U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-QSB

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended March 31, 2002
                                       OR
                  [ ] TRANSITION REPORT PURSUANT TO SECTION 13
                OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
          For the transition period from ____________ to ____________

                         Commission File Number 0-29523


                                 SOFTSTONE INC.
        (Exact name of small business issuer as specified in its charter)


                                    Delaware
                            (State of Incorporation)

                                   73-1564807
                      (IRS Employer Identification Number)

                      5 Interstate Court, Ardmore, OK 73401
                    (Address of principal executive offices)

                                  580-223-3888
                          (Issuer's telephone number)



     Check  whether  the  issuer  (1)  filed all reports required to be filed by
Section  13  or  15(d) of the Exchange Act of 1934 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  [  ]

     As  of May 6, 2002, the Company had 6,939,465 shares of its $.001 par value
common  stock  issued  and  outstanding.

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



<PAGE>
                         PART I - FINANCIAL INFORMATION

Item  1.          Financial  Statements





















                                        2

<PAGE>
                                 SOFTSTONE Inc.
                          (A Development Stage Company)
                                  Balance Sheet
                        March 31, 2002 and June 30, 2001
<TABLE>
<CAPTION>
                                                     Unaudited
                                                     ---------
                                                     March 31,        June 30,
                                                     ---------
                                                       2002             2001
                                                       ----             ----
                                     ASSETS

CURRENT  ASSETS
<S>                                                  <C>             <C>
  Cash and cash equivalents                             $21,375         $12,673
  Accounts receivable                                    21,011
  Other current assets                                    1,118           4,473
                                                     ----------      ----------
    Total  current assets                                43,504          17,146

PROPERTY AND EQUIPMENT, net                             441,913         490,644

OTHER  ASSETS
  Patent                                                 89,444          94,444
  License agreement                                     125,000
  Investment in Levgum, Ltd.                            125,000
  Other                                                   8,116           8,116
                                                     ----------      ----------
    Total other assets                                  347,560         102,560
                                                     ----------      ----------

    Total Assets                                       $832,977        $610,350
                                                     ==========      ==========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT  LIABILITIES
  Accounts payable                                      $39,352         $16,998
  Accrued expenses                                        9,728          19,981
  License agreement fee payable                         125,000
  Notes payable and current portion of long-term debt   258,844         192,231
                                                     ----------      ----------
    Total  current liabilities                          432,924         229,210

LONG-TERM DEBT, less current portion                     39,163          24,125

LOANS FROM STOCKHOLDERS                                 513,416         424,416

STOCKHOLDERS'  EQUITY
  Common  stock  -  par  value  $.001;
    30,000,000  shares  authorized;  issued  and
    outstanding,  7,049,465  and  4,486,053
    respectively                                          7,049           4,486
  Additional paid-in capital                          2,174,524       1,632,528
    Prepaid  compensation
   Deficit accumulated during the development stage  (2,334,099)     (1,704,415)
                                                     ----------      ----------
    Total Stockholders' Equity                         (152,526)         67,401
                                                     ----------      ----------

    Total Liabilities and Stockholders' Equity         $832,977        $610,350
                                                     ==========      ==========
</TABLE>


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

                                        3
<PAGE>
                                 SOFTSTONE Inc.
                          (A Development Stage Company)
                            Statement of Operations
            From October 7, 1998 (inception) through March 31, 2002
     and for the Three and Nine Month Periods Ended March 31, 2001 and 2002
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                        From October 7, 1998
                             Three Months Ended March 31,  Nine Months Ended March 31,   (Inception) through
                             ----------------------------  ---------------------------
                                 2002          2001             2002          2001           March 31, 2002
                                 ----          ----             ----          ----           --------------
<S>                           <C>           <C>               <C>           <C>               <C>
REVENUES                         $8,624       $10,742           $36,120       $22,565            $70,305

OPERATING COSTS AND EXPENSES
  General, selling, and
    administrative              355,172        70,966           630,545       324,631          2,318,498
                              ---------     ---------         ---------     ---------         ----------

  Operating loss               (346,548)      (60,224)         (594,425)     (302,066)        (2,248,193)

OTHER  EXPENSE
  Interest                       12,857         9,807            35,259        19,761             85,906
                              ---------     ---------         ---------     ---------         ----------

  Loss before income taxes     (359,405)      (70,031)         (629,684)     (321,827)        (2,334,099)

Provision for income taxes            -             -                 -             -                  -
                              ---------     ---------         ---------     ---------         ----------

    NET LOSS                  ($359,405)     ($70,031)        ($629,684)    ($321,827)       ($2,334,099)
                              =========     =========         =========     =========         ==========

Net (loss) per share             ($0.06)       ($0.01)           ($0.10)       ($0.04)            ($0.37)
                              =========     =========         =========     =========         ==========

Average common
  shares outstanding          6,348,697     7,302,690         6,471,385     7,302,690          6,312,559
                              =========     =========         =========     =========         ==========
</TABLE>



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

                                        4
<PAGE>
                                 SOFTSTONE Inc.
                          (A Development Stage Company)
                            Statement of Cash Flows
            From October 7, 1998 (inception) through March 31, 2002
          and for the Nine Month Periods Ended March 31, 2001 and 2002
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                     From October 7,
                                      Nine Months Ended March 31,  (Inception) through
                                          2002          2001          March 31, 2002
                                          ----          ----       -------------------
Cash flows from operating activities
<S>                                    <C>            <C>               <C>
  Net loss                             ($629,684)     ($321,827)        ($2,334,099)

Adjustments to reconcile net income
  to net cash provided by operating
  activities:
    Depreciation and amortization         64,689         61,673             202,484
    Noncash compensation                 306,581         31,875             793,913
    Write-off  samples                                                       11,712
Changes in assets and liabilities
    (Increase) decrease in accounts
      receivable                         (21,011)                           (21,011)
    (Increase) decrease in other
      current assets                       3,355                            (21,162)
    Increase (decrease) in
       accounts payable                   22,354          2,911              32,483
    Increase (decrease) in license
      fee payable                       125,000                             125,000
    Increase (decrease) in
      accrued expenses                  (10,253)         (5,979)             14,983
                                      ---------       ---------           ---------
    Total adjustments                   490,715          90,480           1,138,402
                                      ---------       ---------           ---------

    Net cash used by
      operating  activities            (138,969)       (231,347)         (1,195,697)

Cash flows from investing activities
  Purchases of property and equipment   (10,000)         (9,123)           (429,859)
  Purchases of stock                   (125,000)                           (125,000)
  Purchase of exclusive license        (125,000)                           (125,000)
  Other  deposits                                                              (384)
                                      ---------       ---------           ---------
    Net cash used by
      investing  activities            (260,000)         (9,123)           (680,243)
                                      ---------       ---------           ---------

Cash flows from financing activities
  Investment by stockholders             89,000                             339,941
  Proceeds from borrowings               96,697         169,419             417,449
  Payments on borrowings                (15,046)                           (170,180)
  Issuance of stock pursuant
    to offerings                        237,020          53,125           1,310,105
                                      ---------       ---------           ---------
    Net cash provided by
      financing  activities             407,671         222,544           1,897,315
                                      ---------       ---------           ---------

Net increase (decrease) in cash
  and cash equivalents                    8,702         (17,926)             21,375

Cash and cash equivalents at
  beginning of period                    12,673           7,571                   0
                                      ---------       ---------           ---------

cash and cash equivalents at
  end of period                         $21,375        ($10,355)            $21,375
                                      =========       =========           =========

Supplemental  cash  flow  information:
--------------------------------------
  Cash paid during the period
    for interest                        $12,417          $6,293             $25,869
                                      =========       =========           =========

cash paid during the period for
  income taxes                               $0              $0                  $0
                                      =========       =========           =========
</TABLE>



                                        5
<PAGE>
                                 SOFTSTONE Inc.
                          (A Development Stage Company)
                            Statement of Cash Flows
            From October 7, 1998 (inception) through March 31, 2002
          and for the Nine Month Periods Ended March 31, 2002 and 2002
                                  (Unaudited)



Noncash  investing  and  financing  activities:
-----------------------------------------------

   During  the  nine  months  ended  March  31,  2001:
   Common  stock  was  issued  for  office  equipment  valued  at  $18,525.
   Common  stock  totaling  300,000  shares  was  issued to a related company to
   acquire  a  patent.

   During  the  nine  months  ended  March  31,  2002:
   The  Company  issued  1,158,387  shares  of  common  stock to effect a merger
   resulting  in  $1,158  of  goodwill.


























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

                                        6
<PAGE>
                                 SOFTSTONE Inc.
                          (A Development Stage Company)
                  Statement of Stockholder's Equity (Deficit)
            From October 7, 1998 (inception) through March 31, 2002
  and for the Year Ended June 30, 2001 and the Nine Months Ended March 31, 2002
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                       Deficit
                                                                      Accumulated
                                                          Additional    During
                                         Common Stock       Paid-in   Development     Unearned
                                        Shares   Amounts    Capital      Stage      Compensation
                                        ------   -------  ----------  ------------  ------------
<S>                                   <C>        <C>      <C>           <C>            <C>
Issuance of common stock for cash     5,000,000   5,000      51,100
  (October 7, 1998 - Inception)

Stock issued for cash of $293 and
  contributed  services                 292,500     293      43,582

Net loss                                                                  (197,426)
                                      ---------   -----   ---------     ----------     --------
Balance, June 30, 1999                5,292,500   5,293      94,682       (197,426)

Stock issued in exchange for services
  ($0.85/share)(August  1,  1999)       250,000    250      212,250

Stock issued for services and
  a  vehicle
  ($1.00/share)(August 24, 1999)         22,500     22       22,478

Warrants issued to employees
  (October 1, 1999)                                          75,000                    (75,000)

Stock issued for settlement of
  short-term  notes  payable
  ($34,250) and cash of $16,903
  ($1.00/share) (August 31
  through December 29, 1999)            400,000    400      382,697

Stock issued in exchange for
  services ($1.00/share)
  (October 28 through
  December 1, 1999)                     210,000    210      209,790

Stock issued for cash, net
  of offering costs of
  $25,783 ($1.25/share)
  (February 7 through
  May 31, 2000)                         423,190    423      502,782

Amortization of unearned
  compensation                                                                          11,250

Net loss                                                                (1,109,180)
                                      ---------   -----   ---------     ----------     --------

Balance, June 30, 2000                6,598,190   6,598   1,499,679     (1,306,606)   (63,750)

Stock issued for cash at
  $1.25/share (July 1
  through July 31, 2000)                 42,500      43      53,082

Unearned warrants granted to
  employee  upon  termination
  August  9,  2000                                          (63,750)                   63,750

Warrants excercised
  (August 10, 2000)                     675,000     675

Stock issued in exchange for
  patent ($0.03/share)
  (August  12,  2000)                   300,000     300      21,622

Stock issued in exchange for
  office  equipment
  ($1.03/share)(August 12, 2000)         18,000      18      18,507

Net loss for the six months
  ended  December  31,  2001                                              (251,795)

Stock contributed back to
  Company by principals
  (April 4, 2001)                    (3,947,698) (3,948)      3,948

Stock issued in exchange for
  services  ($0.10/share)
  (April 20 through April 23, 2001)     522,961     523      51,773

Stock issued in exchanged for
  cash  ($0.40/share)
  (June 1 through June 30, 2001)
  net of offering costs $62,896         277,100     277      47,667

Net loss, January 1, 2001 to
  June  30,  2001                                                         (146,014)
                                      ---------   -----   ---------     ----------     --------

Balance, June 30, 2001                4,486,053   4,486   1,632,528     (1,704,415)          0
</TABLE>


                                        7
<PAGE>
                                 SOFTSTONE Inc.
                          (A Development Stage Company)
                  Statement of Stockholder's Equity (Deficit)
            From October 7, 1998 (inception) through March 31, 2002
  and for the Year Ended June 30, 2001 and the Nine Months Ended March 31, 2002
                                  (Unaudited)
                                  (continued)

<TABLE>
<CAPTION>
Stock issued in exchange for
  cash  ($0.40/share) (July 1
<S>                                   <C>        <C>      <C>           <C>            <C>
  through  September  30,  2001)        218,300     219       87,101

Stock issued in exchange for
  services ($0.20/share)
  (July 13, 2001)                       257,075     257       51,158

Stock issued to effect merger
  ($0.001/share)(July 24, 2001)         899,376     899

Stock issued in exchange for
  services ($0.40/share)
  (October, 2001)                        20,000      20        7,980

Stock issued in exchange for
  cash ($0.40/share)(October, 2001)      12,500      12        4,988

Stock issued in exchange for cash
  ($0.40/share)(January,  2002)          12,500      13        4,987

Stock issued in exchange for
  services ($0.40/share)
  (January-March, 2002)                 528,000     528       210,672

Stock issued in payment of
  accrued interest($0.45/share)
  (January, 2002)                        52,250      52        23,214

Stock issued in exchange for
  services ($0.50/share)
  (March, 2002)                          25,000      25        12,475

Additional stock issued to effect
  merger (0.001/share)
  (January, 2002)                       259,011     259             0

Stock issued in exchange for
  cash ($0.50/share)
  (February-March, 2002)                279,400     279       139,421

Net loss, July 1, 2001 to
  March  31,  2002                                                        (629,684)
                                      ---------   -----   ---------     ----------     --------

Balance, March 31, 2002               7,049,465  $7,049  $2,174,524     ($2,334,099)         $0
                                      =========   =====   =========     ===========    ========
</TABLE>















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


                                        8
<PAGE>
                                SOFTSTONE, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

                        June 30, 2001 and March 31, 2002
                                  (Unaudited)


NOTE  A  -  NATURE  OF  OPERATIONS  AND  SUMMARY  OF
            ACCOUNTING  POLICIES

Softstone,  Inc.  (the  "Company"),  a  development stage company, was formed to
manufacture a patented rubber product used in the road and building construction
industries  and  has been in the development stage since inception.  The Company
plans to create rubber modules entirely from recycled tires which can be used in
the  construction  of roads, driveways, decks, and other types of walkways.  Its
principal  activities have consisted of financial planning, establishing sources
of  production  and  supply,  developing  markets,  and  raising  capital.   Its
principal  operations have not started and the Company has no present sources of
significant  revenues.

On  October  7,  1998,  Soft Stone Building Products, Inc. ("SSBI" - an Oklahoma
corporation and predecessor to the Company) was incorporated.  Effective May 31,
1999,  SSBI  was  merged with and into Softstone, Inc. (incorporated January 28,
1999  under  the  laws  of  the  State  of  Delaware)  and SSBI was subsequently
dissolved.  Each share of previously outstanding common stock was converted into
2,500  shares  of  common  stock of the new entity and the new capitalization is
reflected  in the accompanying financial statements as if it had occurred at the
beginning  of  the  period  presented.

On  July  24,  2001, the Company entered into a plan of reorganization involving
Kilkenny Acquisition Corp. (Kilkenny) whereby the Company is the survivor and in
control  of  the  board  of  directors.  The  merger  agreement provided for the
exchange  of  899,376  shares  of  the Company's common stock for all the common
stock  of  Kilkenny.  In  connection with this merger, on April 4, 2001, certain
insider  shareholders  of  the  Company  contributed  3,947,686  shares of their
common  stock to the Company effectively reducing the then outstanding shares of
stock  to  3,685,992.  Subsequent  issues  of common stock for cash and services
increased  the  outstanding  stock of the Company to 4,590,646.  The issuance of
the  above  mentioned  shares  of  the Company's common stock on the merger date
increased  the  common  stock  of  the  Company  to  5,669,033  with the Company
shareholders,  prior  to the merger, owning approximately 81% of the outstanding
shares  of  the  Company.

                                        9
<PAGE>

1.    Cash  and  Cash  Equivalents
      ----------------------------

The  Company  considers  all  highly  liquid debt instruments with a maturity of
three  months  or  less  to  be  cash  equivalents.

2.    Property  and  Equipment
      ------------------------

Property  and  equipment  are  stated  at  cost.  Expenditures  for  repairs and
maintenance are charged to expense as incurred.  Upon sale, retirement, or other
disposition,  the cost and related accumulated depreciation are removed from the
accounts  and  any  resulting  gain  or  loss is reflected in operations for the
period.  The  Company depreciates property and equipment using the straight-line
method  over  their  estimated  useful  lives  ranging  from  five to ten years.

Long-lived  assets  to  be  held  and  used are reviewed for impairment whenever
events or changes in circumstances indicate that the related carrying amount may
not  be recoverable.  When required, impairment losses are recognized based upon
the  estimated  fair  value  of  the  asset.

3.    Patent  and  Patent  License  Agreement
      ---------------------------------------

Patent  rights  acquired  under  a  license  agreement  are  amortized using the
straight-line  method  over  fifteen years.  During August, 2000, the patent was
acquired outright in exchange for 300,000 shares of common stock, forgiveness of
debt and  assumption  of  additional  debt.  In March, 2002, the Company entered
into a technology licensing agreement with  a  foreign  company.  Such agreement
provides the Company with an exclusive  license for  North,  Central  and  South
America for a period of five and a half years.  Accordingly,  the  rights  under
the agreement are  being amortized using the straight-line method over sixty-six
months.

4.    Revenue  Recognition
      --------------------

The  Company  currently  has  no  significant  revenues  as  it  is still in the
development  stage.

5.    Income  Taxes
      -------------

Deferred  income  taxes  are  provided  on temporary differences between the tax
basis  of  an  asset  or  liability  and  its  reported  amount in the financial
statements  that  will  result in taxable or deductible amounts in future years.
Deferred income tax assets or liability are determined by applying the presently
enacted  tax  rates  and  laws.

6.    Fair  Value  of  Financial  Instruments
      ---------------------------------------

The  carrying amount of all financial instruments at June 30, 2001 and March 31,
2002,  which  consist of various notes and loans payable, approximate their fair
values.

                                       10
<PAGE>
7.    Use  of  Estimates
      ------------------

In  preparing  financial  statements  in  conformity  with  generally  accepted
accounting  principles, management is required to make estimates and assumptions
that  affect  certain  reported  amounts  and  disclosures,  accordingly, actual
results  could  differ  from  those  estimates.


8.     Earnings  Per  Share
       --------------------

Earnings  per  share  is computed based on the weighted average number of common
shares  outstanding  for  the  period.  The  company has experienced losses from
operations  since  inception. Accordingly, no dilutive computations are required
as  such  computations  would  be  anti-dilutive.


NOTE  B  -  PROPERTY  AND  EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
                                                      March  31,     June  30,
                                                         2002          2001
                                                         ----          ----
<S>                                                   <C>           <C>
     Furniture  and  computer  equipment              $  44,029     $  44,029
     Production  and  other equipment                   522,318       512,318
     Vehicles                                            59,869        59,869
                                                      ---------     ---------
                                                        626,216       616,216
       Less:  Accumulated depreciation
              and  amortization                         184,303       125,572
                                                     ----------    ----------

                                                     $  441,913    $  490,644
                                                     ==========    ==========
</TABLE>

NOTE  C  -  NOTES  PAYABLE

Notes  payable  consist  of  the  following:
<TABLE>
<CAPTION>
                                                      March  31,     June  30,
                                                         2002          2001
                                                         ----          ----
     Revolving note payable to bank;
     interest due monthly at 7% (variable);
<S>                                                   <C>           <C>
     due July 5, 2002                                 $ 100,035     $  80,358

     Demand notes payable to stockholder,
     8%  interest  rate, agreed to be due
     after  March  31,  2003                            352,537       258,537

     Bank term loan; 3.9% interest rate;
     guaranteed by  principal stockholder,
     due July 23, 2002                                   65,000        65,000
</TABLE>

                                       11
<PAGE>
<TABLE>
<CAPTION>
     Note payable to stockholder; no interest
<S>                                                   <C>           <C>
     rate;  agreed to be due after March 31, 2003       160,879       165,879

     Note payable to bank, collateralized by
     accounts receivable, 8% (variable),
     due  April  5, 2002                                 17,020

     Notes payable to shareholders, unsecured,
     12%,  due  on  demand                               10,000

     Note payable to shareholder, unsecured, 8%,
     due September 11, 2002, convertible to common
     stock at a rate of $0.50 per share                  50,000

     Note payable to finance vehicle, 9.5%
     interest  rate, maturing December, 2004,
     collateralized by vehicle                           16,140        19,638

     Note payable to bank, collateralized by
     tractor,  9% (variable), payable in 60
     monthly  installments beginning July 29, 2001        8,973        10,360

     Refinanced bank term loan; payable in
     semiannual payments of $6,485, including
     interest at  8.00% (variable); collateralized
     by equipment, accounts receivable and intangibles
     and  guaranteed  by  the principal  stockholder
     of  the  Company,  due  July 15,  2005              30,839        41,000
                                                      ----------    ---------
                                                        811,423       640,772
          Less:  current portion                        258,844       192,231
                                                      ----------    ---------

     Long-term  debt                                  $ 552,579     $ 448,541
                                                      =========     =========
</TABLE>

The  following  is a summary of maturities of principal under long-term debt for
year  ending  March  31:
<TABLE>
<CAPTION>
<S>                                                 <C>
          2003                                      $258,844
          2004                                       530,205
          2005                                        15,325
          2006                                         6,520
          2007                                           529
                                                    --------
                                                    $811,423
                                                    ========
</TABLE>

                                       12
<PAGE>
NOTE  D  -  COMMON  STOCK  AND  WARRANTS

On  January  28,  1999, the Company issued 395,000 warrants and on July 1, 1999,
issued 275,000 additional warrants to several stockholders of the Company.  Each
warrant  gives  the  holder the right to purchase one share of common stock at a
price  of  $.50  per  share  at anytime on or before January 28, 2004.  The fair
value  of  each  warrant, estimated on the date of grant using the minimum value
method,  is  nominal.

During  October, 1999, the Company issued warrants to purchase 150,000 shares of
common  stock  at  $.50  per  share  to two employees.  The warrants vest over a
five-year  period  and resulted in compensation of $75,000, of which $63,750 was
unearned  at  June  30,  2000, and will be recognized over the remaining vesting
period.  The  fair value of these warrants does not exceed the compensation cost
recognized  for  financial  reporting.  During  the  fiscal  year ended June 30,
2001,  the  one  employee  terminated  and  another  exercised his warrants with
paid-in  capital  charged  for  the  unearned compensation.  At June 30, 2001, a
total  of  145,000  warrants  remained  outstanding.

During  August  2000,  the  Company purchased office equipment by issuing 18,000
shares  of  its common stock and recording the office equipment at its estimated
fair  value based on invoiced cost of $1.03 for each share of stock issued.  The
Company also issued 300,000 shares of its common stock to acquire all the patent
rights  for  its  production  process,  recording  as cost of the newly acquired
rights  the  estimated  predecessor  cost  of  the  patent  rights acquired, and
stockholders exercised their rights to acquire 675,000 shares of common stock at
par  value.

In  April  2001,  pursuant  to  the merger agreement discussed in Note A certain
insider  stockholders  contributed back to the Company 3,947,698 shares of their
common  stock, and this common stock was cancelled, and 522,961 shares of common
stock  valued  at  $.10  was  issued to consultants and an attorney for services
rendered  in  acquiring  capital and facilitating the merger.  In January, 2002,
the  Company issued an additional 259,011 shares of common stock to complete the
merger.

In  January,  2002,  the  Company  issued 279,400 warrants to purchase shares of
common  stock at $0.50 per share.  Such warrants were issued in conjunction with
the stock offering described below.  In March, 2002, the Company issued warrants
to  purchase  225,000 shares of common stock at $0.25 per share to a shareholder
as  additional  consideration  for  a  loan  to  the  Company.



Compensation
------------
During  August  1999, the Company entered into employment contracts with two key
employees,  resulting  in the issuance of 250,000 shares of the Company's common
stock.  Such  contracts  are  for  a  term  of  12  months and contain a vesting

                                       13
<PAGE>
provision  requiring  the  employees,  in  the  event  of  early  termination of
employment,  to either surrender to the Company the pro rata unearned portion of
the  stock  issued  or  to  purchase  the  stock  at  a price of $.85 per share.
Additionally,  the  Company issued 22,500 shares of stock to another employee in
exchange  for a vehicle and services that vested immediately.  Also, the Company
issued  210,000  shares  of  stock to employees and on-employees in exchange for
services  that  vested  immediately.  These  agreements  result  in compensation
expense  of approximately $432,500 recognized by the Company during fiscal 2000.
During  the  nine month period ending March 31, 2002, the Company issued 532,075
shares  to  employees  of  the  Company  as  compensation,  298,000  shares  for
consulting  fees  and  52,250  shares  in  payment  of  accrued  interest.


Stock  Offering
---------------
Pursuant  to  Rule 504 of Regulation D ("504 offering") of the Securities Act of
1933,  the Company offered for sale 400,000 shares of its common stock for $1.00
per  share  under  an  Offering  Memorandum  dated August 24, 1999.  The Company
offered 480,000 shares of common stock under a second 504 offering for $1.25 per
share,  of  which 423,190 have been sold as of June 30, 2000.  During the fiscal
year  ended  June  30, 2001, an additional 42,500 shares were sold in connection
with  the  second  offering.

In May 2001, the Company, pursuant to Rule 506, offered 625,000 shares of common
stock  at $.40 per share. Prior to June 30, 2001, 277,100 shares were issued and
an  additional  230,800  shares  were  sold  during  the six month period ending
December  31,  2001.  Offering  costs  of  the offering totaled $62,896 of which
$52,296  related  to  the  shares  of stock issued for services mentioned above.


NOTE  E  -  INCOME  TAXES

The  Company's  effective income tax  benefit differed from the benefit computed
using  the  federal  statutory  tax  rate  are  as  follows:
<TABLE>
<CAPTION>
                                                   Nine  Months Ended  March 31,
                                                          2002        2001
                                                          ----        ----
<S>                                                    <C>         <C>
     Income tax benefit at federal statutory rate      $  226,686  $  115,858
     Change  in  valuation  allowance                    (226,686)   (115,858)
                                                       ----------  ----------
                                                       $        -  $        -
</TABLE>

<TABLE>
<CAPTION>
                                                      From October 7, 1998
                                                      (inception)  through
                                                            March  31,
                                                              2002
                                                      --------------------
<S>                                                       <C>
     Income tax benefit at federal statutory rate         $  840,276
     Nondeductible  expenses                                   7,108
     Other,  including  graduated  rates                      28,436
     Change  in  valuation  allowance                       (875,820)
                                                          ----------
                                                          $        -
</TABLE>

                                       14
<PAGE>
Components  of  deferred  tax  assets  are  as  follows:

<TABLE>
<CAPTION>
     Assets                                    March 31, 2002     June 30, 2001
                                               --------------     -------------
<S>                                              <C>                <C>
       Net operating loss carryforward           $  875,820         $  608,693
       Valuation allowance                         (875,820)          (608,693)
                                                 ----------         ----------
                                                 $        -         $        -
</TABLE>


The  valuation allowance increased $414,891 for the year ended June 30, 2001 and
$226,686  for  the  nine  months  ended  March  31,  2002
..

A valuation allowance is provided for deferred tax assets when it is more likely
than  not  that  some  portion  or  all  of  the deferred tax assets will not be
realized.  At  March  31, 2002 and June 30, 2001, the Company has a net deferred
tax  asset  mainly  related to a net operating loss carryforward incurred during
its  first  year of operations.  As such carryforward can only be used to offset
future taxable income, management has fully reserved this net deferred tax asset
with  a valuation allowance until it is more likely than not that taxable income
will  be  generated.



NOTE  F  -  RELATED  PARTY  TRANSACTIONS

In  August,  2000, the company completed its acquisition of the patent rights to
its  production  process.  This  transaction  involved  the  issuance of 300,000
shares  of  common  stock to a corporation owned by stockholders of the Company.
Office  equipment  was  acquired  from  a stockholder for the issuance of common
stock  and certain shareholders contributed portions of their common stock which
was  cancelled  to  facilitate  the  merger  discussed  in  Note A.  Most of the
equipment  used  in  the  Company's  manufacturing  process was purchased from a
company  controlled by a shareholder of the Company.  In July, 2001, the Company
issued 100,000 shares of stock to the Company president in exchange for services
rendered.  In  January, 2002, the Company issued an additional 350,000 shares of
stock  to the Company president in exchange for services.  In January, 2002, the
Chairman  received  52,250  shares  of  stock in payment of accrued interest and
225,000  warrants  to  purchase  stock  at  $0.25 per share as consideration for
making  additional  loans  to  the  Company.


                                       15
<PAGE>

NOTE  G  -  GOING  CONCERN

As  shown  in  the accompanying financial statements, the Company incurred a net
loss  of $2,334,099 from October 7, 1998 (inception) through March 31, 2002, and
as  of that date, the Company's current liabilities exceeded its total assets by
$389,420.  These  factors  create  an uncertainty about the Company's ability to
continue  as  a  going  concern.  The  Company  management  is in the process of
executing  a  plan  to  raise  additional  funds  through  the  sale of stock to
shareholders to purchase equipment and go into full scale production. A total of
$22,000  of  additional  funds  were  raised  in  April,  2002.  The  financial
statements do not include any adjustments that might be necessary if the Company
is  unable  to  continue  as  a  going  concern.

On  April  16,  2002,  the  Company, pursuant to Rule 506, is offering 2,800,000
shares  of  its  common stock for sale at $1.00 per share.  The proceeds of this
Offering  will  be  used  for  equipment purchases, debt repayment and operating
capital.


NOTE  H  -  COMMITMENTS  AND  CONTINGENCIES

On  March  15,  2002,  the Company entered into a technology licensing agreement
with  Levgum,  Ltd.,  a  foreign company.  Levgum, Ltd. is the owner of patented
proprietary  formulae  and  processes  utilized  in  the  production  of certain
de-vulcanized  rubber  compounds  with  a  variety of uses in the tire and other
de-vulcanized  rubber  goods  industries.

In  exchange  for  $250,000,  $125,000  of which was paid on March 31, 2002, and
$125,000  of  which is due by May 15, 2002, the Company received a 10% ownership
interest  in  Levgum,  Ltd.  and an exclusive license to Levgum's technology for
North,  Central  and South America.  In order to maintain the exclusivity of the
license,  the  Company  has  agreed  to  the following minimum royalty payments:

     $200,000  over  the  first  eighteen  months  of  the  agreement
     $1,000,000  over  the  next  twelve  months
     $2,000,000  over  the  next  twelve  months
     $3,000,000  over  the  next  twelve  months
     $5,000,000  over  the  next  twelve  months












                                       16
<PAGE>

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

     The  following  discussion  and analysis should be read in conjunction with
the  financial statements and the accompanying notes thereto and is qualified in
its  entirety  by  the  foregoing  and  by  more  detailed financial information
appearing  elsewhere.  See  "Item  1.  Financial  Statements."

     Results  of Operations - Third Quarter (Q3) of Fiscal Year 2002 Compared to
     ---------------------------------------------------------------------------
     Third  Quarter  of  Fiscal  Year  2001
     --------------------------------------

     Softstone had sales of $8,624 in Q3 2002, as compared with sales of $10,742
in  Q3  2001  (Softstone's  fiscal  year  ends on June 30).  Until Softstone (i)
acquires  equipment  that  produces wire-free chips from shredded tires and (ii)
refurbishes its tire shredder, it is unable to operate profitably.  Accordingly,
Softstone is not pursuing sales that must be made before such equipment purchase
and  renovation  takes  place.

     Our  general, selling and administrative expenses - which have been devoted
to  raising  capital  and  acquiring a public market for our common stock - were
$355,172  in  Q3  2002  as  compared  with  $70,966  in  Q3  2001.

     We  had a loss of $359,405 in Q3 2002, or $0.06 a share, as compared with a
loss  of  $70,031  in  Q3  2001,  or  $0.01  a  share.

     Results  of  Operations - First Nine Months of Fiscal Year 2002 Compared to
     ---------------------------------------------------------------------------
     First  Nine  Months  of  Fiscal  Year  2001
     -------------------------------------------

     Softstone  had  sales of $36,120 in the first nine months of FY 2002 (March
31,  2002)  compared  to  sales  of  $22,565 in the first nine months of FY 2001
(March  31,  2001).   Until  Softstone  (i)  acquires  equipment  that  produces
wire-free  chips  from shredded tires and (ii) refurbishes its tire shredder, it
is  unable  to operate profitably.  Accordingly, Softstone is not pursuing sales
that  must  be  made  before such equipment purchase and renovation takes place.

     Our  general, selling and administrative expenses - which have been devoted
to  raising  capital  and  acquiring a public market for our common stock - were
$630,545  in  the  first nine months of FY 2002 as compared with $324,631 in the
first  nine  months  of  FY  2001.

     We  had  a net loss of $629,684, or $0.10 a share, in the first nine months
of  FY  2002  as  compared with a net loss of $321,827, or $0.04 a share, in the
first  nine  months  of  FY  2001.

     We  covered  our  $629,684  loss in the first nine months of FY 2002 by net
borrowings  of $155,975 and the sale of $276,888 in stock in private placements.
Our  loss  was  attributed primarily to depreciation and amortization ($62,963),
non-cash  compensation  ($283,115)  and  a  license fee payable of $125,000.  We
covered  our  loss of $321,827 in the first nine months of FY 2001 by borrowings
of  $169,419  and  the  sale  of $53,125 in stock.  Some $61,673 of our loss was
attributed  to  depreciation  and  amortization,  and  $31,875 was attributed to
non-cash  compensation.

                                       17
<PAGE>

     Agreement  With  Levgum,  Ltd.
     ------------------------------

     We executed an agreement with Levgum, Ltd. of Tel Aviv, Israel. Levgum owns
patents  pertaining  to  certain  technology  for  the devulcanization of rubber
tires. We are told by Levgum that this is the best devulcanization technology in
the  world   and  that   it  is   commercially  viable,  as  compared  to  other
devulcanization  technologies  that  work  but  cost  more to apply per pound of
rubber  produced  than  the  cost  of  virgin  rubber.

     Levgum  shipped  to  us  ten kilograms of its devulcanized rubber for us to
perform  laboratory  trials  on.  The trials were performed in Akron, Ohio at an
independent  rubber  testing laboratory. The trials were most satisfactory. They
indicate  that  the  Levgum  technology  is  commercially  viable and produces a
product  twice  as good - from an analysis standpoint - as any other technology.
We  acquired  the  exclusive  rights  to  Levgum's  technology  for  the Western
Hemisphere,  including the right to sublicense the technology in this geographic
area.

     We  are required to pay $250,000 to Levgum for these exclusive rights for a
5.5  year  period  and for a ten percent equity interest in Levgum. We have paid
$125,000  of this amount. To retain the exclusive rights, we would have to remit
royalties  to  Levgum  as  follows:

<TABLE>
<CAPTION>
<S>                                        <C>
          First  18  months:               $  200,000
          Next  12  months:                 1,000,000
          Next  12  months:                 2,000,000
          Next  12  months:                 3,000,000
          Next  12  months:                 5,000,000
</TABLE>

     The  royalties  would  consist  of  $30 for each ton of devulcanized rubber
produced  in  the  Western  Hemisphere with Levgum's devulcanization technology.


     OUTLOOK

     The  statements  made  in  this  Outlook  are  based  on  current plans and
expectations.  These statements are forward looking, and actual results may vary
considerably  from  those  that  are  planned.

     We  propose  to  raise  additional  funds  for  the  renovation of our tire
shredder  and  the  purchase  of  equipment  that  produces wire-free chips from
shredded  tires.  We  have not identified the source of these funds.  We project
that  we  will  commence  to  operate profitably when we do acquire these needed
funds  of  approximately  $150,000.

     On  April  17,  2002  our  common stock was approved for listing on the OTC
Bulletin  Board.  Out  stock  market  symbol  is  "SOFS".


                                       18
<PAGE>

                          PART II - OTHER INFORMATION

Item  6.  Exhibits  and  Reports  on  Form  8-K

     (a)  Exhibits

          The  following  exhibits  are filed, by incorporation by reference, as
part  of  this  Form  10-QSB:

          2              Agreement  and Plan  of Reorganization of July 24, 2001
                         between Softstone, Inc. and Kilkenny Acquisition Corp.*

          3              Certificate  of  Incorporation  of  Softstone  Inc.*

          3.1            Bylaws  of  Softstone,  Inc.*

         10              Lease Agreement  of February 1, 2000,  between  Ardmore
                         Development Authority, as lessor, and Softstone,  Inc.,
                         as  lessee.*

         10.1            Scrap  Tire  Disposal  Agreement  of  January 11, 2000,
                         between Michelin North America,  Inc.,  and  Softstone,
                         Inc.*

         10.2            Letter  of  intent  of  May  1,  2001,  of  Little  Elm
                         Independent School District regarding  the  Little  Elm
                         Walking  Trail.*

         10.3            Agreement   of   March  15,  2002  with   Levgum,  Inc.
                         concerning exclusive license to Western Hemisphere  for
                         Levgum's  devulcanization  technology.

         99              United  States  Patent  No.  5,714,219.*

         *     Previously filed with Form 8-K August 8, 2001 Commission File No.
               000-29523;  incorporated  by  reference.




     (b)  Reports  on  Form  8-K

          None.


                                       19
<PAGE>

                                   SIGNATURES

In  accordance  with the requirements of the Exchange Act, the registrant caused
this  report  to  be  signed  on  its  behalf by the undersigned, thereunto duly
authorized.

                                   SOFTSTONE  INC.


                                   By:/s/  Keith  P.  Boyd
                                      ------------------------------------------
                                      Keith  P.  Boyd
                                      Chief  Executive  Officer

Dated:  May  14,  2002
























                                       20
<PAGE>

                                 SOFTSTONE INC.
                         Commission File Number 0-29523

                    INDEX TO EXHIBITS - FORM 10-QSB 03-31-02


          The  following  exhibits  are filed, by incorporation by reference, as
part  of  this  Form  10-QSB:

     Number               Description

       2       Agreement  and  Plan of  Reorganization of  July 24, 2001 between
               Softstone, Inc.  and  Kilkenny  Acquisition  Corp.*

       3       Certificate  of  Incorporation  of  Softstone  Inc.*

       3.1     Bylaws  of  Softstone,  Inc.*

      10       Lease   Agreement   of   February  1,  2000,   between    Ardmore
               Development  Authority,  as   lessor,  and  Softstone,  Inc.,  as
               lessee.*

      10.1     Scrap  Tire  Disposal  Agreement  of  January  11,  2000, between
               Michelin North  America,  Inc.,  and  Softstone,  Inc.*

      10.2     Letter  of  intent  of  May  1,  2001, of Little Elm  Independent
               School District  regarding  the  Little  Elm  Walking  Trail.*

      10.3     Agreement   of  March  15,  2002  with  Levgum,  Inc.  concerning
               exclusive   license   to   Western   Hemisphere   for    Levgum's
               devulcanization  technology.

      99       United  States  Patent  No.  5,714,219.*

*     Previously  filed  with  Form  8-K  August  8,  2001  Commission  File No.
      000-29523;  incorporated  by  reference.


<PAGE>
                TECHNOLOGY LICENSING & SHARE PURCHASE AGREEMENT

Entered  into  this  15th  day  of  March,  2002, by and between Levgum Ltd., an
Israeli  company  numbered  51-265410-  4,  and  located  at  c/o Mofet B'Yehuda
Technological  Incubator, P.O. Box 80, Kiryat Arba 90100, Israel (the "Grantor")
and  Softstone,  Inc.,  a corporation incorporated in the State of Oklahoma with
its  principal  offices at 5 Interstate Court, Ardmore, Oklahoma 73401, USA (the
"Recipient").

WHEREAS  the Grantor is the owner of the proprietary formulae for which a patent
has been filed in Israel and soon to be filed in the United States and elsewhere
(the  "Technology"  or "Know-how") essential for the process of recycling rubber
to  form  a new type of devulcanized rubber compound (the "Base Product") and is
the  licensor  of  the trademarks that are used in identifying and marketing the
products  manufactured  from  such  Technology. Such Base Product has properties
that  make  it  suitable  for  use  as the base material for making a variety of
rubber  compounds  for  volume  use  in the tire and general devulcanized rubber
goods  industry  ("Rubber  Products");  and

WHEREAS  the  Recipient  is  in  the business in the United States of converting
waste  tires  to  useable rubber products and is interested selling devulcanized
rubber  compound  and  in  receiving  a  license  from  the  Grantor  to use the
Technology  so  that  the  Recipient may manufacture and process rubber into the
Base  Product  within  the  defined  and  limited territory described below; and

WHEREAS  the  Recipient  is  interested  purchasing  shares  of  the  Grantor as
described  in  this  Agreement;  and

WHEREAS  the  Grantor  is willing to grant this license to the Recipient and the
Grantor  is  willing  to issue shares to the Recipient, subject to the terms and
conditions  herein  set  forth;

NOW  THEREFORE, in consideration of the covenants and promises set forth herein,
the  parties  agree  as  follows:

1.   Purchase  of  Shares  &  Related  Rights:
     -----------------------------------------

1.1  In  return  for the grant  of the  License as described  in this Agreement,
     and  in return for the issuance of eighty-three (83) Ordinary Shares of the
     Grantor,  par  value  1.00  New  Israeli  Shekel  ("NIS")  per  share  (the
     "Shares"),  the  Recipient  shall  pay  the Grantor a total of US$ 250,000.
1.2  The  Grantor  represents that  the  amount of Shares  are equivalent to 10%
     of  the outstanding capital of the Company, as calculated immediately after
     such  share  issuance.
1.3  The  Recipient  agrees  to  pay the  full consideration  of US$ 250,000  by
     May  14,  2002 as  follows: $125,000 by March 15, 2002; and $125,000 by May
     14, 2002. Such payments shall be made via wire transfer to the bank account
     of  the  Grantor  at the following bank address: Bank: Bank Leumi Le'Israel
     b.m.  (Bank  no.  10),  SWIFT  Code:  LUMIILITTLV,  Branch:  Kiryat  Yovel,

                                                                    Exhibit 10.3
                                                              Page 1 of 12 Pages
<PAGE>

     Jerusalem  (Branch  no.  915),  Name  of  Account: Levgum Ltd., Account no.
     155800/57.
1.4  Within  three  (3)  days  after  receipt  of  the full  consideration,  the
     Grantor shall issue the Shares to the Recipient, report the issuance to the
     Registrar  of  Companies,  and issue the relevant share certificates to the
     Recipient.
1.5  Board  of  Directors.  So long as  the Recipient holds  at least 10% of the
     outstanding  equity  of  the  Grantor,  the  Recipient shall be entitled to
     appoint  one  member  to  the  Board  of  Directors  of  the  Grantor. This
     obligation  shall  remain  in  effect  until  the  Grantor's Initial Public
     Offering  on  a  public stock exchange located either in Israel, the United
     States,  Europe  or  Japan  ("IPO").
1.6  Pre-emptive  Right.   For  the  shorter  period of (i)  until the Grantor's
     IPO,  or  (ii)  until  the  end of the period of exclusivity of the License
     right  as defined below, the Recipient shall have the right to maintain its
     percentage ownership in the Grantor by purchasing a pro rata portion of any
     further  issuance  of  securities  by  the  Grantor at the price offered in
     future  issuances,  other than shares offered pursuant to an employee stock
     option  plan.

2.   Grant  of  License:
     -------------------

2.1  Subject  to  the  terms and  conditions stated  herein, the  Grantor hereby
     grants  the  Recipient the right to use the Grantor's Technology for rubber
     devulcanization  and  the  right  to sublicense this right to third parties
     (the  "License").  Such  License  is  limited  to the Territory, as defined
     below,  and  is  granted only for the period of this Agreement. The License
     shall  be  the exclusive license granted by the Grantor with respect to the
     Grantor's Technology within the Territory so long as the Recipient pays the
     minimum  royalties  described  below  at  section 3.5. Such a failure shall
     result  in  the  License  becoming a non-exclusive license in the Territory
     during  the  term  of this Agreement. The Recipient may not use the license
     right  granted  by  this  Agreement  and  may not manufacture de-vulcanized
     rubber  using  the  Modifier  outside  of  the  Territory.
2.2  Use  of  Trademark.   The Recipient  is authorized and  agrees to apply the
     Grantor's  trademark  name on the packaging of the Base Product sold by the
     Recipient  that  was  manufactured  through  the  Grantor's Technology. The
     Recipient shall have the right to sell any de-vulcanized rubber produced by
     the  Modifier  so  long  as  all  the  accompanying  packaging and shipping
     documents  of  such  de-vulcanized  rubber (e.g. labels, bags inscriptions,
     invoices,  etc.)  will  include the following note: "Produced under license
     from  LEVGUM  Ltd.". The size and placement of the Grantor's trademark name
     on the Base Product's packaging shall be mutually agreed to by the parties.
2.3  Territory.   The "Territory" is  defined as the countries located in North,
     South  and  Central  America.
2.4  The  Recipient  may  not sublicense  or transfer  any part  of such License
     right  to  any person or entity without providing advance written notice to
     the  Grantor  of  the  sublicensee's/transferee's  name,  address and other
     contact  information, and without having such sublicensee/transferee commit
     to  obligations  to  the benefit of the Grantor as stated in sections 3.6 -
     3.12 below.

3.   Recipient's  Covenants:
     -----------------------
                                                                    Exhibit 10.3
                                                              Page 2 of 12 Pages
<PAGE>

3.1  Plant.  The  Recipient, and  its sublicensees,  shall maintain  and operate
     within  the  Territory  a  plant  or  plants  with  manufacturing equipment
     adequate  to  produce and supply the Base Product in quantities adequate to
     meet  the minimum royalties listed below, and all manufacturing of the Base
     Products  shall  take  place  only in this plant or plants unless otherwise
     authorized  in  writing  by  the Grantor. The Recipient agrees that, in the
     manufacture  and  packaging  of  the  Base Product, it will comply with all
     applicable  laws, regulations and ordinances pertaining to the operation of
     its  plant(s).
3.2  Modifier.  The  Recipient  and  its  sublicensees  shall  purchase from the
     Grantor,  and  the Grantor shall sell to the Recipient and its sublicensees
     the  quantities  of  the chemical modifier required in order to convert and
     recycle  rubber  into  the  Base  Product  (the  "Modifier")  in  an amount
     necessary needed to manufacture and sell the Base Product in the Territory.
     The  Recipient  agrees,  and  shall  cause  its  sublicensees  to agree, to
     purchase  the  Modifier only from the Recipient and from no other party and
     shall  not  manufacture the Modifier on its own. The Modifier shall be sold
     by  the  Grantor  pursuant  to  the written purchase orders received by the
     Grantor  from  the  Recipient  and  its sublicensees. The Modifier shall be
     supplied  (CIF  -  port  name,  USA)  within  thirty (30) days after actual
     receipt  by  the  Grantor  of  the  following: (a) a written order from the
     Recipient,  and  (b)  the  Modifier's  purchase price as described below at
     Section  5.
3.3  Use  of  the  Modifier.  The  Recipient  covenants that  the Modifier shall
     only be used by the Recipient for rubber devulcanization and the production
     of  Base  Product  in the Territory, and shall only be used pursuant to the
     terms  of  this  Agreement.
3.4  Best  Efforts.  The  Recipient shall  devote its  best efforts  to the sale
     and  promotion  of  the  Base Product made through the use of the Company's
     Technology  so  as  to  achieve  maximum distribution and sales of the Base
     Product  within  the  Territory.
3.5  Minimum  Royalties.  In  return  for  the  grant   of  the  License by  the
     Grantor,  the Recipient shall pay, and shall cause its sublicensees to pay,
     to  the  Grantor  a  royalty  payment  equal  to  US$  30  for  each ton of
     devulcanized  rubber  produced  and   sold  by  the  Recipient  and/or  its
     assigns/sublicensees  by  use  of  the  Grantor's  Technology. Such royalty
     payments  shall  be payable on the 15th of each month for the products sold
     in  the  prior month. In order for the License granted by this Agreement to
     remain  an  exclusive license, the following minimum royalty payments shall
     be  paid:

          (a)  During  the first 18 months from the date of this agreement - US$
               200,000;
          (b)  Over  the  following  12  months  -  US$  1  million;
          (c)  Over  the  following  12  months  -  US$  2  million;
          (d)  Over  the  following  12  months  -  US$  3  million;and
          (e)  Over  the  following  12  months  -  US$  5  million.

     If the Recipient does not achieve the above-mentioned royalty payments, the
     License  granted  by  this  Agreement  shall  no  longer  be  exclusive.
3.6  Books and Records.   The Recipient  shall maintain  full and accurate books
     and  records  showing  production  and  sales of the Base Product and shall
     furnish  monthly  reports  with  respect  thereto  in  a  form  that may be
     reasonably  specified from time to time by the Grantor. The Recipient shall

                                                                    Exhibit 10.3
                                                              Page 3 of 12 Pages
<PAGE>

     afford  the  Grantor  or  its representatives a reasonable opportunity once
     every  three  (3) months, during business hours and on at least forty-eight
     (48)  hours'  prior  notice,  to  conduct  a  visit  of  Recipient's and/or
     sublicensee's  plant(s)  and/or  an  examination  of the Recipient's and/or
     sublicensee's  books  and  records  relating  to  this  Agreement.
3.7  Proprietary Rights and Marks.   The Recipient  acknowledges and agrees that
     all proprietary rights in the Technology, the Modifier and the Base Product
     licensed  hereunder,  including  but not limited to patents, copyrights and
     trademarks,  and  any  other products developed from such Know-how, are and
     shall  remain  at  all  times  the exclusive property of the Grantor or its
     licensors,  and  may  only  be  used  by  the  Recipient  pursuant  to this
     Agreement.  The  Recipient  agrees  not to assign or otherwise transfer its
     rights  to  use  the  Know-how  without advance written notification to the
     Grantor.  In  addition,  the  Recipient  may  not  use  the Know-how or the
     Modifier  for  any  use  other  than for the production of the Base Product
     pursuant  to  the  terms  of  this  Agreement.
3.8  Confidentiality.    The  Recipient   shall  not  disclose  confidential  or
     proprietary  information  and  trade secrets provided by the Grantor in any
     form,  including  proprietary  information  concerning  the Know-how or the
     Modifier,   to   others   or   use   such   information   without  the  new
     recipient-sublicensee  obligating itself in writing to this confidentiality
     provision  in the form attached to Exhibit A, and then only as necessary to
     carry  out  the  terms of this Agreement. The Recipient may not perform any
     reverse  engineering upon the Modifier in order to discover the composition
     of  the  Modifier  or  in  order to learn about the Know-how. The Recipient
     shall treat such information with the same care as it would exercise in the
     handling of its own confidential or proprietary information and in no event
     shall  such  information  be  disclosed  to any person including employees,
     consultants and/or contractors unless such individual is bound by the terms
     of this Section. Upon termination or cancellation of this Agreement for any
     reason,  all such information, including all samples of the Modifier, shall
     be  immediately  returned  by the Recipient to the Grantor and, in light of
     the  value and nature of such information, the undertakings in this Section
     shall  remain in effect in perpetuity. Confidential information as referred
     to  in  this  Section shall not include information (i) which is or becomes
     public  knowledge through no fault of the Recipient; or (ii) which is known
     to  the Recipient at the time of disclosure by the Grantor, as evidenced by
     the Recipient's written records satisfactory to the Grantor; or (iii) which
     is  disclosed to the Recipient on a non-confidential basis by a third party
     having  no  obligation  of  secrecy  to  the  Grantor.
3.9  Patent  Litigation and Infringement:   Should the  Recipient determine that
     a  third  party is infringing one or more of the patents connected with the
     Know-how, the  Recipient  must  immediately  notify  the  Grantor  of  such
     infringement. If the Recipient determines that a suit should be brought for
     infringement  of  same  before  a  court  of law, Patent Authority or other
     judicial body, in any jurisdiction in the Territory, then the Grantor shall
     consent  to  being  named as a party in any such litigation and the Grantor
     shall  cooperate  with  the  Recipient  in prosecuting such litigation. Any
     expenses  incurred in connection with such litigation shall be borne by the
     Recipient.  Nothing  in  this  section detracts from the Grantor's right to
     prosecute  such  an  action  on  its  own volition, and the Recipient shall
     cooperate in the filing and prosecution of such suit, including being named
     as  a  party.
3.10 Indemnification  of  Grantor.  The  Recipient  shall  indemnify   and  save
     harmless  the  Grantor  and its directors and affiliated companies from and
     against  any  loss,  claim or damage, including reasonable attorney's fees,

                                                                    Exhibit 10.3
                                                              Page 4 of 12 Pages
<PAGE>

     resulting  from  any  negligence  or breach of warranty by the Recipient in
     connection  with  the  manufacture,  packaging, sale or distribution of the
     Products  or  any  unrelated  products of the Recipient, and not due to any
     impurity,  adulteration,  or  misbranding of the Modifier as of the time of
     delivery  to  the  Recipient by the Grantor. With respect to the risks thus
     assumed,  the  Recipient  shall obtain and maintain a policy of contractual
     liability insurance in an amount deemed reasonable for the type of business
     conducted  by  the  Recipient  and  shall  also list the Grantor as a party
     covered  by  such  insurance.  At the request of the Grantor, the Recipient
     shall defend the Grantor and its directors or affiliates in connection with
     any  claim,  suit,  action,  or proceeding covered by this indemnification.
     Evidence  of  such insurance coverage shall be provided by the Recipient to
     the  Grantor  upon  Grantor's  request.
3.11 Product Liability Insurance.   In addition  to and not  in substitution for
     the  Recipient's covenant stated at section 3.10 above, the Recipient shall
     obtain  and  maintain  product  liability  insurance  in  an  amount deemed
     reasonable  for  the  type of business conducted by the Recipient and shall
     also  list  the  Grantor  as a party covered by such insurance. Evidence of
     such  insurance  coverage shall be provided by the Recipient to the Grantor
     upon  Grantor's  request.
3.12 Limited  Warranty  and  Waiver  of  Certain  Remedies:
     ------------------------------------------------------
     (a)  The  rights and remedies granted to the Recipient by the Grantor under
          this  Agreement  are the sole and exclusive rights and remedies of the
          Recipient  and  its sublicensees for non-performance or non-conformity
          of  the  Know  how  or the Modifier. The Grantor agrees to provide the
          Modifier  as  specified  in  this agreement. During the period of this
          agreement  (the  "Limited Warranty Period"), if the Recipient notifies
          the Grantor of the failure of the Modifier to substantially conform to
          such  specifications ("Non-Conformance"), the Grantor will, at its own
          expense,  replace  the  Modifier with Modifier that performs properly.
          EXCEPT  FOR THE FOREGOING LIMITED WARRANTY, THE GRANTOR MAKES NO OTHER
          EXPRESS,  STATUTORY  OR  IMPLIED WARRANTIES AND SPECIFICALLY DISCLAIMS
          THE  WARRANTIES  OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
          AND  NON-INFRINGEMENT  OF THIRD PARTY RIGHTS. IF THE DISCLAIMER OF ANY
          IMPLIED  WARRANTIES  IS  NOT PERMITTED BY LAW, SUCH IMPLIED WARRANTIES
          ARE  LIMITED  TO  THE  DURATION  OF  THE LIMITED WARRANTY PERIOD. SOME
          STATES  DO  NOT  ALLOW  THE  DISCLAIMER  OF  IMPLIED WARRANTIES OR THE
          LIMITATION  ON HOW LONG AN IMPLIED WARRANTY LASTS, SO SUCH LIMITATIONS
          OR  EXCLUSIONS MAY NOT APPLY TO THE RECIPIENT. THIS WARRANTY GIVES THE
          RECIPIENT  SPECIFIC LEGAL RIGHTS AND THE RECIPIENT MAY ALSO HAVE OTHER
          RIGHTS  WHICH  VARY  FROM  STATE  TO  STATE.
     (b)  If within the  Limited  Warranty  Period, the Recipient reports to the
          Grantor  a failure of the Modifier to conform to the Limited Warranty,
          and  returns  to  the  Grantor  the  defective Modifier, THE GRANTOR'S
          ENTIRE LIABILITY AND THE RECIPIENT'S SOLE AND EXCLUSIVE REMEDY FOR THE
          BREACH  OF  WARRANTY  OR  ANY  OTHER  LEGAL OBLIGATION RELATING TO THE
          PRODUCT  OR  RELATED  MATERIALS (WHETHER UNDER CONTRACT, TORT OR OTHER
          LEGAL  THEORY),  SHALL  BE,  AT  THE GRANTOR'S OPTION, TO (A) USE BEST

                                                                    Exhibit 10.3
                                                              Page 5 of 12 Pages
<PAGE>

          EFFORTS  TO SUPPLY THE RECIPIENT WITH A WORKAROUND FOR SUCH ERROR, (B)
          REPLACE  THE MODIFIER, OR (C ) RETURN OF THE RECIPIENT'S CONSIDERATION
          PAID  TO  THE  GRANTOR.
     (c)  Limitation of Liability.  THE  GRANTOR  SHALL  NOT BE LIABLE UNDER ANY
          THEORY  FOR  ANY DAMAGES SUFFERED BY THE RECIPIENT, OR ANY USER OF THE
          PRODUCTS  OF  THE  RECIPIENT, INCLUDING ANY INCIDENTAL, CONSEQUENTIAL,
          EXEMPLARY,  OR  SPECIAL  DAMAGES,  INCLUDING  ANY LOST PROFITS OR LOST
          SAVINGS,  EVEN  IF  THE GRANTOR HAS BEEN ADVISED OF THE POSSIBILITY OF
          SUCH  DAMAGES,  OR  FOR  ANY CLAIM BY ANY THIRD PARTY. THIS LIMITATION
          SHALL  NOT APPLY TO CLAIMS OF PERSONAL INJURY TO THE EXTENT APPLICABLE
          LAW  PROHIBITS  SUCH  LIMITATION.  Some states or jurisdictions do not
          allow the exclusion  or  limitation of  incidental,  consequential  or
          special damages, so the above exclusions and limitations may not apply
          to  the  Recipient.

4.   Grantor's  Covenants:
     ---------------------

4.1  License.   The  Grantor represents  and warrants to the  Recipient that the
     Grantor  has  the right to grant the License to the Recipient as stated and
     pursuant  to  the  terms  of  this  Agreement.
4.2  Supply  of the Modifier.   So long as  the Recipient abides by the terms of
     this  Agreement and provides the necessary purchase price for the Modifier,
     the  Grantor  shall  provide  the  Recipient with an on-going supply of the
     Modifier  needed to manufacture and sell the Base Product in the Territory.
     The  Modifier shall be supplied to the Recipient at a price and pursuant to
     the  procedures  listed  below  in  section  5.
4.3  Indemnification  of  Recipient.   The Grantor agrees that it will indemnify
     and hold harmless the Recipient from and against any and all costs, losses,
     and  liabilities,  including  reasonable attorney's fees, arising out of or
     resulting  from  any claims that the authorized use by the Recipient of the
     Knowhow  pursuant to this Agreement, and any and all other of the Grantor's
     distinctive  markings,  designs, trademarks or other marks pursuant to this
     Agreement,  infringe the proprietary rights or trademark rights of another,
     and  the  Grantor will defend any such infringement claim, suit, action, or
     proceeding  by  any  person,  firm,  or  corporation against the Recipient,
     provided  that  prompt  notice  is  given   to  the  Grantor  of  any  such
     infringement  claim,  suit,  action  or  proceeding  concerning  which  the
     Recipient  expects  that  the  Grantor  will be called upon to indemnify or
     defend  the  Recipient.  The  Recipient  acknowledges  the  validity of and
     ownership  by  the  Grantor  and/or  its  licensor  of  the Know-how and in
     connection  with  the  sale  of the Products, agrees to take no action that
     would  prejudice  or  interfere with that validity or ownership. All use of
     the  Know-how  and  Trademarks  by the Recipient under this Agreement shall
     inure  to  the  exclusive  benefit  of  the  Grantor  and/or  its licensor.
4.4  Confidentiality.   The  Grantor  shall   not   disclose   confidential   or
     proprietary  information and trade secrets provided by the Recipient in any
     form,  including the specifications of the desired Base Product provided by

                                                                    Exhibit 10.3
                                                              Page 6 of 12 Pages
<PAGE>

     the  Recipient, to others or use such information without the prior written
     consent  of the Recipient and then only as necessary to carry out the terms
     of  this  Agreement. The Grantor shall treat such information with the same
     care  as  it  would  exercise  in  the  handling of its own confidential or
     proprietary information and in no event shall such information be disclosed
     to  any  person  including employees, consultants and/or contractors unless
     such  individual is bound by the terms of this Section. Upon termination or
     cancellation  of  this Agreement for any reason, all such information shall
     be  immediately  returned  by the Grantor to the Recipient and, in light of
     the  value and nature of such information, the undertakings in this Section
     shall  remain in effect in perpetuity. Confidential information as referred
     to  in  this  Section shall not include information (i) which is or becomes
     public knowledge through no fault of the Grantor; or (ii) which is known to
     the Grantor at the time of disclosure by the Recipient, as evidenced by the
     Grantor's  written records satisfactory to the Recipient; or (iii) which is
     disclosed  to  the  Grantor  on  a  non-confidential basis by a third party
     having  no  obligation  of  secrecy  to  the  Recipient.

5.   Consideration  &  Royalty  paid  by  Recipient:
     -----------------------------------------------

5.1  Payment  for  Modifier.   In  return  for  providing   the  Modifier,   the
     Recipient and its sublicensees shall pay the Grantor a payment of US$ 3,000
     (three thousand) for every ton of Modifier ordered by the Recipient and its
     sublicensees.  The  shipment  terms  shall  be  CIF  -  USA  port.
5.2  The  Recipient and  its sublicensees  shall make  such payments pursuant to
     the following schedule: For the first and second order of the Modifier, the
     Recipient  shall  pay  50%  of  the  price  upon placing the order with the
     Grantor,  and  50%  shall  be  paid  by an irrevocable, confirmed Letter of
     Credit  payable within thirty (30) days after shipment of the Modifier from
     Israel.  For  all  further orders, the Recipient and its sublicensees shall
     pay  25% of the price upon placing the order with the Grantor, 25% - within
     30  days  after  shipment  is  made  from the Israeli port, and 50% - by an
     irrevocable,  confirmed  Letter of Credit payable 60 days from the shipment
     date  from  Israel.
5.3  It  is noted  that the  above-mentioned Letter of Credit  shall be provided
     within  ten  (10)  days  after  the Recipient and its sublicensees makes an
     order  of Modifier from the Grantor. In no event shall any shipment be made
     prior  to  the  receipt of the relevant Letter of Credit by the Grantor. In
     addition,  the  Letter  of  Credit  must be in a form that is acceptable to
     either  Bank  HaPoalim,  Bank  Discount  or  Bank  Leumi  Le'Israel  b.m

6.   Term  and  Termination:
     -----------------------

6.1  The  initial  term  of  this  Agreement  and  the   grant  hereunder  shall
     commence  on the date hereof and will remain in effect for the initial term
     of  sixty-six  (66)  months  unless terminated earlier under the provisions
     herein.  It  is  highlighted  that  the  exclusivity of the License granted
     pursuant  to  this  Agreement  shall  remain  in effect only so long as the
     Recipient  makes  the minimum royalty payments listed at section 3.5 above.
6.2  The  Grantor  may  terminate  this  Agreement  should the Recipient fail to
     correct  within  ninety  (90)  days  of  written  notice  of  the following
     occurrences:

                                                                    Exhibit 10.3
                                                              Page 7 of 12 Pages
<PAGE>

     (a)  the  Recipient  fails  to  provide timely payments for the Modifier as
          required  by  this  Agreement  and/or  provide  timely  payment of the
          Royalty  Payments  as  required  by  this  Agreement,  or
     (b)  the  Recipient breaches any  of the fundamental covenants, obligations
          or  terms  of this Agreement, including but not limited to sections 1,
          2,  3,  and  5,  or
     (c)  the Recipient is  dissolved  or becomes bankrupt, insolvent or becomes
          unable  to  pay  its  obligations  when  they  become  due,  or
     (d)  the institution of  any  proceeding  or  arrangement by or against the
          Recipient relating to or in the nature of a bankruptcy, insolvency, or
          assignment  for  the  benefit  of  creditors,   which   proceeding  or
          arrangement  is  consented  to by the Recipient or is not dismissed or
          discontinued  within  ninety  (90)  days after the institution of this
          proceeding  or  arrangement.
6.3  The  Recipient  understands  the  economic  value  of  the   Know-how,  and
     understands  the  great importance of protecting the confidentiality of the
     Know-how  and  the composition of the Modifier. In light of these facts and
     notwithstanding  that mentioned in section 6.2, in the event of a breach of
     the  confidentiality  provisions  and protection of proprietary information
     provisions  mentioned  at  sections  3.8  and  3.9  above,  the Grantor may
     immediately terminate this Agreement with no advance notice. This provision
     for  termination  does  not  detract in any way from the Grantor's right to
     claim  any  other  remedies  under  law,  or  claim any additional damages.
6.4  In  the  event  of  termination, the  License  hereunder  shall immediately
     terminate  and  the  Recipient  shall immediately return to the Grantor all
     information  relating  to  the  Know-how  and  all samples of the Modifier.
6.5  Termination  shall  not  affect  any  payments  due  the  Grantor  on  Base
     Products  produced  by  the  Recipient  prior  to  termination.

7.   Miscellaneous  Provisions:
     --------------------------

7.1  Legality.  Each  of  the parties  hereto represents  and warrants  that the
     entering  into  of  this  Agreement  does not conflict with, or violate the
     terms  of,  any  other  agreement  to which it is a party or by which it is
     bound.
7.2  Force  Majeure.  Either party  shall be  excused from  any delay or failure
     in  performance  hereunder caused by any labor dispute, governmental, civil
     or  military  requirement,  act  of  God,  earthquake,  inability to secure
     materials  and  transportation  facilities,  and  other  causes  beyond its
     control.  If  such  delaying cause shall continue for more than ninety (90)
     days, the party injured by the inability of the other to perform shall have
     the  right,  upon  written  notice  to  the  other party, to terminate this
     Agreement.
7.3  Only Agreement.  This Agreement is the  entire agreement  and understanding
     between  the  parties  relative  to the subject matter contained herein and
     supersedes  all  other  agreements and letters of intent, oral and written,
     heretofore  made  between  the  parties.  Any  amendment  hereto must be in
     writing  and  signed by an authorized representative of the Grantor and the
     Recipient.
7.4  Invalidity.  Should  any  portion  of  this  Agreement  be held invalid, or
     unlawful,  the  remainder  of the Agreement shall continue to be binding on
     both parties.

                                                                    Exhibit 10.3
                                                              Page 8 of 12 Pages
<PAGE>

7.5  Section  Titles.   Section  titles  or  captions  contained  herein are for
     reference  only  and  shall not be considered in construing this Agreement.
7.6  Notice.   All  notices  and  requests  required  or  authorized  hereunder,
     shall,  except  where  specifically  provided otherwise, be given either in
     writing by personal delivery to the party to whom notice is to be given, or
     sent by registered mail, addressed to the party intended at its address set
     forth  in the caption or by cable or facsimile. The date of delivery, cable
     or  facsimile in the case of personal delivery or the date upon which it is
     deposited  in the mail in the case of notice by mail, shall be deemed to be
     the  date  of  such  notice.
7.7  Waiver.  The  waiver  by  either party  of any breach  or alleged breach of
     any  provision  hereunder  shall  not  be  construed  to be a waiver of any
     concurrent,  prior  or  succeeding  breach  of  said provision or any other
     provision  herein.
7.8  Counterparts.    This   Agreement   may  be  executed   simultaneously   in
     counterparts  each  of  which  shall be deemed to be an original but all of
     which  together  shall  constitute  one  and  the  same  Agreement.
7.9  Governing  Law  &  Jurisdiction.   It is  hereby agreed between the parties
     that  the  laws  of the State of New York shall apply to this agreement and
     that the sole and exclusive place of jurisdiction in any matter arising out
     of  or  connected  with  this Agreement shall be the International Court of
     Arbitration  of  the  International  Chamber  of Commerce ("ICC") in Paris,
     France.  Any  dispute  which  may arise between the parties concerning this
     Agreement  shall be settled amicably. In the event that such dispute cannot
     be  resolved  amicably, then both parties agree to have the dispute resolve
     by  arbitration  in  the  English  language  pursuant  to  the rules of the
     International  Court  of  Arbitration  of the ICC. In the event the parties
     cannot  agree  on  the  identity  of  an arbitrator, then the parties shall
     arbitrate their dispute in the English language before a sole arbitrator of
     the  International  Court  of  Arbitration  of  the  ICC  in Paris, France.

IN  WITNESS  WHEREOF,  the  parties  have executed this Agreement as of the date
first  above  written.



Levgum  Ltd.                              Softstone  Inc.

By:/s/  Yinon  Elroy                      By:/s/  Keith  Boyd
   ------------------------                 ------------------------------
   Yinon  Elroy,  CEO                        Keith  Boyd,  President






                                                                    Exhibit 10.3
                                                              Page 9 of 12 Pages
<PAGE>


                                    EXHIBIT A
                                Sublicensee NDA

                (see attached Confidential Disclosure Agreement)

                        Confidential Disclosure Agreement
                        ---------------------------------

Made  as  of  this  ----  day  of -----  , 200 --- BY AND BETWEEN LEVGUM LTD., a
company  organized  under  the laws of the State of Israel numbered 51-265410-4,
with  offices  located in the Mofet B'Yehuda Technological Incubator, located at
P.O.Box  80,  Kiryat  Arba,  Israel  (the  "Company");  AND ___________________,
a  company  incorporated  in the State of ________  with  offices  located  at:
_____________  __________________________________________________________  (the
"Recipient").

                                   WITNESSETH

WHEREAS, the Company possesses certain confidential and proprietary information,
formulae and technology in connection with the devulcanization of rubber via the
use  of  a  chemical  modifier  (the  "Company's  Technology");  and

WHEREAS,  the  Recipient is interested obtaining a (sub)license right to use the
Company's  Technology  in  order  to  devulcanize rubber by use of the Company's
chemical  modifier  (the  "purposes  of  this  Agreement");  and

WHEREAS,  to induce the Company or its assigns to provide information concerning
the  Company's  Technology  to the Recipient, the Recipient desires to set forth
herein  its  representations,  warranties,   undertakings  and   obligations  of
confidentiality  and  nondisclosure;

NOW, THEREFORE, in consideration of the mutual promises and undertakings herein,
the  parties  agree  as  follows:

1.   The  term  "Information"  means  any and  all  confidential and proprietary
     information  including  but  not  limited  to  any  and all specifications,
     formulae,  prototypes,  analyses,  and  any and all records, data, methods,
     techniques,  processes,  notes,  and  any  other  data  or  information (in
     whatever  form),  as  well  as  improvements  and know-how related thereto,
     relating  to  the  Company's  Technology  and  its  chemical  modifier.

          Information  shall  not include information that (a) was already known
          to or independently developed by the Recipient prior to its disclosure
          as  demonstrated  by  reasonable and tangible evidence satisfactory to
          the  Company;  (b)  shall  have appeared in any printed publication or
          patent or shall have become a part of the public knowledge except as a
          result  of  breach  of this Agreement by the Recipient; (c) shall have
          been received by the Recipient from another person or entity having no

                                                                    Exhibit 10.3
                                                             Page 10 of 12 Pages
<PAGE>

          obligation  to  the  Company;  or  (d)  is  approved in writing by the
          Company  for  release by the Recipient. However, Information shall not
          be  deemed  to have been known to the Recipient or to be a part of the
          public  knowledge  merely  because  it is expressed in publications or
          patents  in  general  terms not specifically pertaining to the subject
          matter  of the Information or because it is a combination which can be
          pieced  together to reconstruct the Information from multiple sources,
          none  of which shows the whole combination, its principle of operation
          and  use.

2.   The  Recipient  agrees  to  hold  in trust  and confidence  all Information
     disclosed  to  it  and  further  agrees  not  to  exploit  or  disclose the
     Information to any person or entity or use or copy the Information directly
     or  indirectly  for  any purpose other than the purposes of this Agreement.
     Furthermore,  the  Recipient  agrees not to analyze or reverse engineer any
     samples  of  the Company's modifier in order to discover the composition of
     such  modifier.

3.   The  Recipient  agrees  to  disclose  the  Information   only   to  persons
     necessary  in  connection  with  the  purposes  stated  above  and who have
     undertaken the same confidentiality obligation as hereunder in favor of the
     Company.  The  Recipient  agrees  to  assume  full  responsibility  for the
     confidentiality  of  the  Information  disclosed  to  it and to prevent its
     unauthorized  disclosure,  and  shall  take  appropriate  measures with its
     employees  and  other  persons  acting  on  its  behalf to ensure that such
     persons  are  bound  by  a  like  covenant  of  secrecy.

4.   If  the  Recipient  is  requested  or  required by law or by court order to
     disclose  the  Information  or any part of it, the Recipient shall give the
     Company  advanced  notice  of such request or order so that the Company may
     properly  protest  and/or  cause  the  rescission  or  order  and  seek the
     appropriate  relief. In the event such relief is not granted, the Recipient
     shall  disclose  only  the  portion  of  the  Information he is required to
     disclose  by  law  or  the  court  order.

5.   The  Recipient  acknowledges  and  agrees  that  the  Information furnished
     hereunder  is  and shall remain the proprietary property of the Company. If
     Information  has  been  removed from the premises of the Company and unless
     otherwise  required by statute or government rule or regulation, all copies
     of  the  Information,  except  for  that  portion  of the Information which
     consists of analyses, compilations, studies, or other documents prepared by
     the  Recipient  or  those  acting  on  its behalf, shall be returned to the
     Company  immediately  upon  request by the Company without retaining copies
     thereof.  The  portion  of  the  Information  which  consists  of analyses,
     compilations,  studies  or other documents prepared by the Recipient, shall
     be  held by the Recipient and kept confidential and subject to the terms of
     this Agreement, or shall be destroyed, as the Company shall determine. Such
     destruction  shall  be  confirmed  in  writing to the Company upon request.

6.   The Recipient's  undertakings herein  shall be binding upon its affiliates,
     subsidiaries  or successors and shall continue until the earlier of (i) the
     expiration  of  seven  years from the last disclosure under this Agreement,
     (ii) such time as the substance of the Company's disclosure has entered the

                                                                    Exhibit 10.3
                                                             Page 11 of 12 Pages
<PAGE>

     public  domain  without  the  Recipient's  fault  or  negligence,  or (iii)
     permission  is  specifically  granted  in  writing  to the Recipient by the
     Company  to  release  or  make  use  of  such  Information.

7.   It is understood  and agreed that  the disclosure of the Information by the
     Company shall not grant the Recipient any express, implied or other license
     or  rights  to  patents  or  trade  secrets  of the Company, whether or not
     patentable,  nor  shall it constitute or be deemed to create a partnership,
     joint  venture  or  other  undertaking.

8.   It is hereby  agreed between the  parties that the laws of the State of New
     York shall apply to this agreement and that the sole and exclusive place of
     jurisdiction  in any matter arising out of or connected with this Agreement
     shall  be  the  International  Court  of  Arbitration  of the International
     Chamber  of  Commerce ("ICC") in Paris, France. Any dispute which may arise
     between the parties concerning this Agreement shall be settled amicably. In
     the  event that such dispute cannot be resolved amicably, then both parties
     agree  to  have  the dispute resolve by arbitration in the English language
     pursuant to the rules of the International Court of Arbitration of the ICC.
     In  the  event  the  parties cannot agree on the identity of an arbitrator,
     then  the  parties  shall  arbitrate  their dispute in the English language
     before  a  sole arbitrator of the International Court of Arbitration of the
     ICC  in  Paris,  France.

9.   A  determination that  any term of this  Agreement is void or unenforceable
     shall  not  affect  the  validity  or  enforceability  of any other term or
     condition.

IN  WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the  date  first  above  written.


-------------------------------        -------------------------------------
The  Recipient                         Levgum  Ltd.
By:                                    By:
   ----------------------------           ----------------------------------
Title:                                Title:
     --------------------------             --------------------------------

(Agreements/124Lev-Softstone-License1)







                                                                    Exhibit 10.3
                                                             Page 12 of 12 Pages