United
      States


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





**FORM
      10-KSB/A**





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


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**





For
      the
      Year ended 12/31/04


Amendment
        dated September 6, 2005





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, 2004 Common
      shares issued and outstanding: 96,460,736





As
        of December
        31, 2004, 38,460,734 (39.87%) shares
        of shares of Common Stock were held by non-affiliates, with a market value
        calculated at $4,999,895 ,
        based
        on closing low bid of $0.13 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 11










***Page
          - 1***








INTRODUCTION





PART
      I





ITEM
      1.
      Description of Business


(a)
      Historical Information


(b)
      Business


(c)
      Financing Plans


(d)
      Planned Acquisitions


(e)
      Employees





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 2004





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


(a)
      Audit
      Committee


(b)
      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








***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.
 
 
 **NATUTRE
        OF THIS AMENDMENT**
 
 
 1.
        First
        and foremost, our Financial Reporting is unchanged and unaffected by this
        Amendment.
 
 2.
        Item
        13, Controls and Procedures is corrected to conform to current
        rules.
 
 3.
        While
        there have been no change in our internal accounting, disclosure to that
        effect
        is added.
  4.
        The
        wording and the number of our Section 302 Certification(s) has been corrected
        to
        conform to current standards.






**PART
      I**





**ITEM****1****.
      Description of Business.**





**(** **a** **)
      Historical Information.**





**(** **1** **)
      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.





**(** **2** **)
      Issuances Shares.** §4(2) refers to the Securities Act of 1933. S-8 refers to the form of
      registration pursuant to the Act.





Narrative
                Description
            12/31/03
              Share
                Amounts
            12/31/04
                Share Amounts12/31/02
                Total Issued and Outstanding
            2,844,254ISSUE
                cash: $2,500, January 7, 2003
            20,000,0002/12/04,authorize
                a Reverse Split of this corporation's common stock Fifteen shares
                to
                become one share, then one share to become three shares
                5/04
            22,844,254
            4,568,848Servives
                @ $0.50: Registered S-8
            2,550,000Servives
                @ $0.10: Registered S-8
            35,291,688Cash
                @ $0.01: §4(2):
                12 Investors
            54,000,000Options
                exercised @ 0.05: §4(2)
            50,000Total:
                December 31, 2004:
            
            96,460,536




**(** **b** **)
      Business.** Our
      Business Plan has substantially changed from our annual report for the year
      ended December 31, 2003, and our previous quarterly report for the period ending
      September 30, 2004, as indicated in our last previous Quarterly
      Report.





*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.





***Page
          - 3***





On
      or
      about July 8, 2004, the Company entered into agreement to acquire a working
      interest in a horizontally drilled oil and gas well in the Giddings Field of
      the
      Austin Chalk Trend in South Central Texas. The well is being drilled by
      Holifield Oil Company which is owned and operated by Ray Holifield. Mr.
      Holifield is not an officer, director, affiliate or shareholder of this
      reporting corporation. Our relationship with Holifield, as driller and operator
      is contractual and entered into at arms length.





Since
      1976, Ray Holifield has drilled 2,000 wells in the Austin Chalk, many of those
      utilizing the technique of horizontal drilling, which wells hae produced more
      than 200 million barrels of oil equivalent. Mr. Holifield had pioneered most
      of
      the techniques used in horizontal drilling. In fact, more than half the
      horizontal drain wells in the world have been drilled in the Austin Chalk.
      Many
      of Holifield's wells in the Giddings Field are re-entries, which lowers up-front
      costs by about 50% compared with drilling a new well. Existing wells normally
      have casing, pumping equipment, tank batteries, and gas pipeline connections,
      all greatly reducing capital costs. Where the pipelind is already in place,
      oil
      and gas can often start very soon after the rig is released.





In
      addition to the foregoing, Ray Holifield has developede a new technology --the
      “Hybrid Lift System” --which he says can produce an additional 10,000 to 30,000
      barrels of oil from horizontal wells along with additional gas as
      well.





Over
      the
      past three decades, Ray Holifield has drilled almost 25% of the 9,000 wells
      in
      the five-county areas that Giddings Field encompasses. He has collected an
      extensive database of geological and engineering records on Giddings Field
      at a
      cost of approximately 10 million dollars ($10,000,000).





Ray
      Holifield and Austin Chalk Oil & Gas estimate that there is at least one
      billion dollars of oil and gas reserves waiting to be recovered in the Giddings
      Field. They also estimate that about 60% of the anticipated revenues will come
      from gas and 40% from oil.





In
      the
      early 1970's, Mr. Holifield was associated with D.R. McCord and Associates,
      a
      pioneer in using computers for oil field modeling and simulation. While working
      for McCord in the Middle East, Mr. Holifield developed innovative techniques
      in
      Giddings Field, which enabled him to quickly identify fractures and faults
      containing hydrocarbons. In Lee County Texas alone, he has used this seismic
      data to drill 647 vertical wells. Many began production at more than a thousand
      barrels of oil per day. Overall, these 647 wells averaged 147,902 barrels of
      oil, equivalent to a production rate that of 4.7 times greater than the average
      of all other operators in the same area.





We
      have
      obtained an option to participate in the next five wells to be drilled by
      Holifield Oil. We have recently announced that our Edgmon-Cameron H12 well
      has
      begun producing oil, water and gas at low rates of recovery due to low bottom
      pressure. We regard this as normal for the area. The well has approximately
      1,000 barrels of oil in its storage tanks.





We
      have
      established our website: http://www.austinchalkoil.com. Our trading symbol
      is
      OTC:ACKO.





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





**(** **d** **)
      Planned Acquisitions.** None.





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








***Page
          - 4***





**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 having
        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.**





On
      February 12, 2004, an absolute majority of all shares issued and outstanding,
      and which would be entitled to vote at meeting of shareholders empowered and
      directed a Reverse Split of our common stock, fifteen shares to become one
      share. Later, on May 4, 2004, those shareholders approved a three for one
      forward split.








**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:




Austin
      Chalk


quarter
            high
                bid
            low
                bid
            volume1st
                2003
            3.00
            1.10
            168,1002nd
                2003
            2.00
            1.01
            92,6203rd
                2003
            1.05
            0.51
            725,1004th
                2003
            0.55
            0.45
            15,142,7401st
                2004
            1.01
            0.16
            15,656,9402nd
                2004
            0.40
            0.04
            1,850,2803rd
                2004
            0.25
            0.09
            624,6604th
                2004
            0.21
            0.13
            3,981,580





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 over 100, taking into account shares held in Broker's
      accounts.





***Page
          - 5***




**(** **c** **)
      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 2004.** Section
      4(2) refers to the Securities Act of 1933.





Cash @ $0.01: 4(2): 12 Investors with preexisting relationships
                  with
                  management.
              54,000,000Options
                  exercised @ 0.05: §;4(2):
                  by an Officer
              50,000








**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
      enjoyed no revenues during the periods covered by this report or corresponding
      periods during the previous fiscal year.





**Cuationary
      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
          - 6***








**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, 2004 be included and filed with the
      Securities and Exchange Commission.





**(** **b** **)
      Financial Statements.** Audited
      Financial Statements for
      years ended December 31, 2004 are provided as Attachment FKA-04, 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.





The
      Remainder of this Page is Intentionally left
      Blank







***Page
          - 7***


**PART
      III**











**ITEM****9****.
      Directors and Executive Officers, Promoters and Control Persons;**


**Compliance
      with Section 16(a) of the Exchange Act.**





April
      4,
      2002 Marlen L. Roepke was appointed as the sole director and elected President
      and Treasurer respectively. On July 1, 2004, Darrel Figg was appointed as an
      additional Director. On July 8, 2004, Mr. Figg was elected president, and our
      previous president/director Marlen Roepke was elected
      secretary/treasurer.




**Darrell
      Figg** - President and Chief Operating Officer. Darrell Figg is one of
      the Company’s two founders.  Darrell Figg has spent the majority of his
      life in the oil industry, beginning at Dresser Industries, a Gulf Coast-based
      company, in 1971, as a senior engineer.  His achievements in this industry
      have earned him the respect and admiration of his peers and colleagues. 
      With experiences in the Northern and Southern hemispheres, his career has given
      ample opportunity to understand what makes the oil business tick.  Most
      recently, he was the president of Drilling Fluids Engineering & Consulting,
      Mr. Figg provided assistance to the industry’s strongest worldwide market
      leaders.  His vast knowledge of all aspects of the business, conduct,
      procurement and procedural elements of the oil business, Mr. Figg is a
      well-qualified man to lead Austin Chalk Oil & Gas, Inc.  Darrell Figg
      received his Bachelor’s Degree from Southern Methodist
      University.


**Marlen
      L. Roepke** (58) was
      Director, Customer Account Management, Thinktanks Worldwide.com, Houston, Texas
      (4/00-8/01); Director Service Delivery, Sprint Enterprise Network Services,
      Houston, Texas (5/98-4/00); Director, Systems Integration, MCI Systemhouse
      Corporation, Houston, Texas (5/94-5/98); Manager, Product Support, Oracle
      Corporation, Houston, Texas (5/93-5/94); Vice President, Systems Integration,
      The Technology Group, Inc., Houston Texas (4/87-5/93); Director, Information
      Resources, Texas Municipal Power Agency, Bryan Texas (8/85-4/87); Manager,
      Information Services, Skytop Brewster, Houston Texas (5/77-6/79); Manager Data
      Administration, Cameron Iron Works, Houston Texas (4/75-5/77); and he earned
      his
      BA, Business Administration, University of Minnesota, in accounting, in
      1965.





The
      Remainder of this Page is Intentionally left Blank





***Page
          - 8***











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**
              President/CEO
              Apr.
                23, 2001 - Feb. 7, 2002
            2004
            0
            0
            0
            0
            100,000
            0
            02003
            0
            0
            0
            0
            0
            0
            02002
            0
            0
            0
            0
            0
            0
            02001
            0
            0
            0
            0
            0
            0
            0Marlen
                L. Roepke
              Sole
                Officer/ Director
              Feb.
                7, 2002
            2004
            0
            0
            0
            0
            100,000
            0
            02003
            0
            0
            0
            0
            666,666
            0
            02002
            0
            0
            0
            0
            0
            0
            02001
            0
            0
            0
            0
            0
            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.








**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.





***Page
          - 9***








**Certain
      Beneficial Owners and Owners of 5% or more**





Name
                and Address of Beneficial Owner
              Common
                Stock
            Share
              Ownership
            %
                of TotalDarrel
                Figg
              1914
                Agusta #8
              Houston
                TX 77054
            0
            0.00Marlen
                L. Roepke
              1914
                Agusta #8
              Houston
                TX 77054
            63,335
            0.07Officers
                and Directors as Group
            63,335
            0.07Eradio
                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.
            58,063,337
            60.19Total
                Issued and Outstanding (for reference)
            96,460,736
            100.00Less
                All affiliates
            58,000,002
            60.13Total
                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 the
        period covered by 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(c) and 15d-14(c)) 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 changes in our internal control over financial reporting identified
        in
        connections with the evaluation that occurre during our last fiscal quarter
        which has affected, or is reasonably likely to materially affect our internal
        contol over finnacial reporting, as required by Item 308(c) of Regulation
        S-B. 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.





***Page
          - 10***





**(** **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, 2004, 2003 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.








***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: September
      5,  2005  by


/s/
                Darrel Figg
              Darrel
                Figg
              President
            /s/
                Marlen L. Roepke
              Marlen
                L. Roepke
              Secretary












***Page
          - 11***








**Exhibit
      31**





**Section
      302 Certification**








***Page
          - 12***







Austin
        Chalk Oil & Gas, Ltd.
 CERTIFICATIONS
        PURSUANT TO
 SECTION
        302 OF THE SARBANES-OXLEY ACT OF 2002
   CERTIFICATION
   I,
        Darrel
        Figg, certify that:
   1.
          I have
          reviewed this annual report on Form 10-KSB of Austin Chalk Oil & Gas, Ltd.;
  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 officer 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 we 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 officer 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 function):
  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 officer and I have indicated in this annual
          report whether or not 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:
        September 5, 2005
   by
   /s/
        Darrel Figg
 Darrel
        Figg
 President
  ***Page
            - 13***
  Austin
        Chalk Oil & Gas, Ltd.
 CERTIFICATIONS
        PURSUANT TO
 SECTION
        302 OF THE SARBANES-OXLEY ACT OF 2002
   CERTIFICATION
  I,
        Marlen
        Roepke, certify that:
  1.
        I have
        reviewed this annual report on Form 10-KSB of Austin Chalk Oil & Gas, Ltd.;
  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 officer 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 we 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 officer 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 function):
  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 officer and I have indicated in this annual
        report whether or not 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:
        September 5, 2005
  by
 /s/
        Marlen L. Roepke
 Marlen
        L.
        Roepke
 Secretary















***Page
          - 14***











**Exhibit
      32**





**CERITIFICATION
      PURSUANT TO 18 USC SECTION 1350**








***Page
          - 15***








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, Ltd.
        ("Austin Chalk") on Form 10-KSB for the period ending December 31,
        2004 as filed with the Securities and Exchange Commission on the date
        hereof (the "Report"), I, Darrel Figg, President, and Chief Executive Officer
        of
        Austin Chalk, certify, pursuant to s.906 of the Sarbanes-Oxley Act of 2002,
        that:
   (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 represents, the financial condition
        and result of operations of Austin Chalk.
   Dated:
        September 5, 2005
   by
  /s/
        Darrel Figg
 Darrel
        Figg
 President
  ***Page
            - 16***
  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, Ltd.
        ("Austin Chalk") on Form 10-KSB for the period ending December 31,
        2004 as filed with the Securities and Exchange Commission on the date
        hereof (the "Report"), I, Marlen Roepke, Secretary/Treasurer, and Chief
        Financial Officer of Austin Chalk, certify, pursuant to s.906 of the
        Sarbanes-Oxley Act of 2002, that:
  (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 represents, the financial condition
        and result of operations of Austin Chalk.
  Dated:
        September 5, 2005
   by
   /s/
        Marlen L. Roepke
 Marlen
        L.
        Roepke
 Secretary







***Page
          - 17***








**Exhibit
      Attachment AC-99.1**





**Audit
      Committee Report**








***Page
          - 18***







*Austin
      Chalk Oil and Gas, Ltd.*


5868
      Westheimer, Suite 233


Houston
      TX, 77057


Form
      Type: 10-KSB





AUDIT
      COMMITTEE REPORT





The
      Audit
      Committee of *Austin
      Chalk Oil and Gas, Ltd* .
      ("AustinChalk") is composed of the Corporation's Board of Directors. The members
      of the Committee are the Board of Directors. 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, 2001 filed with
      the
      Securities and Exchange Commission.





Dated:
      March 31, 2005




/s/
                  Darrel Figg
                Darrel
                  Figg
                President
              /s/
                  Marlen L. Roepke
                Marlen
                  L. Roepke
                Secretary







***Page
          - 19***











**Attachment
      AFK-04**





**Audited
      Financial Statements**


**of**


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





**for
      the years ended**


**December
      31, 2004, 2003**


**and
      from inception**












***Page
          - 20***




**Austin
        Chalk Oil & Gas, LTD.**
 (formerly
        KNW NETWORKS, INC.)
 (A
        Development Stage Company)
 
 FINANCIAL
        STATEMENTS
 
 December
        31, 2004 and 2003
 
 
 **C
        O N T E N T S**
 
 
 Independent
        Auditor’s Report
 
 Balance
        Sheets
 
 Statements
        of Operations
 
 Statements
        of Stockholders’ Equity
 
 Statements
        of Cash Flows
 
 Notes
        to
        the Financial Statements
 
   
 
 
 ***Page
            - 21***
 
 
 
 INDEPENDENT
        AUDITOR’S REPORT
 
 
 To
        the
        Board of Directors and Stockholders of
 Austin
        Chalk Oil & Gas, LTD
 (formerly
        KNW Networks, Inc.)
 (A
        Development Stage Company)
 
 We
        have
        audited the accompanying balance sheets of Austin Chalk Oil & Gas, LTD.
        (formerly KNW Networks, Inc.) (a development stage company) as of December
        31,
        2004 and 2003 and the related statements of operations, stockholders’ equity and
        cash flows for the years ended December 31, 2004 and 2003 and from inception
        on
        December 16, 1998 through December 31, 2004. 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 audits.
 
 We
        conducted our audits in accordance with auditing standards generally accepted
        by
        the Public Company Accounting Oversight Board in the United States of America.
        Those standards require that we plan and perform the audits 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 audits 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 of Austin Chalk Oil & Gas, LTD.
        (formerly KNW Networks, Inc.) (a development stage company) as of December
        31,
        2004 and 2003 and the results of its operations and cash flows for the years
        ended December 31, 2004 and 2003 and from inception on December 16, 1998
        through
        December 31, 2004 in conformity with accounting principles generally accepted
        in
        the United States of America.
 
 The
        accompanying financial statements have been prepared assuming that the Company
        will continue as a going concern. As discussed in Note 2 to the financial
        statements, the Company has minimal assets and all revenues are from a
        shareholder. These factors raise substantial doubt about its ability to continue
        as a going concern. Management’s plans in regard to these matters are also
        described in the Note 2. The financial statements do not include any adjustments
        that might result from the outcome of this uncertainty.
 
 
 
 Chisholm,
        Bierwolf & Nilson
 Bountiful,
        Utah
 March
        24,
        2005
 
 ***Page
            - 22***
   **Austin
        Chalk Oil & Gas, LTD.**
 (formerly
        KNW NETWORKS, INC.)
 Balance
        Sheets
 
 
 December
                  312004
              
              
              2003ASSETSCURRENT ASSETSCash
              
              $
              44,909
              
              $
              26Total
                Current Assets
              
              
              44,909
              
              
              26OTHER ASSETSInvestment in Oil Properties
              
              
              74,500
              
              
              -Total
                Other Assets
              
              
              74,500
              
              
              -TOTAL
                ASSETS
              
              $
              119,409
              
              $
              26LIABILITIES
                  AND STOCKHOLDERS’
                  EQUITYCURRENT LIABILITIESAccounts payable
              
              $
              195
              
              $
              6,223Accounts payable - related party (Note
                4)
              
              
              19,287
              
              
              112,245Notes
                payable (Note 5)
              
              
              24,970
              
              
              35,000Total
                Current Liabilities
              
              
              44,452
              
              
              153,468STOCKHOLDERS’ EQUITYCommon stock, authorized100,000,000 shares of $0.001 par
                value,issued and outstanding and
                96,460,5354,568,848 shares,
                respectively
              
              
              96,460
              
              
              4,569Additional paid-in capital
              
              
              1,262,501
              
              
              899,224Subscription Receivable
              
              
              (2,500)
              
              
              -Retained
                earnings (deficit)
              
              
              (1,281,504)
              
              
              (1,057,235)Total Stockholders’ Equity
              
              
              74,957
              
              
              (153,442)TOTAL LIABILITIES AND STOCKHOLDERS’
                EQUITY
              
              $
              119,409
              
              $
              26
 
 The
        accompanying notes are an integral part of these
        financial statements.
   ***Page
            - 23***
   **Austin
        Chalk Oil & Gas, LTD.**
 (formerly
        KNW NETWORKS, INC.)
 (A
        Development Stage Company)
 Statements
        of Operations
 
 
 FromInception onDecember
                  16,For
                  the Year Ended
              
              
              1998
                  ThroughDecember
                  31,
              
              
              December
                  31,2004
              
              
              2003
              
              
              2004REVENUES
              
              $
              -
              
              $
              -
              
              $
              -EXPENSESGeneral
                  and administrative
              
              
              224,269
              
              
              453,635
              
              
              971,765Total
                  Expenses
              
              
              224,269
              
              
              453,635
              
              
              971,765INCOME
                (LOSS) FROM OPERATIONS:
              
              
              (224,269)
              
              
              (453,635)
              
              
              (971,765)DISCONTINUED OPERATIONS:Income
                  (loss) from discontinued operations
              
              
              -
              
              
              -
              
              
              (443,238)Gain
                  (loss) on disposal of operations
              
              
              -
              
              
              -
              
              
              133,499Income
                  (Loss) from Discontinued Operation
              
              
              -
              
              
              -
              
              
              (309,739)NET
                (LOSS)
              
              $
              (224,269)
              
              $
              (453,635)
              
              $
              (1,281,504)NET LOSS PER SHARE:(Loss)
                  from continuing operations
              
              $
              (0.00)
              
              $
              (0.02)
              
              $
              (0.08)(Loss)
                  from discontinued operations
              
              
              -
              
              
              -
              
              
              (0.03)Loss
                  Per Share
              
              $
              (0.00)
              
              $
              (0.02)
              
              $
              (0.11)Weighted
                average shares outstanding
              
              
              63,609,621
              
              
              21,145,624
              
              
              11,289,299
 
  
   The
              accompanying notes are an integral part of these financial
              statements.
 ***Page
            - 24***
   **Austin
        Chalk Oil & Gas, LTD.**
 (formerly
        KNW NETWORKS, INC.)
 (A
        Development Stage Company)
 Statements
        of Stockholders’ Equity
  Additional
              
              
              RetainedCommon
                  Stock
              
              
              Paid
              
              
              EarningsShares
              
              
              Amount
              
              
              In
                  Capital
              
              
              (Deficit)Balance at inception -December 16, 1998
              
              
              1,425
              
              $
              1
              
              $
              8,019
              
              $
              -Shares issued forsubscriptions receivable at $11.25
                per
                share
              
              
              174
              
              
              0
              
              
              9,800
              
              
              -Spin off adjustment (Note 1)
              
              
              -
              
              
              -
              
              
              6,844
              
              
              -Net
                loss for the period ended December 31, 1998
              
              
              -
              
              
              -
              
              
              -
              
              
              (11,209)Balance, December 31, 1998
              
              
              1,599
              
              
              1
              
              
              24,663
              
              
              (11,209)Shares issued for cash at$112.50 per share
              
              
              184
              
              
              0
              
              
              103,500
              
              
              -Shares issued for services at $112.79
                per share
              
              
              44
              
              
              0
              
              
              24,926
              
              
              -Shares issued for services at $1.15
                per
                share
              
              
              13
              
              
              0
              
              
              78
              
              
              -Net
                loss for the year ended December 31, 1999
              
              
              -
              
              
              -
              
              
              -
              
              
              (72,381)Balance, December 31, 1999
              
              
              1,840
              
              
              1
              
              
              153,167
              
              
              (83,590)Shares issued for servicesat $1.13
                per
                share
              
              
              4,503
              
              
              5
              
              
              25,333
              
              
              -Cancellation of shares
              
              
              (1,778)
              
              
              (2 )
              
              
              2
              
              
              -Net
                loss for the year ended December 31, 2000
              
              
              -
              
              
              -
              
              
              -
              
              
              (44,771 )Balance, December 31, 2000
              
              
              4,565
              
              
              4
              
              
              178,502
              
              
              (128,361 )
 
 
 
   The
              accompanying notes are an integral part of these financial
              statements.
 ***Page
            - 25***
   **Austin
        Chalk Oil & Gas, LTD.**
 (formerly
        KNW NETWORKS, INC.)
 (A
        Development Stage Company)
 Statements
        of Stockholders’ Equity (Continued)
  Additional
              
              
              RetainedCommon
                  Stock
              
              
              Paid
              
              
              EarningsShares
              
              
              Amount
              
              
              In
                  Capital
              
              
              (Deficit)Balance, December 31, 2000
              
              
              4,565
              
              $
              4
              
              $
              178,502
              
              $
              (128,361)Shares issued for services at $0.15
                per
                share
              
              
              26,666
              
              
              27
              
              
              19,973
              
              
              -Shares issued for services at $0.15
                per
                share
              
              
              66,666
              
              
              67
              
              
              49,933
              
              
              -Cancellation of shares
              
              
              (2,334 )
              
              
              (3)
              
              
              3
              
              
              -Shares issued in round-up
              
              
              1
              
              
              -
              
              
              -
              
              
              -Net
                loss for the year ended December 31, 2001
              
              
              -
              
              
              -
              
              
              -
              
              
              (181,378 )Balance, December 31, 2001
              
              
              95,564
              
              
              95
              
              
              248,411
              
              
              (309,739 )Shares issued in round up
              
              
              3,950
              
              
              4
              
              
              283
              
              
              -Shares issued for reduction of debt
                at
                $0.44 per share
              
              
              22,667
              
              
              23
              
              
              49,977
              
              
              -Shares issued for reduction of debt
                at
                $0.75 per share
              
              
              26,667
              
              
              27
              
              
              99,973
              
              
              -Shares issued for services at $0.05
                per
                share
              
              
              420,000
              
              
              420
              
              
              104,580
              
              
              -Net
                loss for the year ended December 31, 2002
              
              
              -
              
              
              -
              
              
              -
              
              
              (293,861)Balance, December 31, 2002
              
              $
              568,848
              
              $
              569
              
              $
              503,224
              
              $
              (603,600)Shares issued for services at $0.02
                per
                share
              
              
              4,000,000
              
              $
              4,000
              
              $
              396,000
              
              $
              -Net
                loss for the year ended December 31, 2003
              
              
              -
              
              
              -
              
              
              -
              
              
              (453,635)Balance,
                December 31, 2003
              
              $
              4,568,848
              
              $
              4,569
              
              $
              899,224
              
              $
              (1,057,235)
 
 
 The
              accompanying notes are an integral part of these financial
              statements.
 ***Page
            - 26***
   **Austin
        Chalk Oil & Gas, LTD.**
 (formerly
        KNW NETWORKS, INC.)
 (A
        Development Stage Company)
 Statements
        of Stockholders’ Equity (Continued)
  Additional
              
              
              RetainedCommon
                  Stock
              
              
              Paid
              
              
              EarningsShares
              
              
              Amount
              
              
              In
                  Capital
              
              
              (Deficit)Balance, December 31, 2003
              
              
              4,568,848
              
              $
              4,569
              
              $
              899,224
              
              $
              (1,057,235)Shares issued for reduction of debt
                at
                $0.50 per share
              
              
              300,000
              
              
              300
              
              
              49,700
              
              
              -Shares issued for services at $0.50
                per
                share
              
              
              2,250,000
              
              
              2,250
              
              
              72,750Shares issued for reduction of debt
                at
                $0.01 per share
              
              
              35,291,688
              
              
              35,292
              
              
              82,377
              
              
              -Shares issued for cash at $0.01 per
                share
              
              
              54,000,000
              
              
              54,000
              
              
              126,000
              
              
              -Stock options granted for
                services
              
              
              -
              
              
              -
              
              
              30,000
              
              
              -Stock options exercised at $0.05 per
                share
              
              
              50,000
              
              
              50
              
              
              2,450
              
              
              -Net loss for the year ended December
                31, 2004
              
              
              -
              
              
              -
              
              
              -
              
              
              (224,269)Balance, December 31, 2004
              
              
              96,460,536
              
              $
              96,461
              
              $
              1,262,501
              
              $
              (1,281,504)
   The
              accompanying notes are an integral part of these financial
              statements.
 ***Page
            - 27***
  **Austin
        Chalk Oil & Gas, LTD.**
 (formerly
        KNW NETWORKS, INC.)
 (A
        Development Stage Company)
 Statements
        of Cash Flows
   FromInception
                  onDecember
                  16,For
                  the Year Ended
              
              
              1998
                  throughDecember
                  31,
              
              
              December
                  31,2004
              
              
              2003
              
              
              2004CASH FLOWS FROM OPERATING
                ACTIVITIESNet loss
              
              $
              (224,269 )
              
              $
              (453,635 )
              
              $
              (1,281,504 )Adjustments to reconcile net loss
                to
                net cash provided by operations:Stock issued for services
              
              
              75,000
              
              
              400,000
              
              
              700,629Stock issued for satisfaction of
                payables
              
              
              167,668
              
              
              -
              
              
              367,652Stock options issued for
                services
              
              
              30,000
              
              
              -
              
              
              30,000Bad debt
              
              
              -
              
              
              -
              
              
              11,154Decrease in accounts payable
              
              
              (6,028)
              
              
              245
              
              
              14,204Decrease
                in accounts payable - related party
              
              
              (92,958)
              
              
              53,272
              
              
              19,287Net
                Cash Flows Used in Operating Activities
              
              
              (50,587)
              
              
              (118)
              
              
              (138,578 )CASH FLOWS USED IN INVESTMENT
                ACTIVITIESCash payments for notes
                receivable
              
              
              -
              
              
              -
              
              
              (63,993 )Cash
                payments for oil properties
              
              
              (74,500)
              
              
              -
              
              
              (74,500 )Net
                Cash Used in Investment Activities
              
              
              (74,500)
              
              
              -
              
              
              (138,493 )CASH FLOWS FROM FINANCING
                ACTIVITIESCash received from notes
                payable
              
              
              -
              
              
              -
              
              
              35,000Payments on notes payable
              
              
              (10,030)
              
              
              -
              
              
              (10,030)Cash received from subscriptions
                receivable
              
              
              -
              
              
              -
              
              
              9,800Cash received from spin-off (Note
                1)
              
              
              -
              
              
              -
              
              
              3,710Issuance
                of stock for cash
              
              
              180,000
              
              
              -
              
              
              283,500Net
                Cash Flows from Financing Activities
              
              
              169,970
              
              
              -
              
              
              321,980NET INCREASE (DECREASE) IN
                CASH
              
              
              44,883
              
              
              (118)
              
              
              44,909CASH,
                BEGINNING OF YEAR
              
              
              26
              
              
              114
              
              
              -CASH,
                END OF YEAR
              
              $
              44,909
              
              $
              26
              
              $
              44,909
 
   The
              accompanying notes are an integral part of these financial
              statements.
 ***Page
            - 28***
   **Austin
        Chalk Oil & Gas, LTD.**
 (formerly
        KNW NETWORKS, INC.)
 (A
        Development Stage Company)
 Staments
        of Cash Flows (Continued)
   FromInception
                onDecember
                16,For
                  the Year Ended
              
              1998
                ThroughDecember
                  31,
              
              December
                31,2004
              
              
              2003
              
              
              2004SUPPLEMENTAL CASH FLOW
                INFORMATIONCash Paid for:Interest
              
              $
              -
              
              $
              -
              
              $
              -Taxes
              
              $
              -
              
              $
              -
              
              $
              -
  
 SUPPLEMENTAL
        NON-CASH INFORMATION
 
 During
        June 2002, the Company issued 22,667 shares of common stock for satisfaction
        of
        payables  in
        the
        amount of $50,000.
 
 During
        September 2002, the Company issued 26,667 shares of common satisfaction of
        payables
 in
        the
        amount of $100,000.
 
 During
        October 2002, the Company issued 420,000 shares of common stock for services
        valued at
 $105,000.
 
 Fraction
        shares in the amount of 3,950 were issued as a result of a 10:1, 3:1, and
        5:1
        reverse stock splits during the year ended December 31, 2002.
 
 During
        January 2003, the Company issued 4,000,000 shares of common stock for services
        valued at $400,000, to an officer of the Company.
 
 During
        March 2004, the Company issued 300,000 shares of common stock for satisfaction
        of payables in the amount of $50,000.
 
 During
        March 2004, the Company issued 2,250,000 shares of common stock for services
        valued at $75,000, to an officer of the Company.
 
 During
        May 2004, the Company issued 35,291,688 shares of common stock for satisfaction
        of payables in the amount of $117,669.
 
 During
        July 2004, the Company issued 50,000 shares of common stock upon the exercise
        of
        options  granted
        at $0.05 per share or $2,500.
 
 During
        July 2004, the Company granted options to purchase 200,000 shares of common
        stock for services valued at $30,000.
 
   ***Page
            - 29***
   **Austin
        Chalk Oil & Gas, LTD.**
 (formerly
        KNW NETWORKS, INC.)
 (A
        Development Stage Company)
 Notes
        to the Financial Statements
 December
        31, 2004 and 2003
 
 NOTE
                  1 -
              SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES
 
 a.
        Organization
 
 Austin
        Chalk Oil & Gas, LTD., (“the Company”) is a Nevada corporation organized on
        December 16, 1998. The Company was created on this date through a spin off
        of
        the operations and assets to the shareholders of Knowledge Networks
        Acquisitions, Inc. The Company specialized in Microsoft consulting and training
        as well as telecommunications consulting, training and outsourcing.
 
 b.
        Accounting Method
 
 The
        Company recognizes income and expenses on the accrual basis of
        accounting.
 
 c.
        Earnings (Loss) Per Share
 
 The
        computation of earnings per share of common stock is based on the weighted
        average number of shares outstanding at the date of the financial
        statements.
 
 FromInception
                  onDecember
                  16,For
                  the Years Ended
              
              
              1998
                  ThroughDecember
                  31,
              
              
              December
                  31,2004
              
              
              2003
              
              
              2004Numerator - loss fromcontinuing operations
              
              $
              (224,269)
              
              $
              (453,635)
              
              $
              (971,765)Numerator - loss fromdiscontinued
                operations
              
              
              -
              
              
              -
              
              
              (309,739 )Denominator - weightedaverage
                number of shares outstanding
              
              
              63,609,621
              
              
              21,145,624
              
              
              11,289,299Loss per share:Loss from continuing
                operations
              
              $
              (0.00
              
              $
              (0.02)
              
              $
              (0.08)Loss from discontinued
                operations
              
              
              -
              
              
              -
              
              
              (0.03 )Loss per share
              
              $
              (0.00 )
              
              $
              (0.02)
              
              $
              (0.11 )
  
   ***Page
            - 30***
   **Austin
        Chalk Oil & Gas, LTD.**
 (formerly
        KNW NETWORKS, INC.)
 (A
        Development Stage Company)
 Notes
        to
        the Financial Statements
 December
        31, 2004 and 2003
 
 NOTE
                  1 -
              SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES
                  (Continued)
 
 d.
        Cash
        and Cash Equivalents
 
 The
        Company considers all highly liquid investments with maturities of three
        months
        or less to be cash equivalents.
 
 e.
        Provision for Income Taxes
 
 No
        provision for income taxes has been recorded due to net operating loss
        carryforwards totaling approximately $1,281,504 that will be offset against
        future taxable income. These NOL carryforwards begin to expire in the year
        2019.
        No tax benefit has been reported in the financial statements because the
        Company
        believes there is a 50% or greater chance the carryforward will expire
        unused.
 
 Accordingly,
        per FASB 109, the potential tax benefits of the loss carryforwards are offset
        by
        the valuation of the same amount.
 
 Deferred
        tax assets and the valuation account is as follows at December 31, 2004 and
        2003.
   December
                  31,2004
              
              
              2003Deferred tax asset:NOL carryforward
              
              $
              435,711
              
              $
              359,460Valuation allowance
              
              
              (435,711)
              
              
              (359,460)Total
              
              
              -
              
              
              -
  
 f.
        Use of
        Estimates
 
 The
        preparation of financial statements in conformity with generally accepted
        accounting principles requires management to make estimated and assumptions
        that
        affect reported amounts of assets and liabilities, disclosure of contingent
        assets and liabilities at the date of the financial statements and revenues
        and
        expenses during the reporting period. Actual results could differ from those
        estimates.
 
 g.
        Recently Enacted Accounting Standards
 
 Statement
        of Financial Accounting Standards (“SFAS”) No. 151, “Inventory Costs - an
        amendment of ARB No. 43, Chapter 4”, SFAS No. 152, “Accounting for Real Estate
        Time-Sharing Transactions - an amendment of FASB Statements No. 66 and 67”, SFAS
        No. 153, “Exchanges of Nonmonetary Assets - an amendment of APB Opinion No. 29”,
        and SFAS No. 123 (revised 2004), “Share-Based Payment”, were recently issued.
        SFAS No. 151, 152, 153 and 123 (revised 2004) have no current applicability
        to
        the Company or their effect on the financial statements would not have been
        significant.
 
 
   ***Page
            - 31***
   **Austin
        Chalk Oil & Gas, LTD.**
 (formerly
        KNW NETWORKS, INC.)
 (A
        Development Stage Company)
 Notes
        to
        the Financial Statements
 December
        31, 2004 and 2003
 
 NOTE
        2
        -GOING CONCERN
 
 The
        accompanying financial statements have been prepared assuming that the Company
        will continue as a going concern. The Company is dependent upon raising capital
        to continue operations. The financial statements do not include any adjustments
        that might result from the outcome of this uncertainty. It is management’s plan
        to remain in the development stage until a profitable opportunity is found.
        The
        Company has minimal expenses and will be funded by shareholders during the
        coming year.
 
 NOTE
                  3 -
              COMMON
                  STOCK
 
 During
        February 2001, the Company canceled 11,667 shares of common stock.
 
 During
        June 2001, the Company authorized a 10 for 1 reverse split. The financial
        statements have been retroactively restated to reflect the reverse
        split.
 
 During
        July 2001, the Company issued 133,333 shares of common stock for services
        valued
        at $20,000 of which 46,666 shares were issued to an officer of the
        Company.
 
 During
        July 2001, the Company issued 333,333 shares of common stock for services
        valued
        at $50,000 to an officer of the Company
 
 During
        June 2002, the Company issued 113,334 shares of common stock for forgiveness
        of
        debt in the amount of $50,000.
 
 During
        September 2002, the Company issued 133,333 shares of common stock for
        forgiveness of debt in the amount of $100,000.
 
 During
        October 2002, the Company issued 2,100,000 shares of common stock for services
        valued at $105,000.
 
 Fraction
        shares in the amount of 19,748 were issued as a result of a 10:1, 3:1, and
        5:1
        reverse stock splits during the year ended December 31, 2002.
 
 During
        February 2002, the Company authorized a 10 for 1 reverse split. The financial
        statements have been retroactively restated to reflect the reverse
        split.
 
 During
        September 2002, the Company authorized a 3 for 1 reverse split. The financial
        statements have been retroactively restated to reflect the reverse
        split.
 
 During
        October 2002, the Company authorized a 5 for 1 reverse split. The financial
        statements have been retroactively restated to reflect the reverse split.
 
 
   ***Page
            - 32***
   **Austin
        Chalk Oil & Gas, LTD.**
 (formerly
        KNW NETWORKS, INC.)
 (A
        Development Stage Company)
 Notes
        to
        the Financial Statements
 December
        31, 2004 and 2003
 
 NOTE
        3 -
        COMMON STOCK (Continued)
 
 During
        January 2003, the Company issued 4,000,000 shares of common stock for services
        valued at $400,000.
 
 During
        February 2004, the Company authorized a 15 for 1 reverse split. The financial
        statements have been retroactively restated to reflect the reverse
        split.
 
 During
        March 2004, the Company issued 300,000 shares of common stock for satisfaction
        of payables in the amount of $50,000.
 
 During
        March 2004, the Company issued 2,250,000 shares of common stock for services
        valued at $75,000, to an officer of the Company.
 
 During
        May 2004, the Company issued 35,291,688 shares of common stock for satisfaction
        of payables in the amount of $117,669.
 
 During
        May 2004, the Company authorized a 3 for 1 forward split. The financial
        statements have been retroactively restated to reflect the forward
        split.
 
 During
        July 2004, the Company issued 50,000 shares of common stock upon the exercise
        of
        options granted at $0.05 per share or $2,500.
 
 During
        July 2004, the Company granted options to purchase 200,000 shares of common
        stock for services valued at $30,000.
 
 NOTE
        4 -
        RELATED PARTY TRANSACTIONS
 
 During
        1999, $63,993 was paid to an officer the Company. The note is payable upon
        demand with no provision for interest.
  During
        2000, sales of $55,000 were to a shareholder.
 
 During
        2000, 22,517 shares of common stock were issued to officers and shareholders
        for
        consulting services of $25,338.
 
 During
        2000, services were performed by a shareholder. The balance payable at December
        31, 2000 is $14,009
 
 During
        January 2001, the Company forgave an officer, of a $63,993 note
        receivable
 
 During
        July 2001, the Company issued 333,333 and 133,333 shares of common stock
        valued
        at $50,000 and $20,000 to two officers of the Company.
 
 
 NOTE
        5 -
        NOTES PAYABLE
 
 On
        December 14, 2001, the Company entered into a note payable agreement with
        Patagonia Commercial.S.A. in the amount of $35,000. The note bears no interest
        and is due December 2002. As of December 31,2004, the balance on the note
        is
        $24,970.
 
   ***Page
            - 33***
   **Austin
        Chalk Oil & Gas, LTD.**
 (formerly
        KNW NETWORKS, INC.)
 (A
        Development Stage Company)
 Notes
        to
        the Financial Statements
 December
        31, 2004 and 2003
  NOTE
        6 -
        OPTIONS FOR PURCHASE OF COMMON STOCK
 
 In
        July
        2004, the Company established two agreements with individuals to purchase
        common
        stock options. The Company granted a total of 200,000 options with an exercise
        price of $.05. these options expire 10 years from the grant date. The following
        tables summarize the information regarding options outstanding at December
        31,
        2004.
 
 Stock
                  Option Agreement
              
              2004WeightedNumber
              
              
              Averageof
                  Shares
              
              
              Exercise
                  PriceOutstanding
                  at beginning of year
              
              
              -
              
              $
              -Granted
              
              
              200,000
              
              
              .05Exercised
              
              
              -
              
              
              -Canceled
              
              
              -
              
              
              -Outstanding
                  at Quarter end
              
              
              200,000
              
              $
              .05Exercisable
                  at end of year
              
              
              200,000
              
              $
              .05
 In
        accordance with SFAS 123, "Accounting for Stock-Based Compensation" an option
        expense has been recognized for the quarter ended December 31, 2004 in the
        amount of $30,000.
 2004Risk-free
                  interest rate
              4.25
                  %Dividend
                  yield
              0
                  %Volatility
              288
                  %Average
                  expected term (years to exercise date)
              1/12
 
 Officer
        stock options outstanding and exercisable under this agreement as of December
        31, 2004 are:
 WeightedWeighted
              Average
              
              WeightedRange
              Number
                  of
              Average
              Remaining
              Number
                  of
              AverageOf
                  Exercise
              Options
              of
                  Exercise
              Contractual
              Options
              of
                  ExercisePrice
              Granted
              Price
              Life
                  (years)
              Vested
              Price$
                  .05
              200,000
              $
                  .05
              9.4
              200,000
              $
                  .05
  
 ***Page
            - 34***