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 September 30, 2004
 
 Commission File Number: 0-30565
 
 **Austin Chalk Oil and Gas, Ltd.**
 
 (formerly KNW Networks, Inc. )
 (24843 Del Prado, Suite 318, Dana Point, CA 92629)
  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
 
 As of September 30, 2004 the Total Issued and Outstanding was 96,410,354
 
 Transitional Small Business Disclosure Format (check one): yes [   ] no [X]
 
 
 
 
 
 **PART I: FINANCIAL INFORMATION**
 
 **Item 1. Financial Statements.**
 
 The financial statements, for the three months and nine months ended September 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 - 1***
 
 
 
 
 **Austin Chalk Oil & Gas LTD**
 
 Formerly KNW Networks, Inc.
 
 Financial Statements
 
 September 30, 2004
 
 
 
 ***Page - 2***
 
 **Austin Chalk Oil & Gas, LTD**
 (Formerly KNW Networks, Inc.)
 (a Development Stage Company)
 Balance Sheets
 **ASSETS**September 30,


December 31,2004


2003(Unaudited)Current AssetsCash

$
15,381

$
26Notes Receivable


40,000


-Total Current Assets


55,381


26Other AssetsInvestment Oil Properties


74,500


-Total Other Assets


74,500


-Total Assets

$
129,881

$
26**LIABILITIES AND STOCKHOLDERS' EQUITY**Current LiabilitiesAccounts Payable

$
-

$
6,223Notes Payable - Related Party


17,894


112,245Notes Payable


-


35,000Total Current Liabilities


17,894


153,468Total Liabilities


17,894


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


1,260,050


880,948Accumulated Deficit


(1,234,459
)

(1,057,235
)Subscriptions Receivable


(10,015
)Total Stockholders' Equity


111,987


(153,442
)Total Liabilities and Stockholders' Equity

$
129,881

$
26










***Page - 3***
 
 **Austin Chalk Oil & Gas, LTD**
 (Formerly KNW Networks, Inc.)
 (a Development Stage Company)
 Statements of Operations
 (Unaudited)
 For the nine


For the nine


For the three


For the three


From Inceptionmonths ended


months ended


months ended


months ended


on December 16, 1998September 30


September 30,


September 30,


September 30,


thru Sept. 30,2004


2003


2004


2003


2004Revenues

$
-

$
-

$
-

$
-

$
-Operating ExpensesGeneral & Administrative


173,828


438,736


55,272


7,117


921,324Total Operating Expenses


173,828


438,736


55,272


7,117


921,324Operating Income (Loss) before discontinued operations


(173,828
)

(438,736
)

(55,272
)

(7,117
)

(921,324
)(Loss) from discontinued operations


-


-


-


-


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


-


-


-


-


133,499Net (loss) from operations


(173,828
)

(438,736
)

(55,272
)

(7,117
)

(1,231,063
)Other Income (Expense)Impairment Loss














-Miscellaneous Income


-


-


-


-


-Interest Expense


(3,396
)

(6,897
)

-


(5,294
)

(3,396
)Total Other Income (Expense)


(3,396
)

(6,897
)

-


(5,294
)

(3,396
)Net Income (Loss)

$
(177,224
)
$
(445,633
)
$
(55,272
)
$
(12,411
)
$
(1,234,459
)Net Income (Loss) Per Share

$
(0.01
)
$
(0.02
)
$
(0.00
)
$
(0.00
)
$
(0.16
)Weighted Average Shares Outstanding


30,448,030


22,845,000


96,410,736


22,845,000


7,586,617











***Page - 4***


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


From inceptionSeptember 30,


on December 16, 1998to Sept. 30,2004


2003


2004Cash Flows from Operating ActivitiesNet Income (Loss)

$
(177,224
)
$
(433,221
)
$
(1,234,459
)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


(139,352
)

33,127


(119,120
)Increase (Decrease) in Accounts Payable and Accrued Expenses


(6,223
)

-


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


(80,130
)

(94
)

(168,121
)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


15,355


(94
)

15,381Cash and Cash Equivalents at Beginning of Period


26


144


-Cash and Cash Equivalents at End of Period


15,381


50

$
15,381Cash Paid For:Interest

$
-

$
-

$
-Income Taxes

$
-

$
-

$
-














***Page - 5***










**Austin Chalk Oil & Gas LTD**


(Formerly KNW Networks, Inc.)


Notes to the Financial Statements


September 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 September 30, 2004 since there have been no material changes (other than indicated in other footnotes, and note 1, and note 2) 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.





Note 2: 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 September 30, 2004.







Stock Option Agreement

2004WeightedAverageNumber


Exerciseof Shares


PriceOutstanding at beginning of year


-

$
-Granted


200,000


.05ExercisedCanceledOutstanding at Quarter end


200,000

$
.05Exercisable at end of year


200,000

$
.05







***Page - 6***













**Austin Chalk Oil & Gas LTD**


(Formerly KNW Networks, Inc.)


Notes to the Financial Statements


September 30, 2004











Note 2: Options for Purchase of Common Stock continued








In accordance with SFAS 123, "Accounting for Stock-Based Compensation" an option expense has been recognized for the quarter ended September 30, 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 September 30, 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
9.7
200,000
$ .05











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 June 30, 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, 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. 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).





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 oil equivalent - a production rate 4.7 times greater than the average of all other operators in the same area.





The Company, has obtained an option to participate in the next five wells to be drilled by Holifield Oil.





**(** **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 Proceedings.** 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, Darrell 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.Darrell Figgwas 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. Roepkewas 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.





**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 September 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: November 15, 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,Darrell Figg, 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: November 15, 2004


by











/s/ Darrell Figg


Darrel Figg


President/Director








***Page - 11***





**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: November 15, 2004  by











/s/ Marlen L. Roepke


Marlen L. Roepke


Secretary/Director










***Page - 12***





**Exhibit 32**





**CERTIFICATION PURSUANT TO 18 USC SECTION 1350**












***Page - 13***


**CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350**
 
 **AS ADOPTED PURSUANT TO SECTION 906 OF THE**
 **SARBANES-OXLEY ACT OF 2002**
 
 
 
 In connection with the Quarterly Report of *Austin Chalk Oil & Gas, Inc.* a Nevada corporation (the "Company"), on 10-QSB for September 30, 2004 as filed with the Securities and Exchange Commission (the "Report"), I, Darrell Figg , (President / Director of the Company, on September 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) of the Securities Exchange Act of 1934; and
  
 (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
 
 Dated: November 15, 2004

















/s/ Darrell Figg
 Darrel Figg
 President/Director


***Page - 14***


**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 September 30, 2004 as filed with the Securities and Exchange Commission (the "Report"), I, Marlen L. Roepke, (Secretary Officer Director of the Company, on September 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) of the Securities Exchange Act of 1934; and







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








Dated: November 15, 2004


by








/s/ Marlen L. Roepke


Marlen L. Roepke


Secretary/Director









***Page - 15***