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

                                  FORM 10-KSB
                  [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                    For the fiscal year ended June 30, 2002

                                       OR

                    [ ] TRANSITION UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
              For the transition period from ________ to ________


                                 Softstone Inc.
             (Exact name of registrant as specified in its charter)

   Delaware                         000-29523                        73-1564807
  (state of                  (Commission File Number)              (IRS Employer
incorporation)                                                      I.D. Number)

                     111 Hilltop Lane, Pottsboro, TX 75076,
                                  903-786-9618
            -------------------------------------------------------
            (Address and telephone number of registrant's principal
               executive offices and principal place of business)

                      5 Interstate Court, Ardmore, OK 73401
                                  580-223-3888
         --------------------------------------------------------------
         (Former Address and telephone number of registrant's principal
                executive offices and principal place of business
                          if changed since last report)
      Securities registered under Section 12(b) of the Exchange Act: None

         Securities registered under Section 12(g) of the Exchange Act:
                         Common Stock, $0.001 par value
                                (Title of Class)

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

<PAGE>

Check  if there is no disclosure of delinquent filers in response to Item 405 of
Regulation  S-B  is  not  contained  in  this  form,  and  no disclosure will be
contained,  to  the  best  of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or  any  amendment  to  this  Form  10-KSB.  [X]

State  issuer's  revenues  for  its  most  recent  fiscal  year:  $37,490

State the aggregate market value of the voting and non-voting common equity held
by  non-affiliates computed by reference to the price at which the common equity
was  sold,  or  the  average  bid  and  asked price of such common equity, as of
October  15,  2002:  $492,910.

As of September 30, 2002, there were 7,041,965 shares of the Registrant's Common
Stock,  par  value  $0.001  per  share,  outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

If  the following documents are incorporated by reference, briefly describe them
and  identify  the  part  of  the Form 10-KSB (e.g., Part I, Part II, etc.) into
which  the document is incorporated:  (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act").  The listed
documents  should be clearly described for identification purposes (e.g., annual
report  to  security  holders  for  fiscal  year ended December 24, 1990).  None

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















                                       ii
<PAGE>
                                TABLE OF CONTENTS


                                                                           Page
                                                                           ----

Item  1   Description  of  Business                                          1
          Business  Development                                              1
          Our  Business                                                      1
          Revenue  by  Sectors                                               4
          Distribution  Methods                                              4
          Dependence  on Major Customers or Suppliers                        5
          Patents,  Trademarks and Licenses                                  5
          Government  Approval  of  Principal  Products  or  Services        5
          Government  Regulations                                            5
          Research  and  Development                                         6
          Environmental  Laws                                                6
          Employees                                                          6
          Seasonality                                                        6

Item  2   Description  of  Property                                          6

Item 3    Legal Proceedings                                                  6

Item  4   Submission  of  Matters  to  a  Vote  of  Security  Holders        6

Item  5   Market  for  Common  Equity  and  Related  Stockholder  Matters    7

Item  6   Management's  Discussion  and  Analysis                            7
          Overview                                                           7
          Results  of  operations                                            8
          Sales                                                              8
          Operating  expenses                                                8
          Net  income  (loss)                                                9
          Balance  sheet  items                                              9
          Liquidity  and  Capital Resources                                  9

Item  7   Financial  Statements                                             10

Item  8   Changes  In  and  Disagreements  With Accountants on Accounting
            and  Financial  Disclosure                                      27

Item  9   Directors, Executive Officers, Promoters and Control Persons      27

Item 10   Executive  Compensation                                           32

                                      iii
<PAGE>

          Employment  Contracts                                             33
          Stock  Options                                                    33

Item 11   Security  Ownership  of  Certain  Beneficial  Owners
            and  Management                                                 33

Item 12   Certain  Relationships  and  Related  Transactions                34

Item 13   Exhibits  and  Reports  on  Form  8-K                             36
          Exhibits                                                          36
          Forms  8-K                                                        37

Signatures                                                                  38

























                                       iv
<PAGE>

Item  1.     Description  of  Business.

Business  Development.
----------------------

     Our  company  was  incorporated  on  January  28,  1999,  pursuant  to  the
provisions  of the General Corporation Act of the State of Delaware.  On May 31,
1999, we merged with Soft Stone Building Products, Inc., an Oklahoma corporation
that  was  a  predecessor  to  our  company's  business.  Our  initial  business
operations were conducted at 620 Dallas Drive, Denton, Texas 76205.  On February
1, 2000, we moved our offices and facilities to Ardmore, Oklahoma.  In June 2002
we moved our production facilities to a building in Ardmore, OK at an industrial
air  park  and  we  moved  our office facilities to 111 Hilltop Lane, Pottsboro,
Texas  75076,  which  is  our  present  address.

Description  of  Business
-------------------------

     Our  focus  initially  was solely on realizing the commercial benefits of a
process  developed  for  this  purpose  and  patented  by  our  first president,
Frederick  Parker.  Because  we  have  this  process,  we  have  a contract with
Michelin  North  America's  Ardmore  tire manufacturing facility that pays us to
take  its  waste  tires.

     More recently our primary focus has shifted to the commercial possibilities
of  a  superior,  newly  discovered devulcanization process to which we recently
acquired  a  5.5-year  exclusive  license  for  the  Western  Hemisphere.

     Devulcanization  -  The  Levgum  Process
     ----------------------------------------

     This  process  - called the Levgum Process after the name of the company of
scientists  and  engineers  in  Israel that developed and patented the process -
breaks  down  the  sulfur  links across polymer chains in vulcanized rubber.  It
allows  the  rubber  to  be  used  again.

There  are  other  devulcanization techniques.  But, ours is better, cheaper and
eco-friendlier  than  all  others.

Before  we  agreed to pay $250,000 for our exclusive license, we took the Levgum
devulcanized rubber product to the Akron Rubber Development Laboratory in Akron,
Ohio  for  testing  and  for  comparison  with  virgin  rubber and with the best
devulcanized  rubber  produced  by  other  techniques.  The  laboratory results:

-  Levgum  devulcanized  rubber  retains  80  percent  of  virgin  rubber's
   properties,  making  it  most  useful.  Other techniques retain 40 percent at
   best.

-  Levgum's  devulcanized  rubber  can  be  produced  at significantly less cost
   than  can  other  devulcanization  technologies  or  than  the cost of virgin
   rubber.

                                        1
<PAGE>

-  We  use  conventional  machines  operating  at  room  temperatures. Competing
   technologies  employ lengthy operations involving grinding, chemical, heating
   and mechanical  processes.

-  The  Levgum  devulcanization  process  is  non-toxic  and eco-friendly. Other
   technologies  are  not.
-
     We  took  a  sample  of the Levgum devulcanized rubber and the Akron Rubber
Development  Laboratory  test results to the chief chemist at Michelin's Ardmore
tire  factory.  The chemist advised us that our product is superior to all other
devulcanized  rubber  products.  He  sent  a  sample  of  it  and  a copy of the
laboratory  test results to Michelin North America's home office.  He speculated
that  Michelin  could  well decide to substitute our product for five percent of
the virgin rubber used in its tires and that other tire manufacturers could well
substitute  our  product  for  even  higher  percentages of virgin rubber.  This
equates  to  an  enormous  amount.

     We  shall  exploit  our licensed technology through sub-licenses throughout
the Western Hemisphere.  In addition to our Michelin contract, we are engaged in
discussions  with  Rubbermaid's principal plant in Mexico.  It has to dispose of
150  tons  of  waste  rubber a month.  By substituting our Levgum technology and
making  use  of  its  own  waste  rubber, this Rubbermaid facility should effect
savings  of  $99,000  a  month  -  savings  that  drop  to  its  bottom  line.

     We  do  not propose to build devulcanization plants. Instead, we propose to
sub-contract  the initial manufacturing of the devulcanized rubber and then sell
sub-licenses  to  other  companies.  We  will also offer our assistance with the
marketing of the devulcanized rubber for a commission. Prospective licensees can
send  representatives  to  us to learn the nuances of the Levgum process, and we
will offer through our contacts a turnkey system for r their own devulcanization
facilities. Our license obligations to Levgum and our anticipated charges to our
sub-licensees  are  as  follows:

<TABLE>
<CAPTION>
                                                  Charges
                                 ---------------------------------------------
                                 Our  outgo       Income  from        Net  to
                                 to  Levgum       sub-licensees      Softstone
                                 ----------       -------------      ---------

Levgum-supplied  "modifier"
<S>                              <C>               <C>                <C>
  to mix with used rubber        $3,000 a ton      $3,500 a ton       $500 a ton

Royalty  on a  ton of Levgum-
  processed  rubber                 $30 a ton         $60 a ton        $30 a ton

Sub-license  fee                     $0             Will  vary         Will vary
</TABLE>

     We  need  $50,000  in  capital to fund our manufacture of a fully automated
tire  de-beader,  which we propose to then manufacture for sale to the industry,
to pursue opportunities to sublicense the Levgum devulcanization technology, and
to  market  crumb  rubber  produced  by  us  or other manufacturers. We have not
identified  the  source  of  these  funds.

                                        2
<PAGE>

     Devulcanization
     ---------------

     Technology  exists  today to "fine grind" rubber from 80 to 200 mesh (holes
per  square  inch).  This technology has long been the best source for injecting
recycled  rubber into virgin rubber mixes.  The cost to do so is extremely high;
often  costing  20  to  30  percent  more than the cost of virgin rubber itself.
Rubber  manufacturing  companies  do  this to meet government regulations and to
have  a way to recycle their own waste.  Rubber disposal is extremely expensive;
companies  that can "fine grind" have the ability to sell back to a company 100%
of  its  scrap  in  a  usable  form.

     For  years,  manufacturers  tried  to  establish a process which breaks the
sulfur  links  across  polymer chains (devulcanize) without hurting the original
chemical  properties,  allowing  the resulting material to be re-deployed in new
and  existing  products.  Although  some have been successful, they were plagued
with  economic  or  environmental  problems.  Softstone has a 5.5-year exclusive
license  to  the  Western  Hemisphere  for  a process that (i) breaks the sulfur
lattice under normal room temperature conditions using conventional machines and
(ii)  does  away  with  the expensive and lengthy operations involving grinding,
chemical,  heating and mechanical processes.  It is the only process known today
where  relatively large pieces of rubber waste can be used, a feature that saves
substantial amounts of investment in terms of plant and machinery, labor, power,
space, storage and transportation.  The process itself is 100% non-toxic and eco
friendly.  The  final  product produced is in granular form and, when mixed with
virgin  rubber or master compounds, results in better homogeneity than any other
process  available  today.  The test results we obtained from a test facility in
Akron,  Ohio  proved  that the devulcanized rubber, itself, maintains 80% of the
original properties of the uncured compound.  This results in a product that can
be produced and sold far cheaper than the "fine grind" powders while maintaining
much  higher  physical  properties.

Our  devulcanized  rubber  development  plan  is  as  follows:

     1.  Develop  a  turnkey  devulcanization  system.
     2.  Develop  the  market.
     3.  Sub-license the technology to large recyclers, the largest of which has
         contacted  Softstone  and  is  very interested in using the technology.
     4   Manufacture  an  automated  tire  de-beader.

     Softstone  envisions  utilizing  its  contacts  in  the recycled rubber and
virgin  rubber  industry  to  establish market presence.  We see no need at this
time  to  establish  a  raw material supply beyond the needs of the  development
location  to  implement the devulcanized technology into the market. Instead, we
plan  to  expand  on  our  relationships  with  crumb  rubber  manufacturers  by
sublicensing  the  technology  and  jointly  developing  the  market.

     Our  compensation  for  these efforts will come from the following sources.

     1.  Sales  of  devulcanized  rubber  from  the  pilot  plant  in  Ardmore.
     2.  Sales  of  sub-licenses.

                                        3
<PAGE>

     3.  Sales  of  the  automated  tire  de-beader.
     4.  Royalties  for  the  amount of rubber devulcanized with our process and
         commissions  on  sales.

     Conversion  of  Waste  Tires  Into  Useful  Products
     ----------------------------------------------------

     There  is  a  worldwide need for a method to convert whole waste tires into
useful  products  with  no  waste  as  a  byproduct  and with favorable economic
results.  New  tire  manufacturers  in the U.S. are required to dispose of their
manufacturing rejects without creating an unsightly mess or adding to ecological
problems.  Government  agencies at all levels tend to cooperate with any company
having  a reasonable means of disposing of the approximately seven million tires
each  year  that are discarded as rejects or as worn-out tires.  Virtually every
state  has  a program whereby it pays a fee per tire to qualified companies that
dispose  of  used  tires.

     Softstone's  past  president,  Frederick  Parker,  is  a  co-inventor  of a
patented  process  Softstone  uses  to convert waste tires into useful products.
The  Parker  I  System  machine  was  constructed  in  Ardmore,  Oklahoma  as  a
proof-of-concept  prototype. With subtle adjustments recently made, this machine
became a production model that ingests whole tires at one end of the machine and
ejects  rubber modules at the other end with virtually no waste or contaminants.
The  rubber modules are virtually indestructible and have been tested for use as
a  playground  covering,  pathways,  walking trails, horse barn stalls and other
uses.

     The  Parker  I  System  machine  can  make  a  variety of products by using
different  molds.  Our  most  popular  product is a two-foot by four-foot module
approximately  two  inches  thick that interlocks with adjacent modules for walk
ways  and  driveways.  However,  the  size  and  thickness of the modules can be
adjusted for use as highway cone holders, crash barriers, guardrails, bridge and
road  impact  pads  and as a substitute for asphalt in several key applications.

     Approximately  80 to 85 percent of the modules' composition is comprised of
wire-free  tire   chips.    The  balance   is  comprised  of  readily  available
polyurethane  binders  and  other  substances.

We  have  raised  and  spent  approximately  $1.5  million  since  inception  on
developing  our  patented  process  and on designing and constructing our Parker
System  I  proof-of-concept  machine  in  Joshua,  Texas. The Parker System I is
highly  automated.  Whole  tires  are  inserted into a shredder, reduced to chip
rubber,  blended  with a specially prepared binder element, placed into a custom
mold  and  then  pressed  into place and locked. These molds are then moved on a
conveyor  belt  through  a heated oven where the product cures and comes out the
other end as a rubber-molded product ready for sale. We believe there is no more
efficient  or  economical method of processing tires into finished products than
our  process.

We  need  to refurbish our tire shredder and to purchase equipment that produces
wire-free  chips from the shredded tires.  However, once this equipment is added
to  our  existing  machinery,  our  plant should become profitable and will have
several  cash  flow  streams  -

-  tire  revenue  from  Michelin,

                                        4
<PAGE>
-  sale  of  modules,

-  sale  of  extra  crumb  rubber,

-  sale  of  excess  chip  rubber  for use as tire-derived fuel in cement plants
   in  the  southwestern  U.S.,  and

-  additional  rubber-molded  product  lines  (still  to  be  developed).

     Our modules have withstood a 300,000-pound deformation test and immediately
rebounded;  yet,  the  product  has  qualified  for  installation  on children's
playgrounds.  The product is ready to be installed immediately after it is made.
There is no curing time necessary.  The product is relatively light but does not
break,  crack  or  tear.

     We  have  attended  U.S. Army Corps of Engineers presentations at which our
product was discussed by the Corps as a suitable substitute for concrete in uses
such  as  erosion control along the Mississippi River.  Our articulated mattress
configurations  have  multiple  applications  for  the  Corps  -

-  in  soil  conservation,

-  along  highways,

-  at  beaches  as  storm  surge  protection,

-  for  wetlands  protection,

-  as  temporary  roads  over  delicate  marshlands,

-  to  prevent  riverbank  erosion,  and

-  underwater,  to  cover  transoceanic  pipelines  and  protect them from being
   snagged  by  fishnets.

     We  believe,  however, that the primary markets for our products are paving
applications  where  concrete  and  asphalt  now  dominate,  such  as sidewalks,
driveways  and trails.  Concrete and asphalt have significant drawbacks compared
to  Softstone-based  products.  Concrete and asphalt crack and heave due to soil
and  weather  conditions.  They often must be replaced after a few years of use.
Softstone's rubber modules, however, will not crack because of weather's cold or
melt because of its heat.  If there is a soil heaving condition, our product can
be  lifted  and  relaid  when  the  ground  condition  is  corrected.

Distribution  Methods
---------------------

     We  have  one  distributor  of  the product in Oklahoma City, Trinity Brick
Sales,  Inc.  Softstone  has  several  interested parties; however, we await the
refurbishment  of  our  tire shredder and the installation of the equipment that

                                        5
<PAGE>
produces  wire-free chips from the shredded tires before we increase this staff.
Our  strategy  is  to  market  our  rubber  products  primarily  and directly to
construction  companies,  home  builders,  landscape  architects,  golf  course
designers,  road  and  path  construction companies and municipalities.  We also
intend  to  market  directly  to end-users and distributors through independent,
commissioned  salesmen.

Competitive  Business  Conditions
---------------------------------

Many  firms make molded rubber products, including some for patio, horse trailer
and  barn  applications.  It is our observation and belief that our products are
superior  to  all  others  in  economics  and  durability.

     Once we complete the installation in our integrated plant of equipment that
will  reduce  tires  to wire-free tire chips, Softstone will commence to realize
its  potential  from  our  molding operations.  We estimate we can achieve gross
revenue  of  more  than $2 million a year from our single "prototype-production"
assembly  line,  with  a  gross  margin  of better than 60 percent.  If we add a
second  assembly line, we estimate that our gross margin will increase to better
than  70  percent.  We  doubt  that  our  competition  can  compete  with  such
efficiency.  To  the  best of our knowledge and belief, no other company takes a
whole  tire  and  reduces it to a useable retail product in a single, continuous
process  with  no  waste  or  by-product.

Sources  and  Availability  of  Raw  Materials;  Names  of  Principal  Suppliers
--------------------------------------------------------------------------------

     There is virtually an endless supply of waste tires.  Many sources will pay
us  to  take  the tires off their hands.  Michelin pays us $0.77 to $0.85 a tire
and  states that it would like to do this at every one of its eighteen U.S. tire
manufacturing  facilities.

We currently use pure MDI-based RoyalBond binders from Uniroyal Chemical.  MDI -
methylene  diphenyl  diisocyanate  - in its pure form provides superior adhesion
between  rubber  particles  and  the surrounding polymer and improves properties
such  as  flex-life,  elongation  and  long-term  weatherability.

Dependence  on  Major  Customers  or  Suppliers
-----------------------------------------------

     While  our  present  source  of  supply  of  tires is reject tires from the
Michelin  tire  manufacturing  facility  in Ardmore, Oklahoma, and our source of
binder  is  MDI-based  RoyalBond  binder  from  Uniroyal  Chemical,  we  are not
dependent  on  either  of these for their products.  There are ample supplies of
used  tires  - more than we can use - within the Oklahoma City and Dallas, Texas
areas,  both  of which are less than two hours driving distance from our offices
in  Pottsboro,  Texas  on  the Texas-Oklahoma border.  As for binders, MDI-based
binders  are  readily  available  from  other  sources.

     We are still in the development stage as far as sales are concerned and are
not dependent on any major customers.  However, our lack of significant sales is
due  to  our  need  for  a  wire-free  chip  producing  grinder.

Patents,  Trademarks  and  Licenses
-----------------------------------

                                        6
<PAGE>

     The  inventors  of our patented Parker One System, one of whom is Frederick
Parker,  our  past  president,  have  assigned  the  patent to Softstone with no
retained  royalty.

     We  have  a  5.5-year  exclusive  license  to  the  Levgum  devulcanization
technology  for  the  Western  Hemisphere.

Government  Approval  of  Principal  Products  or  Services
-----------------------------------------------------------

     We  are  not  required  to  obtain  the  approval  of  our  products by any
governmental  agency.  Our  operations,  however,  are  subject  to  a number of
governmental  regulations.

Government  Regulations
-----------------------

     Our  operations  are  subject  to  regulation by various federal, state and
local governmental entities and enactments, which include environmental laws and
workplace  regulations,  including  the  Occupational Safety and Health Act, the
Fair  Labor Standards Act, the Clean Air Act, the Clean Water Act and other laws
and  regulations  regarding  health,  safety,  sanitation, environmental issues,
building  codes and fire codes.  We believe that our current compliance programs
adequately  address  such concerns and that we will be in substantial compliance
with  such  laws  and  regulations.  Our  failure  to  comply with such laws and
regulations  could  result  in  serious  sanctions  and  penalties  that  could
materially  and  adversely  affect  our  business.

Research  and  Development
--------------------------

          We  have  spent  approximately  $650,000  over  the  last two years in
research  and  development  activities  with  regard  to  the development of our
products.  None  of  the  cost  of  these  activities  was borne directly by our
customers.

Environmental  Laws
-------------------

     We  must  comply  with  the  environmental regulations of the Environmental
Protection  Agency  and  the equivalent Oklahoma and Texas agencies charged with
environmental  protection.  This  consists,  primarily,  in  complying  with
regulations  regarding the disposal of waste products.  Such compliance requires
no  significant  outlay  of capital by us and only minimum costs.  We produce no
hazardous  waste  as  most  of  our  competitors  do.

Seasonality
-----------

     There  is  no  seasonal  aspect  to  our  business.

                                        7
<PAGE>
Employees
---------

     At  present  we  have one full-time employee and no part-time employees. We
propose  to  add seven full-time and five part-time employees at such time as we
install  equipment  that  converts  shredded  tires  into  wire-free tire chips.

     Exclusive  License  With  Levgum,  Ltd.
     ---------------------------------------

     On  March  15, 2002 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  convinced  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  most  satisfactory. We then
acquired the exclusive rights to Levgum's technology for the Western Hemisphere,
including  the  right  to  sublicense  the  technology  in this geographic area.

     We paid $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  will  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  will  consist  of  $30  for each ton of devulcanized rubber
produced  in  the  Western Hemisphere using Levgum's devulcanization technology.

Reports  to  Security  Holders
------------------------------

     We file reports with the Securities and Exchange Commission.  These reports
are  annual  10-KSB, quarterly 10-QSB, and periodic 8-K reports.  We also intend
to  furnish  stockholders  with  annual  reports containing financial statements
audited  by  independent public or certified accountants and such other periodic
reports  as  we may deem appropriate or as required by law.  The public may read
and  copy any materials we file with the SEC at the Public Reference Room of the
SEC  at  450  Fifth Street, N.W., Washington, D.C. 20549.  The public may obtain
information  on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330.  We  are  an electronic filer, and the SEC maintains an Internet
Web  site  that  contains  reports,  proxy  and information statements and other
information  regarding  issuers  that  file  electronically  with  the SEC.  The
address  of  such  site  is  http://www.sec.gov.

                                        8
<PAGE>
Item  2.     Description  of  Property.

     We  neither  own  nor  lease any office or manufacturing space.  Our office
space  is  provided  rent  free  in  Pottsboro,  Texas by our president, and our
manufacturing space, in which all our tire processing equipment has been placed,
has  been  provided  rent  free  in Ardmore, Oklahoma by the Ardmore Development
Authority.

Item  3.     Legal  Proceedings.

     Neither  our  company nor any of our property is a party to, or the subject
of,  any  material  pending  legal  proceedings  other  than  ordinary,  routine
litigation  incidental  to  our  business.

Item  4.     Submission  of  Matters  to  a  Vote  of  Security  Holders.

     There  have  been no matters submitted to a vote of our stockholders during
the  last  fiscal  year  or  during  the subsequent period to the filing of this
report.

Item  5.     Market  for  Common  Equity  and  Related  Stockholder  Matters.

     Our common stock was admitted to trading on the OTC Bulletin Board on April
17,  2002.  Its stock symbol is "SOFS."  The following table shows the quarterly
high  and  low prices of the stock since it was admitted to trading.  The prices
reflect  inter-dealer  quotations  without mark-up, mark-down or commissions and
may  not  represent  actual  transactions.

<TABLE>
<CAPTION>
                                 High               Low
          Calendar  2002:
<S>                              <C>                <C>
               2nd  Qtr          0.51               0.11
               3rd  Qtr          0.25               0.06
</TABLE>

     There  are  approximately  173  holders  of  record of our company's common
stock.

     Our  company  has  declared no dividends on our common stock.  There are no
restrictions that would or are likely to limit the ability of our company to pay
dividends  on  its  common  stock,  but we have no plans to pay dividends in the
foreseeable future and intend to use earnings for the expansion of our business.

Recent  Sales  of  Unregistered  Securities
-------------------------------------------

     During  the  past  three  years  Softstone  sold shares of its Common Stock
without  registering  them  as  follows:


                                        9
<PAGE>
<TABLE>
<CAPTION>
                                                                 Amount  of
Date               Amount      Purchasers                       Consideration     Type of Consideration
--------------     ------     -----------------------------     -------------     ---------------------
<S>                <C>         <C>                                 <C>            <C>
07/99 to 07/00     250,000     Employees and consultants(1)        $212,500       Services

                    22,500     Employee(1)                          $22,490       Services and vehicles

                   400,000     Officers(1)                          383,097       Cash  and  cancellation
                                                                                    of  notes payable
                   210,000     Employees(1)                         210,000       Services
                   423,190     Rule  405  Offering                  503,782       Cash
07/00 to 07/01      42,500     Rule  405  Offering                   53,125       Cash
                   675,000     Warrant  Holders(2)                      675       Cash
                   300,000     Officer(2)                            21,922       Assignment  of  Patent
                    18,000     Officer(2)                            18,525       Office  equipment
                   522,961     Consultants(2)                        52,296       Services
                   277,100     Rule  506  Offering                   47,944       Cash
07/01 to 07/02     545,200     Rule  506  Offering                  254,520       Cash
                   825,075     Rule  506  Offering                  322,247       Services
                    52,250     Rule  506  Offering                   24,290       Cancellation  of  Interest
                                                                                    on Debt
                 1,158,387     Rule  506  Merger                      1,158       Corporate  shell
</TABLE>

Item  6.     Management's  Discussion  and  Analysis.

     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  "Financial  Statements."

     Results  of  operations.
     ------------------------

     The  following  table  presents, as a percentage of sales, certain selected
financial  data  for  each  of  fiscal  years  June  30, 2002 and June 30, 2002:

<TABLE>
<CAPTION>
                                                         Fiscal Year Ended
                                                         -----------------
                                                     06-30-2002     06-30-2001
                                                     ----------     ----------
<S>                                                   <C>             <C>
          Sales                                          100%           100%

          Operating expenses                           2,007           1,335%
          Income from operations                      (1,907)%        (1,235)%

          Other expenses                              (1,038)%            88%

          Net income (loss)                           (2,945)%        (1,322)%
          Net loss per share                          $(0.18)         $(0.06)
</TABLE>


                                       10
<PAGE>
     Sales.
     ------

     Sales  of  $37,490  for fiscal year 2002 increased by $7,403, or 25 percent
over sales of $30,087 in fiscal 2001.  The increase is due primarily to an order
from  the  City  of  Ardmore  for  an  installation  at  Douglas  Park.

     Operating  expenses.
     --------------------

     Operating  expenses  increased  from $401,548 in fiscal 2001 to $752,324 in
fiscal 2002, or 87 percent.  This 87 percent increase is attributed primarily to
the  purchase  of,  and  research conducted prior to, the purchase of the Levgum
Devulcanization  Technology.

     Net  income  (loss).
     --------------------

     Our  net  loss  of  $397,809  in  fiscal  2001  plummeted  to a net loss of
$1,104,133  in  fiscal  2002.  This  increase  is  attributed  to the company is
purchasing the rights to a foreign patent for $250,000, which purchase had to be
expensed  as  the patent has not been appraised, the compensation of individuals
with  stock  and  the  cost associated with the reorganization of the company to
alleviate  overhead.  We  have temporarily stored our production equipment until
we  obtain  a  needed  tire  shredder,  in  order  to  conserve  money.

     Balance  sheet  items.
     ----------------------

     Current  assets  of  $3,836  on  June  30,  2002, compares unfavorably with
current  liabilities  of  $673,467 at that time, an unfavorable current ratio of
..006.

     Liquidity  and  Capital  Resources.
     -----------------------------------

     During  the  fiscal  year  ended June 30, 2001, we financed our net loss of
$397,809  primarily  through  -

-  sales  of  common  stock  for  $164,640  in  cash,

-  the  issuance  of  $92,743  worth of common stock for services, equipment and
   a  patent,  and

-  loans  amounting  to  $250,941  from  an officer and director of the company.

          During  the  fiscal year ended June 30, 2002, we financed our net loss
of  $1,104,133  primarily  through  -

-  sales  of  common  stock  for  $254,520  in  cash,

-  loans  of  $287,263,

-  the  issuance  of  $346,537  worth of common stock for services and interest,


                                       11
<PAGE>

-  depreciation  and  amortization  of  $83,307,

-  a  $125,000  loss  on  an  investment,  and

-  a  $214,444  loss  on  the  impairment  of  assets.

     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  have been unable to raise funds for the renovation of our tire shredder
and the purchase of equipment that produces wire-free chips from shredded tires.
We  were  able, however, to raise $250,000 to acquire the exclusive license from
Levgum  for the Western Hemisphere rights to its devulcanization technology.  We
have  shifted our business emphasis to exploiting such license, to manufacturing
a  fully  automated tire de-beader for sale to the industry and to selling crumb
rubber  manufactured  by  other  manufacturers.

     We  have cut our overhead by laying off our tire processing crew, by moving
our  tire  processing  equipment to rent-free space in Ardmore, OK and by moving
our  corporate  offices  to  Pottsboro, Texas to space provided rent free by our
president.  We  are  enthusiastic about our prospects regarding sublicensing our
devulcanization  technology,  selling our fully automated tire de-beader machine
and  selling  crumb  rubber  to  our  many  contacts  in  the  industry.


     Our  future  results of operations and the other forward-looking statements
contained  in  this  Report  involve  a  number  of risks and uncertainties.  In
addition  to  the  factors  discussed  above, among the other factors that could
cause actual results to differ materially are the following:  the loss of any of
several  key  personnel;  the  emergence  of competition not now detected; and a
general  economic  turndown.

Item  7.     Financial  Statements.
                                                                            Page
                                                                            ----

     Independent  Auditors'  Report  dated  September  27,  2002              13
     Balance Sheet June 30, 2002                                              14
     Statements  of  Operations  from  October  7,  1998
          (Inception)  through  June  30,  2002                               15
     Statements  of  Stockholders'  Equity  (Deficit)
           from  October  7,  1998 (Inception)
           through  June  30,  2002                                           16
     Statements  of  Cash  Flows  from  October  7,  1998
          (Inception)  through  June  30,  2002                               18
     Notes  to  the  Financial  Statements                                    19


                                       12
<PAGE>


                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------


To  the  Stockholders  and  Board  of  Directors
Softstone,  Inc.

We have audited the accompanying balance sheet of Softstone, Inc. (a development
stage  company)  as  of  June 30, 2002 and the related statements of operations,
stockholders' equity and cash flows for the period then ended and for the period
from  October  7, 1998 (inception), to June 30, 2002. These financial statements
are  the  responsibility  of  the Company's management. Our responsibility is to
express  an  opinion  on  these  financial  statements  based  on  our  audit.

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

In  our  opinion,  the financial statements referred to above present fairly, in
all  material  respects,  the  financial position Softstone, Inc. as of June 30,
2002  and  the  results of its operations and its cash flows for the period then
ended and from October 7, 1998 (inception), to June 30, 2002, in conformity with
accounting  principles  generally  accepted  in  the  United  States of America.

The  Company's  financial  statements  are prepared using the generally accepted
accounting  principles  applicable  to  a  going concern, which contemplates the
realization  of  assets  and  liquidation of liabilities in the normal course of
business.  The  Company's  has  not  earned  any revenue since its inception and
through  June 30, 2002, the Company had incurred cumulative losses of $2,808,548
and  negative  working capital of $667,631. These factors as discussed in Note 9
to  the  financial  statements,  raises  substantial  doubt  about the Company's
ability  to  continue  as a going concern. Management's plans in regard to these
matters  are  also  described in Note 9. The financial statements do not include
any  adjustments  that  might  result  from  the  outcome  of  this uncertainty.



KABANI  &  COMPANY,  INC.
CERTIFIED  PUBLIC  ACCOUNTANTS

Fountain  Valley,  California
September  27,  2002



                                       13
<PAGE>
                                 SOFTSTONE, INC
                          (A Development Stage Company)
                                  BALANCE SHEET
                                  June 30, 2002


                                     ASSETS
                                     ------
<TABLE>
<CAPTION>
CURRENT  ASSETS:
<S>                                                                 <C>
     Cash & cash equivalents                                        $     1,253
     Accounts receivable                                                  2,583
                                                                    -----------
          Total current assets                                            3,836
                                                                    -----------

PROPERTY AND EQUIPMENT, net                                             421,837
                                                                    -----------

                                                                    $   425,673
                                                                    ===========


                      LIABILITIES AND STOCKHOLDERS' DEFICIT
                    ----------------------------------------

CURRENT  LIABILITIES:
     Accounts payable                                               $    39,366
     Accounts payable-related party                                     160,879
     Accrued expenses                                                    29,618
     Loans - current                                                    443,605
                                                                    -----------
          Total current liabilities                                     673,467
                                                                    -----------

LONG  TERM  LIABILITIES
     Notes payable                                                       56,014
     Loans from related parties, net of current portion                 262,537

COMMITMENTS  &  CONTINGENCIES

STOCKHOLDERS'  DEFICIT
     Common  stock,  $0.001par  value; 30,000,000
      shares  authorized; 7,041,965 shares issued
      and outstanding                                                     7,042
    Additional paid-in capital                                        2,232,162
    Shares to be issued                                                   2,999
    Deficit accumulated from inception                               (2,808,548)
                                                                    -----------
         Total stockholders' deficit                                   (566,345)
                                                                    -----------

                                                                    $   425,673
                                                                    ===========
</TABLE>


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

                                       14
<PAGE>
                                 SOFTSTONE, INC
                          (A Development Stage Company)
                            STATEMENTS OF OPERATIONS
             FROM OCTOBER 7, 1998 (INCEPTION) THROUGH JUNE 30, 2002

<TABLE>
<CAPTION>
                                                                Cumulative
                                                              From Inception
                                   Year Ended June 30,      (October 7, 1998) to
                                   2002          2001          June 30, 2002
                               ------------  ------------   --------------------
<S>                            <C>           <C>              <C>
Net  revenues                  $     37,490  $     30,087     $     71,675


Operating  expenses
  General and administrative        752,324       401,548        2,440,277
                               ------------  ------------     -------------

Operating loss                     (714,834)     (371,461)      (2,368,602)

Other  expense:
  Interest expense                   49,855        26,348          100,502
  Loss  on  investment              125,000             -          125,000
  Loss on impairment of
    intangibles                     214,444             -          214,444
                               ------------  ------------     -------------

        Total other expense         389,299        26,348          439,946

Loss before income taxes         (1,104,133)     (397,809)      (2,808,548)

     Income  tax                          -             -                -

Net  loss                      $ (1,104,133) $   (397,809)     $(2,808,548)
                               ============  ============      ===========

Basic weighted average number
  of common stock outstanding     6,174,516     6,629,351
                               ============  ============

Basic  net loss per share      $      (0.18) $      (0.06)
                               ============  ============

Diluted weighted average
  number  of  common stock
  outstanding                     6,174,516     6,629,351
                               ============  ============

Diluted net Loss per share     $      (0.18) $      (0.06)
                               ============  ============
</TABLE>

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

                                       15
<PAGE>
                                 SOFTSTONE, INC
                          (A DEVELOPMENT STAGE COMPANY)
                  STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
             FROM OCTOBER 7, 1998 (INCEPTION) THROUGH JUNE 30, 2002

<TABLE>
<CAPTION>
                                                                                        Deficit         Total
                            Common Stock      Additional     Stock                     accumulated   Stockholders'
                         Number of             Paid-In       to be      Unearned          from          Equity
                          shares    Amount     Capital       issued    Compensation     inception      (Deficit)
                         ---------  ------   ------------  ----------  ------------   -------------  -------------
Shares issued for
<S>                      <C>        <C>      <C>            <C>         <C>            <C>           <C>
  cash - Oct. 7, 1998    5,000,000  $ 5,000  $     51,100   $      -    $      -       $          -  $     56,100

Stock issued for cash
  and services             292,500      293        43,582          -           -                  -        43,875

Net loss                         -        -             -          -           -           (197,426)     (197,426)
                        ----------  -------  ------------   --------    --------       ------------  ------------

Balance, June 30 1999    5,292,500    5,293        94,682          -           -           (197,426)      (97,451)

Stock issued for
  services ($.85/shr)      250,000      250       212,250          -           -                  -      (251,002)

Stock issued for
  services and vehicle
  ($1.00/shr)               22,500       22        22,478          -           -                  -             -

Warrants issued to
  employees                      -        -        75,000          -      (75,000)                -             -

Stock issued for
  settlement of ST notes
  payable ($34,250) and
  cash ($1.00/shr)         400,000      400       382,697          -            -                 -       383,097

Stock issued for
  services ($1.00/shr)     210,000      210       209,790          -            -                 -       210,000

Stock issued for cash
  net of offering cost
  of $25,783
  ($1.25/shr)              423,190      423       502,782          -            -                 -       503,205

Amortization of
  unearned compensation          -        -             -          -       11,250                 -        11,250

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

Balance June 30, 2000    6,598,190    6,598     1,499,679          -     (63,750)        (1,306,606)     (350,081)

Stock issued for
  cash ($1.25/shr)          42,500       43        53,082          -           -                  -        53,125

Unearned warrants
  granted to employee
  upon termination               -        -       (63,750)         -      63,750                  -             -

Warrants exercised         675,000      675             -          -           -                  -           675

Stock issued in exchange
  for patent ($.33/shr)    300,000      300        21,622          -           -                  -        21,922

Stock issued in exchange
  for office equipment
  ($1.03/shr)               18,000       18        18,507          -           -                  -        18,525

Stock contributed back
  to Company by
  principals            (3,947,698)  (3,948)        3,948         -            -                  -            -

Stock issued for
  service ($.10/shr)       522,961      523        51,773         -            -                  -       52,296

Stock issued for cash
  ($.40/shr) net of
  offering cost of
  $62,896                  277,100      277        47,667         -            -                  -       47,944

Net Loss                         -        -             -         -            -           (397,809)    (397,809)
                        ----------  -------  ------------   --------    --------       ------------  ------------

Balance  30,  2001       4,486,053    4,486     1,632,528         -            -         (1,704,415)    (553,403)

Share issued for cash
  ($.40/shr)               243,300      243        97,077         -            -                  -       97,320

Shares issued for cash
  ($.50/shr)               289,400      290       144,410         -            -                  -      144,700

Shares issued for cash
  ($1.00/shr)               12,500       13        12,487         -            -                  -       12,500

Share issued for
  service ($.36/shr)       257,075      257        92,290         -            -                  -       92,547

Share issued for
  service ($.40/shr)       543,000      543       216,657         -            -                  -      217,200

Share issued for
  service ($.50/shr)        25,000       25        12,475         -            -                  -       12,500

Shares issued for
  interest ($.45/shr)       52,250       52        24,238         -            -                  -       24,290

Shares issued for
  merger ($.001/shr)     1,158,387    1,158             -         -            -                  -        1,158

Shares to be issued
  for cash ($.33/shr)            -        -             -       999            -                  -          999

shares to be issued
  for loan incentive
  ($.40/shr)                     -        -             -     2,000            -                  -        2,000

Cancellation of shares     (25,000)     (25)            -         -            -                  -          (25)

Net loss                         -        -             -         -            -         (1,104,133)  (1,104,133)
                        ----------  -------  ------------   --------    --------       ------------  ------------

Balance June 30, 2002    7,041,965  $ 7,042  $  2,232,162   $ 2,999     $      -       $ (2,808,548) $(1,052,347)
                         =========  =======  ============   =======     ========       ============  ===========
</TABLE>

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


                                       16
<PAGE>
                                 SOFTSTONE, INC
                          (A Development Stage Company)
                            STATEMENTS OF CASH FLOWS
             FROM OCTOBER 7, 1998 (INCEPTION) THROUGH JUNE 30, 2002

<TABLE>
<CAPTION>
                                                                Cumulative
                                                              From Inception
                                   Year Ended June 30,      (October 7, 1998) to
                                   2002          2001          June 30, 2002
                               ------------   ------------  --------------------
CASH FLOWS FROM OPERATING
  ACTIVITIES:
<S>                            <C>            <C>                <C>
  Net  loss                    $ (1,104,133)  $   (397,809)      $ (2,808,548)
  Adjustments to reconcile
    net loss to net cash
    used  in  operating
    activities:
      Depreciation and
        amortization                 83,307         82,230            221,102
      Issuance of common stock
        for  compensation                 -              -            487,332
      Issuance of common stock
        for services and
        interest                    346,537              -            346,537
      Issuance of common stock
        for  merger                   1,133              -              1,133
      Shares to be issued for
        loan  incentive               2,000              -              2,000
      Loss  on  investment          125,000              -            125,000
      Loss  on  impairment
        of  assets                  214,444              -            214,444
      Write-off of samples                -         11,712             11,712
      (Increase) decrease of
        other current assets          4,473         (4,473)           (20,044)
      Increase of accounts
        receivable                   (2,583)                           (2,583)
      Increase (decrease) in
        accounts payable             22,368        (12,081)            32,497
      Increase (decrease) in
        accrued expense               8,252         (2,717)            33,488
                               ------------   ------------       ------------
          Total adjustments         804,931         74,671          1,452,618
                               ------------   ------------       ------------
      Net  cash  used  in
        operating  activities      (299,202)      (323,138)        (1,355,930)
                               ------------   ------------       ------------

CASH FLOWS FROM INVESTING
  ACTIVITIES
  Purchase  of
    patents/investment             (250,000)             -           (250,000)
  Other                                   -           (384)              (384)
  Purchase  of  property
    and equipment                         -        (31,380)          (419,859)
  Net  cash  used  in
    investing  activities          (250,000)       (31,764)          (670,243)
                               ------------   ------------       ------------

CASH  FLOWS  FROM
  FINANCING  ACTIVITIES:
  Investments by stockholders             -        250,941            250,941
  Proceeds  from  borrowings        287,263         75,360            608,015
  Payments on borrowings             (5,000)      (130,937)          (160,134)
  Issuance of common stock
    for cash                        254,520        164,640          1,327,605
  Receipt of cash for stock
    to  be  issued                      999              -                999
                               ------------   ------------       ------------
  Net  cash  provided  by
    financing  activities           537,782        360,004          2,027,426
                               ------------   ------------       ------------

Net increase (decrease) in
  cash & cash equivalents           (11,420)         5,102              1,253

CASH & CASH EQUIVALENTS,
  BEGINNING                          12,673          7,571                  -

CASH & CASH EQUIVALENTS,
  ENDING                       $      1,253   $     12,673       $      1,253
                               ============   ============       ============
CASH  PAID  FOR:
  Interest                     $     31,318   $     12,953       $     44,770
                               ============   ============       ============
  Income taxes                 $          0   $          0       $          0
                               ============   ============       ============
</TABLE>

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

                                       17
<PAGE>
                                SOFTSTONE, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS


1.   ORGANIZATIONS  AND  DESCRIPTION  OF  BUSINESS

     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  (October  7,  1998).  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.  Realization  of a major portion of its
     assets  and satisfaction of its liabilities is dependent upon the Company's
     ability to meet its future financing requirements and the success of future
     operations.  These  factors  raise  substantial  doubt  about the Company's
     ability  to  continue  as  a going concern (see Note 9 for more information
     regarding  these  matters).  The  financial  statements  do not include any
     adjustments  that  might  arise  as  a  result  of  this  uncertainty.

     On October 7, 1998, SoftStone Building Products, Inc. ("SSBI" - an Oklahoma
     corporation and predecessor to the Company) was incorporated. Effective May
     31,  1999,  SSBI  was merged 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 1,158,387 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
     3,947,698  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. For
     accounting  purposes,  the transaction between the Company and Kilkenny has
     been  be treated as a re-capitalization of the Company, with the Company as
     the  accounting  acquirer (reverse acquisition), and has been accounted for
     in  a manner similar to a pooling of interests. Since Kilkenny is a dormant
     entity  with  insignificant assets or liabilities, no pro forma information
     is  presented.

                                       18
<PAGE>
                                SOFTSTONE, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS


2.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

     Cash  and  cash  equivalents

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

     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  seven  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. Being a
     development stage company, the Company does not believe any of its property
     and  equipment  is  impaired.

     Patent  and  patent  license  agreement

     In August 2000, patent rights amounting $100,000 were acquired, in exchange
     for  300,000  shares of common stock, forgiveness of debt and assumption of
     additional  debt. Patent rights were acquired for the manufacturing process
     and  had  been amortized using the straight-line method over fifteen years.
     In  March  2002,  additional patent rights were purchased for $125,000. The
     net  book  value  of $89,444 for the patent purchased in 2000 and the newly
     purchased  patent  of $125,000 were written off as impairment of intangible
     assets  as  on  June  30, 2002.

     Revenue  recognition

     The  Company's  revenue  recognition  policies are in compliance with Staff
     accounting  bulletin  (SAB)  101. Revenue is recognized when merchandise is
     shipped to a customer. The Company currently has no significant revenues as
     it  is  still  in  the  development  stage.

     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.

                                       19
<PAGE>
                                SOFTSTONE, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS


     Fair  value  of  financial  instruments

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

     Earnings  per  share

     Net  loss  per  share  is  calculated  in  accordance with the Statement of
     financial  accounting  standards  No.  128  (SFAS  No.  128), "Earnings per
     share".  Basic net loss per share is based upon the weighted average number
     of  common  shares  outstanding. Diluted net loss per share is based on the
     assumption  that  all  dilutive  convertible  shares and stock options were
     converted or exercised. Dilution is computed by applying the treasury stock
     method. Under this method, options and warrants are assumed to be exercised
     at  the beginning of the period (or at the time of issuance, if later), and
     as  if  funds  obtained  thereby  were used to purchase common stock at the
     average  market  price  during  the  period.

     Weighted  average  number  of shares used to compute basic and diluted loss
     per  share  is  the  same  in this financial statements since the effect of
     dilutive  securities  is  anti-dilutive.

     Use  of  estimates

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

     Stock-based  compensation

     SFAS  No.  123  prescribes  accounting  and  reporting  standards  for  all
     stock-based   compensation   plans,   including  employee   stock  options,
     restricted  stock,  employee  stock  purchase  plans and stock appreciation
     rights. SFAS No. 123 requires compensation expense to be recorded (i) using
     the  new  fair  value  method  or  (ii) using the existing accounting rules
     prescribed  by  Accounting Principles Board Opinion No. 25, "Accounting for
     stock  issued  to  employees"  (APB  25)  and  related interpretations with
     proforma  disclosure  of  what net income and earnings per share would have
     been  had  the  Company  adopted the new fair value method. The Company has
     chosen  to account for stock-based compensation using Accounting Principles
     Board  Opinion  No.  25,  "Accounting  for  Stock  Issued to Employees" and
     has  adopted  the  disclosure  only  provisions  of  SFAS 123. Accordingly,
     compensation  cost  for stock options is measured as the excess, if any, of
     the  quoted  market  price  of the Company's stock at the date of the grant
     over  the  amount  an  employee  is  required  to  pay  for  the  stock.

     The  Company  accounts for stock-based compensation issued to non-employees
     and  consultants  in  accordance  with  the  provisions of SFAS 123 and the

                                       20
<PAGE>
                                SOFTSTONE, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS


     Emerging  Issues  Task  Force  consensus in Issue No. 96-18 ("EITF 96-18"),
     "Accounting  for Equity Instruments that are Issued to Other Than Employees
     for Acquiring or in Conjunction with Selling, Goods or Services". Valuation
     of  shares  for services is based on the estimated fair market value of the
     services  performed.

     Segment  Reporting

     Statement  of  Financial  Accounting  Standards  No.  131  ("SFAS  131"),
     "Disclosure  About  Segments  of  an  Enterprise  and  Related Information"
     requires  use of the "management approach" model for segment reporting. The
     management  approach  model  is  based  on  the  way a company's management
     organizes  segments  within  the company for making operating decisions and
     assessing  performance.  Reportable  segments  are  based  on  products and
     services,  geography,  legal  structure, management structure, or any other
     manner in which management disaggregates a company. Currently, SFAS 131 has
     no  effect  on   the  Company's   consolidated  financial   statements   as
     substantially  all  of  the  Company's  operations  are  conducted  in  one
     industry  segment.

     Accounting  developments

     In  July  2001,  the  FASB  issued  SFAS  No.  142,  "Goodwill  and  Other
     Intangibles."  SFAS  No. 142 addresses the initial recognition, measurement
     and amortization of intangible assets acquired individually or with a group
     of  other  assets  (but  not  those acquired in a business combination) and
     addresses  the  amortization  provisions for excess cost over fair value of
     net  assets acquired or intangibles acquired in a business combination. The
     statement  is effective for fiscal years beginning after December 15, 2001,
     and  is  effective  July 1, 2001 for any intangibles acquired in a business
     combination  initiated  after  June 30, 2001. The Company is evaluating any
     accounting  effect,  if any, arising from the recently issued SFAS No. 142,
     "Goodwill  and  Other  Intangibles"  on the Company's financial position or
     results  of  operations.

     SFAS  No.  144,  "Accounting  for  the Impairment or Disposal of Long-Lived
     Assets,"  was  issued  in August 2001. SFAS No. 144 is effective for fiscal
     years beginning after December 15, 2001, and addresses financial accounting
     and  reporting  for  the  impairment or disposal of long-lived assets. This
     statement  supersedes  SFAS  No.  121  "Accounting  for  the  Impairment of
     Long-Lived  Assets  and  for  Long-Lived Assets to Be Disposed Of," and the
     accounting  and  reporting provisions of APB Opinion No. 30, "Reporting the
     Results of Operations - Reporting the Effects of Disposal of a Segment of a
     Business,  and Extraordinary, Unusual and Infrequently Occurring Events and
     Transactions,"  for the disposal of a segment of a business. The Company is
     evaluating  any accounting effect, if any, arising from the recently issued
     SFAS  No.  144, "Goodwill and Other Intangibles" on the Company's financial
     position  or  results  of  operations.

     In  May  2002, the Board issued SFAS No. 145, Rescission of FASB Statements
     No.  4,  44,  and  64,  Amendment  of  FASB Statement No. 13, and Technical
     Corrections  ("SFAS  145").  SFAS  145  rescinds the automatic treatment of

                                       21
<PAGE>
                                SOFTSTONE, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS


     gains  or  losses from extinguishments of debt as extraordinary unless they
     meet  the  criteria  for extraordinary items as outlined in APB Opinion No.
     30,  Reporting the Results of Operations, Reporting the Effects of Disposal
     of  a  Segment  of  a Business, and Extraordinary, Unusual and Infrequently
     Occurring  Events  and  Transactions. SFAS 145 also requires sale-leaseback
     accounting  for certain lease modifications that have economic effects that
     are  similar  to  sale-leaseback  transactions  and makes various technical
     corrections  to existing pronouncements. The provisions of SFAS 145 related
     to  the  rescission  of  FASB  Statement  4  are effective for fiscal years
     beginning  after  May  15,  2002, with early adoption encouraged. All other
     provisions  of  SFAS 145 are effective for transactions occurring after May
     15,  2002,  with early adoption encouraged. The Company does not anticipate
     that  adoption  of  SFAS 145 will have a material effect on its earnings or
     financial position.

     In  June  2002,  the  FASB  issued  SFAS  No.  146,  "Accounting  for Costs
     Associated  with  Exit  or  Disposal  Activities." This statement addresses
     financial  accounting  and  reporting  for  costs  associated  with exit or
     disposal activities and nullifies Emerging Issues Task Force ("EITF") Issue
     No.  94-3, "Liability Recognition for Certain Employee Termination Benefits
     and  Other Costs to Exit an Activity (including Certain Costs Incurred in a
     Restructuring)."  This  statement  requires  that  a  liability  for a cost
     associated  with  an  exit  or  disposal  activity  be  recognized when the
     liability is incurred. Under EITF Issue 94-3, a liability for an exit cost,
     as defined, was recognized at the date of an entity's commitment to an exit
     plan.  The  provisions of this statement are effective for exit or disposal
     activities  that  are  initiated  after  December  31,  2002  with  earlier
     application  encouraged.  The  Company does not expect adoption of SFAS No.
     146  to  have  a  material  impact,  if  any,  on its financial position or
     results  of  operations.

3.   PROPERTY  AND  EQUIPMENT

     Property and  equipment  consist  of  the  following  at  June  30,  2002:

<TABLE>
<CAPTION>
<S>                                                        <C>
             Furniture  and  computer  equipment           $  43,529
             Production  and  other  equipment               522,318
             Vehicles                                         59,869
                                                           ---------
                                                             625,716
             Less:  Accumulated  depreciation
               and  amortization                            (203,879)
                                                           --------

                                                           $ 421,837
                                                           ========
</TABLE>


                                       22
<PAGE>
                                SOFTSTONE, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS


4.  NOTES  PAYABLE

    Notes  payable  consist  of  the  following  at  June  30,  2002:
<TABLE>
<CAPTION>
         Revolving  note  payable  to  bank;
         interest due  7/5/02,  prime  +  1%,
<S>                                                                   <C>
         maturing December  5,  2002                                  $100,035

         Notes payable to stockholder, 8% & 12%
         interest  rates                                               541,537

         Bank  term loan; 3.9% interest  rate;
         maturing  September  24,  2002
         The fair value of the loan at current
         market  rate  of  9%  would  be
         approximately $64,000.                                         64,570

         Note payable to finance vehicle, 9.5%
         interest  rate,  maturing  July  15,
         2005, collaterized  by  vehicle                                16,202

         Refinanced bank term loan; payable on
         demand  or  in semiannual payments of
         $6,485,  including interest at 10.75%
         (variable);  collateralized  by
         equipment accounts  receivable  and
         intangibles and guaranteed  by  the
         principal stockholder of  the  Company,
         due  July 15, 2004                                             30,839

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

         Note payable to stockholder; interest
         free; due  on  demand                                         160,879
                                                                      --------

                                                                       923,035

         Less:  current  portion                                       604,484
                                                                      --------

         Long-term  debt                                              $318,551
                                                                      ========
</TABLE>

                                       23
<PAGE>

     The  following is a summary of maturities of principal under long-term debt
     for years  ending  June  30:

<TABLE>
<CAPTION>
<S>                                              <C>
                            2004                 $  262,537
                            2005                     16,202
                            2006                     39,812
                                                 ----------
                                                 $  318,551
                                                 ==========
</TABLE>

     The notes payable has been classified in the balance sheet at June 30, 2002
     as  per  follows:

<TABLE>
<CAPTION>
<S>                                              <C>
        Accounts  payable  -  related  part      $  160,879
        Loans  current                              443,605
        Current  liabilities                        604,484
        Notes  Payable                               56,014
        Loans  related  parties - non current       262,537
                                                 ----------

                                                 $  923,035
                                                 ==========
</TABLE>

5.   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 any time 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  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.

                                       24
<PAGE>
                                SOFTSTONE, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS


     In April 2001, pursuant to the merger agreement discussed in Note 8 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  non-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.

     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  for  $53,125  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 and prior to June 30, 2001, 277,100 shares
     were  issued.  Offering  costs  of  this  offering totaled $62,896 of which
     $52,296 related to the shares of stock issued for services mentioned above.

6.   INCOME  TAXES

     The  Company's  effective  income  tax  benefit  differed  from the benefit
     computed using  the  federal  statutory  tax  rate  as  follows:

                                       25
<PAGE>
                                SOFTSTONE, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                        Period  from
                                                             October  7,  1998
                                      Year Ended June 30,   (inception)  through
                                      2002          2001      June 30, 2002
                                    ----------   ---------  --------------------
     Income  tax  benefit  at
<S>                                 <C>          <C>             <C>
     federal  statutory  rate       $  375,405   $  135,256      $  954,907

     Nondeductible  expenses            (2,100)      (1,700)          7,970

     Other,  including
       graduated rates                       -            -          23,321

     Change in valuation
       allowance                      (373,305)      (133,556)      (981,998)
                                    ----------     ----------     ----------
                                    $        -     $        -     $        -
                                    ==========     ==========     ==========
</TABLE>

Components  of  deferred  tax  assets  at  June  30,  2002,  are  as  follows:
<TABLE>
<CAPTION>
            Assets
<S>                                                          <C>
            Net  operating loss carryforward                 $ 981,998
            Valuation  allowance                              (981,998)
                                                             ---------
                                                             $       -
                                                             =========
</TABLE>

     The valuation allowance increase $373,305 for the year ended June 30, 2002,
     and  $133,556  for  the  year  ended  June  30,  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 June 30, 2002 and 2001, the Company had a net deferred
     tax  asset  mainly  related  to  a  net  operating  loss  carryforward from
     operating  losses incurred. 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. Net operating loss carryforwards can be
     carried  forward  for  fifteen  years  for  federal  tax purpose subject to
     certain  limitations  and  they  will  expire  in  the  year  2017.

7.   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 their common
     stock,  which  was  cancelled to facilitate the merger discussed in Note 8.
     Most  of  the  equipment  used  in  the  Company  manufacturing process was
     purchased  from  a  company  controlled  by  a  shareholder of the Company.

                                       26
<PAGE>
                                SOFTSTONE, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS


8.  MERGER  &  ACQUISITION

     The Company has agreed to participate in a plan of reorganization involving
     Kilkenny  Acquisition Corp. (Kilkenny) whereby the Company, upon merger, is
     the  survivor and controls the board of directors. To facilitate the merger
     and  acquire additional capital, the Company is committed to use certain of
     the  Company 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 of their common stock to the Company and effectively
     reduced  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, July 24, 2001,
     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  merged  Company.

     In  March  2002, the Company entered into a purchase agreement with Levgum,
     Ltd.  (Levgum)  of  Tel  Aviv, Israel, where the Company received 83 shares
     with  1.00 par value representing 10% of outstanding capital, for $250,000.
     The  Company  also  received  the  right to use their technology for rubber
     devulcanization and right to sublicense as part of this purchase agreement.
     The  recorded  its  investment in Levgum for $125,000 and license agreement
     acquired  through  acquisition  at  $125,000. On June 30, 2002, the Company
     evaluated  its  investment  and  patents  rights  according to FASB 121 and
     recognized  an  impairment loss equal to the book value of these intangible
     assets.

9.   GOING  CONCERN

     The  accompanying financial statements have been prepared assuming that the
     Company  will  continue  as  a  going  concern.  This  basis  of accounting
     contemplates  the  recovery of the Company's assets and the satisfaction of
     its  liabilities  in  the normal course of business. Through June 30, 2002,
     the  Company  had  incurred  cumulative  losses  of $2,808,548 and negative
     working  capital  of  $667,631.  The Company's successful transition from a
     development  stage  company to attaining profitable operations is dependent
     upon  obtaining  financing adequate to fulfill its research and development
     activities,  production  of its equipment and achieving a level of revenues
     adequate  to  support  the  Company's  cost structure. Management's plan of
     operations  anticipates  that  the  cash  requirements  for the next twelve
     months  will  be met by obtaining capital contributions through the sale of
     common  stock and cash flow from operations. However, there is no assurance
     that  the  Company  will  be  able  to  implement  its  plan.

10.  SUBSEQUENT  EVENT

     Effective August 7, 2002, the Company ventured a business agreement to sell
     the  specified tire bufflings with $42,500 advance payment and $42,500 upon
     delivery.

                                       27
<PAGE>
                                SOFTSTONE, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS


     The  Company  received  stock  subscriptions  to  purchase  3,500 shares of
     restricted  common  stock  for  $1,165  subsequent  to  June  30,  2002.
























                                       28
<PAGE>
Item  8.     Changes  In  and  Disagreements  With Accountants on Accounting and
             Financial  Disclosure.

     On  September  5,  2002  Hogan  &  Slovacek of Oklahoma City and Tulsa, the
principal independent accountants of Softstone Inc., resigned.  Hogan & Slovacek
had  been  engaged as Softstone's principal independent accountants since August
22,  2001,  when  it  replaced  Grant  Thornton  LLP  as  Softstone's  principal
independent  accountants.  See Softstone's Form 8-K filed with the Commission on
August  27,  2001  (Commission  File  No.  000-29523).

     The report of Hogan & Slovacek on the financial statements of Softstone for
its fiscal year ended June 30, 2001 contained no adverse opinions or disclaimers
of  opinion, and, other than raising substantial doubt about Softstone's ability
to continue as a going concern for the fiscal year ended June 30, 2001, were not
otherwise  modified  as  to  uncertainty,  audit scope, or accounting principles
during  the  period  of its engagement (August 22, 2001 to September 5, 2002) or
the  interim  period  to September 5, 2002, the date of resignation.  Similarly,
the reports of Grant Thornton on the financial statements of Softstone contained
no  adverse  opinions  or  disclaimers  of  opinion,  and,  other  than  raising
substantial  doubt  about Softstone's ability to continue as a going concern for
each  of  the fiscal years ended June 30, 2000 and 1999, were not modified as to
uncertainty, audit scope, or accounting principles during such past two years or
the  interim  period  to  August  21,  2001,  the  date  of  resignation.

     During  the  past  two years or interim periods prior to September 5, 2002,
there were no disagreements between Softstone and either Grant Thornton or Hogan
&  Slovacek,  whether or not resolved, on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure which,
if  not  resolved  to Grant Thornton's or Hogan & Slovacek's satisfaction, would
have  caused  it to make reference to the subject matter of the disagreements in
connection  with  its  reports.

     On  September 5, 2002, Softstone engaged Kabani & Company, Inc. of Fountain
Valley,  California  as  its  new principal accountant to audit its consolidated
financial  statements.

     The  decision  to  change  accountants  was recommended and approved by the
board  of  directors.

Item  9.     Directors,  Executive  Officers,  Promoters  and  Control  Persons.

          A list of the current officers, directors and significant employees of
Softstone,  Inc.  appears  below.  The  directors  are  elected  annually by the
shareholders.  The  officers  serve  at  the pleasure of the board of directors.
The  directors  do  not  presently  receive fees or other remuneration for their
services.

                                       29
<PAGE>
<TABLE>
<CAPTION>
                                                    Office Held     Term of
      Person              Office                       Since         Office
------------------------------------------------------------------------------
<S>                       <C>                            <C>         <C>
Keith P. Boyd, 28         President                      2001        May 2002
                          Director                       2001        May 2002

Frederick W. Parker,      Director                       1999        May 2002

Gene F. Boyd, 64          Secretary                      1999        May 2002
                          Chairman of the Board
                            of Directors                 1999        May 2002

Jim Miller, 65            Vice President                 2001        May 2002

Joseph J. Johnston, 58    Chief Financial Officer        2001        May 2002
</TABLE>

     Keith  P.  Boyd.  Mr.  Boyd  has spent most of his adult life assisting his
father,  Gene Boyd, with the family interests, Meinecke-Boyd, Inc., located near
Ardmore,  Oklahoma.  After  a year in college, he joined the U.S. Navy and ended
his  naval career as a petty officer - machinist mate 3rd class - aboard the USS
Chicago,  SSN  721, a nuclear-powered, fast-attack submarine.  In late 1998, Mr.
Boyd  raised  the  first  investor  capital  for Softstone.  He has considerable
mechanical  skills and abilities and assisted with the design and fabrication of
Softstone's  Parker  System  machine.    He  formulated  Softstone's  sales  and
marketing effort and has been responsible to date for all of its sales.  In June
2001  he  was elected president and CEO of Softstone, Inc. (the company's third)
and  then  merged  the  company  with a 12G reporting shell, making Softstone an
SEC-reporting public corporation.  Mr. Boyd negotiated our contract with Levgum,
Ltd.,  of Israel and restructured the company to incorporate the devulcanization
technology.  Keith Boyd has initiated the beginnings of a global market strategy
through  his  research  of  product  applications as well as market entries.  He
devotes  100  percent  of  his  time  to  the  affairs  of  Softstone.

     Frederick  W.  Parker.  Mr.  Parker  attended  the  University  of Southern
California and the University of Wyoming.  From December 1969 to May 1980 he was
employed  as an executive and wholesaler of drilling fund securities of Canadian
American  Securities,  a subsidiary of American Quasar Petroleum.  From May 1980
to  June 1982 he founded and operated ENEX Securities and the ENEX Income Funds.
From  1982  to November 1984 he owned and operated Parker Energy Funding, a coal
methane  gas  company.  From 1986 to 1987 he was a consultant to several oil and
gas  production  companies  regarding deep well injection of hazardous oil field
waste.  From  June  1987  to October 1990 he was the executive vice president of
Princeton  Clearwater Corporation.  From 1990 to 1999 he operated the consulting
firm of Donner-Gray, primarily regarding oil and gas and real estate activities.
From  May  1996  to  September  1998  he  was  the  director  of marketing of VE
Enterprises, a manufacturing concern.  From October 1998 until June 1999 when it
was  merged  with  Softstone,  Inc., he was the president and owner of Softstone
International  LLC,  which  owned the patented technology for the manufacture of
rubber  modules,  which  patent  was  assigned  to  Softstone,  Inc.   Upon  the
incorporation  of  Softstone,  Inc. on January 28, 1999, he became its president
and  a  director.  He is still a director of Softstone but resigned his position
as  president  in  May  2001.


                                       30
<PAGE>

     Gene F. Boyd. Gene F. Boyd.   Mr. Boyd , a 1960 graduate of Texas Tech, has
been  the  president of Meinecke-Boyd, Inc., an Oklahoma ranching and investment
corporation,  since  January  1979.  As  the  operator  of a 3600-acre Simmental
cattle ranch at Tishomingo, Oklahoma, Mr. Boyd practiced (and preached) holistic
resource  management,  which  included rotational grazing to enhance the natural
recycling of soil and grasses.  He also served as vice-president of the Oklahoma
Simmental  Association  and  as  a  board  member of soil and water conservation
districts.  Intrigued  by  the  potential  and  the  need  for  recycled  rubber
products, Mr. Boyd and his wife moved to Ardmore, Oklahoma after 26 years on the
ranch,  so  that  he  could  be  a  full-time  participant  in  the start-up and
development  of  Softstone,  Inc.  Upon the incorporation of Softstone, Inc., on

January 28, 1999, Mr. Boyd became its secretary and its chairman of the board of
directors,  positions  he  still  holds.

                                       31

<PAGE>
     Jim  Miller.  Mr.  Miller  has  years  of  experience  in  the  areas  of
manufacturing  and  equipment automation.  Mr. Miller formerly worked as head of
operations  for  Amusements  of  America,  where  he  built  - from blue print -
carnival  rides  for  the  amusement  Industry.  Prior  to  his  employment with
Amusements  of  America,  he owned and operated Miller Manufacturing of Lubbock,
Texas,  developing  amusement  rides. He completed the automation of Softstone's
Parker System I, tripling its production capabilities.  Mr. Miller is developing
for  Softstone  a  fully  automated tire de-beader machine.  He is continuing to
devote  his  time  to  this  project  and  Softstone.

     Joseph  J.  Johnston.  From  May  1997  until  1999  Mr.  Johnston  was the
president,  chief  financial  officer  and chairman of the board of directors of
Creative  Restaurant  Concepts,  Inc.,  an  Oklahoma  City  owner and manager of
several  restaurants.  From  1999  until  2002  he  was  a  restaurant  business
consultant for Monroe Advisers, Inc., an Oklahoma City business consulting firm.

Item  10.     Executive  Compensation.

     No  executive officer of the company has received total compensation in any
of  the  last three years that exceeds $100,000.  The table below sets forth all
compensation  awarded  to,  earned  by, or paid to the presidents of the company
during  the  last  three  fiscal  years:

<TABLE>
<CAPTION>
                         Annual  Compensation                         Awards
                   ----------------------------------        --------------------------
                                                                             Securities
                                               Other                         Underlying
             Fiscal         Annual           Restricted         Options/        LTIP
Name          Year     Salary     Bonus     Compensation     Stock  Awards      SARS          Payouts
----------   ------    ------     -----     ------------     -------------   -----------      -------
<S>            <C>      <C>          <C>            <C>         <C>                 <C>          <C>
Keith Boyd     2002     $______      0              0           $______             0            0
Keith Boyd     2001     $36,000      0              0           $20,000             0            0
Frederick
  Parker       2001           0      0              0                 0             0            0
Tom Brewer     2000      20,833      0              0                 0             0            0
Frederick
  Parker       2000           0      0              0                 0             0            0
Tom Brewer     1999      18,750      0              0                 0             0            0
</TABLE>


     Employment  Contracts.
     ----------------------

     As  of September 30, 2002, Softstone has no long-term compensation plans or
employment  agreements  with  any  of  its  officers  or  directors.

     There  are  no  employment  contracts,  compensatory plans or arrangements,
including  payments  to be received from Softstone, with respect to any director
or  executive  officer of Softstone which would in any way result in payments to
any  such  person  because  of  his  or  her  resignation,  retirement  or other
termination  of  employment  with  Softstone  or its subsidiaries, any change in
control  or  Softstone, or a change in the person's responsibilities following a
change  in  control  of  Softstone.

                                       32
<PAGE>
     Stock  Options.
     ---------------

     There  have  been no stock options granted to the officers and directors of
Softstone,  nor  have  there  been  any  other forms of compensation paid to the
officers  and  directors  of  the  company.

Item  11.     Security  Ownership  of  Certain Beneficial Owners and Management.

     The  following  table  sets  forth certain information regarding beneficial
ownership  of  the  common  stock of Softstone as of September 30, 2002, by each
officer and director of Softstone, by each individual who is known to Softstone,
as  of  the  date  of  this filing, to be the beneficial owner of more than five
percent  of  Softstone's  common  stock,  its  only  voting security, and by the
officers  and  directors  of  Softstone  as  a  group:

<TABLE>
<CAPTION>
                               Amount  and
   Name and Address of          Nature of            Percent
     Beneficial Owner          Beneficial of           of
                                 Ownership            Class         Office
---------------------------------------------------------------------------------
<S>                            <C>                     <C>          <C>
Keith  P.  Boyd                  532,150               7.5.0        President
P.O.  Box  2365
Ardmore,  OK  73402

Frederick  W.  Parker  (1)       775,419              11.0           Director
811  N.  Rockford  Place
Ardmore,  OK  73401

Gene  F.  Boyd  (2)              750,296               10.6          Secretary
Route  2,  Box  437                                                  Director
Tishomingo,  OK  73460

Jim  Miller                       55,000                0.8          Vice
906  Oak  Tree  Loop                                                 President
Ardmore,  OK   73401

Officers  and  Directors  as
  a  Group (4  persons)        2,112,865               30.0
</TABLE>

(1)  Mr.  Parker's  shares  are held of record by the Frederick W. Parker Family
     Limited  Partnership.

(2)  Of  these  shares,  712,745  are  held  of  record  by  the  Gene  F.  Boyd
     Revocable Living Trust, 10,000 shares are held  of record by Meinecke/Boyd,
     Inc., a  company  under  the  control  of  Mr. Boyd, and 27,551 are held of
     record by the Betty  Sue  Boyd  Revocable  Living  Trust.

Item  12.     Certain  Relationships  and  Related  Transactions.

                                       33
<PAGE>
     On  June 29, 1999 Softstone acquired a license to the U.S. patent rights to
the  manufacturing process now employed in the company's plant in Joshua, Texas.
The  license  was acquired from Softstone International LLC, an entity under the
control  of  Frederick Parker, a co-inventor of the patented process and who was
at  that time the chief executive officer and a director of Softstone, Inc.  The
cost  of  the  license  was  $100,000  and was financed by a promissory note due
December  31,  2000.  Subsequently, on July 31, 2000 Softstone bought all rights
to  the  patent  through  the  issuance  of  300,000  shares  of common stock to
Softstone  International  LLC,  and  the $100,000 promissory note was cancelled.

     Softstone's  Transactions  with  Management.  In fiscal year 2002 Softstone
borrowed  money  from the following persons on the following terms for operating
capital:

<TABLE>
<CAPTION>
Lender      Relationship to Softstone   Principal Amount  Interest Rate  Maturity Date
<S>         <C>                           <C>                <C>         <C>
Gene  Boyd  Secretary  and  Director      $__________        ______%     __-__-__
Betty Boyd  Mother of the President       $                        %       -  -
            and husband of the
            Secretary
</TABLE>


Item  13.     Exhibits  and  Reports  on  Form  8-K.

(a)     Exhibits

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

     Exhibit                              Item

         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.**

                                       34
<PAGE>

        16.1       Letter  of September  9,  2002  of  Hogan & Slovacek 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  10-QSB  May  20,  2002 Commission File No.
      000-29523;  incorporated  by  reference.

***   Previously  filed  with  Form 8-K  September 11, 2002  Commission File No.
      000-29523;  incorporated  by  reference.


(b)     Forms  8-K

     Form 8-K dated September 5, 2002, reporting Item 4 - Change in Registrant's
Certifying  Accountant  (Commission  File  #000-29523,  EDGAR  Accession
#0001060830-02-000155  filed  September  11,  2002).















                                       35
<PAGE>

                                   SIGNATURES

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

Date:  October  15,  2002                 Softstone  Inc.

                                          By:/s/  Keith  Boyd
                                             -----------------------------------
                                             Keith  Boyd,  President

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


                                          /s/  Keith  Boyd
Date:  October  15,  2002                 --------------------------------------
                                          Keith  Boyd,  President,  Chief
                                               Executive Officer and  Director


                                          /s/  Gene  Boyd
Date:  October  15,  2002                 --------------------------------------
                                          Gene  Boyd,  Secretary  and  Director


                                          /s/  Joseph  J.  Johnston
Date:  October  15,  2002                 --------------------------------------
                                          Joseph  J.  Johnston, Chief Financial
                                               Officer







                                       36
<PAGE>
                            CERTIFICATION PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
                            (18 U.S.C. SECTION 1350)


     In  connection  with  the accompanying Annual Report of Softstone Inc. (the
"Company")  on  Form  10-KSB  for  the  fiscal  year  ended  June  30, 2002 (the
"Report"), I, Keith Boyd, Chief Executive Officer of the Company, hereby certify
that  to  my  knowledge:

     (1)     The Report fully complies with the requirements of Section 13(a) or
15(d)  of  the  Securities Exchange Act of 1934 (15 U.S.C.  78m or  78o(d)); and

     (2)     The  information  contained  in  the Report fairly presents, in all
material  respects,  the  financial  condition  and results of operations of the
Company.


                                        /s/  Keith  Boyd
Dated:  October  15,  2002
                                        Keith  Boyd
                                        Chairman  and  Chief  Executive  Officer


     The  above certification is furnished solely pursuant to Section 906 of the
Sarbanes-Oxley  Act  of 2002 (18 U.S.C.  1350) and is not being filed as part of
the  Form  10-K  or  as  a  separate  disclosure  document.













<PAGE>
                            CERTIFICATION PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
                            (18 U.S.C. SECTION 1350)


     In  connection  with  the accompanying Annual Report of Softstone Inc. (the
"Company")  on  Form  10-KSB for the period ended * (the "Report"), I, Joseph J.
Johnston,  Chief  Financial  Officer  of  the Company, hereby certify that to my
knowledge:

     (1)     The Report fully complies with the requirements of Section 13(a) or
15(d)  of  the  Securities Exchange Act of 1934 (15 U.S.C.  78m or  78o(d)); and

     (2)     The  information  contained  in  the Report fairly presents, in all
material  respects,  the  financial  condition  and results of operations of the
Company.


                                      /s/  Joseph  J.  Johnston
Dated:  October  15,  2002
                                      Joseph  J.  Johnston
                                      Chief  Financial  Officer


     The  above certification is furnished solely pursuant to Section 906 of the
Sarbanes-Oxley  Act  of 2002 (18 U.S.C.  1350) and is not being filed as part of
the  Form  10-K  or  as  a  separate  disclosure  document.