**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 endedMarch
                31, 2007[
                ]
            Transition
                Report pursuant to 13 or 15(d) of the Securities Exchange Act of
                1934For
                the transition periodto__________Commission
                File Number:333-107300





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, 4th Floor, San Francisco, California
                94109(Address
                of principal executive offices)





415-205-1695(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 [X] No





State
      the
      number of shares outstanding of each of the issuer’s classes of common stock, as
      of the latest practicable date: 364,044 common shares as of March 31,
      2007.





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
            14PART
                II - OTHER INFORMATIONItem
                1.
            Legal
                Proceedings
            15Item
                2.
            Unregistered
                Sales of Equity Securities and Use of
                Proceeds
            15Item
                3.
            Defaults
                Upon Senior Securities
            15Item
                4.
            Submission
                of Matters to a Vote of Security
                Holders
            15Item
                5.
            Other
                Information
            15Item
                6.
            Exhibits
            15


2
 Table
          of Contents


**PART
      I - FINANCIAL INFORMATION**





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





Our
                unaudited financial statements included in this Form 10-QSB are as
                follows:F-1
            Consolidated
                Balance Sheet as of March 31,
                2007;F-2
            ConsolidatedStatements
                of Operations for the three months ended March 31, 2007 and 2006;F-3
            Consolidated
                Statements of Cash Flows for the three months
                ended March 31, 2007 and 2006;F-4
            Notes




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 March 31, 2007
      are
      not necessarily indicative of the results that can be expected for the full
      year.




3
 Table
          of Contents


**California** **News
        Tech**


**Comparative
      Consolidated Balance Sheets**


**(Unaudited)**


ASSETSMarch
                  31, 2007
              
              
              March
                  31, 2006Current
                  assets:Cash
              
              $
              11,841
              
              $
              100,622Accounts
                  Receivable
              
              
              2,510
              
              
              6,125Prepaid
                  expenses
              
              
              11,300
              
              
              27,550Total
                  current assets
              
              
              25,651
              
              
              134,297Equipment,
                  net of depreciation
              
              
              -
              
              
              811Product
                  development, net of amortization
              
              
              252,196
              
              
              319,260$
              277,847
              
              $
              454,368LIABILITIES
                  AND SHAREHOLDER'S
                  EQUITYCurrent
                  liabilities:Accounts
                  payables and accrued expenses
              
              $
              75,278
              
              $
              42,475Deferred
                  revenue
              
              
              -
              
              
              4,187Notes
                  payable
              
              
              191,940
              
              
              91,940Total
                  current liabilities
              
              
              267,218
              
              
              138,602Shareholder's
                  equity:Common
                  stock: $0.003 par value, 8,333,333 shares
                authorized
                  and 3,244,775 shares outstanding at
                March
                  31, 2006. $0.03 par value, 100,000,000
                shares
                  authorized and 364,044 shares outstanding at
                  March 31, 2007
              
              
              10,923
              
              
              9,734Aditional
                  paid-in capital
              
              
              1,783,500
              
              
              1,539,226Accumulated
                  deficit
              
              
              <1,783,794>
              
              
              <1,233,495>Total
                  shareholder's equity
              
              
              10,629
              
              
              315,765$
              277,847
              
              $
              454,368






F1
 Table
          of Contents


**California
          News Tech**
 **Comparative
          Consolidated Statement of Operations and Accumulated
          Deficit**
 **(Unaudited)**
  March
                    31, 2007
                
                March
                    31, 2006Revenue
                $
                6,012
                
                $
                26,389Expenses:Selling
                    and administrative costs
                
                10,635
                
                
                78,902Other
                    operating expenses
                
                68,227
                
                
                201,322Amortization
                
                16,800
                
                
                17,02095,662
                
                
                297,245Net
                    Loss
                $
                <89,650>
                
                $
                <270,856>Accumulated
                    deficit at beginning of quarter
                
                <1,694,144>
                
                
                <962,339>Accumulated
                    deficit at end of quarter
                $
                <1,783,794>
                
                $
                <1,233,195>Basic
                    and diluted net loss per share
                $
                <0.25>
                
                $
                <0.08>Shares
                    used in basic and diluted net loss per share calculation
                
                364,044
                
                
                3,244,775Non-cash
                    stock-based employee compensation included inselling
                    and administrative costs
                $
                0
                
                $
                6,004
   F2
 Table
            of Contents
  **California
        News Tech**


**Comparative
      Consolidated Statement of Cash
      Flows**


(Unaudited**)**




March
                31, 2007
            
            March
                31, 2006Cash
                flow from operations:Net
                loss
            $
            <89,650>
            
            $
            <270,856>Adjustments
                to reconcile net loss to net cash provided
                by
                  operationsDepreciation
                and amortization
            
            16,800
            
            
            17,020Decrease
                in accounts receivable
            
            12,877
            
            
            3,695Decrease
                in prepaid expenses
            
            -
            
            
            8,625Increase
                in accounts payable
            
            17,298
            
            
            19,981Increase
                <decrease> in deferred revenue
            
            <1,638>
            
            
            702Increase
                in note payable
            
            35,000
            
            
            40,940Total
                adjustments
            
            80,337
            
            
            90,963Total
                cash used by operations
            
            <9,313>
            
            
            <179,893>Cash
                used in investing activities:Product
                development
            
            
            
            
            <6,500>Total
                cash used in investing activities
            
            
            
            
            <6,500>Cash
                provided by financing activities:Long-term
                notes payable
            
            
            
            
            <77,140>Common
                stock
            
            
            
            
            146,498Total
                cash provided by financing activities
            
            
            
            
            69,358Net
                decrease in cash
            
            <9,313>
            
            
            <117,035>Cash
                at the beginning of the quarter
            
            21,154
            
            
            217,657Cash
                at the end of the quarter
            $
            11,841
            
            $
            100,622






F3
 Table
          of Contents


**California
          News Tech**
 **Notes
          to Comparative Consolidated Financial
          Statements**
 **March
          31, 2007 and March 31, 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.
  Media
            Sentiment, Inc. was incorporated during October 2006, under the laws
            of the
            State of Nevada, as a wholly owned subsidiary of California News
            Tech.
  **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.
  F4
 Table
              of Contents
 **California
          News Tech**
 **Notes
          to Comparative Consolidated Financial Statements**
 **March
          31, 2007 and March 31, 2006**
 **(Unaudited)**
 
 
 **Note
          2.**   **Summary
          of Significant Accounting Policies (Continued)**
 
 **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; ·
              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
          will be deferred and recorded on a monthly basis as earned. 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.
  F5
 Table
              of Contents
 **California
          News Tech**
 **Notes
          to Comparative Consolidated Financial Statements**
 **March
          31, 2007 and March 31, 2006**
 **(Unaudited)**
 
 **Note
          2.**   **Summary
          of Significant Accounting Policies (Continued)**
 
 **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.
  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.
 
 **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 2007,
          2006,
          2005 and 2004.
 F6
 Table
              of Contents
 **California
          News Tech**
 **Notes
          to Comparative Consolidated Financial Statements**
 **March
          31, 2007 and March 31, 2006**
 **(Unaudited)**
 
 
 **Note
          2.**   **Summary
          of Significant Accounting Policies (Continued)**
 
 **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.
  **Note
          3.**   **Going
          Concern and Liquidity**
  Without
          raising additional capital the Company will not continue operations.
          Historically, the Company has incurred significant losses and negative
          cash
          flows from operations. As of March 31, 2007, the accumulated deficit was
          $1,800,819 and the negative working capital was $241,567. The Company has
          primarily funded operations through private placements and a public offering.
          There is no assurance that these sources of capital will available to the
          Company in the future.
 
 **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:
   Quarter
                    Ended March 31,2007
                2006Shares issuable under stock options
                81,650
                816,500Shares issuable pursuant to
                  warrants
                0
                30,000
  The
          weighted
          average exercise price of stock options, was $14.20 at March 31, 2007 and
          $1.42
          at March 31, 2006. The average exercise price of outstanding warrants was
          $1.00
          per share for those granted during 2006, no options were granted during
          2007.
 
 F7
 Table
              of Contents
 **California
          News Tech**
 **Notes
          to Comparative Consolidated Financial Statements**
 **March
          31, 2007 and March 31, 2006**
 **(Unaudited)**
 
 **Note
          5.**   **Equipment**
 
 Equipment
          consists of the following:
  March
                    31, 2007
                
                
                March
                    31, 2006Computer
                  equipment
                $
                10,511
                
                $
                10,511Accumulated
                  depreciation
                
                <10,511>
                
                
                <9,700>Net
                  book value
                $
                0
                
                $
                811
 
 **Note
          6.**   **Intangible
          Assets**
  Intangible
          assets consist of product development and website development costs of
          $336,060
          with related amortization of $100,889 at March 31, 2007. Total product
          and
          website development costs at March 31, 2006 were $336,060
 
 **Note
          7.**   **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.
  At
          March 31,
          2007, $76,940 of notes payable to a former officer of the Company are the
          subject of ongoing negotiation.
  The
          remaining
          notes of $115,000 are due to an officer and director of the Company, Marian
          Munz
          and his wife Tunde Munz. These notes are convertible, at the option of
          the note
          holder, into common and preferred shares of Media Sentiment, Inc at a price
          of
          $0.01 per share, subject to adjustment for splits and reverse splits.
 
 **Note
          8.**  **Shareowners’
          Investment**
  As
          of March
          31, 2007, the Company’s authorized share capital consists of 100,000,000 shares
          at $0.003 par value. The 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.
 F8
 Table
              of Contents
 **California
          News Tech**
 **Notes
          to Comparative Consolidated Financial Statements**
 **March
          31, 2007 and March 31, 2006**
 **(Unaudited)**
 
 **Note
          8.**   **Shareowners’
          Investment (Continued)**
 
 On
          January 9, 2007, the increase in the number of authorized shares to 100,000,000
          and the one for ten reverse split of the common stock as approved by the
          shareholders on December 29, 2006, became effective.
 
 Issued
          share capital and paid-in capital balances are:
  Common
                      StockShares
                  
                  
                  Amount
                  
                  
                  Paid-in
                    CapitalBalance,
                    December 31, 2001
                  
                  2,018,833
                  
                  $
                  6,057
                  
                  $
                  581,659Issuance
                    of common shares
                  
                  437,500
                  
                  
                  1,312
                  
                  
                  142,748Balance,
                    December 31, 2002
                  
                  2,456,333
                  
                  
                  7,369
                  
                  
                  724,407Issuance
                    of common shares
                  
                  50,000
                  
                  
                  150
                  
                  
                  9,850Balance,
                    December 31, 2003
                  
                  2,506,333
                  
                  
                  7,519
                  
                  
                  734,257Issuance
                    of common shares
                  
                  285,000
                  
                  
                  855
                  
                  
                  283,307Balance,
                    December 31, 2004
                  
                  2,791,333
                  
                  
                  8,374
                  
                  
                  1,017,564Issuance
                    of common shares
                  
                  333,833
                  
                  
                  1,001
                  
                  
                  375,523Balance,
                    December 31, 2005
                  
                  3,125,166
                  
                  
                  9,375
                  
                  
                  1,393,087Issuance
                    of common shares
                  
                  515,274
                  
                  
                  1,548
                  
                  
                  390,413Balance,
                    December 31, 2006
                  
                  3,640,440
                  
                  
                  10,923
                  
                  
                  1,783,500Reverse
                    1 for 10 split
                  
                  <3,276,396>
                  
                  
                  0
                  
                  
                  0Balance
                    March 31, 2007
                  
                  364,044
                  
                  $
                  10,923
                  
                  $
                  1,783,500
 
 **Note
          9.**   **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. No options were granted or exercised during the
          first
          quarter of 2007. The following table summarizes information about stock
          options
          outstanding at March 31, 2007 as adjusted for the reverse split:
  Grant
                    Date
                Weighted
                    Average
                  Exercise
                    Price
                Options
                    Outstanding
                Options
                    Exercisable2002
                $8.30
                26,800
                26,8002003
                10.00
                8,000
                8,0002004
                10.00
                4,000
                4,0002005
                29.90
                24,125
                24,1252006
                14.20
                18,725
                18,725
 
  F9
 Table
              of Contents
 **California
          News Tech**
 **Notes
          to Comparative Consolidated Financial Statements**
 **March
          31, 2007 and March 31, 2006**
 
 
 **Note
          9.**   **Stock
          Option Plans (Continued)**
  The
          weighted
          average exercise price of the stock options was $14.20 at March 31, 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
                  2003Risk-free interest rate
                  4.42%
                  4%
                  4%
                  3%Expected dividend
                  --
                  --
                  --
                  --Expected volatility factor
                  15%
                  30%
                  30%
                  30%Expected option term
                  5
                      year
                  5
                      years
                  5
                      years
                  3
                      years
 
 D uring
          the
          year ending December 31, 2003, the Company adopted the disclosure provisions
          of
          SFAS No. 148, however, the transition provisions were not adopted. In accordance
          with SFAS 123(R), in 2006 the Company changed its method of accounting
          for stock
          compensation.
  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.
  **Note
          10.**  **Warrants**
  Warrants
          accompanied the shares issued during 2004 giving 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, a total of 288,500
          warrants were outstanding. An additional 1,000,000 warrants were authorized
          during the year ended December 31, 2005. At March 31, 2007 there are no
          warrants
          outstanding.
  F10
 Table
              of Contents
 **California
          News Tech**
 **Notes
          to Comparative Consolidated Financial Statements**
 **March
          31, 2007 and March 31, 2006**
 
 
 
 **Note
          11.**  **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, 2006, the Company had a net operating loss carryforward for
          U.S.
          federal income tax purposes of approximately $1,700,000. The federal net
          operating loss carryforward, if not utilized, will begin to expire in
          2014.
 
 **Note
          12.**  **Commitments
          and Contingencies**
  At
          the annual
          meeting held March 6, 2004, a resolution was approved concerning the granting
          of
          stock options to directors. The plan provides for 1,000 options to be granted
          monthly to each external director plus 5,000 options to each director attending
          a board meeting, up to a maximum of five (5) regular and special meetings
          per
          year. The exercise price remains at $1.00. The maximum number of options
          to be
          authorized annually cannot exceed 15% of the outstanding shares at each
          year
          end.
  At
          March 31,
          2007, the State of California Employment Development Department was engaged
          in
          an audit of the Company’s personnel records. The Employment Development
          Department has made a determination that the Company owes $26,000 in payroll
          taxes. The Company disagrees with this determination and will appeal.
  **Note
          13.**  **Subsequent
          Events**
  On
          October
          30, 2006, the Company entered into a Debenture Subscription 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 is payable quarterly; all principal and interest are due May 30,
          2008.
          The debenture is convertible, at the option of the holder, after May 2,
          2007 at
          the lower of: (i) sixty percent (60%) of the average closing price on the
          NASD
          OTCBB of the Company’s common stock for the preceding five trading days, or (ii)
          $0.01 per share, subject to adjustment for splits and reverse splits.
  F11
 Table
              of Contents
 **California
          News Tech**
 **Notes
          to Comparative Consolidated Financial Statements**
 **March
          31, 2007 and March 31, 2006**
 
 
 **Note
          13.**  **Subsequent
          Events (Continued)**
  The
          agreement
          permits DNB to appoint one member to the Company Board of Directors. In
          the
          event of default, DNB may appoint sufficient members to the Company’s Board of
          Directors to have control of the Company. The closing date for the Debenture
          Subscription Agreement has been extended by mutual agreement of the Company
          and
          DNB to May 2, 2007.
  The
          Company
          transferred most of its assets and liabilities to its subsidiary, Media
          Sentiment, Inc. during October 2006.


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**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**





Since
      2001 our business has been providing online access to news media analysis for
      a
      subscription fee. Our online news media analysis research product is called
      MediaSentimentTM and quantifies qualitative press coverage, or Media Sentiment®.
      The central premise behind MediaSentimentTM 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
      benefits our customers as they interpret and track the potential impact of
      media
      sentiment on the overall financial markets and as it may affect particular
      companies. We do not anticipate continuing this line of business beyond the
      second or third quarter 2007.





On
      October 16, 2006 we created a subsidiary Nevada Corporation named Media
      Sentiment, Inc. On October 31, 2006 we moved all our assets and business to
      that
      new, wholly-owned corporation in satisfaction of a closing condition of a
      debenture subscription agreement we executed October 30, 2007.




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**Debenture
      Subscription Agreement**





Since
      inception, our business has not been profitable over any annual or quarterly
      period. The market price for our common stock (CNEW:OB) has been at or near
      all
      time lows. Our 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 third party services, and to otherwise execute on our business
      plan.





For
      those
      reasons, on October 30, 2006, we entered into a subscription agreement pursuant
      to which we agreed to sell a convertible debenture to DNB Capital Management
      or
      its assigns in the face amount of $100,000, due in two years, with interest
      at
      18% per annum. We disclosed the terms of the subscription agreement and the
      underlying debenture on Form 8-K filed October 30, 2007. The subscription
      agreement was originally scheduled to close on or before December 15, 2006,
      subject to several conditions precedent that we were required to 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, increasing our authorized
      common stock to 100,000,000 shares, and providing our Board with the authority
      to change the name of the company.





On
      October 31, 2006, we transferred all our assets and operations to our wholly
      owned subsidiary, Media Sentiment, Inc., in preparation for divesting ourselves
      of those assets and operations. The assets we assigned to Media Sentiment,
      Inc.
      include the right to receive the proceeds of the Debenture should it close.





In
      addition, on November 2, 2006, we announced our intention to spinoff all shares
      of Media Sentiment, Inc. common stock to our shareholders as a stock dividend.
      We subsequently indefinitely postponed the spin-off as a result of comments
      by
      the staff of the Securities and Exchange Commission, and therefore, Media
      Sentiment, Inc. remains our wholly owned subsidiary.





At
      the
      Shareholder’s Meeting held December 29, 2006, our shareholders voted to approve
      the following:




a.
            An
                increase in the number of authorized shares of common stock to One
                Hundred
                Million shares (100,000,000), which became effective upon our filing
                of an
                amendment to our Articles of Incorporation to reflect this change
                on
                December 29, 2006;b.
            A one for ten reverse stock split of
              the
              Company’s common stock, which became effective January 9, 2007;
              andc.
            A change in our name to an exact name
              to be
              later determined by our board of
              directors.




The
      debenture subscription agreement was originally scheduled to close December
      15,
      2006. It did not because we were unable to satisfy the closing conditions.
      Subsequently, the parties extended the closing date several times, ultimately
      to
      May 2, 2007. That date also passed without the parties closing the subscription
      agreement, again because we were unable to satisfy the closing conditions,
      most
      notably that we satisfy our debts and spinoff our existing operations.





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Although
      we have thus far been unable to spinoff our existing operations or satisfy
      our
      existing debts, we believe that we are very close to securing a modification
      of
      those conditions from a new, but related, potential buyer of a debenture, JWA
      Ventures, LLC, which would allow us to spin off Media Sentiment, Inc.
      immediately after we consummate a business combination transaction with a
      suitable merger partner and would allow us to pay our existing debts out of
      the
      proceeds of the debenture. Previously, both had been conditions precedent to
      issuing the debenture and it has been our inability to satisfy these conditions
      that has precluded us from issuing the debenture thus far.





Although
      we have not executed any binding agreements at this time either for a business
      combination transaction or for the issuance of the debenture, we anticipate
      doing so over the next several days. There can be no assurance that we will
      be
      successful in reaching a final agreement on either a business combination or
      on
      a debenture. However, in anticipation of closing the debenture, we have received
      $10,000 of the purchase price from the anticipated buyer of the debenture,
      JWA
      Ventrues, LLC, and we have fixed the record date for the spinoff as April 20,
      2007. If we are unsuccessful in closing a transaction for the sale of the
      debenture on mutually agreeable terms, the $10,000 we have already received
      will
      be a general unsecured debt that we will have to repay on demand.





As
      a
      result of the transactions and anticipated transactions described above, we
      do
      not expect that our current operations, as run by our wholly owned subsidiary
      Media Sentiment, Inc., will be a material part of our business plan beyond
      the
      second quarter 2007.





**Existing
      Business Operations**





Because
      we anticipate implementing a spinoff of our existing assets and operations
      to
      our shareholders of record on April 20, 2007, during the second or third quarter
      of 2007, we do not anticipate that our existing business operations will be
      a
      material part of our business plan upon implementation of that spinoff.
      Therefore, the following discussion is accurate for the first quarter 2007,
      but
      will not be correct for the balance of 2007 in the event we are successful
      in
      our immediate efforts to acquire a new business and spinoff our existing
      operations.





Our
      current operations are based, in large part, upon our belief that there have
      been dramatic qualitative and quantitative changes in media reporting over
      the
      last decade, driven in part by the Internet. Persons interested in media reports
      now have a variety of options and vast stores of information to negotiate.
      For
      frequent users of media reports, such as active stock market traders, the
      processing and assimilation of data has become much more complex. Also, with
      the
      advent of online trading and ECNs that enable trading directly, the speed at
      which investors and traders may need to make decisions has increased
      dramatically as well. Lastly, as some of the research indicates, the advent
      of
      algorithmic trading vastly enhances the role of computers in today’s trading and
      investment field.





Our
      MediaSentimentTM research product assists our customers in quickly understanding
      the cumulative sentiment reflected in media reports. Our tracking technology
      quickly scans available media reports for key words and provides an assessment
      as to whether the overall tone of the news story is positive, negative, or
      neutral. We believe that the use of our technology will expand in the




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coming
      years, driven by an ongoing increase in information availability and a demand
      for tools that assist in the quick assimilation of media reports.





Our
      business model relies on our capability to give our customers near real-time
      measurement and trend analysis of the media sentiment regarding the public
      companies they may wish to track. Our customers are interested in media
      sentiment because they believe that media sentiment either reflects public
      sentiment, drives public sentiment, or both, and that public sentiment affects
      the general economy and particular companies. We create our research product,
      MediaSentimentTM, by using our computer systems to search the Internet for
      publicly available media reports about publicly traded companies. We use
      proprietary Internet search engine technology that is focused on searching
      strictly news and publicly traded corporate websites. Our computer systems
      analyze the news reports published on the Internet using our proprietary
      software to measure the sentiment.


Our
      MediaSentiment TM trend
      system measures sentiment by searching each media report for certain key words
      and phrases that we have previously identified both as significant to
      determining sentiment and as indicative of either positive or negative
      sentiment. By quantifying the number of words or phrases in a media report
      that
      indicate positive or negative sentiment, we then classify each report as
      positive, negative or neutral. Next we total the number of each of the positive,
      negative and neutral reports and then calculate the percentage each category
      represents of the overall media coverage for the requested period of time.
      The
      results are then displayed graphically for the benefit of our customers on
      our
      password protected website. Our computers have been collecting and analyzing
      media reports since June of 2002, which allows us to present both historical
      and
      current information so that our customers can also observe any trends. Our
      system further allows our customers to access the source media reports and
      abstracts of the source reports, also prepared by our software, should they
      wish
      to review any of the media reports that underlie our graphs.





HeadsUp,
      another feature of our MediaSentimentTM 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 on the trading day
      following the reports. HeadsUp presents users with an easy to use graphical
      interface, displaying thumbs up and thumbs down assessments of the media
      sentiment. These assessments are strictly an analysis of the cumulative media
      sentiment of earnings releases of the publicly traded companies and are not
      buy
      or sell recommendations for the specific stocks. They are meant to help users
      make a faster and better buy or sell decision by providing information in real
      time manner. These thumbs up and thumbs down recommendations are generated
      automatically by our computer systems.





We
      have
      developed a new product named MediaSentiment Pro which adds two additional
      features to complement the HeadsUp feature found in MediaSentimentTM:





1.  MediaSentiment
      UpperHandTM performs a correlation analysis automatically with two selected
      technical indicators that indicate buy/sell market pressures and presents to
      users the stock symbols of companies who meet the selected criteria.


2.  MediaSentiment
      BigMoversTM performs a correlation analysis automatically between Wall Street’s
      analysts’ estimates versus the actual earnings per shares that selected
      companies report.





MediaSentiment
      Pro is a unique product which enables traders and investors to rapidly receive
      an




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estimate
      of the impact of the sentiment regarding the earnings press release, combined
      with earnings surprise factors and buy/sell market pressures as determined
      by
      selected technical analysis indicators. All this is done in near real-time
      and
      presented in a proprietary, easy to use and understand graphical user interface,
      which literally gives users a thumbs up or thumbs down on selected
      stocks:





HeadsUp
      symbols are indicated by one thumb up or one thumb down


UpperHand
      symbols are indicated by two thumbs up or two thumbs down


BigMovers
      symbols are indicated by three thumbs up or three thumbs down





We
      market
      MediaSentiment Pro as a tool to help users make investment decisions faster
      and
      more accurately. We plan to sell monthly subscriptions to MediaSentiment Pro.
      However, users may choose to subscribe to any function individually. aHeadsUp
      will be available for annual subscriptions while UpperHand and BigMovers will
      be
      available for both monthly and yearly subscriptions.





We
      have
      also developed a product MediaSentiment for MetaStock that integrates Media
      Sentiment indicators into a traditional technical analysis platform through
      a
      partnership with MetaStock, a Reuters product. This new product enables users
      to
      see historical charts of the correlations of media sentiment indicators with
      stock price, trading volume, and other technical analysis indicators. It also
      enables users to receive aHeadsUp and UpperHand signals on the charts in near
      real-time.





Based
      on
      our research, we believe that the quantifying of Media Sentiment® and
      integrating that quantification into a traditional technical analysis is a
      new
      and innovative idea which has the potential to increase the capabilities of
      technical analysts who currently rely heavily on stock price and volume as
      indicators. Our plan is to start marketing this integration product in
      partnership with MetaStock at prices similar to our other products. We released
      our new products that are part of MediaSentiment Pro as well as the integration
      module with MetaStock during the first quarter of 2007.





Another
      component of our MediaSentimentTM system is the newsletter, E-motions. We
      developed the newsletter to explore case studies highlighting the relationship
      between big price moves in MediaSentimentTM featured stocks, news coverage, and
      investor sentiment.





We
      have
      also developed the first beta version of a new product that was code-named
      PublicMemory.com. We used that product to track the news coverage of the
      congressional elections in 2006 and assess the media attention that candidates
      received. The resulting graphs were used by Stanford University’s Political
      Communications Lab web site. After conducting internal marketing research,
      we
      determined that there might be a market opportunity in taking advantage of
      today’s fast-growing online advertising market, so we began developing a second
      beta version of this unique information search product. We named this second
      version of the product eSibyl.com.





Our
      intent is to develop eSibyl.com into an easy-to-use, easy-to-customize,
      issue-oriented search product to bring internet users the information that
      is
      critical to them in near real time. Our plan is to make the eSibyl results
      very
      easy to distribute anywhere on the web, so users can read the critical content
      they need wherever they are located. We are also developing eSibyl to function
      in multiple




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languages,
      which will enable us to expand usage globally very quickly. We plan to finalize
      the second beta version of eSibyl.com and to take it to the marketplace by
      the
      end of the third quarter of 2007, provided we are not successful in spinning
      off
      our current operations before that time.





We
      have
      also determined that our first MediaSentimentTM system could be improved to offer
      more powerful search capabilities and cover more news sources and public
      companies. For so long as we continue to pursue, rather than spinoff, our
      existing operations during the next twelve months, we plan to research future
      versions of MediaSentimentTM that will increase the number of news sources which
      will be interrogated by our search engine, seek to implement more user-friendly
      tools to enhance the performance of our product, and improve and further develop
      the trend graphs.





We
      may
      need to increase staffing to handle the additional demands associated with
      the
      expansion of our customer base. We may hire additional employees and/or
      contractors to assist us with sales, customer service, technical support,
      website management and development, and administration. If we hire additional
      employees and/or contractors, we will then need to lease additional office
      space
      to accommodate the associated growth.





Further,
      and again for so long as we continue to pursue, rather than spinoff, our
      existing operations, we plan to continue our current efforts in market research
      and development. As part of this process, we will continuously survey the online
      investor community to gain a greater understanding of investors’ likes and
      dislikes. Based upon this feedback, we will consider the merits of offering
      additional products and services and of proceeding with anticipated expansions.





For
      so
      long as we continue to pursue, rather than spinoff, our existing operations
      during the next twelve months, we plan to continue to market these products
      through strategic partnerships, direct marketing, and advertising to online
      traders/investors. Our initial target market is the financial users’ community
      and, more specifically, online investors. We believe that the online investor
      relies on the Internet as a primary news provider for research and investment
      decision making processes and that these investors are unable to independently
      analyze the sheer volume of information available through the Internet. Our
      business is to provide our customers with news scanning and analysis at a very
      low cost.





The
      execution of our business plan in the next twelve months is contingent upon
      our
      ability to significantly increase our revenue from sales. If we are unable
      to do
      so, additional financing through another debt or equity financing arrangement
      will be required for execution of our business plan over the next twelve months.
      If we are unable to obtain additional financing, the implementation of our
      business plan will be impaired.





**Results
      of Operations for the three months ended March 31, 2007 and
      2006**





We
      generated revenue in the amount of $6,012 during the three month period ended
      March 31, 2007, compared to $26,389 for the three month period ended March
      31,
      2006. Our revenue for the reporting period was generated primarily through
      subscription sales. The decline in our revenue can be attributed primarily
      to
      the loss of revenue related to mailing list rentals and bartered services.





We
      incurred operating expenses in the amount of $95,662 for the three months ended
      March 31, 2007,




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compared
      to operating expenses of $297,245 for the three months ended March 31, 2006.
      The
      decrease in our operating expenses for the three months ended March 31, 2007,
      was primarily attributable to a decrease in our Selling and Administrative
      Costs
      from $78,902 during the quarter ended March 31, 2006 to $10,635 during the
      quarter ended March 31, 2007 and a decrease in Other Operating Expenses in
      the
      first quarter from $201,322 to $68,227 from the same period in the previous
      year. In addition, we have amortized our capitalized product development costs
      over sixty months, resulting in a depreciation and amortization expense for
      the
      period ending March 31, 2007 of $16,800, down slightly from $17,020 for the
      period ending March 31, 2006.





**Liquidity
      and Capital Resources**





On
      March
      31, 2007, we had cash in the amount of $11,841. As of March 31, 2007, we had
      total current assets of $25,651 and total current liabilities of $267,218.
      As a
      result, our working deficit on March 31, 2007 was $241,567.





For
      so
      long as we continue to pursue, rather than spinoff, our existing operations
      during the next twelve months, we intend to fund operations though increased
      sales, and debt and/or equity financing arrangements, In the event we are not
      successful in obtaining a new business in the near future, than the completion
      of our existing business plan for the next 12 months is contingent upon us
      obtaining additional financing. If we are unable to obtain additional financing,
      the full implementation of our business plan will be impaired and the Company's
      ability to continue as a going concern will be in doubt.





**Off
      Balance Sheet Arrangements**





As
      of
      March 31, 2007, there were no off balance sheet arrangements.





**Going
      Concern**




Our
      independent auditors have stated in their Auditor’s Report included in our
      annual report on Form 10-KSB that we have incurred operating losses, accumulated
      deficit, and negative cash flow from operations. As of December 31, 2006, our
      accumulated deficit was $1,694,144. Our ability to raise capital through future
      issuances of common stock is unknown. Continuation of our business is dependent
      on our ability to obtain financing, promote our software, maintain our
      processing system, and continue to enhance our services.





These
      factors raise doubt about our ability to continue as a going concern. Our
      consolidated financial statements do not include any adjustments that may result
      from the outcome of these aforementioned uncertainties.





**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




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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 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;


·
            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
      will be deferred and recorded on a monthly basis as earned. Any delivery,
      selling or other costs billed to the customers will be included in net revenue
      and the related delivery, selling or other costs will be included in the cost
      of
      selling subscriptions.





***Deferred
      Revenue***





Deferred
      revenue is primarily comprised of customer deposits for unearned
      subscriptions.





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***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.





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.





***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 amount 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 anti-dilutive because they had an exercise price greater
      than
      the average market price during the year or due to the net loss in 2006, 2005
      and





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2004.




***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 affect 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.





**Recently
      Issued Accounting Pronouncements**





None


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**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 March 31, 2007. 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 March 31, 2007, our disclosure controls and procedures
      are
      effective. There have been no changes in our internal controls over financial
      reporting during the quarter ended March 31, 2007.





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.





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.


14
 Table
          of Contents




**PART
      II - OTHER INFORMATION**





**Item
      1.     Legal
      Proceedings**





With
      the
      exception of matters discussed in this section, 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.





At
      March
      31, 2007, the State of California Employment Development Department was engaged
      in an audit of the Company’s personnel records. The Employment Development
      Department has made a determination that the Company owes $26,000 in payroll
      taxes. We have not, however, received any written notification of this
      determination. The Company disagrees with this determination and will appeal.





**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 March
      31, 2007.





**Item
      5.     Other
      Information**





None .





**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






15
 Table
          of Contents








**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:
            May
                9, 2007By:       /s/
                Marian Munz
              Marian
                Munz
              Title:**Chief
                Executive Officer and Director**