Sharewell Capital 10QSB 2004 Q3 Quarterly report (small business)

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 endedSeptember 30, 2004

Commission File Number:0-30565

Austin Chalk Oil and Gas, Ltd.

(formerlyKNW 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 ofSeptember 30, 2004 the Total Issued and Outstanding was96,410,354

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


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Austin Chalk Oil & Gas LTD

Formerly KNW Networks, Inc.

Financial Statements

September 30, 2004


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Austin Chalk Oil & Gas, LTD

(Formerly KNW Networks, Inc.)

(a Development Stage Company)

Balance Sheets

ASSETS
		September 30,			December 31,
		2004			2003
		(Unaudited)
Current Assets
Cash	$	15,381		$	26
Notes Receivable		40,000			-

Total Current Assets		55,381			26

Other Assets
Investment Oil Properties		74,500			-

Total Other Assets		74,500			-

Total Assets	$	129,881		$	26


LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Accounts Payable	$	-		$	6,223
Notes Payable - Related Party		17,894			112,245
Notes Payable		-			35,000

Total Current Liabilities		17,894			153,468


Total Liabilities		17,894			153,468

Stockholders' Equity
Common Stock, Authorized 100,000,000 Shares of $.001 Par Value,
96,410,535 and 22,844,254 shares issued and outstanding respectively		96,411			22,845
Additional Paid in Capital		1,260,050			880,948
Accumulated 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

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


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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 Inception
		months ended			months ended			months ended			months ended			on December 16, 1998
		September 30			September 30,			September 30,			September 30,			thru Sept. 30,
		2004			2003			2004			2003			2004

Revenues	$	-		$	-		$	-		$	-		$	-

Operating Expenses
General & Administrative		173,828			438,736			55,272			7,117			921,324

Total Operating Expenses		173,828			438,736			55,272			7,117			921,324

Operating 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		-			-			-			-			133,499

Net (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

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


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Austin Chalk Oil & Gas, LTD

(Formerly KNW Networks, Inc.)

(a Development Stage Company)

Statements of Cash Flows

(Unaudited)

		For the nine months ended						From inception
		September 30,						on December 16, 1998
								to Sept. 30,
		2004			2003			2004

Cash Flows from Operating Activities

Net Income (Loss)	$	(177,224	)	$	(433,221	)	$	(1,234,459	)
Adjustments to Reconcile Net Loss to Net Cash
Provided by Operations:
Bad debt expense		-			-			11,154
Stock Issued for Services		-			400,000			625,629
Stock issued for forgiveness of debt		242,669			-			442,653
Change 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	)		-			106,022

Net Cash Provided(Used) by Operating Activities		(80,130	)		(94	)		(168,121	)

Cash Flows from Investing Activities
Cash paid for Oil Interests		(74,500	)		-			(138,493	)

Net Cash Provided (Used) by Investing Activities		(74,500	)		-			(138,493	)

Cash Flows from Financing Activities
Cash received from notes payable		-			-			35,000
Cash received from subscription receivable		-			-			9,800
Cash received from spin-off		-			-			3,710
Common stock issued for cash		169,985			-			273,485

Net Cash Provided(Used) by Financing Activities		169,985			-			321,995

Increase (Decrease) in Cash		15,355			(94	)		15,381

Cash and Cash Equivalents at Beginning of Period		26			144			-

Cash and Cash Equivalents at End of Period		15,381			50		$	15,381

Cash Paid For:
Interest	$	-		$	-		$	-
Income Taxes	$	-		$	-		$	-

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


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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	2004
				Weighted
				Average
		Number		Exercise
		of Shares		Price
Outstanding at beginning of year		-	$	-
Granted		200,000		.05
Exercised
Canceled
Outstanding at Quarter end		200,000	$	.05
Exercisable at end of year		200,000	$	.05


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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.

	2004
Risk-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:

			Weighted
		Weighted	Average		Weighted
Range	Number of	Average	Remaining	Number of	Average
Of Exercise	Options	of Exercise	Contractual	Options	of Exercise
Price	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.


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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.


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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 toAustin 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 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.

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

/s/ Marlen L. Roepke

Marlen L. Roepke

Secretary/Director


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Exhibit 31

Section 302 Certification


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CERTIFICATIONS PURSUANT TO SECTION 302

I,Darrell Figg, certify that:

1. I have reviewed this quarterly report on Form 10-QSB ofAustin 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

/s/ Darrell Figg

Darrel Figg

President/Director


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CERTIFICATIONS PURSUANT TO SECTION 302

I,Marlen L. Roepke, certify that:

1. I have reviewed this quarterly report on Form 10-QSB ofAustin Chalk Oil & Gas, Inc..;

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;

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

Dated: November 15, 2004 by

/s/ Marlen L. Roepke

Marlen L. Roepke

Secretary/Director


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Exhibit 32

CERTIFICATION PURSUANT TO 18 USC SECTION 1350


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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 ofAustin 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


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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 ofAustin 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

/s/ Marlen L. Roepke

Marlen L. Roepke

Secretary/Director


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Sharewell Capital Inactive 10QSB2004 Q3 Quarterly report (small business)