United States


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549








FORM 10-QSB








[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)


OF THE SECURITIES EXCHANGE ACT OF 1934





For the Quarter ended June 30, 2004





Commission File Number: 0-30565





Austin Chalk Oil and Gas, Ltd.





formerly KNW Networks, Inc.





Nevada 91-2014670


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








5868 Westheimer, Houston, TX 77057


(Address of principal executive offices)      (Zip Code)








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





As of June 30, 2004 the Total Issued and Outstanding was 96,410,354





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











Page - 1










PART I: FINANCIAL INFORMATION





Item 1. Financial Statements.





The financial statements, for the three months and six months ended June 30, 2004, included herein have been prepared by the Company, without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnotes disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information not misleading.











**The Remainder of this Page is Intentionally left Blank**







Page - 2


Austin Chalk Oil & Gas LTD
 
 (Formerly KNW Networks, Inc.)
 
 Financial Statements
 
 June 30, 2004






Page - 3






Austin Chalk Oil & Gas, LTD
 (Formerly KNW Networks, Inc.)
 (a Development Stage Company)
 **Balance Sheets**
   June 30,


December 31,2004


2003ASSETS


(Unaudited)Current AssetsCash

$
75,392

$
26Total Current Assets


75,392


26Other AssetsInvestment Oil Properties


74,500


-Total Other Assets


74,500


-Total Assets

$
149,892

$
26LIABILITIES AND STOCKHOLDERS' EQUITYCurrent LiabilitiesAccounts Payable

$
-

$
6,223Notes Payable - Related Party


12,632


112,245Notes Payable


-


35,000Total Current Liabilities


12,632


153,468Total Liabilities


12,632


153,468Stockholders' EquityCommon Stock, Authorized 100,000,000 Shares of $.001 Par Value,96,410,535 and 22,844,254 shares issued and outstanding respectively


96,411


22,845Additional Paid in Capital


1,230,051


880,948Accumulated Deficit


(1,179,187
)

(1,057,235
)Subscriptions Receivable


(10,015
)Total Stockholders' Equity


137,260


(153,442
)Total Liabilities and Stockholders' Equity

$
149,892

$
26




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

Page - 4






Austin Chalk Oil & Gas, LTD
 (Formerly KNW Networks, Inc.)
 (a Development Stage Company)
 **Statements of Operations**
 (Unaudited)
   For the six


For the six


For the three


For the three


From Inceptionmonths ended


months ended


months ended


months ended


on December 16, 1998June 30,


June 30,


June 30,


June 30,


thru June 30,2004


2003


2004


2003


2004Revenues

$
-

$
-

$
-

$
-

$
-Operating ExpensesGeneral & Administrative


118,556


433,221


26,955


14,001


866,052Total Operating Expenses


118,556


433,221


26,955


14,001


866,052Operating Income (Loss) before discontinued operations


(118,556
)

(433,221
)

(26,955
)

(14,001
)

(866,052
)(Loss) from discontinued operations


-


-


-


-


(443,238
)(Loss) from disposal of discontinued operations


-


-


-


-


133,499Net (loss) from operations


(118,556
)

(433,221
)

(26,955
)

(14,001
)

(1,175,791
)Other Income (Expense)Impairment Loss














-Miscellaneous Income


-


-


-


-


-Interest Expense


(3,396
)

-


-


-


(3,396
)Total Other Income (Expense)


(3,396
)

-


-


-


(3,396
)Net Income (Loss)

$
(121,952
)
$
(433,221
)
$
(26,955
)
$
(14,001
)
$
(1,179,187
)Net Income (Loss) Per Share

$
(0.00
)
$
(0.02
)
$
(0.00
)
$
(0.00
)
$
(0.33
)Weighted Average Shares Outstanding


30,448,030


22,070,773


56,180,434


22,844,254


3,547,161
















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Austin Chalk Oil & Gas, LTD
 (Formerly KNW Networks, Inc.)
 (a Development Stage Company)
 **Statements of Cash Flows**
 (Unaudited)
   From inceptionFor the six months ended


on December 16,June 30,


to June 30,


19982004


2003


2004Cash Flows from Operating ActivitiesNet Income (Loss)

$
(121,952
)
$
(433,221
)
$
(1,179,187
)Adjustments to Reconcile Net Loss to Net CashProvided by Operations:Bad debt expense


-


-


11,154Stock Issued for Services


-


400,000


625,629Stock issued for forgiveness of debt


242,669


-


442,653Change in Assets and Liabilities


-


-


-(Increase) in Accounts Recievable


-(Increase) in Accounts Payable -related


(134,613
)

33,127


(114,381
)Increase (Decrease) in Accounts Payable and Accrued Expenses


(6,223
)

-


106,022Net Cash Provided(Used) by Operating Activities


(20,119
)

(94
)

(108,110
)Cash Flows from Investing ActivitiesCash paid for Oil Interests


(74,500
)

-


(138,493
)Net Cash Provided (Used) by Investing Activities


(74,500
)

-


(138,493
)Cash Flows from Financing ActivitiesCash received from notes payable


-


-


35,000Cash received from subscription receivable


-


-


9,800Cash received from spin-off


-


-


3,710Common stock issued for cash


169,985


-


273,485Net Cash Provided(Used) by Financing Activities


169,985


-


321,995Increase (Decrease) in Cash


75,366


(94
)

75,392Cash and Cash Equivalents at Beginning of Period


26


144


-Cash and Cash Equivalents at End of Period


75,392


50

$
75,392Cash Paid For:Interest

$
-

$
-

$
-Income Taxes

$
-

$
-

$
-
















Page - 6




Austin Chalk Oil & Gas, LTD


(Formerly KNW Networks, Inc.)
 **Notes to the Financial Statements**
 June 30, 2004
 
 
 
 GENERAL
 
 Austin Chalk Oil & Gas, LTD (Formerly KNW Networks, Inc.) (the Company) has elected to omit substantially all footnotes to the financial statements for the six months ended June 30, 2004 since there have been no material changes (other than indicated in other footnotes, and note 1) to the information previously reported by the Company in their Annual Report filed on Form 10-KSB for the fiscal year ended December 31, 2003.
 
 
 Note 1: Stockholders Equity
 
 On February 27, 2004, the company did a 15 to 1 reverse split on common stock, and in the month of March issued 100,000 shares, at .50 per share, of common stock for services valued at $50,000, and 750,000 shares, at .10 per share, of common stock for debt relief valued at $75,000. On May 13, 2004, the company did a 3 to 1 forward split on common stock, and in the Month of May issued 11,763,896 shares, at .01 per share, of common stock for the relief of debt valued at $117,638.
 
 
 
 UNAUDITED INFORMATION
 
 The information furnished herein was taken from the books and records of the Company without audit. However, such information reflects all adjustments which are, in the opinion of management, necessary to properly reflect the results of the interim period presented. The information presented is not necessarily indicative of the results from operations expected for the full fiscal year.








Page - 7






Item 2. Discussion and Analysis or Plan of Operation .
 
 ( a ) Plan of Operation for the next twelve months . Our plan of operation is substantially changed from our annual report for the year ended December 31, 2003, and our previous quarterly report for the period ending March 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.
 
 On or about July 8, 2004, we joined in a purchase agreement to acquire a working interest in a horizontally drilled well in the Giddings Field, Austin Chalk Trend on acreage of ExxonMobil Production Company in Lee County Texas. This well is being drilled by Holifield Oil Company and is 75% owned by ExxonMobil. Since 1976, Holifield Oil Company has drilled 1500 wells in the Austin Chalk, which wells have produced more than 200 million barrels of oil equivalent.
 
 We are participants in a five-well package in the Austin-Chalk Field.
 
 We are presently negotiating for participation in other fields with Holifield/ExxonMobil.
 
 ( b ) Discussion and Analysis of Financial Condition and Results of Operations . We have enjoyed no revenues during the periods covered by this report or corresponding periods during the previous fiscal year.
 
 
 
 Page - 8
 
 **PART II: OTHER INFORMATION**
   
 Item 1. Legal Procedings. None.
 
 Item 2. Changes in Securities. None.
 
 Item 3. Defaults on Senior Securities. None.
 
 Item 4. Submission of Matters to Vote of Security Holders . About June 3, 2004, our shareholders authorized and we effected a change of our corporate name to Austin Chalk Oil and Gas, Ltd.
 
 Item 5. Other Information .
 
 ( a ) Officers and Directors . 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.
 
 ( b ) Officer Options . On July 8, 2004
 
 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, in part, on August 9, 2004, and acquired 50,000 shares for $2500.00.
 
 **(c) Corporate Address**
 
 On August 16th, 2004, the corporation moved its corporate address to
 5868 Westheimer, Houston, TX, 77057
 
 Item 6. Exhibits and Reports on Form 8-K.
 
 31. Section 302 Certification
 
 32.   Certification(s) Pursuant to 18 USC Section 1350;
 
 
 SIGNATURES
 
 Pursuant to the requirements of the Securities Exchange Act of 1934, this Form 10-Q Report for the Quarter ended June 30, 2004, has been signed below by the following person on behalf of the Registrant and in the capacity and on the date indicated.
 
 
 Austin Chalk Oil & Gas, Inc.
 
 Dated: August 17, 2004  by
 
 
 
 /s/ Marlen L. Roepke
 Marlen L. Roepke
 Secretary/Director
 
  
 Page - 9
  
 Exhibit 31
 
 Section 302 Certification
 
 
 Page - 10
    CERTIFICATIONS PURSUANT TO SECTION 302
 
 I, Marlen L. Roepke , certify that:
 
 1. I have reviewed this quarterly report on Form 10-QSB of Austin Chalk Oil & Gas, Inc. .;
 
 2. Based on my knowledge, this quarterly 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 quarterly report;
 
 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly 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 quarterly 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 quarterly report (the "Evaluation Date"); and
 
 c) presented in this quarterly 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 quarterly 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: August 17, 2004  by
 
 
 
 /s/ Marlen L. Roepke
 Marlen L. Roepke
 Secretary/Director
 
  
 Page - 11
  
 
 
 
 Exhibit 32
 
 CERTIFICATION PURSUANT TO 18 USC SECTION 1350
 
 
 Page - 12
    
 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 Quarterly Report of Austin Chalk Oil & Gas, Inc. a Nevada corporation (the "Company"), on 10-QSB for June 30, 2004 as filed with the Securities and Exchange Commission (the "Report"), I, Marlen L. Roepke, (Sole Officer Director of the Company, on June 30, 2004), certify, pursuant to 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350), that to my knowledge:
 
 (1) The Report fully complies with the requirements of section 13(a) or 15(d) ofthe Securities Exchange Act of 1934; and
 
 (2) The information contained in the Report fairly presents, in all materialrespects, the financial condition and results of operations of the Company.
 
 
 Dated: August 17, 2004  by
 
 
 
 /s/ Marlen L. Roepke
 Marlen L. Roepke
 Secretary/Director
 
 Page - 13