**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      DC 20549





**FORM
      10-QSB**





[X]
            Quarterly
                Report pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934For the quarterly period endedSeptember
                30, 2006[ 
                ]
            Transition
                Report pursuant to 13 or 15(d) of the Securities Exchange Act of
                1934For the transition periodto__________Commission
                File Number:000-50762





California
      News Tech


(Exact
      name of small business issuer as specified in its charter)





Nevada
            88-0417389(State
                or other jurisdiction of incorporation or organization)
            (IRS
                Employer Identification No.)








825
                Van Ness Avenue Suite 406-407, San Francisco, California
                94109(Address
                of principal executive offices)





415-861-3421(Issuer’s
                telephone number)_______________________________________________________________(Former
                name, former address and former fiscal year, if changed since last
                report)





Check
      whether the issuer (1) 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 issuer was required to file such reports),
      and
      (2) has been subject to such filing requirements for the past 90 days [X] Yes
      [
      ] No





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). [ ] Yes [ ] No





State
      the
      number of shares outstanding of each of the issuer’s classes of common stock, as
      of the latest practicable date: 3,640,440 common shares as of October 30,
      2006.





Transitional
      Small Business Disclosure Format (check one): Yes [ ] No [X]








TABLE
                OF CONTENTS
            PagePART
                I - FINANCIAL INFORMATIONItem
                1.
            Financial
                Statements
            3Item
                2.
            Management’s
                Discussion and Analysis or Plan of
                Operation
            4Item
                3.
            Controls
                and Procedures
            11PART
                II - OTHER INFORMATIONItem
                1.
            Legal
                Proceedings
            12Item
                2.
            Unregistered
                Sales of Equity Securities and Use of
                Proceeds
            12Item
                3.
            Defaults
                Upon Senior Securities
            12Item
                4.
            Submission
                of Matters to a Vote of Security
                Holders
            12Item
                5.
            Other
                Information
            12Item
                6.
            Exhibits
            13


2
 Table
          of Contents


**PART
      I - FINANCIAL INFORMATION**





**Item
      1.****Financial
      Statements**





Ourunaudited
                financial statements included in this Form 10-QSB are as
                follows:F-1
            ComparativeBalance Sheet as of September 30, 2006;F-2
            ComparativeStatements of Operations for the three and nine months ended September
                30,
                2006 and 2005;F-3
            Comparative
                Statements of Cash Flows for the nine months ended September 30,
                2006 and
                2005;F-4
            Notes
                to Financial Statements;








These
      unaudited financial statements have been prepared in accordance with accounting
      principles generally accepted in the United States of America for interim
      financial information and the SEC instructions to Form 10-QSB. In the opinion
      of
      management, all adjustments considered necessary for a fair presentation have
      been included. Operating results for the interim period ended September 30,
      2006
      are not necessarily indicative of the results that can be expected for the
      full
      year.










Table
          of Contents














**CALIFORNIA
                NEWS TECH****Comparative
                Financial Statements****For
                the three months and nine months****ending
                September 30, 2006 and September 30, 2005****(Unaudited)**














**California
                News Tech****Comparative
                Balance Sheets****(Unaudited)**




Assets
              
              September
                  30, 2005
              
              
              September
                  30, 2006Current
                  assets:Cash
              $
              273,357
              
              $
              12,922Accounts
                  Receivable
              
              -
              
              
              24,153Prepaid
                  expenses and deposits
              
              3,800
              
              
              67,675Total
                  current assets
              
              277,157
              
              
              104,750Equipment,
                  net of depreciation
              
              551
              
              
              361Product
                  development, net of amortization
              
              320,560
              
              
              285,660Total
                  assets
              $
              598,267
              
              $
              390,771Liabilities
                  and Shareholders' EquityCurrent
                  liabilitiesAccounts
                  payable
              $
              47,081
              
              $
              53,940Deferred
                  revenue
              
              4,451
              
              
              3,873Notes
                  payable
              
              68,500
              
              
              106,940Total
                  current liabilities
              
              120,032
              
              
              164,753Long-term
                  notes payable
              
              77,140Shareholder's
                  equityCommon
                  stock: $0.003 par value, 8,333,333 sharesauthorized,
                  2,999,333 shares and 3,530,043shares
                  outstanding at September 30, 2005 and September30,
                  2006.
              
              8,998
              
              
              10,590Paid-in-capital
              
              1,224,616
              
              
              1,713,093Accumulated
                  deficit
              
              <832,519>
              
              
              <1,497,665>Total
                  shareholders' equity
              
              401,095
              
              
              226,018Total
                  liabilities and shareholders' equity
              $
              598,267
              
              $
              390,771






F-1
 Table
          of Contents




**California
                  News Tech, Inc.****Comparative
                  Statements of Operations and Accumulated Deficit****(Unaudited)**
  Nine
                  months ending
              
              
              Three
                  months endingSeptember
                30, 2005
              
              
              September
                30, 2006
              
              
              
              
              September
                  30, 2005
              
              
              September
                30, 2006Revenue
              $
              14,283
              
              $
              70,186
              
              
              
              $
              5,427
              
              $
              19,384ExpensesSelling
                  and administrative costs
              
              24,342
              
              
              243,271
              
              
              
              
              19,303
              
              
              24,922Office
                  and other operating costs
              
              146,884
              
              
              311,171
              
              
              
              
              50,927
              
              
              108,286Depreciation
                  and amortization
              
              655
              
              
              51,070
              
              
              
              
              220
              
              
              17,025171,880
              
              
              605,513
              
              
              
              
              70,126
              
              
              151,947Net
                  loss
              $
              <157,597>
              
              $
              <535,326>
              
              
              
              $
              <64,698>
              
              $
              <132,563>Accumulated
                  deficit at beginning of the period
              
              <674,922>
              
              
              <962,339>
              
              
              
              
              <767,821>
              
              
              <1,365,102>Accumulated
                  deficit at end of the period
              $
              <832,519>
              
              $
              <1,497,665>
              
              
              
              $
              <832,519>
              
              $
              <1,497,665>Basic
                  and diluted net loss per share
              $
              <0.05>
              
              $
              <0.15>
              
              
              
              $
              <0.02>
              
              $
              <0.04>Shares
                  used in basic and diluted net loss per sharecalculation
              
              2,999,333
              
              
              3,530,043
              
              
              
              
              2,999,333
              
              
              3,530,043Non-cash
                  stock-based employee compensationincluded
                  in selling and administrative costs
              $
              0
              
              $
              6,004
              
              
              
              $
              0
              
              $
              0










F-2
 Table
          of Contents




**California
                  News Tech****Comparative
                  Statements of Cash Flows****(Unaudited)**
  Nine
                  months ending
              
              
              
              Three
                  months endingSeptember
                30, 2005
              
              
              September
                30, 2006
              
              
              
              September
                  30, 2005
              
              
              September
                30, 2006Cash
                  used by operating activities:Net
                  loss
              $
              <157,597>
              
              $
              <535,326>
              
              
              $
              <64,698>
              
              $
              <132,563>Adjustments
                  to reconcile net loss to net cash used byoperating
                  activities:Depreciation
                  and amortization
              
              655
              
              
              51,070
              
              
              
              220
              
              
              17,025Changes
                  in assets and liabilities:Accounts
                  receivable
              
              507
              
              
              <14,332>
              
              
              
              
              
              
              <6,300>Prepaid
                  expenses and deposits
              
              <1,896>
              
              
              <31,500>
              
              
              
              <2,300>
              
              
              <5,750>Accounts
                  payable
              
              27,501
              
              
              31,446
              
              
              
              27,252
              
              
              648Deferred
                  revenue
              
              4,127
              
              
              44
              
              
              
              1,423
              
              
              <283>Notes
                  payable
              
              25,000
              
              
              55,940
              
              
              
              25,000
              
              
              15,000Total
                  cash used in operating activities
              
              <101,703>
              
              
              <442,659>
              
              
              
              <13,102>
              
              
              <112,223>Cash
                  used in investing activities:Product
                  development
              
              <19,961>
              
              
              <6,500>
              
              
              
              <19,961>Total
                  cash used in investing activities
              
              <19,961>
              
              
              <6,500>
              
              
              
              <19,961>Cash
                  provided by financing activitiesNotes
                  payable
              
              
              
              
              <77,140>Common
                  stock
              
              208,000
              
              
              321,565
              
              
              
              242,676
              
              
              62,281Total
                  cash provided by financing activities
              
              208,000
              
              
              244,425
              
              
              
              242,676
              
              
              62,281Net
                  increase (decrease) in cash
              
              86,336
              
              
              <204,735>
              
              
              
              209,612
              
              
              <49,942>Cash
                  at the beginning of the period
              
              187,020
              
              
              217,657
              
              
              
              63,744
              
              
              62,864Cash
                  at the end of the period
              $
              273,357
              
              $
              12,922
              
              
              $
              273,357
              
              $
              12,922










F-3
 Table
          of Contents


**California
        News Tech**
 **Notes
        to Financial Statements**
 **September
        30, 2006**
 **(Unaudited)**
 
 
 **Note
        1.**  **Description
        of Business**
 
 California
        News Tech was originally incorporated during 1999, under the laws of the
        State
        of Nevada, to create and market Internet search tools. The Company changed
        its
        name from NewsSurfer.com Corporation and in the year 2000 became known as
        California News Tech. During the years 2002, 2003 and 2004, the Company added
        to
        its search engine software the ability for users to access specific news
        relating to publicly listed companies. During the first quarter of 2006,
        the
        Company completed development of its website.
  **Note
        2.**  **Summary
        of Significant Accounting Policies**
 
 **Use
        of Estimates**
 
 The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States requires management to make estimates
        and assumptions that affect the amounts reported in the financial statements
        and
        accompanying notes. Actual results could differ from those estimates and
        could
        affect future operating results.
 
 **Equipment**
 
 Equipment
        is recorded at cost, less accumulated depreciation. Depreciation is computed
        using the straight-line method over estimated useful lives of three to five
        years. The straight-line method of depreciation is also used for income tax
        purposes.
 
 **Impairment
        of Long-Lived Assets**
 
 The
        Company evaluates the recoverability of its equipment, product and website
        development costs and recognizes the impairment of long-lived assets in the
        event the net book value of such assets exceeds net realizable value. The
        Company evaluates asset recoverability at each balance sheet date or when
        an
        event occurs that may impair recoverability of the asset.
 
 **Revenue
        Recognition**
 
 The
        Company recognizes net revenue when the earnings process is complete, as
        evidenced by:
 ·
            an
                agreement with the customer; ·
            delivery
                to and acceptance of the product by the customer has
                occurred; 
 -4-
 
 F-4
 Table
            of Contents
 **California
        News Tech**
 **Notes
        to Financial Statements**
 **September
        30, 2006**
 **(Unaudited)**
 
 
 **Note
        2.**  **Summary
        of Significant Accounting Policies (Continued)**
 
 **Revenue
        Recognition (Continued)**
 ·
            the
                amount of the fees to be paid by the customer are fixed or determinable;
                and ·
            collection
                of these fees is probable.  If
        an
        acceptance period is contractually provided, license revenues are recognized
        upon the earlier of customer acceptance or the expiration of that period.
        In
        instances where delivery is electronic and all other criteria for revenue
        recognition have been achieved, the product is considered to have been delivered
        when the customer is provided the access code to download the software from
        the
        Internet.
 
 Because
        of possible price fluctuations or technology obsolescence, subscription revenue
        is deferred and recorded on a monthly basis as earned. Any delivery, selling
        or
        other costs billed to the customers is included in net revenue and the related
        delivery, selling or other costs is included in the cost of selling
        subscriptions.
 
 **Deferred
        Revenue**
 
 Deferred
        revenue is customer deposits for unearned subscriptions.
 
 **Product
        Development**
  Where
        there is reasonable assurance of recovery, development costs are capitalized.
        Capitalization of costs ceases when the product is available for general
        release
        to customers. Annual amortization of capitalized costs is the greater of
        amortization computed using the straight-line method over the remaining
        estimated economic life of the product or computed using the ratio of the
        product’s current and anticipated future gross revenue.
 
 **Stock-based
        Compensation Plans**
 
 The
        Company has non-qualified stock-based compensation plans for consultants
        and
        directors. On January 1, 2006, the Company adopted the fair value recognition
        provisions of SFAS 123(R), *Stock-Based
        Compensation.* SFAS
        123(R) requires all share-based payments to employees, including grants of
        employee stock options, to be recognized in the financial statements based
        on
        their fair value at the date of grant. The related compensation expense is
        recorded at the date of grant (the Company’s employee stock options are fully
        vested at the time of grant) as compensation expense. Excess tax benefits,
        if
        any, will be recognized as an addition to paid-in capital.
 
 -5-
  F-5
 Table
            of Contents
 **California
        News Tech**
 **Notes
        to Financial Statements**
 **September
        30, 2006**
 **(Unaudited)**
 
 
 **Note
        2.**  **Summary
        of Significant Accounting Policies (continued)**
 
 **Stock-based
        Compensation Plans (continued)**
  Stock-based
        compensation expense for employee stock options has been calculated using
        the
        Black-Scholes option valuation model. At this time, the Company is assuming
        there will be no forfeitures.
 
 There
        was
        no stock-based compensation for the third three month period of
        2006.
 
 **Income
        Taxes and Deferred Taxes**
 
 The
        Company utilizes the liability method of accounting for income taxes. Deferred
        tax liabilities or assets are recognized for the expected future tax
        consequences of temporary differences between the book and tax bases of assets
        and liabilities. The Company regularly assesses the likelihood that the deferred
        tax assets will be recovered from future taxable income, and a valuation
        allowance is recorded to reduce the deferred tax assets to the amounts that
        are
        believed to be realizable. A full valuation allowance on any future tax benefits
        is being provided until the Company can sustain a level of profitability
        that
        demonstrates the ability to utilize these assets.
 
 **Basic
        and Diluted Net Loss per Common Share**
 
 Basic
        net
        loss per common share is based on the weighted average number of shares
        outstanding during each year. Diluted net loss per share is computed by dividing
        net loss by the sum of the weighted average number of shares of common stock
        outstanding plus all additional common stock that would have been outstanding
        if
        potentially dilutive common shares related to stock options had been issued.
        Stock options were antidilutive because they had an exercise price greater
        than
        the average market price during the year or due to the net loss in the third
        three months of 2005 and 2006.
 
 **Certain
        Significant Risks and Uncertainties**
 
 The
        Company participates in the high technology industry and believes that changes
        in any of the following areas could have a material adverse effect on the
        Company’s future financial position, results of operations or cash flows:
        advances and trends in new technologies; competitive pressures in the form
        of
        price reductions; market acceptance of the Company’s services; development of
        sales channels; litigation or claims against the Company based on intellectual
        property, regulatory or other factors.
 
 
 -6-
  F-6
 Table
            of Contents
 **California
        News Tech**
 **Notes
        to Financial Statements**
 **September
        30, 2006**
 **(** **Unaudited)**
 
 
 **Note
        3.**  **Going
        Concern and Liquidity**
 
 Historically,
        the Company has incurred significant losses and negative cash flows from
        operations. As of September 30, 2006, the accumulated deficit was $1,498,010
        and
        the negative working capital was $60,003. The Company has primarily funded
        operations through private placements and a public offering.
 
 **Note
        4.**  **Net
        Loss per Common Share**
 
 The
        following potential common shares have been excluded from the calculation
        of
        diluted net loss per share for the years presented because the effect would
        have
        been antidilutive:
 
 Three
        months ended September 30:
 2006  2005
 Shares
        issuable under stock options  835,617        710,700
 Shares
        issuable pursuant to
        warrants                                    
30,000         288,500
 
 The
        weighted average exercise price of stock options, was $1.44 and $1.34 at
        September 30, 2006 and 2005, respectively. The weighted average exercise
        price
        for options granted during the third quarter of 2006 was $1.46. The average
        exercise price of outstanding warrants was $1.00 per share for those granted
        during 2005 and 2006.
  **Note
        5.**  **Equipment**
 
 Equipment
        consists of the following:
 September
        30, 2006 September 30, 2005
 Computer
        equipment                                                   
 $
        10,511                            
  $ 9,811
 Accumulated
        depreciation <10,150 > <9,260 >
 Net
        book
        value                                                                   
$ 361 $ 551
 
 **Note
        6.**  **Notes
        Payable to Related Parties**
 
 During
        2002, the Company entered into agreements with certain consultants, who are
        also
        members of the board of directors, to delay cash compensation for services
        rendered. These agreements continued through the 2003 year. Effective March
        6,
        2006, the agreements were modified and extended. The notes payable to a related
        party consist of uncollateralized, non-interest bearing notes totaling $91,940.
        The notes are the subject of ongoing negotiation.
 
 -7-
  F-7
 Table
            of Contents
  **California
        News Tech**
 **Notes
        to Financial Statements**
 **September
        30, 2006**
 **(Unaudited** **)**
 
 
 **Note
        6.**  **Notes
        Payable to Related Parties (continued)**
 
 During
        the third three month period of 2006 the Company borrowed $15,000 from an
        officer and director. The company expects to repay this note during December
        2006.
 
 **Note
        7.**  **Shareowners’
        Investment**
 
 As
        of
        September 30, 2006, the Company’s authorized share capital consists of 8,333,333
        shares at $0.003 par value. There are no preference shares authorized. At
        the
        special meeting of the shareholders held December 28, 2001, a one-for-three
        reverse stock split of the outstanding and authorized shares was approved.
        All
        share and per share amounts in these financial statements have been adjusted
        to
        give effect to the reverse stock split. Issued share capital and paid-in
        capital
        balances are:
 Common
          Stock          Paid-in
 Shares  Amount   Capital
 Balance,
          December 31, 2001  2,018,833  $6,057  $581,659
 Issuance
          of common
          shares 437,500   1,312  142,748
 Balance,
          December 31, 2002  2,456,333           
          7,369  724,407
 Issuance
          of common shares   50,000  150   9,850
 Balance,
          December 31, 2003  2,506,333  7,519  734,257
 Issuance
          of common shares   285,000   855   283,307
 Balance,
          December 31,
          2004              2,791,333  8,374  1,017,564
 Issuance
          of common shares   333,833   1,001   375,523
 Balance,
          December 31, 2005  3,125,166             
9,375         1,393,087
 Issuance
          of common
          shares 298,208  895  277,099
 Balance,
          June 30,
          2006 3,495,333  10,270  1,670,186
 Issuance
          of common
          shares 44,710  320  43,251
 Balance,
          September 30,
          2006 3,530,043  $
          10,590  $1,713,093
 
 
 **Note
        8.**  **Stock
        Option Plans**
 Directors
        and
        consultants have been granted options to purchase common shares at fair market
        value. The granting of options is administered by the board of directors
        with
        grant and vesting provisions, term and exercise price subject to the discretion
        of the board.  The
        following table summarizes information about stock options outstanding at
        September 30, 2006:
 
 
 
 
 
 
 -8-
  F-8
 Table
            of Contents
  **California
        News Tech**
 **Notes
        to Financial Statements**
 **September
        30, 2006**
 **(Unaudited)**
 
 
 **Note
        8.**  **Stock
        Option Plans (continued)**
 
 Outstanding
 and            Weighted
        Average
 Year  Granted  Exercised  Forfeited  Exercisable   Exercise
        Price
 2002      
        514,400      
101,500          222,150          
190,750                  
$0.824
 2003       179,200          
        --                 
22,000           
157,200                   
1.000
 2004       146,000          
        6,000  7,000  133,000                   
1.000
 2005      
        413,125        
10,000            21,125           
225,250                   
1.397
 2006 259,167  25,000  37,000  197,167  1.817
 Total 1,487,392  142,500  309,275  903,367  $1.441
  The
        weighted average exercise price of the stock options was $1.44 at September
        30,
        2006 with vesting simultaneous with the grant date. Options expire should
        a
        director retire or a consultant’s contract terminate unless otherwise authorized
        by the board of directors. The fair value was estimated using the Black-Scholes
        option-pricing model with the following weighted average
        assumptions:
 
 2006  2005  2004  2003
 Risk-free
        interest
        rate                
 4.42%            
4%  4%  3%
 Expected
        dividend  --  --  --  --
 Expected
        volatility factor  15%  30%  30%  30%
 Expected
        option term  5
        years            5
        years        5 years  3 years
 
 During
        the year ending December 31, 2003, the Company adopted the disclosure provisions
        of SFAS No. 148, however, the transition provisions were not
        adopted.
 
 All
        stock
        options are issued at fair market value on the date of grant. Accordingly,
        stock
        compensation expense for stock options granted during the periods is not
        recognized. Under the fair value based method, compensation cost is measured
        at
        the grant date based on the value of the award and is recognized over the
        service period, which is usually the vesting period.
 
 Fair
        value is determined using an option-pricing model, such as Black-Scholes,
        that
        takes into account the stock price at the grant date, the exercise price,
        the
        expected life of the option, the volatility of the underlying stock, the
        expected dividends, and the risk-free interest rate over the expected life
        of
        the option.
 
 
 
 
 
  -9-
  F-9
 Table
            of Contents
  **California
        News Tech**
 **Notes
        to Financial Statements**
 **September
        30, 2006**
 **(Unaudited)**
 
 
 **Note
        9.**  **Warrants**
 
 Warrants
        accompanied the shares issued during 2004. The warrants gave the shareowner
        the
        right to purchase additional shares for $2.00 per share. A total of 285,000
        warrants were granted with the sale of the shares. At December 31, 2004,
        there
        were a total of 288,500 warrants outstanding. There were an additional 1,000,000
        warrants authorized during the year ended December 31, 2005. At September
        30,
        2006 there are 30,000 warrants outstanding.
  **Note
        10.**  **Income
        Taxes**
 
 The
        tax
        effect of significant temporary differences representing future tax assets
        and
        future tax liabilities has been fully offset by a valuation allowance. The
        Company has determined that realization is uncertain and therefore a valuation
        allowance has been recorded against this future income tax asset.
 
 As
        of
        December 31, 2005, the Company had a net operating loss carryforward for
        U.S.
        federal income tax purposes of $962,958. The federal net operating loss
        carryforward, if not utilized, will begin to expire in 2014.
 
 **Note
        11.**  **Subsequent
        event**
 
 On
        October
        30, 2006, the Company entered an agreement with DNB Capital Management, Inc.
        (DNB) under which the Company will sell to DNB a debenture in the amount
        of
        $100,000 bearing interest at 18% per annum.  The interest will be payable
        quarterly beginning March 31, 2007; all principal and interest will be due
        two
        yarears from the date the debenture is actually issued.  The debenture will
        be convertible, at the option of the holder after March 31, 2007 at the lower
        of:  (i) sixty percent (60%) of the average closing price on the NASD OTCBB
        of the Company common stock for the preceding five trading days, or (ii)
        $0.001
        per share, subject to adjustment for splits and reverse splits.  The
        agreement permits DNB to appoint one member to the Company Board of
        Directors.  In the event  of default,  DNB may appoint sufficient
        memebers to the Company Board of Directors to have control of the
        Company.
  The
        agreement
        is scheduled to close on or before December 15, 2006, subject to several
        conditions precedent, including divesting the Company of all its present
        operations and assets, satisfying outstadning debt obligations, and reorganixing
        the Company's captial structure by implementing a one for ten reverse stock
        split and increasing its authorized common stock to 100,000,000
        shares.
 On
          October
          31, 2006, the Board of Directors transferred all assets and operations
          to their
          wholly owned subsidiary, Media Sentiment, Inc., a Nevada corporation. The
          Company presently holds all issued and outstanding capital stock of Media
          Sentiment, Inc., consisting of 3,640,440 shares of its common
          stock.
  The
          Company’s
          Board further resolved to spin-off all shares of Media Sentiment, Inc. common
          stock to its shareholders. The distribution will be made on November 27,
          2006,
          to all shareholders of record of California News Tech as of 5:00 p.m. Pacific
          Time on November 20, 2006, as a stock dividend, payable in the amount of
          one (1)
          share of Media Sentiment, Inc. for every (1) share of California News Tech.
          Following the spin-off, the Company will not hold any shares of Media Sentiment,
          Inc. and it will be an independent company.
 
 -10-
  F-10
 Table
            of Contents
  **California
        News Tech**
 **Notes
        to Financial Statements**
 **September
        30, 2006**
 **(Unaudited)**
 
 
 The
        Company is spinning off Media Sentiment, Inc. in satisfaction of a closing
        condition of the Debenture Subscription Agreement between the Company and
        DNB
        Capital Management, Inc. dated October 30, 2006, that the Company divest
        itself
        of all current operations and assets. The Company previously reported execution
        of this agreement on a form 8K filed October 30, 2006. Upon closing the
        Subscription Agreement, anticipated to occur on or before December 15, 2006,
        Media Sentiment, Inc. will receive all of the net proceeds of that transaction,
        approximately $100,000, less any amounts necessary to pay off any debts that
        the
        Company has not paid or arranged to transfer to Media Sentiment, Inc. by
        the
        closing. Media Sentiment will use those funds to fund the continued operation
        and development of its business. Media Sentiment, Inc. will not have any
        obligation under the Debenture, including any repayment obligation. The Company
        will remain solely liable to repay the Debenture and will need to locate
        and
        successfully acquire other assets and operations in order to be able to meet
        the
        obligations under the Debenture. 
 There
          can be
          no assurance that the Company will be successful in satisfying the closing
          conditions of the Debenture Subscription Agreement or that the transaction
          will
          close.
  The
          Company
          anticipates further restructuring steps in the coming weeks in order to
          satisfy
          the remaining conditions of the Debenture Subscription Agreement, as well
          as to
          better facilitate acquisition of a new business opportunity, including
          asking
          its shareholders to approve an increase in the number of our authorized
          shares
          to 100,000,000, a one for ten reverse split of its presently issued and
          outstanding common stock, and granting the Board the authority to amend
          the
          articles of incorporation for the sole purpose of changing the name of
          the
          company.




F-11
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          of Contents


**Item
      2.     Management’s Discussion and
      Analysis or Plan of Operation**





**Forward-Looking
      Statements**





Certain
      statements, other than purely historical information, including estimates,
      projections, statements relating to our business plans, objectives, and expected
      operating results, and the assumptions upon which those statements are based,
      are “forward-looking statements” within the meaning of the Private Securities
      Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933
      and Section 21E of the Securities Exchange Act of 1934. These
      forward-looking statements generally are identified by the words “believes,”
“project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,”
“may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and
      similar expressions. We
      intend
      such forward-looking statements to be covered by the safe-harbor provisions
      for
      forward-looking statements contained in the Private Securities Litigation Reform
      Act of 1995, and are including this statement for purposes of complying with
      those safe-harbor provisions. Forward-looking
      statements are based on current expectations and assumptions that are subject
      to
      risks and uncertainties which may cause actual results to differ materially
      from
      the forward-looking statements. Our
      ability to predict results or the actual effect of future plans or strategies
      is
      inherently uncertain. Factors which could have a material adverse affect on
      our
      operations and future prospects on a consolidated basis include, but are not
      limited to: changes in economic conditions, legislative/regulatory changes,
      availability of capital, interest rates, competition, and generally accepted
      accounting principles. These risks and uncertainties should also be considered
      in evaluating forward-looking statements and undue reliance should not be placed
      on such statements. We
      undertake no obligation to update or revise publicly any forward-looking
      statements, whether as a result of new information, future events or otherwise. Further
      information concerning our business, including additional factors that could
      materially affect our financial results, is included herein and in our other
      filings with the SEC.





**Overview**





We
      were
      incorporated on January 22, 1999 in Nevada as the NewsSurfer.com Corporation.
      In
      January 2001, we changed our name to California News Tech, and by November
      2001,
      we shifted our business plan to focus on providing online access to news media
      analysis for a subscription fee.





As
      discussed in greater detail below, see “Debenture Subscription Agreement and
      Spin-Off of Current Assets and Operations,” as of October 31, 2006, we have
      transferred all of our existing operations and assets into our wholly-owned
      subsidiary, Media Sentiment, Inc., including all of the Products and Services
      discussed below. On October 31, 2006, our Board resolved to spin-off that
      subsidiary as an independent company to our shareholders of record as of
      November 20, 2007. Thereafter, we will have no operations or assets and our
      management will need to locate and acquire a new business
      opportunity.








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**Products
      and Services**




Media
      Sentiment **®**




Our
      primary online news media analysis research product is called Media Sentiment®.
      The central premise behind Media Sentiment® is that media reports about the
      American economy in general and about specific, publicly traded companies
      contain important information which can be quantified, graphed, and presented
      to
      our customers in a manner that helps them understand media sentiment. This
      can
      help our customers interpret and track the potential impact of media sentiment
      on the overall financial markets and as it may affect particular
      companies.




Because
      of the dramatic qualitative and quantitative changes in media reporting over
      the
      last decade driven in part by the Internet, people interested in media reports
      now have a variety of options and vast stores of information to negotiate,
      process, and assimilate. Media Sentiment **®** is our
      online news media analysis research product that tracks and scans media reports
      about the American economy in general and about specific, publicly traded
      companies for important information which is then quantified, graphed, and
      presented to our customers in a manner that helps them understand media
      sentiment. This product helps our customers interpret and track the potential
      impact of media sentiment on the over all financial markets and how it may
      also
      affect particular companies.




Media
      Sentiment **®** provides
      information to our customers in real-time. We create our research product by
      utilizing our computer systems to search the Internet for publicly available
      media reports. Our computer systems analyze the news reports published on the
      Internet using our proprietary software to measure the sentiment and the results
      are displayed graphically. Our customers access the information via our secure
      website. In addition, our system allows customers to access the source and
      abstracts of the media reports via our website. And, because our computers
      have
      been collecting and analyzing media reports since June of 2002, we can present
      both historical and current information so that our customers can also observe
      any trends.




HeadsUp TM ,
      another
      feature of our Media Sentiment **®** research
      product, attempts to forecast the effects of the media sentiment resulting
      from
      the earnings release reports of publicly traded companies on the company’s stock
      price. HeadsUp TM presents
      users with an easy to use graphical interface, displaying thumbs-up and
      thumbs-down assessment of the media sentiment.




E-Motions
      is the e-mail newsletter component of our Media Sentiment **®** system.
      We launched E-Motions in August 2005. This newsletter is currently released
      three times a month. E-Motions strives to provide our readers with
      self-knowledge about the emotions behind their own investing so that they can
      improve their financial strategies. E-Motions addresses financial and media
      psychology in an entirely new way, focusing on the companies featured each
      week
      at MediaSentiment.com. The newsletter explores case studies exploring the
      potential relationship between price moves, news coverage, and investor
      sentiment. E-Motions is currently offered at no cost in an effort to encourage
      subscriptions to our paid product.




In
      addition to the Media Sentiment **®** tool and
      accompanying products, we are also integrating our technology with other
      traditional technical analysis platforms such as MetaStock TM from
      Equis, a Reuters company, which utilizes our proprietary technology to offer
      customers a greater range of trading techniques.




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In
      June
      2006 we completed the first phase of integration between MediaSentiment Heads
      UpTM tools and the MetaStockTM Pro platform from Equis, a Reuters company.
      MetaStockTM from Equis/Reuters is a leading investment analysis platform, with
      over 150,000 customers in over 97 countries. As a result of the integration,
      event-driven media sentiment indicators can now be used in combination with
      traditional technical indicators, based on price and volume data.




In
      July
      2006, we launched a beta version of a new product, available on the Internet
      at
      PublicMemory.com. This new product is a Web 2.0 tool and will allow users to
      create their own research criteria, define issues and which websites to
      research, and distribute the research content via the RSS web publishing
      format.




In
      September 2006, we announced our plan to work with UDICO Holdings to explore
      short and long term options for potentially combining UDICO’s patented text
      analysis technology with PublicMemory.com’s online research technology.




In
      September 2006 we announced the beta version of a new product, Media Sentiment®
UpperHandTM, which will be available as a free download during the beta test
      period. This new product is designed to analyze earnings releases, determine
      a
      net positive or negative sentiment score, and then combine the resulting score
      with supply and demand technical indicators for supply and demand. We intend
      to
      charge a subscription fee for this product pending the successful conclusion
      of
      the beta test.




During
      October 2006, we started testing the beta version of a new product called Media
      Sentiment® Big MoversTM. This new product is designed to incorporate additional
      weighting for earnings announcements which deviate from published analyst
      expectations into our traditional media sentiment analysis tools. We intend
      to
      charge a subscription fee for this product pending the successful conclusion
      of
      the beta test.




We
      are
      also exploring the possibility of bundling Heads UpTM, Upper HandTM and Big
      MoversTM to create the Media Sentiment® Pro package.




We
      use
      external data providers for the data necessary to produce the Upper HandTM and
      Big MoversTM signals. We use the data from Reuters MetaStock and QuoteCenter
      platforms for Upper HandTM signals.





**Debenture
      Subscription Agreement and Spin-Off of Current Operations and
      Assets**





Since
      inception, our business has not been profitable over any annual or quarterly
      period. As reflected in our annual report on Form 10KSB, we lost $287,417 in
      2005. As reflected in this report for the period ending September 30, 2006,
      we
      lost $130,848 in the third quarter and $535,326 year to date. The market price
      for our common stock (CNTE:OB) is at or near all time lows. This history of
      unprofitable operations and low stock prices have made it difficult to raise
      capital, to hire and retain employees and consultants, to contract for the
      third
      party services, and to otherwise execute on our business plan.





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For
      those
      reasons, on October 30, 2006, we entered into a Subscription Agreement with
      DNB
      Capital Management, Inc., pursuant to which we agreed to sell DNB Capital
      Management, Inc. a Debenture in the face amount of $100,000, due in two years,
      which will carry interest at 18% per annum. Interest payments are due quarterly,
      with the first payment due March 31, 2007. The Debenture will be convertible
      at
      the option of the Debenture holder into our common stock at any time between
      March 31, 2007 and the due date of the Debenture at the lower of (i)
      sixty
      percent (60%) of the average closing price for our common stock on the NASD
      OTCBB for the five consecutive trading days preceding the date of delivery
      by
      the Debenture holder of a conversion notice, and (ii) $0.01 per share, subject
      to adjustment for
      certain events, including stock splits and reverse stock splits. The Debenture
      entitles DNB Capital Management, Inc. to appoint one member to our Board of
      Directors and, upon default, to appoint or replace members of our Board until
      DNB Capital Management, Inc. has gained control of our Board.





The
      Subscription Agreement is scheduled to close on or before December 15, 2006,
      subject to several conditions precedent that we must satisfy, including
      divesting the Company of all operations and assets ,
      satisfying outstanding debt obligations, and reorganizing the Company’s capital
      structure by implementing a one for ten reverse stock split and increasing
      our
      authorized common stock to 100,000,000 shares .





I n
      order
      to satisfy the closing condition under the Subscription Agreement that we divest
      ourselves of all operations and assets, on October 31, 2006, we transferred
      all
      our assets and operations to our wholly owned subsidiary, Media Sentiment,
      Inc. The
      assets we assigned to Media Sentiment, Inc. include the right to receive the
      proceeds of the Debenture should it close.


I n
      addition, on October 31, 2006, our Board approved the spin-off of all
      3,640,440 shares of Media Sentiment, Inc. common stock to our shareholders. The
      distribution will be made on November 27, 2006, to all shareholders of record
      of
      California News Tech as of 5:00 p.m. Pacific Time on November 20, 2006, as
      a
      stock dividend, payable in the amount of one (1) share of Media Sentiment,
      Inc.
      for every (1) share of California News Tech.





Upon
      completion of this spinoff, we will no longer have any assets or operations. Upon
      closing the Subscription Agreement, which we anticipate will occur on or before
      December 15, 2006, Media Sentiment, Inc. will receive all of the net proceeds
      of
      that transaction, approximately $100,000, less any amounts necessary to pay
      off
      any debts we have not paid or arranged to transfer to Media Sentiment, Inc.
      by
      the closing. Media Sentiment will use those funds to fund the continued
      operation and development of its business. Media Sentiment, Inc. will not have
      any obligation under the Debenture, including any repayment obligation.
      California News Tech will remain solely liable to repay the Debenture and will
      need to locate and successfully acquire other assets and operations in order
      to
      be able to meet our obligations under the Debenture.





We
      anticipate further restructuring steps in the coming weeks in order to satisfy
      the remaining conditions of the Debenture Subscription Agreement, as well as
      to
      adjust our capital structure to better facilitate acquisition of a new business
      opportunity, including asking our shareholders to approve an increase in the
      number of our authorized shares to 100,000,000, a one for ten reverse split
      of
      our presently issued and outstanding common stock, and granting our Board the
      authority to amend our articles of incorporation for the sole purpose of
      changing the name of the company.





There
      can
      be no assurance that we will be successful in satisfying the closing conditions
      of the Debenture Subscription Agreement or that the transaction will
      close.





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**Results
      of Operations for the three and nine months ended September 30, 2006 and
      2005**





We
      generated revenue in the amount of $19,384 during the three month period ended
      September 30, 2006, compared to $5,427 for the three month period ended
      September 30, 2005. Our revenue for the three month period ended September
      30,
      2006 was generated through subscription sales of $1,931, and product licensing
      services valued at $17,453 For the nine month period ended September 30, 2006,
      we generated revenue in the amount of $70,186, compared to revenue of $14,283
      for the same nine month period in the prior year. Our revenue for the nine
      month
      period ended September 30, 2006 was generated through subscription sales of
      $6,949, mailing list rental of $22,784 and advertising and product licensing
      of
      $40,453. We report subscription revenue over the life of the subscription,
      with
      $1,931 reported as revenue earned in the quarter ended September 30, 2006,
      and
      $3,873 carried on the balance sheet as unearned revenue, for recognition in
      future periods.





We
      incurred operating expenses in the amount of $151,947 for the three months
      ended
      September 30, 2006, compared to operating expenses of $70,126 for the three
      months ended September 30, 2005. For the nine month period ended September
      30,
      2006 we incurred operating expenses in the amount of $605,513 compared to
      operating expenses of $171,880 for the same nine month period in the prior
      year.
      The increase in our operating expenses for the three months ended September
      30,
      2006 was primarily attributable to an increase in our office and other operating
      costs of $110,001 up from $50,603 in the prior year and an increase in
      depreciation to $17,025 up from $220 from the prior year.





During
      the first quarter, we began to amortize our capitalized product development
      costs over sixty months, resulting in an increase in our depreciation and
      amortization expense.




**Liquidity
      and Capital Resources**





On
      September 30, 2006, we had cash in the amount of $12,922, which primarily
      resulted from funds raised in public equity offerings. As of September 30,
      2006,
      we had total current assets in the amount of $104,750 and total current
      liabilities of $164,753 As a result, our working capital on September 30, 2006
      was a negative $60,003.





We
      forecast that the cash flow from increased sales will not be sufficient to
      fund
      our capital expenditures and working capital requirements for the next twelve
      months. The implementation of our business plan for the next 12 months is
      contingent upon us obtaining additional equity financing. If we are unable
      to
      obtain additional financing, the full implementation of our business plan will
      be impaired.





**Off
      Balance Sheet Arrangements**





As
      of
      September 30, 2006, there were no off balance sheet arrangements.





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**Going
      Concern**




We
      have
      raised additional capital and will continue as a going concern. Historically,
      we
      have incurred significant losses and negative cash flows from operations. As
      of
      September 30, 2006, the accumulated deficit was $1,498,010 and the negative
      working capital was $60,003. We have primarily funded operations through private
      placements and a public offering. To the extent that sources of financing are
      available, we will promote our software, maintain our processing system, and
      continue to enhance our service. Our management expects that future subscription
      revenue will be sufficient to fund operations.





**Critical
      Accounting Policies**





In
      December 2001, the SEC requested that all registrants list their most “critical
      accounting polices” in the Management Discussion and Analysis. The SEC indicated
      that a “critical accounting policy” is one which is both important to the
      portrayal of a company’s financial condition and results, and requires
      management’s most difficult, subjective or complex judgments, often as a result
      of the need to make estimates about the effect of matters that are inherently
      uncertain. We believe that the following accounting policies fit this
      definition.





Use
      of
      Estimates





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States requires our management to make
      estimates and assumptions that affect the amounts reported in the financial
      statements and accompanying notes. Actual results could differ from those
      estimates and could affect future operating results.





Equipment





Equipment
      is recorded at cost, less accumulated depreciation. Depreciation is computed
      using the straight-line method over estimated useful lives of three to five
      years. The straight-line method of depreciation is also used for income tax
      purposes.





Impairment
      of Long-Lived Assets





We
      evaluate the recoverability of our equipment, product, and website development
      costs and recognize the impairment of long-lived assets in the event the net
      book value of such assets exceeds net realizable value. We evaluate asset
      recoverability at each balance sheet date or when an event occurs that may
      impair recoverability of the asset.





Revenue
      Recognition





We
      recognize net revenue when the earnings process is complete, as evidenced
      by:





§
            an
                agreement with the customer;


§
            delivery
                to and acceptance of the product by the customer has
                occurred;


§
            the
                amount of the fees to be paid by the customer are fixed or determinable;
                and


§
            collection
                of these fees is probable.




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If
      an
      acceptance period is contractually provided, license revenues are recognized
      upon the earlier of customer acceptance or the expiration of that period. In
      instances where delivery is electronic and all other criteria for revenue
      recognition have been achieved, the product is considered to have been delivered
      when the customer is provided the access code to download the software from
      the
      Internet.





Because
      of possible price fluctuations or technology obsolescence, subscription revenue
      is deferred and recorded on a monthly basis as earned. Any delivery, selling
      or
      other costs billed to the customers is included in net revenue and the related
      delivery, selling or other costs is included in the cost of selling
      subscriptions.





Deferred
      Revenue





Deferred
      revenue is comprised of customer deposits for unearned subscriptions.





Product
      Development





Where
      there is reasonable assurance of recovery, development costs are capitalized.
      Capitalization of costs ceases when the product is available for general release
      to customers. Annual amortization of capitalized costs is the greater of
      amortization computed using the straight-line method over the remaining
      estimated economic life of the product or computed using the ratio of the
      product’s current and anticipated future gross revenue.





Stock-based
      Compensation Plans





We
      have
      non-qualified stock-based compensation plans for consultants and directors.
      On
      January 1, 2006, we adopted the fair value recognition provisions of SFAS
      123(R), *Stock-Based
      Compensation.* SFAS
      123(R) requires all share-based payments to employees, including grants of
      employee stock options, to be recognized in the financial statements based
      on
      their fair value at the date of grant. The related compensation expense is
      recorded at the date of grant (our employee stock options are fully vested
      at
      the time of grant) as compensation expense. Excess tax benefits, if any, will
      be
      recognized as an addition to paid-in capital.





Stock-based
      compensation expense for employee stock options has been calculated using the
      Black-Scholes option valuation model. At this time, we are assuming there will
      be no forfeitures.





Income
      Taxes and Deferred Taxes





We
      utilize the liability method of accounting for income taxes. Deferred tax
      liabilities or assets are recognized for the expected future tax consequences
      of
      temporary differences between the book and tax bases of assets and liabilities.
      We regularly assesses the likelihood that the deferred tax assets will be
      recovered from future taxable income, and a valuation allowance is recorded
      to
      reduce the deferred tax assets to the amounts that are believed to be
      realizable.





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A
      full
      valuation allowance on any future tax benefits is being provided until we can
      sustain a level of profitability that demonstrates the ability to utilize these
      assets.





Basic
      and Diluted Net Loss per Common Share





Basic
      net
      loss per common share is based on the weighted average number of shares
      outstanding during each year. Diluted net loss per share is computed by dividing
      net loss by the sum of the weighted average number of shares of common stock
      outstanding plus all additional common stock that would have been outstanding
      if
      potentially dilutive common shares related to stock options had been issued.
      Stock options were anti-dilutive because they had an exercise price greater
      than
      the average market price during the year or due to the net loss in the second
      three months of 2005 and 2006.





Certain
      Significant Risks and Uncertainties





We
      participate in the high technology industry and believe that changes in any
      of
      the following areas could have a material adverse effect on our future financial
      position, results of operations or cash flows: advances and trends in new
      technologies; competitive pressures in the form of price reductions; market
      acceptance of our services; development of sales channels; litigation or claims
      against us based on intellectual property, regulatory or other
      factors.







**Item
      3.   Controls and Procedures**





We
      carried out an evaluation of the effectiveness of the design and operation
      of
      our disclosure controls and procedures (as defined in Exchange Act Rules
      13a-15(e) and 15d-15(e)) as of September 30, 2006. This evaluation was carried
      out under the supervision and with the participation of our Chief Executive
      Officer, Mr. Marian Munz, and our Chief Financial Officer, Mr. William White.
      Based upon that evaluation, our Chief Executive Officer and Chief Financial
      Officer concluded that, as of September 30, 2006, our disclosure controls and
      procedures are effective. There have been no changes in our internal controls
      over financial reporting during the quarter ended September 30, 2006.





Disclosure
      controls and procedures are controls and other procedures that are designed
      to
      ensure that information required to be disclosed in our reports filed or
      submitted under the Exchange Act are recorded, processed, summarized and
      reported, within the time periods specified in the SEC's rules and forms.
      Disclosure controls and procedures include, without limitation, controls and
      procedures designed to ensure that information required to be disclosed in
      our
      reports filed under the Exchange Act is accumulated and communicated to
      management, including our Chief Executive Officer and Chief Financial Officer,
      to allow timely decisions regarding required disclosure.





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Limitations
      on the Effectiveness of Internal Controls





Our
      management does not expect that our disclosure controls and procedures or our
      internal control over financial reporting will necessarily prevent all fraud
      and
      material error. Our disclosure controls and procedures are designed to provide
      reasonable assurance of achieving our objectives and our Chief Executive Officer
      and Chief Financial Officer concluded that our disclosure controls and
      procedures are effective at that reasonable assurance level. Further, the design
      of a control system must reflect the fact that there are resource constraints,
      and the benefits of controls must be considered relative to their costs. Because
      of the inherent limitations in all control systems, no evaluation of controls
      can provide absolute assurance that all control issues and instances of fraud,
      if any, within the Company have been detected. These inherent limitations
      include the realities that judgments in decision-making can be faulty, and
      that
      breakdowns can occur because of simple error or mistake. Additionally, controls
      can be circumvented by the individual acts of some persons, by collusion of
      two
      or more people, or by management override of the internal control. The design
      of
      any system of controls also is based in part upon certain assumptions about
      the
      likelihood of future events, and there can be no assurance that any design
      will
      succeed in achieving its stated goals under all potential future conditions.
      Over time, control may become inadequate because of changes in conditions,
      or
      the degree of compliance with the policies or procedures may deteriorate.





**PART
      II - OTHER INFORMATION**





**Item
      1. Legal
      Proceedings**





We
      are
      not a party to any pending legal proceeding. We are not aware of any pending
      legal proceeding to which any of our officers, directors, or any beneficial
      holders of 5% or more of our voting securities are adverse to us or have a
      material interest adverse to us.





**Item
      2.  Unregistered Sales of
      Equity Securities and Use of Proceeds**





None





**Item
      3. Defaults upon Senior
      Securities**





None





**Item
      4. Submission of Matters
      to a Vote of Security Holders**





No
      matters have been submitted to our security holders for a vote, through the
      solicitation of proxies or otherwise, during the quarterly period ended
      September 30, 2006.





**Item
      5.   Other
      Information**





None





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**Item
      6.      Exhibits**





**Exhibit**
              **Number**
            **Description
                of Exhibit**31.1
            Certification
                of Chief Executive Officer pursuant to 18
                U.S.C. Section 1350, as adopted pursuant to Section 302 of the
                Sarbanes-Oxley Act of 200231.2
            Certification
                of Chief Financial Officer pursuant to 18
                U.S.C. Section 1350, as adopted pursuant to Section 302 of the
                Sarbanes-Oxley Act of 200232.1
            Certification
                of Chief Executive Officer and Chief
                Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
                pursuant
                to Section 906 of the Sarbanes-Oxley Act of
                2002








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**SIGNATURES**





In
      accordance with the requirements of the Securities and Exchange Act of 1934,
      the
      Registrant has duly caused this report to be signed on its behalf by the
      undersigned, thereunto duly authorized.





**California
                News Tech**Date:
            November
                7, 2006By:       /s/Marian
                Munz
              Marian Munz
              Title:**Chief Executive Officer and Director**