United
      States




SECURITIES
      AND EXCHANGE COMMISSION




Washington,
      D.C. 20549




FORM
      10-KSB




**[X]
      ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)**




**OF
      THE SECURITIES EXCHANGE ACT OF 1934**




For
      the
      Year ended 12/31/05




Commission
      File Number: 000-30565




Austin
      Chalk Oil and Gas, Ltd.









Nevada 91-2014670





(Jurisdiction
      of Incorporation)  ( I.R.S.
      Employer Identification No.)




5868
      Westheimer, Suite 233, Houston TX 77057


(Address
      of principal executive offices) (Zip
      Code)




Registrant’s
      telephone number, including area code: (713)
      780-7633





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




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




As
      of
      December 31, 2005 Common shares issued and outstanding: 96,460,736




As
      of
      December 31, 2005, 38,460,734 (39.87%)
      shares of shares of Common Stock were held by non-affiliates, with a market
      value calculated at $4,615.28 ,
      based
      on closing low bid of $0.12 per
      share. Bid prices for thinly traded issues may be unreliable and subject to
      considerable volitivity on very modest volume.




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




[ 
]
      (Indicate by check mark whether if disclosure of delinquent filers (§229.405) is
      not and will not to the best of Registrant’s knowledge be contained herein, in
      definitive proxy or information statements incorporated herein by reference
      or
      any amendment hereto.)




Transitional
      Small Business Disclosure Format (check one): yes [  ] no [X]




Exhibit
      Index is found on page 9




***Page
          - 1***






INTRODUCTION




**PART
      I**




ITEM
      1. Description of Business.




ITEM
      2. Description of Property.




ITEM
      3.
      Legal Proceedings.




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




**PART
      II**




ITEM
      5. Market for Common Equity and Stockholder
      Matters.


(a)
      Market Information.


(b)
      Holders.


(c) Dividends.


(d)
      Sales
      of Unregistered Common Stock 2005.




ITEM
      6.
      Management’s Discussion and Analysis or Plan of Operation.


(a)
      Plan
      of Operation for the next twelve months.


(b)
      Discussion and Analysis of Financial Condition and Results of Operations.




ITEM
      7.
      Financial Statements.




ITEM
      8.
      Changes In and Disagreements With Accountants on Accounting and Financial
      Disclosure.






**PART
      III**




ITEM
      9.
      Directors and Executive Officers, Promoters and Control Persons; Compliance
      with
      Section 16(a) of the Exchange Act.




ITEM
      10.
      Executive Compensation.




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




ITEM
      12.
      Certain Relationships and Related Transactions.




ITEM
      13.
      Controls and Procedures.


(a)
      Attachments.


(b)
      Exhibits.


(c) Form
      8-K Reports.




Signatures






***Page
          - 2***


**INTRODUCTION**




This
      Registrant (Reporting Company) has elected to refer to itself, whenever
      possible, by normal English pronouns, such as “We”, “Us” and “Our”. This Form
      10-KSB Annual Report contains forward-looking statements. Such statements
      include statements concerning plans, objectives, goals, strategies, future
      events, results or performances, and underlying assumptions that are not
      statements of historical fact. This document and any other written or oral
      statements made by us or on our behalf may include forward-looking statements
      which reflect our current views, with respect to future events or results and
      future financial performance. Certain words indicate forward-looking statements,
      words like “believe”, “expect”, “anticipate”, “intends”, “estimates”,
“forecast”, “projects”, and similar expressions.




**PART
      I**




**ITEM
      1. Description of Business.** Form and
      Year of Organization. Knowledge Networks, Inc., (“the Registrant”)(“we,
“us,” or “our”) was incorporated in the State of Nevada on December 23, 1998. On
      or about October 15, 2002, we changes our name from Knowledge Networks, Inc.
      to
      KNW Networks, Inc. About June 3, 2004, our shareholders authorized and we
      effected a change of our corporate name to Austin Chalk Oil and Gas, Ltd.,
      as
      reported in our last previous Quarterly Report. Please see our previous annual
      report for historical information




**Business.** Our
      Business Plan has not substantially changed from our annual report for the
      year
      ended December 31, 2004. Austin Chalk Oil and Gas, Ltd. is actively pursuing
      that new business plan to engage in the oil and gas development of existing
      wells and new properties. We have established our website: http://www.austinchalkoil.com .
      Our
      trading symbol is OTC:ACKO.




We
      have
      made an investment in an additional Oil & Gas property, in South Central
      Texas. The new well, Northstar Hermes #1, which began drilling in
      February/March, 2006, is a 5,300 foot well into the Yegua sands int the
      Sweethome area of Lavaca County, Texas. The Well is expected to tap into
      900,000 MCF of gas
      reserves. Management expects the well to produce at a rate of 1,500 MCF and to
      repay its drilling costs within the first four months of operation. Expectations
      are not outcomes, however, and results may differ from the best intentions
      and
      expectations.




**Financing
      Plans** .
      None
      presently. For more information, please see Item 6 of Part II, Management’s
      Discussion and Analysis.




**Planned
      Acquisitions. None.**




**Employees**.
                We have two Officer/Directors. See Part III, Item 9 and following
                for more
                information.




**ITEM
      2. Description of Property.** We have
      no significant property other than that described in Item 1 above.




**ITEM
        3. Legal Proceedings.**


An
      finder
      has claimed and is claiming what management considers an exorbitant and
      unjustified finders fee, greater than 10%. The finder was paid and has received
      a 10% commission for raising $67,727.70, or $6,772.77. The finder claims
      entitlement to a total fee of $20,000.00 before the payment of the normal 10%
      of
      $6,772.77. He continues to demand the balance of $13,227.33. Management has
      concluded that the demand is unreasonable and out of line with industry
      practice. Management will continue to resist this claim, by such normal means
      as
      are necessary and proper. Management expects an ultimately favorable
      resolution.




**ITEM
      4. Submission of Matters to a Vote of Security Holders.****None**




***Page
          - 3***




**PART
      II**




**ITEM
      5. Market for Common Equity and Stockholder
      Matters.**




**(a)
      Market Information.** We
      have
      one class of securities, Common Voting Equity Shares (“Common Stock”). Our
      Company’s Securities may be quoted in the over-the-counter market, but there is
      a young, sporadic and potentially volatile trading market for them. Quotations
      for, and transactions in the Securities, and transactions are capable of rapid
      fluctuations, resulting from the influence of supply and demand on relatively
      thin volume. There may be buyers at a time when there are no sellers, and
      sellers when there are no buyers, resulting in significant variations of bid
      and
      ask quotations by market-making dealers, attempting to adjust changes in demand
      and supply. A young market is also particularly vulnerable to short selling,
      sell orders by persons owning no shares of stock, but intending to drive down
      the market price so as to purchase the shares to be delivered at a price below
      the price at which the shares were sold short. Based upon standard reporting
      sources, the following information is provided:




quarter
            high
                bid
            low
                bid
            volume1st2003
            3.00
            1.10
            168,1002nd2003
            2.00
            1.01
            92,6203rd2003
            1.05
            0.51
            725,1004th2003
            0.55
            0.45
            15,142,7401st2004
            1.01
            0.16
            15,656,9402nd2004
            0.40
            0.04
            1,850,2803rd2004
            0.25
            0.09
            624,6604th2004
            0.21
            0.13
            3,981,5801st2005
            0.76
            0.16
            26,000,0002nd2005
            0.63
            0.19
            20,000,0003rd2005
            0,35
            0.10
            17,000,0004th2005
            0.22
            0.12
            11,000,000


Source:
      Yahoo Finance









The
      foregoing price information is based upon inter-dealer prices without retail
      mark-up, mark-down or commissions and may not reflect actual transactions.
      SOURCE: Yahoo Finance.




**(b)
      Holders.** Management calculates that the approximate number of shareholders of record
      of
      the Company’s Common Stock, as of December 31, 2004 and currently, was believed
      to be 125, taking into account shares held in Broker’s accounts.




**©
      Dividends.** We have
      not paid any cash dividends on our Common Stock, and do not anticipate paying
      cash dividends on its Common Stock in the next year. We anticipate that any
      income generated in the foreseeable future will be retained for the development
      and expansion of our business. Future dividend policy is subject to the
      discretion of the Board of Directors and will depend upon a number of factors,
      including future earnings, debt service, capital requirements, business
      conditions, the financial condition of the Company and other factors that the
      Board of Directors may deem relevant.




**(d)
      Sales of Unregistered Common Stock 2005.** **None.**




***Page
          - 4***






**ITEM
      6. Management’s Discussion and Analysis or Plan of
      Operation.**




Management’s
      discussion and analysis is intended to be read in conjunction with our audited
      financial statements and the notes attached to them. The following statements
      may be forward looking in nature and actual results may differ from forward
      looking statements.




**(a)
      Plan of Operation for the next twelve months.** Our
      plan
      of operation is for the next twelve moths follows from our discussion in Item
      1
      of Part I. We will continue existing drilling and extraction operation with
      the
      goal of attaining profitability, of the operation and of this corporation for
      the benefit of our shareholders.




(1)
            Cash
                Requirements and of Need for additional funds, twelve months.
                None.




(2)
            Summary
                of Product Research and Development.
                None.




(3)
            Expected
                purchase or sale of plant and significant equipment.
                None.




(4)
            Expected
                significant change in the number of employees.
                None.









**(b)
      Discussion and Analysis of Financial Condition and Results of Operations.** This
      discussion is intended to be read along with our annual audited financial
      statements, found as Attachment FKA-04, and incorporated herein by this
      reference.




We
      have
      begun to book limited revenues from oil and gas drilling, during the periods
      covered by this report.




**Cautionary
      Statements/Risks of Failure.** There
      can be no assurance that we will be successful at any time in the future. There
      is no assurance that any drilling and extracting program will prove profitable.
      Even in the event that one operation many proceed successfully, that success
      may
      be offset by any one or combination of a number of forseeable contingencies.
      We
      will not attempt to provide an exhaustive list of every thing which could go
      wrong, but the most obvious ones include equipment breakdown, labor or
      administrative difficulties, and changes in the world market price for oil.




There
      are
      also risks inherent in a barely capitalized company, with a short history of
      operations. Our business plan includes expanding operations in future. One
      would
      expect some capital requirements for such expansion/acquisition of other working
      or holding interests. There can be no assurance of our success, in raising
      capital through private placements or otherwise. Even if we are successful
      in
      raising capital through the sources specified, there can be no assurances that
      any such financing would be available in a timely manner or on terms acceptable
      to us and our current shareholders. Additional equity financing could be
      dilutive to our then existing shareholders, and any debt financing could involve
      restrictive covenants with respect to future capital raising activities and
      other financial and operational matters.




***Page
          - 5***




**ITEM
        7. Financial Statements.**


**(a)**
            **Audit
                Committee.**The Audit Committee of this Corporation for this fiscal year consists
                of
                the our Board of Directors. Management is responsible for our internal
                controls and the financial reporting process. Our independent auditors
                are
                responsible for performing an independent audit of our financial
                statements in accordance with generally accepted accounting standards
                and
                to issue a report thereon. It is the responsibility of our Board
                of
                Directors to monitor and oversee these processes. In this context
                the
                Committee has met and held discussions with management and the independent
                accountants. Management recommended to the Committee that our financial
                statements were prepared in accordance with generally accepted accounting
                principles, and the Committee has reviewed and discussed the financial
                statements with Management and such independent accountants, matters
                required to be discussed by Statement on Auditing Standards No. 61
                (Communication with Audit Committees). Our independent accountants
                also
                provided to the Committee the written disclosures required by Independence
                Board Standard No. 1 (Independence Discussions with Audit Committees),
                and
                the Committee discussed with the independent accountants that firm’s
                independence.









Based
                upon the Committee’s discussions, and review, of the foregoing, the
                Committee recommended that our audited financial statements in our
                Annual
                Report on Form 10-KSB for the year ended December 31, 2005, be included
                and filed with the Securities and Exchange
                Commission.




**(b)**
            **Financial
                Statements.**Audited Financial Statements for years ended December 31, 2005 are
                provided as Attachment FKA-05, attached hereto, filed herewith and
                incorporated herein by this reference as though fully set forth herein.





**ITEM
        8. Changes In and Disagreements With Accountants on Accounting
        and Financial Disclosure.** ****






None.




***Page
          - 6***




**PART
      III**




**ITEM
      9. Directors and Executive Officers, Promoters and Control
      Persons; Compliance with Section 16(a) of the Exchange
      Act.**




Our
                President, Darrel Figg, remains as Officer Director. His biography
                as been
                previously reported.




Marlen
                L. Roepke, our previous second Director has retired from all corporate
                office.




John
                Spicer, our current second Director, was appointed to replace Mr.
                Roepke.









**ITEM
      10. Executive Compensation.**









Long
                Term CompensationAnnual
                Compensation
            Awards
            Payoutsa
              
              Name
              and
              Principal
              Position
            b
              
              Year
            c
              
              Salary
              ($)
            d
              
              Bonus
              ($)
            e
              
              Other
              Annual
              Compen-sation
              ($)
            f
              
              Restric-ted
              Stock
              Awards
              ($)
            g
              
              Securi-ties
              Under-
              lying
              Options
              SARs
                (#)
            h
              
              LTIP
              Payouts
              ($)
            i
              
              All
                Other
              Compen-sation
              ($)Darrel
                Figg
            2005
            15,000
            0
            0
            0
            
            0
            0President/CEO
            2004
            0
            0
            0
            0
            100,000
            0
            0Apr.
                23, 2001 -Feb.
                7, 2002
            2003
            0
            0
            0
            0
            0
            0
            0MarlenL.
                Roepke
            2005
            15,000
            0
            0
            0
            0
            0
            0Officer/Director
            2004
            0
            0
            0
            0
            100,000
            0
            0Feb.
                7, 2002
            2003
            0
            0
            0
            0
            666,666
            0
            0






1.
            Darrel
                Figg was granted an option to acquire 100,000 shares of common stock,
                exercisable at $0.05, at any time after October 10,
                2004.




2.
            Marlen
                L. Roepke was granted an option to acquire 100,000 shares of common
                stock,
                exercisable at $0.05, at any time. Mr. Roepke exercised his option
                for
                50,000 shares. Mr. Roepke previously was granted 666,666
                shares..







***Page
          - 7***




**ITEM
      11. Security Ownership of Certain Beneficial Owners and
      Management.**




To
      the
      best of our knowledge and belief the following disclosure presents the total
      beneficial security ownership of all Directors and Nominees, naming them, and
      by
      all Officers and Directors as a group, without naming them, and of all persons,
      entities and groups, known to or discoverable by us, to be the beneficial owner
      or owners of more than five percent of any voting class of Registrant’s stock.,
      known to or discoverable by Registrant. More than one person, entity or group
      could be beneficially interested in the same securities, so that the total
      of
      all percentages may accordingly exceed one hundred percent of some or any
      classes. Please refer to explanatory notes if any, for clarification or
      additional information.




Shareholder
            Shares
            %Darrel
                Figg
              4602
                Turf Valley Drive
              Houston
                TX 77064
            -0-
            0.00John
                Spicer
              PO
                Box 667030
              Houston
                TX 77266
            -0-
            0.00Marlen
                L. Roepke
              1914
                Agusta #8
              Houston
                TX 77054
            -0-
            0.00Officers
                and Directors as Group
            0
            0.00Eradio
                Diaz
              Sun
                Tower # 5
              Avenida
                Ricardo J. Alfaro
              Panama
                5 Panama
            58,000,002
            60.13Total
                other 5% Owners
            58,000,002
            60.13Total
                all affiliates
              and
                5% owners.
            58,000,002
            60.13Total
                Issued and Outstanding (for reference)
            96,460,736
            100.00(Less
                All affiliates)
            (58,000,002)
            -60.13Indicagted
                Non-Affiliate Shares
            38,460,734
            39.87











**ITEM
      12. Certain Relationships and Related Transactions.******




None.







**ITEM
        13. Controls and Procedures.**




**Evaluation
      of Disclosure Controls and Procedures.** Based
      upon an evaluation under supervision and with the participation of our
      management, as of a date within 90 days of the filing date of this Annual Report
      on form 10-KSB, our principal executive officer and principal financial officer
      have concluded that our disclosure controls and procedures (as defined in Rules
      13a-14© and 15d-14©) under the Securities Exchange Act of 1934, are effective to
      ensure that information required to be disclosed (in reports that we file or
      submit under that Exchange Act) is recorded, processed, summarized and reported
      within the time periods specified in SEC rules and forms.




**Changes
      in Internal Accounting.** There
      were no significant changes in our internal controls or other factors that
      could
      significantly affect these controls subsequent to the date of their evaluation.
      There wee no significant deficiencies or material weaknesses, and therefore
      there were no corrective actions taken. However, the design of any system of
      controls is based in part upon the assumptions about the likelihood of future
      events, and there is no certainty that any design will succeed in achieving
      its
      stated goal under all potential future considerations, regardless of how
      remote.




**(a)
      Attachments.**




(31)
      Certification pursuant to 302.




(32)
      Certification pursuant to 1350.




(A
      99.1)
      Audit Committee Report




(AFK-02)
      Audited Financial Statements for the years ended December 31, 2005, 2004 and
      from Inception.




**(b)
      Exhibits.** Please
      see our Previous Annual Report on Form 10-KSB, for the year ended December
      31,
      2001, for Exhibits: (3.1) Articles of Incorporation; (3.2) By-Laws, incorporated
      herein by this reference.




**(c) Form
      8-K Reports.** **None.**




***Page
          - 8***




***SIGNATURES***




***Pursuant
      to the requirements*** of the
      Securities Exchange Act of 1934, this report has been signed below by the
      following persons on behalf of the Registrant and individually and in the
      capacities and on the date indicated.




**Austin
      Chalk Oil and Gas, Ltd.**




Dated:
      May 2, 2006




by







*/s/Darrel
              Figg*
            
            */s/John
              Spicer*Darrel
                Figg
              president/director
            
            John
                Spicer
              director












***Page
          - 9***














**Exhibit
      31**




**Section
      302 Certifications**












***Page
          - 10***


**CERTIFICATIONS
      PURSUANT TO SECTION 302**




I,Darrel Figg,
                president/director, certify that:




1.
      I have
      reviewed this annual report on Form 10-KSB of December 31, 2005;




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




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




4.
      The
      registrant’s other certifying officers and I are responsible for establishing
      and maintaining disclosure controls and procedures (as defined in Exchange
      Act
      Rules 13a-14 and 15d-14) for the registrant and have:




a)
                designed such disclosure controls and procedures to ensure that material
                information relating to the registrant, including its consolidated
                subsidiaries, is made known to us by others within those entities,
                particularly during the period in which this annual report is being
                prepared;




b)
                evaluated the effectiveness of the registrant’s disclosure controls and
                procedures as of a date within 90 days prior to the filing date of
                this
                annual report (the “Evaluation Date”);
                and




c)
                presented in this annual report our conclusions about the effectiveness
                of
                the disclosure controls and procedures based on our evaluation as
                of the
                Evaluation Date;




5.
      The
      registrant’s other certifying officers and I have disclosed, based on our most
      recent evaluation, to the registrant’s auditors and the audit committee of
      registrant’s board of directors (or persons performing the equivalent
      functions):




a)
                all significant deficiencies in the design or operation of internal
                controls which could adversely affect the registrant’s ability to record,
                process, summarize and report financial data and have identified
                for the
                registrant’s auditors any material weaknesses in internal controls;
                and




b)
                any fraud, whether or not material, that involves management or other
                employees who have a significant role in the registrant’s internal
                controls; and




6.
      The
      registrant’s other certifying officers and I have indicated in this annual
      report whether there were significant changes in internal controls or in other
      factors that could significantly affect internal controls subsequent to the
      date
      of our most recent evaluation, including any corrective actions with regard
      to
      significant deficiencies and material weaknesses.




***Dated:
      May 2, 2006***











*/s/Darrel
      Figg*


Darrel
        Figg
 President/Director







***Page
          - 11***


**CERTIFICATIONS
      PURSUANT TO SECTION 302**









I,John Spicer,
                secretary/director, certify that:









1.
      I have
      reviewed this annual report on Form 10-KSB of December 31, 2005;




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




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




4.
      The
      registrant’s other certifying officers and I are responsible for establishing
      and maintaining disclosure controls and procedures (as defined in Exchange
      Act
      Rules 13a-14 and 15d-14) for the registrant and have:




a)
                designed such disclosure controls and procedures to ensure that material
                information relating to the registrant, including its consolidated
                subsidiaries, is made known to us by others within those entities,
                particularly during the period in which this annual report is being
                prepared;




b)
                evaluated the effectiveness of the registrant’s disclosure controls and
                procedures as of a date within 90 days prior to the filing date of
                this
                annual report (the “Evaluation Date”);
                and




c)
                presented in this annual report our conclusions about the effectiveness
                of
                the disclosure controls and procedures based on our evaluation as
                of the
                Evaluation Date;




5.
      The
      registrant’s other certifying officers and I have disclosed, based on our most
      recent evaluation, to the registrant’s auditors and the audit committee of
      registrant’s board of directors (or persons performing the equivalent
      functions):




a)
                all significant deficiencies in the design or operation of internal
                controls which could adversely affect the registrant’s ability to record,
                process, summarize and report financial data and have identified
                for the
                registrant’s auditors any material weaknesses in internal controls;
                and




b)
                any fraud, whether or not material, that involves management or other
                employees who have a significant role in the registrant’s internal
                controls; and




6.
      The
      registrant’s other certifying officers and I have indicated in this annual
      report whether there were significant changes in internal controls or in other
      factors that could significantly affect internal controls subsequent to the
      date
      of our most recent evaluation, including any corrective actions with regard
      to
      significant deficiencies and material weaknesses.




***Dated:
      May 2, 2006***




*/s/John
      Spicer*


John
        Spicer
 Secretary/Director








***Page
          - 12***

















**Exhibit
      32**




***CERTIFICATION
      PURSUANT TO 18 USC SECTION 1350***












***Page
          - 13***




**CERTIFICATION
      PURSUANT TO 18 U.S.C. SECTION 1350,**


**AS
      ADOPTED PURSUANT TO SECTION 906 OF THE**


**SARBANES-OXLEY
      ACT OF 2002**








In
      connection with the Annual Report of *Austin
      Chalk Oil & Gas, Inc* .,
      a
      Nevada corporation (the “Company”), on Form 10-kSB for the yeaar ended December
      31, 2005 as filed with the Securities and Exchange Commission (the “Report”),
      We, officers and directors of the Company, certify, pursuant to 906 of the
      Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350), that to our knowledge:




(1)
      The
      Report fully complies with the requirements of section 13(a) or 15(d) of the
      Securities Exchange Act of 1934; and




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




*Dated:
      May 2, 2006*









*/s/Darrel
                Figg*
              
              */s/John
                Spicer*Darrel
                  Figg
                president/director
              
              John
                  Spicer
                director







***Page
          - 14***






Attachment
      AC-99.1









**Audit
      Committe Report**



















***Page
          - 15***


Austin
      Chalk Oil & Gas, Inc.




Form
      Type: 10-KSB




***AUDIT
      COMMITTEE REPORT***




The
      Audit
      Committee of Diatom Corporation is composed of the Corporation’s Board of
      Directors. The members of the Committee recommended, subject to stockholder
      ratification, the selection of the Corporation’s independent
      accountants.




Management
      is responsible for the Corporation’s internal controls and the financial
      reporting process. The independent accountants are responsible for performing
      an
      independent audit of the Corporation’s consolidated financial statements in
      accordance with the generally accepted auditing standards and to issue a report
      thereon. The Committee’s responsibility is to monitor and oversee these
      processes.




In
      this
      context, the Committee has met and held discussions with management and the
      independent accountants. Management represented to the Committee that the
      Corporation’s financial statements were prepared in accordance with generally
      accepted accounting principles, and the Committee has reviewed and discussed
      the
      consolidated financial statements with management and the independent
      accountants. The Committee discussed with the independent accountants matters
      required to be discussed by the Statement on Auditing Standards No.
      61.




The
      Corporation’s independent accountants also provided to the Committee the written
      disclosures required by Independence Standards Board Standard No. 1, and the
      Committee discussed with the independent accountant that firms
      independence.




Based
      upon Committee’s discussion with management and the independent accountants and
      the Committee’s review of the representation of management and the report of the
      independent accountants to the Committee, the Committee recommended that the
      audited consolidated financial statements be included in the Corporation’s
      Annual Report on Form 10-KSB for the year ended December 31, 2005, filed with
      the Securities and Exchange Commission.




**Dated:
      May 2, 2006**












*/s/Darrel
                Figg*
              
              */s/John
                Spicer*Darrel
                  Figg
                president/director
              
              John
                  Spicer
                director





***Page
          - 16***










**Attachment
      AFK-05**









**Audited
      Financial Statements**


**of**


**Austin
      Chalk Oil & Gas, Inc.**


**for
      the years ended**


**December
      31, 2005, 2004**


**and
      from inception**














***Page
          - 17***