
meaning  of the  Private  Securities  Litigation  Reform  Act of 1995.  For this
purpose any statements  contained in this Form 10-QSB 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 market which Galaxy may  participate;  competition  within
Galaxy's  chosen market and failure by Galaxy to successfully  develop  business
relationships.

Plan of Operations

     Since inception,  we have had no revenues and have experienced  losses.  We
have financed our operations  primarily  through the sale of our common stock or
by loans from shareholders.  As of December 31, 2000, we had no cash on hand and
total current liabilities of $28,000.  The $28,000 accounts payable is for legal
and  accounting   fees  which  were  paid  on  our  behalf  by  Mutual  Ventures
Corporation,  a related  party.  We have no  material  commitments  for the next
twelve  months.  We believe  that our  current  cash needs for at least the next
twelve months can be met by loans from our directors, officers and shareholders.

     Our management intends to actively pursue business opportunities during the
next twelve months. All risks inherent in new and inexperienced  enterprises are
inherent  in our  business.  We have  not made a  formal  study of the  economic
potential of any business.  At the present, we have not identified any assets or
business opportunities for acquisition.

     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.

     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
business  opportunity  to be  acquired.  Also,  we  intend  to  concentrate  our
acquisition   efforts  on  properties  or  businesses  that  we  believe  to  be
undervalued  or that we believe may  realize a  substantial  benefit  from being
publicly owned.  Investors should expect that any acquisition candidate may have
little or no operating history, or a history of losses or low profitability.

     It is  emphasized  that our  management  may effect  transactions  having a
potentially  adverse impact upon our shareholders  pursuant to the authority and
discretion of our  management to complete  acquisitions  without  submitting any
proposal to the stockholders for their consideration.

     Should a merger or acquisition prove  unsuccessful,  it is possible that we
may decide not to pursue  further  acquisition  activities  and  management  may
abandon its activities and our shares would become worthless.


                                       9


<PAGE>


                           PART II - OTHER INFORMATION

Item 6.           Exhibits and Reports on Form 8-K

     (a) Exhibits
         27 Financial Data Schedule

     (b) Reports on Form 8-K
         None.

                                   SIGNATURES

     Pursuant to the  requirements  of the  Securities and Exchange Act of 1934,
the  Issuer  has duly  caused  this  report to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                  GALAXY SPECIALITIES, INC.



Dated:   February 8, 2000         /s/ Jeanne Ball
                                  --------------------------------------------
                                  Jeanne Ball, President and Director


                                       10