<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

(Mark One)

[X]  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934

For the quarterly period ended December 31, 2006 or

[ ]  Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

For the transition period from __________ to ___________

Commission file number 0-10541
                      --------

                            COMTEX NEWS NETWORK, INC.
                            -------------------------
       (Exact name of small business issuer as specified in its charter)

                  Delaware                                   13-3055012
                  --------                                   ----------
        (State or other jurisdiction                      (I.R.S. Employer
     of incorporation or organization)                  Identification No.)

       625 North Washington Street, Suite 301, Alexandria, Virginia 22314
       ------------------------------------------------------------------
                    (Address of principal executive offices)

Registrant's telephone number, including area code: (703) 820-2000
                                                   ---------------

Check whether the Registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports) and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]


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


As of February 2, 2007, 13,702,247 shares of the Common Stock of the registrant,
par value $0.01 per share, were outstanding.

Transitional small business disclosure format (check one): Yes [ ] No [X]



<PAGE>

                            COMTEX NEWS NETWORK, INC.
                                TABLE OF CONTENTS

                                                                        Page No.
                                                                        --------
Part I  Condensed Financial Information:

        Item 1. Condensed Financial Statements

                Condensed Balance Sheets                                    2
                as of December 31, 2006 (unaudited)
                and June 30, 2006

                Condensed Statements of Operations                          3
                for the Three and Six Months Ended
                December 31, 2006 and 2005 (unaudited)

                Condensed Statements of Cash Flows                          4
                for the Six Months Ended
                December 31, 2006 and 2005 (unaudited)

                Notes to Condensed Financial Statements                     5

        Item 2. Management's Discussion and Analysis                       10
                or Plan of Operation

        Item 3. Controls and Procedures                                    15

Part II Other Information:

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

SIGNATURES                                                                 16


                                       1

<PAGE>

Part I Condensed Financial Information

Item 1. Condensed Financial Statements

                            Comtex News Network, Inc.
                            Condensed Balance Sheets

<TABLE>
<CAPTION>
                                                                   December 31,     June 30,
                                                                       2006           2006
                                                                   ------------   ------------
                                                                    (Unaudited)
<S>                                                                <C>            <C>
ASSETS

   CURRENT ASSETS
   Cash                                                            $  1,220,152   $  1,881,739
   Marketable Securities                                                327,527
   Accounts Receivable, Net of Allowance of $115,396 and $79,396
      at December 31, 2006 and June 30, 2006, respectively              878,102        843,644
   Prepaid Expenses                                                      33,332         27,982
                                                                   ------------   ------------

      TOTAL CURRENT ASSETS                                            2,459,113      2,753,365

   PROPERTY AND EQUIPMENT, NET                                          198,949        178,377

   DEPOSITS AND OTHER ASSETS                                             43,253         36,922

                                                                   ------------   ------------
TOTAL ASSETS                                                       $  2,701,315   $  2,968,664
                                                                   ============   ============
LIABILITIES AND STOCKHOLDERS' EQUITY

   CURRENT LIABILITIES:
   Accounts Payable and Other Accrued Expenses                     $    929,970   $  1,160,924
   Accrued Payroll Expense                                              157,689        197,356
   Deferred Revenue                                                      14,743         14,214
   Capital Lease Obligations, Current                                                    6,633
                                                                   ------------   ------------

       TOTAL CURRENT LIABILITIES                                      1,102,402      1,379,127

   LONG-TERM LIABILITIES:
   Long-Term Note Payable                                               856,954        856,954
   Deferred Rent                                                                         2,014
                                                                   ------------   ------------

      TOTAL LONG-TERM LIABILITIES                                       856,954        858,968
                                                                   ------------   ------------

TOTAL LIABILITIES                                                     1,959,356      2,238,095

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY

   Common Stock, $0.01 Par Value - 25,000,000 Shares
      Authorized; 13,702,247 and 13,700,247 Shares issued and
      outstanding, as of December 31, 2006 and June 30, 2006,
      respectively                                                      137,022        137,002
   Additional Paid-In Capital                                        13,116,547     13,093,386
   Accumulated Deficit                                              (12,511,610)   (12,499,819)
                                                                   ------------   ------------
      Total Stockholders' Equity                                        741,959        730,569

                                                                   ------------   ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $  2,701,315   $  2,968,664
                                                                   ============   ============
</TABLE>

      The accompanying "Notes to Financial Statements" are an integral part
                         of these financial statements


                                       2

<PAGE>

                            Comtex News Network, Inc
                       Condensed Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                              Three months ended           Six months ended
                                                                 December 31,                December 31,
                                                          -------------------------   -------------------------
                                                              2006          2005          2006          2005
                                                          -------------------------   -------------------------
<S>                                                       <C>           <C>           <C>           <C>
Revenues                                                  $ 1,699,227   $ 1,932,612   $ 3,450,202   $ 3,929,043
Cost of Revenues
   (including depreciation and amortization expense
   of approximately $11,000, $37,000, $25,000 and
   $82,000, respectively)                                     764,465       938,407     1,526,753     1,874,834
                                                          -------------------------   -------------------------
      Gross Profit                                            934,762       994,205     1,923,449     2,054,209

Operating Expenses:
   Technical Operations and Support (Inclusive of
      stock-based compensation of $1,851 and $22,223,
      for the three months ended December 31, 2006 and
      2005, respectively and $3,702 and $30,361, for
      the six months ended December 31, 2006 and 2005,
      respectively)                                           287,723       336,627       574,398       664,880
   Sales and Marketing (Inclusive of stock-based
      compensation of $ 2,289 and $16,756, for the
      three months ended December 31, 2006 and 2005,
      respectively and $4,616 and $22,419, for the six
      months ended December 31, 2006 and 2005,
      respectively)                                           205,925       174,308       383,982       323,533
   General and Administrative (Inclusive of
      stock-based compensation of $ 6,573 and $282,074,
      for the three months ended December 31, 2006 and
      2005, respectively and $14,343 and $384,995, for
      the six months ended December 31, 2006 and 2005,
      respectively)                                           477,203       606,875       904,738     1,024,797

   Depreciation and Amortization                               17,784        38,112        38,941        98,951
                                                          -------------------------   -------------------------
      Total Operating Expenses                                988,635     1,155,922     1,902,059     2,112,161

      Operating (Loss)/ Income                                (53,873)     (161,717)       21,390       (57,952)

Other expense, net
   Interest Expense, net of interest income
      of $5,181, $0, $10,097, and $0, respectively            (16,243)      (22,460)      (32,983)      (47,443)
Realized and unrealized loss on marketable securities          (7,681)                     (7,681)
   Other Income                                                 1,613                       9,842
                                                          -------------------------   -------------------------
      Other Expense, net                                      (22,311)      (22,460)      (30,822)      (47,443)

Loss Before Income Taxes                                      (76,184)     (184,177)       (9,432)     (105,395)

Income Tax (Benefit) Expense                                   (2,900)                      2,359        15,900
                                                          -------------------------   -------------------------
Net Loss                                                  $   (73,284)  $  (184,177)  $   (11,791)  $  (121,295)
                                                          =========================   =========================

Basic and Diluted Net Loss Per Common Share               $     (0.01)  $     (0.01)  $     (0.00)  $     (0.01)
                                                          =========================   =========================

Weighted Average Number of Common Shares in Basic and
Diluted Net Loss per Share                                 13,702,247    13,700,247    13,701,290    13,650,247
                                                          =========================   =========================
</TABLE>

        The accompanying "Notes to Financial Statements" are an integral
                       part of these financial statements


                                       3

<PAGE>

                            Comtex News Network, Inc.
                       Condensed Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                               Six Months Ended
                                                                 December 31,
                                                           -----------------------
                                                              2006         2005
                                                           ----------   ----------
<S>                                                        <C>          <C>
Cash Flows from Operating Activities:
   Net Loss                                                $  (11,791)  $ (121,295)
Adjustments to reconcile net loss to net cash
   (used in) provided by operating activities:
   Depreciation and Amortization                               64,078      180,698
   Provision for doubtful accounts                             22,667
   Realized and unrealized loss on marketable securities        7,681
   Stock Based Compensation                                    22,661      437,775
   Changes in Assets and Liabilities:
      Accounts Receivable                                     (57,125)    (250,162)
      Prepaid Expenses                                         (5,350)     182,807
      Deposits and Other Assets                                (6,331)       5,000
      Accounts Payable and Accrued Expenses                  (230,954)      19,468
      Accrued Payroll Expense                                 (39,667)        (145)
      Deferred Revenue                                            529          (71)
      Deferred Rent                                            (2,014)      (6,256)
                                                           ----------   ----------
   Net Cash (Used in) Provided by Operating Activities       (235,616)     447,819

Cash Flows from Investing Activities:
      Purchases of Marketable Securities                     (998,070)
      Proceeds from Sale of Marketable Securities             662,862
      Purchases of Property and Equipment                     (84,650)     (21,177)
                                                           ----------   ----------
   Net Cash Used In Investing Activities                     (419,858)     (21,177)

Cash Flows from Financing Activities:
   Repayments - Capital Lease Obligations                      (6,633)      (7,802)
   Repayments on Bank Financing Agreement                                 (151,713)
   Proceeds from Exercise of Stock Options                        520       10,000
                                                           ----------   ----------
   Net Cash Used in Financing Activities                       (6,113)    (149,515)

Net (Decrease) Increase in Cash                              (661,587)     277,127

Cash at Beginning of Period                                 1,881,739    1,225,323
                                                           ----------   ----------

Cash at End of Period                                      $1,220,152   $1,502,450
                                                           ==========   ==========

Supplemental Disclosure of Cash Flow Information:
   Cash paid for income taxes                              $    2,359   $   15,900
   Cash paid for interest                                  $   28,798   $   47,443
</TABLE>

        The accompanying "Notes to Financial Statements" are an integral
                       part of these financial statements


                                       4

<PAGE>

                            COMTEX NEWS NETWORK, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
                                December 31, 2006

1. Basis of Presentation
   ---------------------

The accompanying condensed interim financial statements of Comtex News Network,
Inc. (the "Company" or "Comtex") are unaudited, but in the opinion of management
reflect all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of results for such periods. The results of
operations for any interim period are not necessarily indicative of results for
the full year. The balance sheet at June 30, 2006 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by accounting principles generally accepted
in the United States for complete financial statements. These financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 2006 ("2006 Form 10-K"), filed with the Securities and Exchange
Commission on September 28, 2006.

Marketable securities are bought and held principally for the purpose of selling
them in the near term and are classified as trading securities. Trading
securities are recorded at fair value, with the change in fair value during the
period included in earnings.

On December 16, 2004, the FASB issued SFAS No. 123(R), SHARE-BASED PAYMENT. SFAS
No. 123(R) addresses the accounting for share-based payment transactions in
which an enterprise receives employee services in exchange for (a) equity
instruments of the enterprise or (b) liabilities that are based on the fair
value of the enterprise's equity instruments or that may be settled by the
issuance of such equity instruments. SFAS No. 123(R) eliminates the ability to
account for share-based compensation transactions using Accounting Principles
Board Opinion No. 25 and generally requires that such transactions be accounted
for using a fair-value-based method. Comtex adopted this standard on its
effective date, July 1, 2005.

The Company has two stock-based employee compensation plans, which are described
more fully below. Prior to July 1, 2005, the Company accounted for these plans
under the recognition and measurement provisions of APB Opinion 25, ACCOUNTING
FOR STOCK ISSUED TO EMPLOYEES, and related interpretations, as permitted by SFAS
Statement No.123, ACCOUNTING FOR STOCK-BASED COMPENSATION. Effective July 1,
2005, the Company adopted the fair value recognition provisions of SFAS
Statement No. 123(R), SHARE-BASED PAYMENT, using the modified-prospective
transition method. Under this method, compensation cost recognized for the three
and six month periods ended December 31, 2006 and 2005 includes: (a)
compensation costs for all share based payments granted prior to, but not yet
vested as of July 1, 2005, based on grant-date fair value estimated in
accordance with the original provisions of Statement 123, and (b) compensation
cost for all share-based payments granted subsequent to July 1, 2005, based on
the grant-date fair value estimated in accordance with the provisions of
Statement 123(R). Results for prior periods have not been restated. As a result
of adopting Statement 123(R) on July 1, 2005, the Company's loss before income
taxes and net loss for the three and six month periods ended December 31, 2006
were increased by approximately $11,000, and $23,000, respectively, and the
Company's loss before income taxes and net loss for the three and six month
periods ended December 31, 2005 were increased by approximately $321,000, and
$438,000, respectively. There would have been no effect on basic and diluted
earnings per share, cash flow


                                       5

<PAGE>

from operations and cash flow from financing activities for the three and six
month periods ended December 31, 2006 and 2005 if the Company had not adopted
statement 123(R).

The Company did not issue any stock options during the six month period ended
December 31, 2006.

Stock Option Plans
------------------

Stock options are typically granted to employees with an exercise price equal to
the market price of the Company's stock at the date of grant. Stock options are
issued in accordance with a vesting schedule, generally vest over one to three
years, and have a term of 10 years. Compensation expense for stock options is
recognized over the requisite service period for each separately vesting portion
of the stock option award.

Information regarding the 1995 and 2003 Plans is summarized below.

                                                  Weighted
                                   Number of       Average
                                    Options    Exercise Price
                                   ---------   --------------
Outstanding at June 30, 2006       3,312,249        $0.30
   Granted                                --           --
   Exercised                          (2,000)       $0.26
   Forfeited                         (33,650)       $0.34
                                   ---------        -----
Outstanding at December 31, 2006   3,276,599        $0.30
                                   =========        =====

Exercisable at December 31, 2006   3,197,379        $0.30
                                   =========        =====

As of December 31, 2006, 3,197,379 stock option grants had vested. Of this
total, 1,608,079 were granted prior to July 1, 2005, and 1,589,300 were granted
subsequent to July 1, 2005. During the six month period ended December 31, 2006,
2,000 options were exercised. No options were exercised in the three month
period ended December 31, 2006.

As of December 31, 2006, the Company had two share-based plans, the 1995 Plan
and the 2003 Plan, which are described above. The 1995 Plan expired as of
October 12, 2005 and the Company currently has no intentions to renew it or
replace it with a new stock option plan. The compensation cost charged against
income for the 1995 Plan for the three and six month periods ended December 31,
2006 was $10,713 and $22,661, respectively. This number includes (a) $6,024 and
$13,283, respectively, of compensation costs for all share based payments
granted prior to, but not yet vested as of July 1, 2005, based on the grant-date
fair value estimated in accordance with the original provisions of Statement
123(R), and (b) $4,689 and $9,378, respectively, of compensation cost for all
share-based payments granted subsequent to July 1, 2005. Amounts for all
share-based payments granted subsequent to July 1, 2005 are based on the
grant-date fair value estimated in accordance with the provisions of Statement
123(R), net of 5% discount for post vesting forfeitures based on an overall low
turnover. No income tax benefits are recognized in the income statement for
share-based arrangements due to the utilization of federal and state net
operating loss carryforwards.


                                       6

<PAGE>

Stock-based Compensation costs are allocated in operating expense categories as
follows:

<TABLE>
<CAPTION>
                                       For the Three Months ended   For the Six Months ended
                                              December 31,               December 31,
                                       --------------------------   ------------------------
                                            2006        2005             2006      2005
                                           -------   --------          -------   --------
<S>                                        <C>       <C>               <C>       <C>
Technical Operations & Support             $ 1,851   $ 22,223          $ 3,702   $ 30,361
Sales & Marketing                            2,289     16,756            4,616     22,419
General and Administrative                   6,573    282,074           14,343    384,995
                                           -------   --------          -------   --------

Total Stock-Based Compensation Costs       $10,713   $321,053          $22,661   $437,775
                                           =======   ========          =======   ========
</TABLE>

As of December 31, 2006, the total compensation cost related to non-vested
options not yet recognized is $23,614. The period over which this cost is
expected to be recognized is 8 months.

Stock-based compensation cost classified as marketing expense pertains to
options granted to employees in the marketing department.

Income per share is presented in accordance with the provisions of SFAS No. 128,
"Earnings Per Share" ("EPS"). Basic EPS excludes dilution for potentially
dilutive securities and is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock and resulted in the issuance of common stock. Diluted EPS is
equal to basic EPS for all periods presented since all potential dilutive
securities are antidilutive. The computation excludes outstanding options of
approximately 3.3 million to purchase shares of common stock and the effects of
approximately .8 million shares issuable upon the conversion of the long-term
note payable since the inclusion would have an antidilutive effect.

2. Income Taxes
   ------------

There is no provision for regular income taxes for the three and six month
periods ended December 31, 2006 and 2005 due to the utilization of federal and
state net operating loss carryforwards. The provision for state and Federal
income tax for the three and six month periods ended December 31, 2006 and 2005
is due to the alternative minimum tax.

The Company accounts for income taxes in accordance with SFAS No. 109,
ACCOUNTING FOR INCOME TAXES. Under this method, deferred tax assets and
liabilities are determined based on the difference between the financial
statement and tax bases of assets and liabilities using the enacted tax rates in
effect for the year in which the differences are expected to reverse. Deferred
tax assets are reduced by a valuation allowance when the Company cannot make the
determination that it is more likely than not that some portion or all of the
related tax asset will be realized.


                                       7

<PAGE>

3. Commitments and Contingencies
   -----------------------------

On April 15, 2004, the Company's former Chairman/CEO and President, who both
resigned on February 5, 2004, filed a demand for arbitration against the Company
related to the terms of their employment agreements. The demand alleged a breach
of the employment agreements and requested payment of approximately $129,000 to
the former employees. On August 8, 2006, an arbitrator denied the former
President's claim, awarding only a bonus, vacation pay and certain previously
granted options, none of which was in dispute. The Company continues to deny the
allegations presented by the former Chairman/CEO and intends to vigorously
defend this action. Based upon events to date in the arbitration, the Company
has accrued a liability of approximately $61,000 at December 31, 2006.

On November 10, 2006, the Company entered into a new, two-year employment
agreement with its President, Mr. Chip Brian, who had been appointed to the
additional position of Chief Executive Officer. Effective November 1, 2006, Mr.
Brian's base salary was increased to $200,000 per annum and automatically
increases to $220,000 on November 1, 2007. Mr. Brian is also entitled to an
annual bonus, payable quarterly, of up to 25% of his base salary, which may be
reduced if the Company does not meet its budgeted financial goals and a further
incentive bonus of up to 10% of the excess of actual EBITDA over budgeted
EBITDA, as defined in the agreement. Both bonuses are at the discretion of the
Board of Directors. The agreement does not grant stock-based compensation and
stipulates that Mr. Brian's existing Stock Options may be converted to direct
stock ownership following presentation to and approval by the Board of an
appropriate plan to implement such actions. The agreement also stipulates that
Comtex is obligated to pay Mr. Brian's salary and benefits for 12 months if he
is terminated within one year following a change in control of the Company, as
defined in the agreement.

Additionally, the Board voted to pay Mr. Brian a $50,000 incentive bonus in
addition to bonuses previously paid pursuant to his employment agreement then in
effect. The Company recorded approximately $90,000 and $71,000 of salary and
bonus expense, respectively, relating to this executive during the six months
ended December 31, 2006.

4. Notes Payable
   -------------

In December 2003, the Company entered into an Accounts Receivable Purchase
Agreement (the "Financing Agreement"), with the Silicon Valley Bank (the "Bank")
which provides for a revolving line of credit of up to $1 million collateralized
by the Company's accounts receivable. As of December 31, 2006, there was no
balance due to the Bank related to advances under the Financing Agreement.

On December 9, 2003, the Company executed an amendment to the Amended,
Consolidated and Restated 10% Senior Subordinated Secured Note (the "Amended
Note"), payable to AMASYS Corporation ("AMASYS"), an affiliated Company, (said
amendment the "Third Amendment") for the purpose of reducing the price at which
the Amended Note may be converted into common stock of the Company. Pursuant to
the Third Amendment, AMASYS agreed to subordinate the Amended Note to both the
Company's note payable to its former landlord and to the Financing Agreement. In
consideration for these subordination agreements, the Company agreed to reduce
the conversion price stipulated in the Amended Note from the previously-stated
conversion price


                                       8

<PAGE>

of $1.20 per share to $0.75 per share, and to increase this conversion price by
$0.05 every one hundred and eighty (180) days thereafter. At the date of the
transaction the conversion price of the Amended Note was in excess of the stock
price.

On September 26, 2006, AMASYS executed an agreement to redeem from the holders
of its Preferred Stock, pro rata to their respective ownership interests, 55,209
shares of AMASYS Series A Preferred Stock in exchange for: (a) AMASYS' entire
interest in the outstanding Amended Note of Comtex in the amount of $856,954;
and (b) 2,153,437 shares of Comtex common stock. As of September 26, 2006 AMASYS
transferred all title and interest in the Note to unrelated third party
investors.


                                       9

<PAGE>

Item 2.
        MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
        ---------------------------------------------------------

The following discussion of our financial condition and results of operations
should be read in conjunction with financial statements and the related notes
included elsewhere in this Form 10-QSB and the consolidated financial statements
and related notes and Management's Discussion and Analysis of Financial
Condition and Results of Operations included in our annual report on Form 10-K
for the year ended June 30, 2006 filed with the Securities and Exchange
Commission on September 28, 2006. Historical results and percentage
relationships among any amounts in the Condensed Financial Statements are not
expected to be indicative of trends in operating results for any future period.

FORWARD-LOOKING STATEMENTS

This Form 10-QSB contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These statements are subject to a
variety of risks and uncertainties, many of which are beyond our control, which
could cause actual results to differ materially from those contemplated in these
forward-looking statements. In particular, the risks and uncertainties include
those described in our annual report on Form 10-K, for the year ended June 30,
2006 and in other periodic Securities and Exchange Commission filings. These
risks and uncertainties include, among other things, the consolidation of the
Internet news market; competition within our markets; the financial stability of
our customers; maintaining a secure and reliable news-delivery network;
maintaining relationships with key content providers; attracting and retaining
key personnel; the volatility of our Common Stock price; successful marketing of
our services to current and new customers; and operating expense control.

Existing and prospective investors are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date hereof. We
undertake no obligation to update or revise the information contained in this
Form 10-QSB, whether as a result of new information, future events or
circumstances or otherwise.

RESULTS OF OPERATIONS
---------------------

Comparison of the three months ended December 31, 2006, to the three months
ended December 31, 2005
---------------------------------------------------------------------------

During the three months ended December 31, 2006, we reported a net loss of
$73,000 compared to a net loss of $184,000 during the three months ended
December 31, 2005. As discussed below, the net loss decreased primarily due to
the decrease in operating expenses exceeding the decrease in gross profits.

Revenues consist primarily of royalty revenues and fees from the licensing of
content products to information distributors. During the three months ended
December 31, 2006, total revenues were approximately $1,699,000 or approximately
$233,000 (12%) less than the total revenues


                                       10

<PAGE>

for the three months ended December 31, 2005. The decline in revenues was the
direct result of consolidation among customers, primarily in the Internet and
personal investor markets.

Our cost of revenues consists primarily of content license fees and royalties to
information providers, amortization expense on our production software, and data
communication costs for the delivery of our products to customers. The cost of
revenues for the three months ended December 31, 2006 was approximately $764,000
or approximately $174,000 (19%) less than the cost of revenues for the three
months ended December 31, 2005. The decrease in cost was primarily due to a
decrease in royalty usage fees, renegotiation of fixed costs associated with
certain content providers, and a decrease in software amortization expense.

Gross profit for the three months ended December 31, 2006 was approximately
$935,000 or approximately $59,000 (6%) less than the gross profit for the same
period in the prior year. The gross profit as a percentage of revenue increased
for the three months ended December 31, 2006 to approximately 55% from
approximately 51% for the three months ended December 31, 2005. The increase, as
noted in the above paragraphs, is due to the negotiation of lower fixed costs
and the decreased software amortization expense.

Total operating expenses for the three months ended December 31, 2006 were
approximately $989,000 representing an approximate $167,000 (14%) decrease in
operating expenses from the three months ended December 31, 2005. The decrease
in expenses resulted primarily from a decrease in stock-based compensation,
technical operations expenses, and depreciation and amortization expenses
partially offset by an increase in general and administrative expenses, as well
as sales and marketing expenses.

Technical operations and support expenses during the three months ended December
31, 2006 decreased approximately $49,000 (15%) from the three months ended
December 31, 2005. The decrease is primarily due an approximately $35,000
decrease in product development expenses and a decrease in payroll expenses.
Also, decreased expenses related to technology have contributed to this
reduction. These decreases were slightly offset by an increased use of outside
consulting services.

Sales and marketing expenses increased by approximately $32,000 (18%) for the
three months ended December 31, 2006 compared to the three months ended December
31, 2005. The increase is due to an approximately $47,000 increase in product
development expenses and an increase in the use of consulting services,
partially offset by a decrease in payroll expense resulting from decreases in
personnel and related commission expenses over the same period in the prior
year.

General and administrative expenses for the three months ended December 31, 2006
decreased approximately $130,000 (21%) over G&A expenses for the comparable
quarter of the prior year. The decrease is primarily attributable to an
approximate $276,000 decrease in stock-based compensation charges and
professional fees as compared to the prior year. These decreases were partially
offset by an increase in payroll expenses, bad debt expense and corporate
expenses.

Depreciation and amortization expense for the three months ended December 31,
2006 decreased approximately $20,000 (53%) from the same period in the prior
year. The decrease was due primarily to assets reaching the end of their
depreciable lives.


                                       11

<PAGE>

Other expense, net of other income, for the three months ended December 31, 2006
was approximately $22,000, compared to approximately $22,000 the three months
ended December 31, 2005.

Comparison of the six months ended December 31, 2006, to the six months ended
December 31, 2005
-----------------------------------------------------------------------------

During the six months ended December 31, 2006, we reported a net loss of
approximately $12,000 compared to a net loss of approximately $121,000 during
the six months ended December 31, 2005. As discussed below, the net loss
decreased primarily due to the decrease in operating expenses exceeding the
decrease in gross profits.

Revenues consist primarily of royalty revenues and fees from the licensing of
content products to information distributors. During the six months ended
December 31, 2006, total revenues were approximately $3,450,000 or approximately
$479,000 (12%) less than the total revenues for the six months ended December
31, 2005. The decline in revenues was the direct result of consolidation among
customers, primarily in the Internet and personal investor markets.

Our cost of revenues consists primarily of content license fees and royalties to
information providers, amortization expense on our production software, and data
communication costs for the delivery of our products to customers. The cost of
revenues for the six months ended December 31, 2006 was approximately $1,527,000
or approximately $348,000 (19%) less than the cost of revenues for the six
months ended December 31, 2005. The decrease in cost was primarily due to a
decrease in royalty usage fees, renegotiation of fixed costs associated with
certain content providers, and a decrease in software amortization expense.

Gross profit for the six months ended December 31, 2006 was approximately
$1,923,000 or approximately $131,000 (6%) less than the gross profit for the
same period in the prior year. The gross profit as a percentage of revenue
increased for the six months ended December 31, 2006 to approximately 56% from
approximately 52% for the six months ended December 31, 2005. The increase, as
noted in the above paragraphs, is due to the negotiation of lower fixed costs
and the decrease in software amortization expense.

Total operating expenses for the six months ended December 31, 2006 were
approximately $1,902,000 representing an approximate $210,000 (10%) decrease in
operating expenses from the six months ended December 31, 2005. The decrease in
expenses resulted primarily from a decrease in stock-based compensation,
technical operations expenses, and depreciation and amortization expenses
partially offset by an increase in general and administrative expenses, as well
as sales and marketing expenses.

Technical operations and support expenses during the six months ended December
31, 2006 decreased approximately $90,000 (14%) from the six months ended
December 31, 2005. The decrease is primarily due to an approximately $62,000
decrease in product development expenses and a decrease in payroll expenses.
Also, decreased expenses related to technology have contributed to this
reduction. These decreases were slightly offset by an increased use of outside
consulting services.

Sales and marketing expenses increased by approximately $60,000 (19%) for the
six months ended December 31, 2006 compared to the six months ended December 31,
2005. The increase


                                       12

<PAGE>

is due to an approximately $96,000 increase in product development expenses and
an increase in the use of consulting services, partially offset by a decrease in
payroll expense resulting from decreases in personnel and related commission
expenses over the same period in the prior year.

General and administrative expenses for the six months ended December 31, 2006
decreased by approximately $120,000 (12%) over G&A expenses for the comparable
period of the prior year. The decrease is primarily attributable to an
approximate $371,000 decrease in stock-based compensation charges and a decrease
in professional fees as compared to the prior year. These decreases were
partially offset by an increase in payroll expenses, bad debt and corporate
expenses.

Depreciation and amortization expense for the six months ended December 31, 2006
decreased approximately $60,000 (61%) from the same period in the prior year.
The decrease was due primarily to assets reaching the end of their depreciable
lives.

Other expense, net of other income, for the six months ended December 31, 2006
was approximately $31,000, compared to approximately $47,000 for the six months
ended December 31, 2005. This change from the prior year was mainly due to a
decrease in interest expense and an increase in interest income and other
income.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
----------------------------------------------------

For the six months ended December 31, 2006, we had operating income of
approximately $21,000 and net loss of approximately $12,000. At December 31,
2006, we had working capital of approximately $1,357,000, compared to working
capital of approximately $1,374,000 at June 30, 2006. We had net stockholders'
equity of approximately $742,000 and $731,000 at December 31, 2006 and June 30,
2006 respectively. The increase in stockholders' equity is due primarily to the
net income for the six months ended December 31, 2006 before recording
stock-based compensation.

We had cash and marketable securities of approximately $1,548,000 at December
31, 2006, compared to approximately $1,882,000 at June 30, 2006. For the six
months ended December 31, 2006, the Company used approximately $662,000 in cash,
of which approximately $335,000 was used to purchase marketable securities for
trading purposes, net of proceeds from the sale of securities.

We made capital expenditures of approximately $85,000 during the six months
ended December 31, 2006, primarily for computer and communications equipment to
replace outdated equipment. Financing activities resulted in payments of
approximately $6,600 made on capital leases and approximately $500 of proceeds
from the exercise of stock options.

The Company's future contractual obligations and commitments as of December 31,
2006 are as follows:


                                       13

<PAGE>

                        AMOUNTS DUE BY PERIOD
                   ------------------------------
                     2007       2008       2009        TOTAL
                   -------------------------------------------
Operating Leases   $106,665   $214,892   $135,681   $  457,238
Note Payable             --         --    856,954      856,954
                   -------------------------------------------
   Total           $106,665   $214,892   $992,635   $1,314,192
                   ===========================================

Currently we are dependent on our cash reserves to fund operations. We have the
option available to use accounts receivable financing through the Bank. We
recorded a net loss for the six month period ended December 31, 2006 and our
revenue base has been declining. Assuming a continuing erosion of revenue
without an infusion of capital, the Company is at risk of being unable to
generate sufficient liquidity to meet its obligations. The Company has utilized
and will utilize its Financing Agreement should the need arise to meet its
liquidity needs. Further corporate consolidation or market deterioration
affecting our customers could impair our ability to generate such revenues. No
assurance may be given that we will be able to maintain the revenue base or the
profitable operations that may be necessary to achieve our liquidity needs.

EBITDA, as defined below, was approximately $108,000 for the six months ended
December 31, 2006 compared to EBITDA of approximately $561,000 for the six
months ended December 31, 2005. The decrease in EBITDA during the six months
ended December 31, 2006 compared to the six-month period in the prior year is
the net result of decreased revenues and reduced cost of revenues, partially
offset by decreased stock based compensation and depreciation, increased
operating costs, and other items. The table below shows the reconciliation from
net loss to EBITDA;

                                       Six Months
                                   Ended December 31,
                                      2006    2005
                                   ------------------
Reconciliation to EBITDA:
   Net loss                          $ (12)  $(121)
   Stock Based Compensation             23     438
   Depreciation and Amortization        64     181
   Interest/Other Expenses              31      47
   Income Taxes                          2      16
                                   ------------------
   EBITDA                            $ 108   $ 561

EBITDA consists of earnings before stock-based compensation, interest expense,
interest and other income, income taxes, and depreciation and amortization.
EBITDA does not represent funds available for management's discretionary use and
is not intended to represent cash flow from operations. EBITDA should also not
be construed as a substitute for operating income or a better measure of
liquidity than cash flow from operating activities, which are determined in
accordance with generally accepted accounting principles. EBITDA excludes
components that are significant in understanding and assessing our results of
operations and cash flows. In addition, EBITDA is not a term defined by U.S.
generally accepted accounting principles, and as a result, our measure of EBITDA
might not be comparable to similarly titled measures used by other companies.


                                       14

<PAGE>

However, we believe that EBITDA is relevant and useful information, which is
often reported and widely used by analysts, investors and other interested
parties in our industry. Accordingly, we are disclosing this information to
permit a more comprehensive analysis of our operating performance, as an
additional meaningful measure of performance and liquidity, and to provide
additional information with respect to our ability to meet future debt service,
capital expenditure and working capital requirements. See the financial
statements and notes thereto contained elsewhere in this report for more
detailed information.

Item 3.
        CONTROLS AND PROCEDURES
        -----------------------

The Company's Chief Executive and Principal Accounting Officer have concluded,
based on their evaluation as of the end of the period covered by this report,
that the Company's disclosure controls and procedures (as defined in Securities
Exchange Act Rules 13a-15(e) or 15d-15(e)) are effective to ensure that
information required to be disclosed in the reports that the Company files or
submits under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms. There have been no significant changes
that have materially affected, or are reasonably likely to materially affect the
Company's internal controls over financial reporting or in other factors that
could significantly affect these controls subsequent to the date of the
foregoing evaluation.

Part II. Other Information

Item 1. Legal Proceedings

On April 15, 2004, the Company's former Chairman/CEO and President, who both
resigned on February 5, 2004, filed a demand for arbitration against the Company
related to the terms of their employment agreements. The demands alleged
breaches of the employment agreements and requested payment of approximately
$129,000 to the former employees. On August 8, 2006, an arbitrator denied the
former President's claim, awarding only a bonus, vacation pay and certain
previously granted options, none of which was in dispute. The Company continues
to deny the allegations presented by the former Chairman/CEO and intends to
vigorously defend this action. Based upon events to date in the arbitration, the
Company has accrued approximately $61,000 in expenses.

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

     None.


                                       15

<PAGE>

Item 3. Defaults Upon Senior Securities

        None.

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

        None.

Item 5. Other Information

        None.

Item 6. Exhibits

     10.1 Employment Agreement, dated November 10, 2006 between Comtex News
          Network, Inc. and Chip Brian (filed with the Securities and Exchange
          Commission on Form 8-K on November 14, 2006).

     31.1 Certification of Chief Executive Officer pursuant to Section 302 of
          the Sarbanes-Oxley Act of 2002.

     31.2 Certification of Principal Financial and Accounting Officer pursuant
          to Section 302 of the Sarbanes-Oxley Act of 2002.

     32.1 Certification of Chief Executive Officer pursuant to Section 906 of
          the Sarbanes-Oxley Act of 2002.

     32.2 Certification of Principal Financial and Accounting Officer pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002.


                                       16

<PAGE>

                                   SIGNATURES

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

                                       COMTEX NEWS NETWORK, INC.
                                       -------------------------
                                             (Registrant)


February 14, 2007                      By: /s/Chip Brian
                                           -------------------------------------
                                           Chip Brian
                                           President and Chief Executive Officer
                                           (Principal Executive Officer)


February 14, 2007                      By: /s/Richard D. Henderson
                                           -------------------------------------
                                           Richard D. Henderson, CPA.
                                           Treasurer & Controller
                                           (Principal Accounting Officer)


                                       17