**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 endedJune
                30, 2006[
                ]
            Transition
                Report pursuant to 13 or 15(d) of the Securities Exchange Act of
                1934For
                the transition period __________ to __________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 [X] No





State
      the
      number of shares outstanding of each of the issuer’s classes of common stock, as
      of the latest practicable date: 3,590,440 common shares as of July 28,
      2006





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




1
 Table
          of Contents


TABLE
                OF CONTENTS
            PagePART
                I - FINANCIAL INFORMATIONItem
                1.
            Financial
                Statements
            3Item
                2.
            Management’s
                Discussion and Analysis
            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**




Our
                unaudited financial statements included in this Form 10-QSB are as
                follows:F-1
            Comparative
                Balance Sheets as of June 30, 2006 and
                2005;F-2
            ComparativeStatements
                of Operations and Accumulated Deficit for the three and six month
                periods
                ended June 30, 2006 and 2005;F-3
            Statement
                of Cash Flows for the three and six months periods
                ended June 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 June 30, 2006
      are
      not necessarily indicative of the results that can be expected for the full
      year.




3
 Table
          of Contents




**California
          News Tech, Inc.**
 **Comparative
        Balance Sheets**
 **(Unaudited)**
  Assets
                
                June
                    30, 2005
                
                
                June
                    30, 2006Current
                    assets:Cash
                $
                63,744
                
                $
                62,864Accounts
                    Receivable
                
                -
                
                
                19,853Prepaid
                    expenses and deposits
                
                1,500
                
                
                61,925Total
                    current assets
                
                65,244
                
                
                144,642Equipment,
                    net of depreciation
                
                1,206
                
                
                586Product
                    development, net of amortization
                
                300,599
                
                
                302,460Total
                    assets
                $
                367,049
                
                $
                447,688Liabilities
                    and Shareholders' EquityCurrent
                    liabilitiesAccounts
                    payable
                $
                19,829
                
                $
                53,292Deferred
                    revenue
                
                2,684
                
                
                4,156Notes
                    payable
                
                43,500
                
                
                91,940Total
                    current liabilities
                
                66,013
                
                
                149,388Long-term
                    notes payable
                
                77,140Shareholder's
                    equityCommon
                    stock: $0.003 par value, 8,333,333 sharesauthorized,
                    2,791,333 shares and 3,495,333shares
                    outstanding at June 30, 2005 and June30,
                    2006.
                
                8,269
                
                
                10,270Paid-in-capital
                
                982,669
                
                
                1,653,190Accumulated
                    deficit
                
                (767,042)
                
                
                (1,365,161)Total
                    shareholders' equity
                
                223,896
                
                
                298,300Total
                    liabilities and shareholders' equity
                $
                367,049
                
                $
                447,688


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




F-1
 Table
          of Contents





**California
        News Tech, Inc.**
 **Comparative
        Statements of Operations and Accumulated Deficit**
 **(Unaudited)**
   Six
                  months ending
              
              
              Three
                    months endingJune
                  30, 2005
              
              
              June
                  30, 2006
              
              
              June
                  30, 2005
              
              
              June
                  30, 2006Revenue
              $
              8,876
              
              $
              50,802
              
              $
              6,895
              
              $
              24,413ExpensesSelling
                  and administrative costs
              
              54,377
              
              
              189,870
              
              
              25,981
              
              
              110,968Office
                  and other operating costs
              
              46,620
              
              
              229,364
              
              
              26,323
              
              
              28,042Depreciation
                  and amortization
              
              0
              
              
              34,045
              
              
              0
              
              
              17,025100,997
              
              
              453,279
              
              
              52,304
              
              
              156,035Net
                  loss
              $
              (92,121)
              
              $
              (402,477)
              
              $
              (45,409)
              
              $
              (131,622)Accumulated
                  deficit at beginning of the period
              
              (674,922)
              
              
              (962,339)
              
              
              (721,634)
              
              
              (1,233,195)Accumulated
                  deficit at end of the period
              $
              (767,043)
              
              $
              (1,365,102)
              
              $
              (767,043)
              
              $
              (1,364,817)Basic
                  and diluted net loss per share
              $
              (0.03)
              
              $
              (0.12)
              
              $
              (0.02)
              
              $
              (0.04)Shares
                  used in basic and diluted net loss per sharecalculation
              
              2,791,333
              
              
              3,495,333
              
              
              2,791,333
              
              
              3,495,333Non-cash
                  stock-based employee compensationincluded
                  in selling and administrative costs
              $
              0
              
              $
              6,004
              
              $
              0
              
              $
              0




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




F-2
 Table
          of Contents




**California
        News Tech**
 **Comparative
        Statements of Cash Flows**
 **(Unaudited)**
  Six
                  months ending
              
              Three
                  months endingJune
                  30, 2005
              
              
              June
                  30, 2006
              
              
              June
                  30, 2005
              
              
              June
                  30, 2006Cash
                  used by operating activities:Net
                  loss
              $
              (92,121)
              
              $
              (402,477)
              
              $
              (45,410)
              
              $
              (131,622)Adjustments
                  to reconcile net loss to net cash used by
              
              
              
              
              0operating
                  activities:
              
              0
              
              
              0Depreciation
                  and amortization
              
              0
              
              
              34,045
              
              
              0
              
              
              17,025Changes
                  in assets and liabilities:
              
              0
              
              
              0Accounts
                  receivable
              
              507
              
              
              (10,033)
              
              
              653
              
              
              (13,728)Prepaid
                  expenses and deposits
              
              386
              
              
              (25,750)
              
              
              0
              
              
              (34,375)Accounts
                  payable
              
              248
              
              
              30,738
              
              
              (1,495)
              
              
              10,817Deferred
                  revenue
              
              2,704
              
              
              386
              
              
              2,684
              
              
              (375)Notes
                  payable
              
              0
              
              
              40,940
              
              
              0
              
              
              0Total
                  cash used in operating activities
              
              (88,276)
              
              
              (332,151)
              
              
              (43,568)
              
              
              (152,258)Cash
                  used in investing activities:Product
                  development
              
              
              
              
              (6,500)Total
                  cash used in investing activities
              
              0
              
              
              (6,500)
              
              
              0
              
              
              0Cash
                  provided by financing activitiesNotes
                  Payable
              
              
              
              
              (77,140)Common
                  stock
              
              (35,000)
              
              
              260,998
              
              
              (35,000)
              
              
              114,500Total
                  cash provided by financing activities
              
              (35,000)
              
              
              183,858
              
              
              (35,000)
              
              
              114,500Net
                  decrease in cash
              
              (123,276)
              
              
              (154,793)
              
              
              (78,568)
              
              
              (37,758)Cash
                  at the beginning of the period
              
              187,020
              
              
              217,657
              
              
              142,312
              
              
              100,622Cash
                  at the end of the period
              $
              63,744
              
              $
              62,864
              
              $
              63,744
              
              $
              62,864




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




F-3
 Table
          of Contents




**California
      News Tech**


**Notes
      to Financial Statements**


**June
      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:




F-4
 Table
          of Contents





**California
      News Tech**


**Notes
      to Financial Statements**


**June
      30, 2006**


**(Unaudited)**








**Note
      2.**  **Summary
      of Significant Accounting Policies (Continued)**





**Revenue
      Recognition (Continued)**




·
            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
      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.





F-5
 Table
          of Contents




**California
      News Tech**


**Notes
      to Financial Statements**


**June
      30, 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 the second
      three months of 2005 and 2006.




F-6
 Table
          of Contents





**California
      News Tech**


**Notes
      to Financial Statements**


**June
      30, 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**





Having
      raised additional capital the Company will continue as a going concern.
      Historically, the Company has incurred significant losses and negative cash
      flows from operations. As of June 30, 2006, the accumulated deficit was
      $1,365,101 and the negative working capital was $4,746. The Company has
      primarily funded operations through private placements and a public offering.
      To
      the extent that sources of financing are available, the Company will promote
      its
      software, maintain its processing system and continue to enhance its service.
      Management expects that future subscription revenue will be sufficient to fund
      operations.




**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 June 30,2006
              2005Shares issuable under stock
                options
              1,225,867
              710,700Shares issuable pursuant to warrants
              30,000
              288,500




The
      weighted average exercise price of stock options, was $1.40 and $1.34 at June
      30, 2006 and 2005, respectively. The weighted average exercise price for options
      granted during the second quarter of 2006 was $1.14. The average exercise price
      of outstanding warrants was $1.00 per share for those granted during 2005 and
      2006.




F-7
 Table
          of Contents




**California
      News Tech**


**Notes
      to Financial Statements**


**June
      30, 2006**


**(Unaudited** **)**








**Note
      5.**  **Equipment**




Equipment
        consists of the following:


June
                30, 2006
            
            June
                30, 2005Computer equipment
            10,511
            
            9,811Accumulated
              depreciation
            (9,925)
            
            (8605)Net
              book
              value
            586
            
            1206




**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 negation.





**Note
      7.**  **Shareowners’
      Investment**





As
      of
      June 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-inShares
            
            Amount
            
            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
            298,208
            
            895
            
            277,099Balance,
              June 30, 2006
            3,495,333
            
            $10,270
            
            $1,670,186




F-8
 Table
          of Contents





**California
      News Tech**


**Notes
      to Financial Statements**


**June
      30, 2006**


**(Unaudited)**





**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 June
      30, 2006:




Year
              Granted
              
              
              Exercised
              
              
              Forfeited
              
              
              Outstanding
                
                
                and
                Exercisable
              
              
              Weighted
                  Average
                Exercise
                  Price2002
              514,400
              
              
              101,500
              
              
              78,900
              
              
              334,000
              
              $
              0.8242003
              179,200
              
              
              --
              
              
              22,000
              
              
              157,200
              
              
              1.0002004
              146,000
              
              
              6,000
              
              
              7,000
              
              
              133,000
              
              
              1.0002005
              413,125
              
              
              10,000
              
              
              21,125
              
              
              382,000
              
              
              1.3972006
              234,667
              
              
              25,000
              
              
              12,500
              
              
              197,167
              
              
              1.817Total
              1,487,392
              
              
              142,500
              
              
              141,525
              
              
              903,367
              
              $
              1.404


The
      weighted average exercise price of the stock options was $1.40 at June 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
            
            2003Risk-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.




F-9
 Table
          of Contents





**California
      News Tech**


**Notes
      to Financial Statements**


**March
      31, 2006**


**(Unaudited)**





**Note
      8.**  **Stock
      Option Plans (Continued)**





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
      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
      was a total of 288,500 warrants outstanding. There were an additional 1,000,000
      warrants authorized during the year ended December 31, 2005. At June 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.**  **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.




F-10
 Table
          of Contents




**California
      News Tech**


**Notes
      to Financial Statements**


**June
      30, 2006**


**(Unaudited)**








**Note
      11.**  **Commitments
      and Contingencies (Continued)**




On
      February 1, 2006, the Company issued a private placement memorandum for the
      sale
      of up to 1,000,000 shares that granted one warrant per 5,000 share lot. Each
      warrant was a right to purchase an additional 2,500 shares at $4 per share
      within 60 months from the close of the offering. This offering has is expected
      to be modified with a significant reduction in price.





Company
      rents offices for $3,200 per month, on a month-to-month basis





On
      March
      16, 2006 certain directors and principal officers resigned. William White,
      has
      been appointed Chief Financial Officer by the Board of Directors and joins
      Marian Munz as an officer of the Company.




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**Item
      2.     Management’s Discussion and
      Analysis**




**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
      originally 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.





Media
      Sentiment **®**




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




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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, on the trading day following the reports. HeadsUp TM presents
      users with an easy to use graphical interface, displaying thumbs-up and
      thumbs-down assessment of the media sentiment. The assessments are designed
      to
      help users make a faster and better buy or sell decision by providing
      information in real-time manner.





HeadsUp TM brings
      real-time thumbs-up/thumbs-down recommendations about corporate news
      announcements. HeadsUp TM is the
      only product available on the market today capable of sifting through thousands
      of news reports and, within seconds of news reports becoming available on the
      net, rating and presenting the results to investors thereby giving investors
      a
“heads-up” on what will become hot stocks and movers during the trading session.
      In receiving our real-time recommendations, our customers have a great time
      advantage with more time to finalize analysis and to make a buy/sell
      decision.





E-Motions
      is the newsletter component of our Media Sentiment **®** system.
      E-Motions was launched in August 2005 and is presently provided free to readers.
      This newsletter is currently released three times a month and we anticipate
      increasing its frequency to four issues a month. E-Motions is distributed
      through e-mail in HTML format, as well as audio format through podcast
      distributed via the Internet at StreetIQ.com. Our readers are provided 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 highlighting the
      relationship between big price moves in Media Sentiment **®** featured
      stocks, 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 which
      utilizes our proprietary technology to offer customers a greater range of
      trading techniques.




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In
      June
      2006 the Company announced that it has completed the first phase of integration
      between its MediaSentiment Heads UpTM tools and the MetaStockTM Pro platform from
      Equis, a Reuters company. MetaStockTM from Equis/Reuters is the world's leading
      investment analysis platform, with over 150,000 customers in over 97 countries.
      For the first time ever, event-driven media sentiment indicators can now be
      used
      in combination with traditional technical indicators, based on price and volume
      data. Now, traders and investors alike will have access to timely alerts about
      profit opportunities and a greater range of trading techniques available to
      them.





In
      July
      2006, we launched a beta version of a ground-breaking new research tool which
      also utilizes our proprietary technology to make it easy for users to conduct
      custom research. This new product, available on the Internet at
      PublicMemory.com, is a Web 2.0 tool and will allow users to create their own
      research criteria, define issues, and which websites to research. And, users
      can
      distribute the research content via the RSS web publishing format.





Also,
      in
      July 2006 we announced that the Company has received registered status by the
      United States Patent and Trademark Office (USPTO) for the name Media Sentiment®.
      This is another significant milestone for the Company, further proving Media
      Sentiment®'s unique place in a rapidly developing new market.




**Results
      of Operations for the three and six months ended June 30, 2006 and 2005**




We
      generated revenue in the amount of $23,413 during the three month period ended
      June 30, 2006, compared to $6,895 for the three month period ended June 30,
      2005. Our revenue for the three month period ended June 2006 was generated
      through subscription sales of $2,729, mailing list rentals of $10,684, and
      product licensing services valued at $11,000. For the six month period ended
      June 30, 2006, we generated revenue in the amount of $50,802, compared to
      revenue of $8,876 for the same six month period in the prior year. Our revenue
      for the six month period ended June 2006 was generated through subscription
      sales of $5,018, mailing list rental of $34,783 and product licensing of
      $11,000. We report subscription revenue over the life of the subscription,
      with
      $2,729 reported as revenue earned in the quarter ended June 30, 2006, and $4,156
      carried on the balance sheet as unearned revenue, for recognition in future
      periods.





We
      incurred operating expenses in the amount of $156,035 for the three months
      ended
      June 30, 2006, compared to operating expenses of $52,304 for the three months
      ended June 30, 2005. For the six month period ended June 30, 2006 we incurred
      operating expenses in the amount of $453,279 compared to operating expenses
      of
      $100,997 for the same six month period in the prior year. The increase in our
      operating expenses for the three months ended June 30, 2006 was primarily
      attributable to an increase in our selling and administrative costs to $110,968
      up from $26,326 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.




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**Liquidity
      and Capital Resources**




On
      June
      30, 2006, we had cash in the amount of $62,864, which primarily resulted from
      funds raised in public equity offerings. As of June 30, 2006, we had total
      current assets in the amount of $144,642 and total current liabilities of
      $149,388. As a result, our working capital on June 30, 2006 was a negative
      $4,746.





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.




**Assets**




Our
      total
      assets as of June 30, 2006 were $447,688, including cash in the amount of
      $62,864. By comparison, our total assets as of June 30, 2005 were $367,049,
      including cash in the amount of $63,744.




**Liabilities
      and Stockholders Equity**




Our
      total
      liabilities as of June 30, 2006 were $149,388 including accounts payable in
      the
      amount of $53,232 and short term notes payable in the amount of $91,940. Our
      total liabilities as of June 30, 2005 were $143,496 including accounts payable
      of $19,828, short term notes payable of $43,500, and long-term notes payable
      of
      $77,140.





As
      of
      June 30, 2006, Stockholders’ Equity was $298,300, as compared to $223,896 as of
      June 30, 2005.




**Off
      Balance Sheet Arrangements**




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




**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
      June 30, 2006, the accumulated deficit was $1,365,161 and the negative working
      capital was $4,747. 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.




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**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.




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




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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.





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




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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.




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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 June 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 June 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 June 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.





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.




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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**




During
      the three month period ended June 30, 2006, we made sales of 163,499 shares
      of
      restricted, unregistered, fully paid and non assessable common stock. The shares
      of common stock were issued in conjunction with the sales of common stock from
      an exempt private placement and for payment to certain vendors, the issuance
      thereof was authorized by resolution approved by the board of directors of
      the
      company.





The
      proceeds were used for working capital.





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 June
      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:
            August
                14, 2006By:/s/
                Marian Munz
              Marian Munz
              Title:**Chief
                Executive Officer and
                Director**