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 December 31, 2001
                                       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  February  4,  2002,  the Company had 6,150,554 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
                      DECEMBER 31, 2001 AND JUNE 30, 2001
<TABLE>
<CAPTION>
                                                      UNAUDITED
                                                     DECEMBER 31,     JUNE 30,
                                                         2001           2001
                                                     ------------    -----------
                                     ASSETS

CURRENT  ASSETS
<S>                                                    <C>           <C>
  CASH AND CASH EQUIVALENTS                               $1,424        $12,673
  ACCOUNTS RECEIVABLE                                     17,343
  OTHER CURRENT ASSETS                                     2,236          4,473
                                                     -----------     ----------
      TOTAL  CURRENT ASSETS                               21,003         17,146

PROPERTY AND EQUIPMENT, NET                              461,490        490,644

OTHER  ASSETS
  PATENT                                                  91,111         94,444
  OTHER                                                    8,116          8,116
                                                     -----------     ----------
      TOTAL OTHER ASSETS                                  99,227        102,560
                                                     -----------     ----------

      TOTAL ASSETS                                      $581,720       $610,350
                                                     ===========     ==========


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT  LIABILITIES
  ACCOUNTS PAYABLE                                       $41,329        $16,998
  ACCRUED EXPENSES                                        31,910         19,981
  NOTES PAYABLE AND CURRENT PORTION OF LONG-TERM DEBT    202,927        192,231
                                                     -----------     ----------
      TOTAL  CURRENT LIABILITIES                         276,166        229,210

LONG-TERM DEBT, LESS CURRENT PORTION                      52,184         24,125

LOANS FROM STOCKHOLDERS                                  438,416        424,416

STOCKHOLDERS'  EQUITY
  COMMON  STOCK  -  PAR  VALUE  $.001;
    30,000,000  SHARES  AUTHORIZED;  ISSUED  AND
    OUTSTANDING,  5,893,304  AND  4,486,053
    RESPECTIVELY                                           5,893          4,486
  ADDITIONAL PAID-IN CAPITAL                           1,783,755      1,632,528
  PREPAID  COMPENSATION
  DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE    (1,974,694)    (1,704,415)
                                                     -----------     ----------
      TOTAL STOCKHOLDERS' EQUITY                        (185,046)       (67,401)
                                                     -----------     ----------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $581,720       $610,350
                                                     ===========     ==========
</TABLE>


   The accompanying 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 DECEMBER 31, 2001
    AND FOR THE THREE AND SIX MONTH PERIODS ENDED DECEMBER 31, 2000 AND 2001
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                         THREE MONTHS ENDED     SIX MONTHS ENDED     FROM OCTOBER 7, 1998
                                            DECEMBER 31,           DECEMBER 31,      (INCEPTION) THROUGH
                                           2001       2000        2001       2000     DECEMBER 31, 2001
                                        ---------  ---------   ---------  ---------  --------------------
<S>                                     <C>        <C>         <C>        <C>          <C>
REVENUES                                  $24,614     $4,802     $27,496    $11,824       $61,681

OPERATING COSTS AND EXPENSES
  GENERAL, SELLING, AND ADMINISTRATIVE    112,312     91,115     275,373    253,665     1,963,326
                                        ---------  ---------  ----------  ---------    ----------

  OPERATING LOSS                          (87,698)   (86,313)   (247,877)  (241,841)   (1,901,645)

OTHER  EXPENSE
  INTEREST                                 11,705      3,867      22,402      9,954        73,049
                                        ---------  ---------  ----------  ---------    ----------

   LOSS BEFORE INCOME TAXES               (99,403)   (90,180)   (270,279)  (251,795)   (1,974,694)

PROVISION FOR INCOME TAXES                      -          -           -          -             -
                                        ---------  ---------  ----------  ---------    ----------

  NET LOSS                               ($99,403)  ($90,180)  ($270,279) ($251,795)  ($1,974,694)
                                        =========  =========  ==========  =========    ==========

NET (LOSS) PER SHARE                       ($0.02)    ($0.01)     ($0.05)    ($0.03)       ($0.35)
                                        =========  =========  ==========  =========    ==========

AVERAGE COMMON SHARES OUTSTANDING       5,647,929  7,302,690   5,893,304  7,302,690     5,575,652
                                        =========  =========  ==========  =========    ==========
</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 December 31, 2001
         and for the Six Month Periods Ended December 31, 2000 and 2001
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                          From October 7, 1998
                                           Six Months Ended December 31,  (Inception) through
                                                2001          2000          December 31, 2001
                                             ----------     ----------    -------------------

Cash flows from operating activities
<S>                                           <C>           <C>                <C>
  Net  loss                                   ($270,279)    ($251,795)         ($1,974,694)

Adjustments to reconcile net income
  to net cash provided by operating
  activities:
    Depreciation and amortization                43,386        41,115              181,181
    Noncash  compensation                        59,415        31,875              546,747
    Write-off samples                                                               11,712
Changes in assets and liabilities
    (Increase) in accounts
      receivable                                (17,343)                           (17,343)
    (Increase) decrease in other
      current  assets                             2,237                            (22,280)
    Increase (decrease) in accounts payable      24,331       (48,714)              34,460
    Increase (decrease) in accrued expenses      11,929        (3,986)              37,165
                                              ---------     ---------          -----------
          Total  adjustments                    123,955        20,290              771,642
                                              ---------     ---------          -----------

          Net cash used by operating
            activities                         (146,324)     (231,505)          (1,203,052)

Cash flows from investing activities
    Purchases of property and equipment         (10,000)       (9,123)            (429,859)
     Purchases  of  samples
       Other deposits                                                                 (384)
                                              ---------     ---------          -----------

        Net cash used by investing activities   (10,000)       (9,123)            (430,243)

Cash  flows  from  financing  activities
  Investment  by  stockholders                   14,676                            265,617
  Proceeds  from  borrowings                     46,021       169,419              366,773
  Payments on borrowings                         (7,942)                          (163,076)
  Issuance of stock pursuant to offering         92,320        53,125            1,165,405
                                              ---------     ---------          -----------
        Net cash provided by financing
          activities                            145,075       222,544            1,634,719
                                              ---------     ---------          -----------

        Net increase (decrease) in cash
          and cash equivalents                  (11,249)      (18,084)               1,424

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

Cash and cash equivalents at end of period       $1,424      ($10,513)              $1,424
                                              =========      ========          ===========

Supplemental  cash  flow  information:
     Cash paid during the period for interest    $8,278        $4,195              $21,730
                                              =========      ========          ===========

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

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

                                        5
<PAGE>
                                 SOFTSTONE Inc.
                          (A Development Stage Company)
                            Statement of Cash Flows
           From October 7, 1998 (inception) through December 31, 2001
         and for the Six Month Periods Ended December 31, 2000 and 2001
                                  (Unaudited)



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

   During  the  six  months  ended  December  31,  2000:
   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  six  months  ended  December  31,  2001:
   The  Company  issued  899,376  shares  of  common  stock  to  effect a merger
   resulting  in  $899  of  goodwill.

















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

                                        6
<PAGE>
                                SOFTSTONE, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

                      June 30, 2001 and December 31, 2001
                                  (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.

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.

                                        7
<PAGE>
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.

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 December
31,  2001,  which  consist of various notes and loans payable, approximate their
fair  values.

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

                                        8
<PAGE>
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>
                                                   December  31,     June  30,
                                                       2001             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                             164,726         125,572
                                                     ---------       ---------

                                                     $ 461,490       $ 490,644
                                                     =========       =========
</TABLE>

NOTE  C  -  NOTES  PAYABLE

Notes  payable  consist  of  the  following:

<TABLE>
<CAPTION>
                                                   December  31,     June  30,
                                                       2001             2001
                                                   -------------     ---------
     Revolving note payable to bank; interest due
<S>                                                  <C>             <C>
     monthly at 10% (variable); due March 5, 2002    $  100,035      $  80,358

     Demand notes payable to stockholder, 8%
     interest rate, agreed  to be due after
     December 31, 2002                                  277,537        258,537

     Bank  term  loan;  9.5%  interest  rate;
     guaranteed by  principal  stockholder,
     due  March  22,  2002                               65,000         65,000

     Note  payable  to  stockholder;  no
     interest  rate;  agreed to  be  due
     after December 31,  2002                          160,879         165,879

     Note  payable  to  bank,  collateralized
     by  accounts  receivable,  7%  (variable),
     due  March  5,  2002                               17,020

     Notes  payable  to  shareholders,  unsecured,
     12%, due  February  2,  2002                       10,000

     Note  payable  to  finance  vehicle,  9.5%
     interest  rate, maturing  December,  2004,
     collateralized by vehicle                          17,604          19,638
</TABLE>

                                        9
<PAGE>
<TABLE>
<CAPTION>
     Note  payable  to  bank,  collateralized
     by  tractor,  9% (variable),  payable  in
     60  monthly  installments beginning
<S>                                                  <C>             <C>
     July  29, 2001                                      9,464          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                                35,988          41,000
                                                       -------         -------
                                                       693,527         640,772
          Less:  current portion                       202,927         192,231
                                                       -------         -------

     Long-term  debt                                  $490,600        $448,541
                                                       =======         =======
</TABLE>

The  following  is a summary of maturities of principal under long-term debt for
year  ending  December  31:
<TABLE>
<CAPTION>
<S>                                            <C>
          2002                                 $202,927
          2003                                  454,333
          2004                                   15,917
          2005                                   11,882
          2006                                    8,468
                                               --------
                                               $693,527
                                               ========
</TABLE>

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 end 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

                                       10
<PAGE>
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.

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
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 six month period ending December 31, 2001, the Company issued 182,075
shares  to  employees  of  the  Company as compensation and an additional 95,000
shares  for  consulting  fees.

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 504,
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.









                                       11
<PAGE>
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>
                                              Six  Months  Ended  December  31,
                                                       2001        2000
                                                    ----------   ----------
     Income tax benefit at federal
<S>                                                 <C>          <C>
       statutory rate                               $  97,300    $  90,646
     Change  in  valuation  allowance                 (97,300)     (90,646)
                                                    ---------    ---------

                                                    $       -    $       -
</TABLE>

<TABLE>
<CAPTION>
                                                    From  October  7,  1998
                                                     (inception)  through
                                                      December  31, 2001
                                                      ------------------
<S>                                                        <C>
     Income tax benefit at federal statutory rate          $  675,346
     Nondeductible  expenses                                    7,108
     Other,  including  graduated  rates                       28,436
     Change  in  valuation  allowance                        (710,890)
                                                           ----------
                                                           $        -
</TABLE>


Components  of  deferred  tax  assets  at  are  as  follows:

<TABLE>
<CAPTION>
     Assets                                   December 31, 2001   June 30, 2001
                                              -----------------   -------------
<S>                                              <C>                 <C>
       Net operating loss carryforward           $  710,890          $608,693
       Valuation allowance                         (710,890)         (608,693)
                                                 ----------          --------

                                                 $        -          $      -
</TABLE>


The  valuation allowance increased $414,891 for the year ended June 30, 2001 and
$97,300  for  the  six  months  ended  December  31,  2001.

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  December  31,  2001  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.

                                       12
<PAGE>

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.


NOTE  G  -  GOING  CONCERN

As  shown  in  the accompanying financial statements, the Company incurred a net
loss  of  $1,974,694 from October 7, 1998 (inception) through December 31, 2001,
and as of that date, the Company's current liabilities exceeded its total assets
by $255,163.  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  raise   additional  funds  through  the  sale  of  stock  to
shareholders  to  purchase  equipment  and  go  into full scale production.  The
financial  statements  do not include any adjustments that might be necessary if
the  Company  is  unable  to  continue  as  a  going  concern.







                                       13
<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 - Second Quarter (Q2) of Fiscal Year 2002 Compared to
     ---------------------------------------------------------------------------
     Second  Quarter  of  Fiscal  Year  2001
     ---------------------------------------

     Softstone had sales of $24,614 in Q2 2002, as compared with sales of $4,802
in  Q2  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
$112,312  in  Q2  2002  as  compared  with  $91,115  in  Q2  2001.

     We  had a loss of $99,403  in Q2 2002, or $0.02 a share, as compared with a
loss  of  $90,180  in  Q2  2001,  or  $0.01  a  share.

     Results  of  Operations  - First Half of Fiscal Year 2002 Compared to First
     ---------------------------------------------------------------------------
     Half  of  Fiscal  Year  2001
     ----------------------------

     Softstone  had  sales of $27,496 in the first half of FY 2002 (December 31,
2001)  compared  to  sales of $11,824 in the first half of FY 2001 (December 31,
2000).  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
$275,373  in  the  first  half of FY 2002 as compared with $253,665 in the first
half  of  FY  2001.

     We  had  a  net loss of $270,279, or $0.05 a share, in the first half of FY
2002  as  compared  with  a net loss of $251,795, or $0.03 a share, in the first
half  of  FY  2001.

     We covered our $270,279 loss in the first half of FY 2002 by net borrowings
of  $38,079  and  the sale of $106,996 in stock in private placements.  Our loss
was  attributed  primarily  to depreciation and amortization ($43,386), non-cash
compensation  ($59,415)  and  accrued but unpaid expenses ($11,929).  We covered
our  loss of $251,795 in the first half of FY 2001 by borrowings of $169,419 and
the  sale  of  $53,125  in  stock.  Some  $41,115  of our loss was attributed to
depreciation   and  amortization,   and  $31,875   was  attributed  to  non-cash

                                       14
<PAGE>

compensation,  but  these  non-cash  expenses were offset somewhat by $48,714 in
payments  made  on  accounts  payable and a $3,986 decrease in accrued expenses.

     Letter  of  Intent  With  Levgum,  Ltd.
     ---------------------------------------

     On December 21, 2001  we executed a  letter of intent  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 has shipped to us ten kilograms of its devulcanized rubber for us to
perform  laboratory  trials on.  Should the trials be satisfactory, we will have
the  opportunity  to acquire the exclusive rights to Levgum's technology for the
Western  Hemisphere,  including  the  right to sublicense the technology in this
geographic  area.

     We would be 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. 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.

                                       15
<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.*

         16     Letter  of  August  8,  2001 of Baron Accountancy Corp. agreeing
                with the statements  made  in this Form  8-K by Softstone, Inc.,
                concerning   Softstone's   change   of   principal   independent
                accountants.*

         16.1   Letter of August 27,  2001  of Grant Thornton LLP. agreeing with
                the  statements  made  in  this   Form  8-K by  Softstone, Inc.,
                concerning   Softstone's   change   of   principal   independent
                accountants.**

         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.

        **      Previously  filed  with  Form  8-K  August  27,  2001 Commission
                File No. 000-29523;  incorporated  by  reference.

                                       16
<PAGE>

        (b)     Reports  on  Form  8-K

                None.



                                   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:  February  6,  2002