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 March 31, 2008 or
 
 o
              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 registrant as
specified in its charter)
  Delaware
              13-3055012(State
      or other jurisdiction
              (I.R.S.
      Employerof
      incorporation or organization)
              Identification
      No.)
 
 625 North Washington Street,
Suite 301, Alexandria, Virginia 22314
 (Address
of principal executive office)
 
 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 o
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act.)    Yes o  No x
 
 As of May
8, 2008, 15,294,200 shares of the Common Stock of the registrant, par value
$0.01 per share, were outstanding.
  Transitional
Small Business Disclosure Format (check one):   Yes o  No x
  
  COMTEX
NEWS NETWORK, INC.
 TABLE OF
CONTENTS
  Part
      I
              Financial
      Information:
              Page
      No.Item
      1.
              Condensed
      Financial StatementsCondensed
      Balance Sheets as of March 31, 2008 (unaudited) and June 30,
      2007
              2Condensed
      Statements of Operations for the Three and Nine Months Ended March 31,
      2008 and 2007 (unaudited)
              3Condensed
      Statements of Cash Flows  for the Nine Months Ended March 31,
      2008 and 2007 (unaudited)
              4Notes
      to Condensed Financial Statements (unaudited)
              5Item
      2.
              Management's
      Discussion and Analysis or Plan of Operation
              6Item
      3.
              Controls
      and Procedures
              11Part
      II
              Other
      Information:Item
      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
              13SIGNATURES
              
              14
  1
 Part
I   Financial Information
 
 Item 1.  Condensed
Financial Statements
 Comtex
      News Network, Inc.Condensed
      Balance SheetsMarch
      31,
              
              
              June
      30,2008
              
              
              2007ASSETS
              
              (Unaudited)CURRENT
      ASSETSCash
              
              $
              1,744,493
              
              
              $
              581,131Marketable
      Securities
              
              
              -
              
              
              
              523,303Accounts
      Receivable, Net of Allowance for Doubtful Accounts
      of   $115,396
              
              
              828,229
              
              
              
              938,080Prepaid
      Expenses
              
              
              31,402
              
              
              
              15,826TOTAL
      CURRENT ASSETS
              
              
              2,604,124
              
              
              
              2,058,340PROPERTY
      AND EQUIPMENT, NET
              
              
              151,957
              
              
              
              178,758DEPOSITS
      AND OTHER ASSETS
              
              
              43,253
              
              
              
              43,253TOTAL
      ASSETS
              
              $
              2,799,334
              
              
              $
              2,280,351LIABILITIES
      AND STOCKHOLDERS' EQUITYCURRENT
      LIABILITIES:Accounts
      Payable and Other Accrued Expenses
              
              $
              725,031
              
              
              $
              913,850Accrued
      Payroll Expense
              
              
              186,673
              
              
              
              197,899Broker
      Margin Account
              
              
              -
              
              
              
              30,163Deferred
      Revenue
              
              
              20,414
              
              
              
              28,805TOTAL
      LIABILITIES
              
              
              932,118
              
              
              
              1,170,717COMMITMENTS
      AND CONTINGENCIESSTOCKHOLDERS'
      EQUITYCommon
      Stock, $0.01 Par Value - 25,000,000 Shares Authorized;15,294,200
      Shares issued and outstanding at March 31, 2008 and June 30,
      2007
              
              
              152,942
              
              
              
              152,942Additional
      Paid-In Capital
              
              
              13,566,637
              
              
              
              13,563,340Accumulated
      Deficit
              
              
              (11,852,363
              )
              
              
              (12,606,648
              )Total
      Stockholders' Equity
              
              
              1,867,216
              
              
              
              1,109,634TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
              
              $
              2,799,334
              
              
              $
              2,280,351
 
 The
accompanying “Notes to Condensed Financial Statements” are an integral part of
these financial statements
 2
 
 Comtex
      News Network, Inc.Condensed
      Statements of Operations(Unaudited)Three
      Months Ended
              
              
              Nine
      Months EndedMarch
      31
              
              
              March
      312008
              
              
              2007
              
              
              2008
              
              
              2007Revenues
              
              $
              1,769,940
              
              
              $
              1,796,473
              
              
              $
              5,425,719
              
              
              $
              5,246,675Cost
      of Revenues(including
      depreciation and amortization expenseof
      $2,577 and $9,386 for the three months ended March 31,2008
      and 2007, respectively and $13,241 and$34,523
      for the nine months ended March 31, 2008
              
              
              621,262
              
              
              
              767,432
              
              
              
              1,968,736
              
              
              
              2,294,185and
      2007, respectively)Gross
      Profit
              
              
              1,148,678
              
              
              
              1,029,041
              
              
              
              3,456,983
              
              
              
              2,952,490Operating
      Expenses:Technical
      Operations and Support (inclusive of stock-basedcompensation
      of $1,832 for the three months ended
              
              
              346,299
              
              
              
              310,611
              
              
              
              1,018,831
              
              
              
              884,970March
      31, 2007 and $1,182 and $5,495for
      the nine months ended March 31, 2008 and 2007,respectively)Sales
      and Marketing (inclusive of stock-based compensation of$2,526
      for the three months ended March 31, 2007 and
              
              
              170,136
              
              
              
              175,818
              
              
              
              435,229
              
              
              
              560,275$1,684
      and $7,618 for the nine months ended March 31, 2008and
      2007, respectively)General
      and Administrative (inclusive of stock-based compensationof
      $6,355 for the three months ended March 31,
              
              
              384,325
              
              
              
              466,476
              
              
              
              1,160,978
              
              
              
              1,370,7762007,
      and $431 and $20,260 for the nine monthsended
      March 31, 2008 and 2007, respectively)Depreciation
      and Amortization
              
              
              15,422
              
              
              
              14,658
              
              
              
              45,141
              
              
              
              53,599Total
      Operating Expenses
              
              
              916,182
              
              
              
              967,563
              
              
              
              2,660,179
              
              
              
              2,869,620Operating  Income
              
              
              232,496
              
              
              
              61,478
              
              
              
              796,804
              
              
              
              82,870Other
      Income (Expense), net:Interest
      Income
              
              
              11,208
              
              
              
              3,540
              
              
              
              30,079
              
              
              
              13,637Interest
      Expense
              
              
              -
              
              
              
              (14,283
              )
              
              
              (2,565
              )
              
              
              (57,362
              )Realized
      and Unrealized Gain (Loss) on Marketable Securities
              
              
              -
              
              
              
              7,962
              
              
              
              (65,157
              )
              
              
              281Debt
      Conversion Expense
              
              
              -
              
              
              
              (234,336
              )
              
              
              -
              
              
              
              (234,336
              )Other
      Income (Expense)
              
              
              306
              
              
              
              (1,120
              )
              
              
              306
              
              
              
              8,721Net
      Other Income (Expense)
              
              
              11,514
              
              
              
              (238,237
              )
              
              
              (37,337
              )
              
              
              (269,059
              )Income
      (Loss) Before Income Taxes
              
              
              244,009
              
              
              
              (176,759
              )
              
              
              759,467
              
              
              
              (186,189
              )Income
      Taxes
              
              
              133
              
              
              
              3,910
              
              
              
              5,182
              
              
              
              6,269Net
      Income (Loss)
              
              $
              243,876
              
              
              $
              (180,669
              )
              
              $
              754,285
              
              
              $
              (192,458
              )Basic
      Earnings (Loss) Per Common Share
              
              $
              0.02
              
              
              $
              (0.01
              )
              
              $
              0.05
              
              
              $
              (0.01
              )Weighted
      Average Number of Common Shares
              
              
              15,294,200
              
              
              
              14,232,898
              
              
              
              15,294,200
              
              
              
              13,878,464Diluted
      Earnings (Loss) Per Common Share
              
              $
              0.02
              
              
              $
              (0.01
              )
              
              $
              0.05
              
              
              $
              (0.01
              )Weighted
      Average Number of Shares Assuming Dilution
              
              
              15,460,300
              
              
              
              14,232,898
              
              
              
              15,466,939
              
              
              
              13,878,464
 
 The
accompanying “Notes to Condensed Financial Statements” are an integral part of
these financial statements
 3
 
 Comtex
      News Network, Inc.CONDENSED
      STATEMENTS OF CASH FLOWS(Unaudited)Nine
      Months EndedMarch
      312008
              
              
              2007Cash
      Flows from Operating ActivitiesNet
      Income (Loss)
              
              $
              754,285
              
              
              $
              (192,458
              )Adjustments
      to reconcile net income (loss) to net cashprovided
      by (used in) operating activities:Depreciation
      and Amortization
              
              
              58,381
              
              
              
              88,121Realized
      and Unrealized Loss (Gain) on Marketable Securities
              
              
              65,157
              
              
              
              (281
              )Provision
      for doubtful accounts
              
              
              20,463
              
              
              
              19,528Stock-Based
      Compensation
              
              
              3,297
              
              
              
              33,373Debt
      Conversion Expense
              
              
              -
              
              
              
              234,336Changes
      in Assets and Liabilities:Accounts
      Receivable
              
              
              89,388
              
              
              
              (123,547
              )Prepaid
      Expenses
              
              
              (15,576
              )
              
              
              3,996Deposits
      and Other Assets
              
              
              -
              
              
              
              (6,331
              )Accounts
      Payable and Other Accrued Expenses
              
              
              (188,819
              )
              
              
              (307,564
              )Accrued
      Payroll Expense
              
              
              (11,226
              )
              
              
              3,118Deferred
      Revenue
              
              
              (8,391
              )
              
              
              11,233Deferred
      Rent
              
              
              -
              
              
              
              (2,014
              )Net
      Cash Provided By (Used In) Operating Activities
              
              
              766,959
              
              
              
              (238,490
              )Cash
      Flows from Investing Activities:Purchase
      of Marketable Securities
              
              
              (1,258,181
              )
              
              
              (2,946,431
              )Proceeds
      from Sale of Marketable Securities
              
              
              1,716,327
              
              
              
              2,502,363Purchase
      of Property and Equipment
              
              
              (31,580
              )
              
              
              (94,811
              )Net
      Cash Provided By (Used In) Investing Activities
              
              
              426,566
              
              
              
              (538,879
              )Cash
      Flows from Financing Activities:Repayments
      - Capital Lease Obligations
              
              
              -
              
              
              
              (6,633
              )Repayment
      of Note Payable
              
              
              -
              
              
              
              (650,000
              )Repayment
      of Broker Margin Account
              
              
              (30,163
              )
              
              
              -Proceeds
      from Exercise of Stock Options
              
              
              -
              
              
              
              520Net
      Cash Used In Financing Activities
              
              
              (30,163
              )
              
              
              (656,113
              )Net
      Increase (Decrease) in Cash
              
              
              1,163,362
              
              
              
              (1,433,482
              )Cash
      at Beginning of Period
              
              
              581,131
              
              
              
              1,881,739Cash
      at End of Period
              
              $
              1,744,493
              
              
              $
              448,257Supplemental
      Disclosure of Cash Flow Information:Cash
      paid for income taxes
              
              $
              5,182
              
              
              $
              6,269Cash
      paid for interest expense
              
              $
              2,565
              
              
              $
              57,362Non-Cash
      Financing Activity:Conversion
      of Note Payable into Common Stock
              
              $
              -
              
              
              $
              206,954
  The
accompanying “Notes to Condensed Financial Statements” are an integral part of
these financial statements
 4
 
 COMTEX
NEWS NETWORK, INC.
 NOTES TO
CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
 March 31,
2008
 
 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, 2007 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 of America for complete financial statements. These
condensed interim financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company’s Annual Report
on Form 10-KSB for the fiscal year ended June 30, 2007 (“2007 Form 10-KSB”),
filed with the Securities and Exchange Commission on September 24,
2007.
 
 Earnings
per common share is presented in accordance with the provisions of Statement of
Financial Accounting Standards (“SFAS”) No. 128, "Earnings Per Share"
("EPS").  Basic EPS excludes dilution for potentially dilutive securities
and is computed by dividing income available to common stockholders 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 was equal to
basic EPS for the three and nine month periods ended March 31, 2007 since all
potentially dilutive securities are anti-dilutive.  Diluted net loss
per common share for the three and nine month periods ended March 31, 2007 does
not include the effects of options to purchase approximately 3.3 million shares
as the inclusion of these options would have been
anti-dilutive.  Diluted EPS for the three and nine month periods ended
March 31, 2008 does not include the effects of options to purchase approximately
2.2 million shares due to the options’ exercise prices being greater than the
average market price of the Company's common shares during the respective
periods.
  2. Income
Taxes
 
 The
provision for income taxes for the three and nine month periods ended March 31,
2008 and 2007 is due to the alternative minimum tax due to the utilization of
federal and state net operating loss carryforwards.
 
 In June
2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation
No. 48, “Accounting for Uncertainty in Income Taxes-an Interpretation of FASB
Statement No. 109” (“FIN 48”). FIN 48 prescribes a recognition threshold and
measurement attribute for the financial statement recognition and measurement of
tax positions taken or expected to be taken in a tax return. The Company adopted
FIN 48 effective July 1, 2007 and determined the adoption to have no effect on
results of operations or financial position for the three and nine month periods
ended March 31, 2008. The Company will record any future penalties and tax
related interest expense as a component of provision for income
taxes.
  5
 
 The
Company accounts for income taxes in accordance with SFAS No. 109, Accounting for Income
Taxes.  Under this method, deferred tax liabilities and assets
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
period 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.
  3. Commitments and
Contingencies
 
 On April
15, 2004, the Company’s former Chairman/CEO and President, both of whom resigned
on February 5, 2004, filed separate demands 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.  On September 26, 2007, a different arbitrator denied all of
the former Chairman/CEO’s claims, and instructed the former Chairman/CEO to pay
Comtex half of the fees charged by the American Arbitration Association
pertaining to the arbitration.  The Company is currently pursuing
collection of the amounts due to it by the former Chairman/CEO.  The
Company had accrued approximately $61,000 in expenses in previous periods, which
were reversed in the nine-month period ended March 31, 2008 and recorded as a
reduction of general and administrative expenses.
  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 the financial statements and the related notes
included elsewhere in this Form 10-QSB and the 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-KSB for the
fiscal year ended June 30, 2007 filed with the Securities and Exchange
Commission on September 24, 2007. Historical results and percentage
relationships among any amounts in the interim condensed Financial Statements
are not necessarily 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.  These forward-looking statements may be
identified by reference to a future period by use of forward-looking terminology
such as “anticipate,” “expect,” “could,” “intend,” “may” and other words of a
similar nature.  In particular, the risks and uncertainties include
those described in our annual report on Form 10-KSB for the fiscal year ended
June 30, 2007 and in other periodic Securities and Exchange Commission filings.
These risks and uncertainties include, among other things, the fact that Comtex
is in a highly competitive industry subject to rapid technological, product and
price changes; 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;
the overall volatility of the economy and equity markets; and operating expense
control.
  6
 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 March 31, 2008 to the three months ended March 31,
2007
 
 During
the three months ended March 31, 2008, we reported net income of approximately
$244,000 compared to a net loss of approximately $181,000 for the three months
ended March 31, 2007.  The increase in net income resulted from
reduced cost of revenue and fees from the licensing of content products to
information distributors; as well as reduced operating expenses and increased
other income.  The net loss reported for the three months ended March
31, 2007 was attributed to the debt conversion expense recorded to settle the
Company’s long term debt. During the three months ended March 31, 2008, revenues
were approximately $1,770,000 or approximately $27,000 (1.5%) less than the
revenues for the three months ended March 31, 2007. The decrease was primarily
due to consolidations of database customers.
 
 Our cost of revenues consisted
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 March 31, 2008 was approximately $621,000 or
approximately $146,000 (19%) less than the cost of revenues for the three months
ended March 31, 2007.  The decreased costs were primarily due to
decreased royalty usage fees, reduced fixed costs associated with certain
content providers, and decreased software amortization expenses.
 
 Gross
profit for the three months ended March 31, 2008 was approximately $1,149,000 or
approximately $120,000 (12%) greater 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 March 31, 2008 to approximately 65% from
approximately 57% for the three months ended March 31, 2007.  The
increased profit margin, as discussed above, resulted primarily from reduced
fixed costs and decreased software amortization expenses.
 
 Total
operating expenses for the three months ended March 31, 2008 were approximately
$916,000 representing an approximate $51,000 (5%) decrease in operating expenses
from the three months ended March 31, 2007. The decrease in expenses resulted
primarily from a decrease in stock-based compensation expense, decreased sales
and marketing expenses, reduced general and administrative expenses, partially
offset by increased technical operations and support expenses, and higher
depreciation and amortization expenses.
  7
 Technical
operations and support expenses during the three months ended March 31, 2008
increased to approximately $346,000, which was approximately $36,000 (11%)
greater than the three months ended March 31, 2007.  The increase was
primarily due to an approximate $15,000 increase resulting from the use of
outside consultants and other increased product development costs.
 
 Sales and
marketing expenses decreased by approximately $6,000 (3%) to approximately
$170,000 for the three months ended March 31, 2008 compared to the three months
ended March 31, 2007.  The decrease was due to an approximate $18,000
decrease in salary expense offset by an increase in advertising and promotional
expenses of approximately $11,000 over the same period in the prior
year.
 
 General and administrative expenses
for the three months ended March 31, 2008 decreased approximately $82,000 (18%),
to approximately $384,000, from G&A expenses for the comparable quarter of
the prior year.  The decrease was primarily attributable to an
approximate $16,000 decrease in salary expenses incurred compared to the prior
period and a decrease of approximately $58,000 in other professional and legal
fees due to the settlement of an outstanding arbitration with the Company’s
former CEO.
 
 Depreciation
and amortization expenses for the three months ended March 31, 2008 increased
approximately $1,000 (5%) to approximately $15,000 from the same period in the
prior year.  The increase was due primarily to the implementation of
equipment upgrades planned in the Company’s capital budget.
 
 Other
income (expense), net, for the three months ended March 31, 2008 was
approximately $12,000, compared to approximately ($238,000) for the three months
ended March 31, 2007.  The increase in net other income was primarily
due to the Company settling its long term note payable and the structure of
reporting the debt conversion expense associated with this transaction during
fiscal 2007.
 
 Comparison of the nine
months ended March 31, 2008, to the nine months ended March 31,
2007
 
 During the nine months ended March
31, 2008, we reported net income of approximately $754,000 compared to a net
loss of approximately $192,000 during the nine months ended March 31,
2007.  The increase in net income resulted primarily from increased
sales, discussed below, combined with reduced cost of revenue and reduced
operating expenses.
 
 During
the nine months ended March 31, 2008, revenues were approximately $5,426,000 or
approximately $179,000 (3%) greater than revenues for the nine months ended
March 31, 2007.  The increase was primarily due to the realization of
approximately $181,000 of prior year revenue from a customer as a result of an
internal audit by the customer.  The cost of revenues for the nine
months ended March 31, 2008 was approximately $1,969,000, or approximately
$325,000 (14%) less than the cost of revenues for the nine months ended March
31, 2007.  The decreased costs were primarily due to decreased royalty
usage fees, reduced fixed costs associated with certain content providers, and
decreased software amortization expense.
  8
 Gross
profit for the nine months ended March 31, 2008 was approximately $3,457,000 or
approximately $504,000 (17%) greater than the gross profit for the same period
in the prior year.   The gross profit as a percentage of revenue
increased for the nine months ended March 31, 2008 to approximately 64% from
approximately 56% for the nine months ended March 31, 2007.  The
increased profit margin, as discussed above, resulted primarily from increased
revenues due to the realization of approximately $181,000 of prior years revenue
from a customer as a result of an internal audit by the customer and from
reduced fixed costs and the decreased software amortization
expense.
 
 Total
operating expenses for the nine months ended March 31, 2008 were approximately
$2,660,000 representing an approximate $209,000 (7%) decrease in operating
expenses from the nine months ended March 31, 2007. The decrease in expenses
resulted primarily from a decrease in stock-based compensation, sales and
marketing expenses, general and administrative expenses, and depreciation and
amortization expenses partially offset by increased technical operations and
support expenses.
 
 Technical operations and support
expenses during the nine months ended March 31, 2008 increased approximately
$134,000 (15%) to approximately $1,019,000 from the nine months ended March 31,
2007.  The increase was primarily due to an approximately $78,000
increase in product development expenses, the use of outside consultants and an
increase in salaries and bonuses incurred of $26,000 over the prior year
period.
 
 Sales and
marketing expenses decreased by approximately $125,000 (22%) to approximately
$435,000 for the nine months ended March 31, 2008 compared to the nine months
ended March 31, 2007.  The decrease was due to an approximate $184,000
decrease in payroll and commission expense and a revised commission plan from
the same period in the prior year.  These decreases were partially
offset by an increase in advertising and promotional expenses.
 
 General and administrative expenses
for the nine months ended March 31, 2008 decreased by approximately $210,000
(15%) to approximately $1,161,000 from G&A expenses for the comparable
period of the prior year.  The decrease was primarily attributable to
an approximate $130,000 decrease in other professional and legal fees and a
decrease of approximately $49,000 in salaries as compared to the same period in
the prior year.  These decreases were partially due to the settlement
of the outstanding arbitration with the Company’s former CEO and the reversal of
the related accrued expenses in the current nine-month period.
 
 Depreciation
and amortization expense for the nine months ended March 31, 2008 decreased
approximately $8,000 (16%) to approximately $45,000 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 nine months ended March 31, 2008 was
approximately $37,000, compared to approximately $269,000 for the nine months
ended March 31, 2007.  This change from the prior period was mainly
due to the debt conversion expense recorded in fiscal year 2007.
 
 9
 
 FINANCIAL CONDITION,
LIQUIDITY AND CAPITAL RESOURCES
 
 For the nine months ended March 31,
2008, we had operating income of approximately $797,000 and net income of
approximately $754,000.  At March 31, 2008, we had working capital of
approximately $1,672,000, compared to working capital of approximately $888,000
at June 30, 2007.  We had total stockholders’ equity of approximately
$1,867,000 and $1,110,000 at March 31, 2008 and June 30, 2007,
respectively.  The increase in stockholders’ equity was primarily due
to the increase in net income for the nine months ended March 31,
2008.
 
 We had
cash of approximately $1,744,000 at March 31, 2008, compared to approximately
$581,000 of cash at June 30, 2007.  For the nine months ended March
31, 2008, the Company had an increase of approximately $1,163,000 in cash, which
was mainly due to the sale of all marketable securities and the cash provided by
operations for the nine month period.
 
 We made capital expenditures of
approximately $32,000 during the nine months ended March 31, 2008, compared to
approximately $95,000 for the nine months ended March 31,
2007.  Significant capital expenditures are likely in the near future
in connection with the implementation of equipment upgrades planned in the
Company’s capital budget.
 
 The
Company’s future contractual obligations and commitments as of March 31, 2008
are as follows:
  Contractual
      ObligationsFY
      2008
              
              
              FY
      2009
              
              
              FY
      2010
              
              
              FY
      2011
              
              
              FY
      2012
              
              
              TotalOperating
      Leases
              
              $
              58,545
              
              
              $
              148,569
              
              
              $
              4,656
              
              
              $
              4,656
              
              
              $
              3,104
              
              
              $
              219,530
 
 Currently
we are dependent on our cash reserves to fund operations. We have the option
available to use accounts receivable financing through a
bank.  Although we recorded net income for the quarter ended March 31,
2008 compared to a net loss for the prior year period, when prior period
revenues are excluded our revenue base remained fairly consistent compared to
the first nine months of the prior fiscal year.  Considering the
possible erosion of revenue due to the current market conditions, without an
infusion of capital, the Company is at risk of being unable to generate
sufficient liquidity to meet its obligations.  The Company utilized
and will continue to utilize its bank financing agreement, should the need
arise, to meet its liquidity needs.  Further corporate consolidation
or sustained 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 $858,000 for the nine months ended March 31,
2008 compared to EBITDA of approximately $204,000 for the nine months ended
March 31, 2007.  The increase in EBITDA during the nine months ended
March 31, 2008 compared to the nine-month period in the prior year was due to
the collection and recognition of revenue from prior periods, the reversal of
accrued expense related to a legal settlement, and the reduction in the cost of
revenues as discussed earlier.
 
 10
 
 The table
below shows the reconciliation from net income (loss) to EBITDA (in
thousands);
 
 Nine
      MonthsEnded
      March 31,2008
              
              
              2007Reconciliation
      to EBITDA:Net
      Income (Loss)
              
              $
              754
              
              
              $
              (192
              )Stock-Based
      Compensation
              
              
              3
              
              
              
              33Depreciation
      and Amortization
              
              
              59
              
              
              
              88Interest/Other
      Expenses, net
              
              
              37
              
              
              
              269Income
      Taxes
              
              
              5
              
              
              
              6EBITDA
              
              $
              858
              
              
              $
              204
 
 
 EBITDA
consists of earnings before stock-based compensation, debt conversion expense,
interest expense, interest and other income, unrealized and realized gains
(losses) in marketable securities, 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 U.S. 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.
 
 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
condensed financial statements and notes thereto contained elsewhere in this
report for more detailed information.
 
 Item
3.
 
 CONTROLS AND
PROCEDURES
 
 The
Company’s Chief Executive Officer 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) and 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 during the last fiscal quarter that have materially affected, or are
reasonably likely to materially affect, the Company’s internal controls over
financial reporting.
 
 11
 
 Part
II.  Other Information
  Item
1.  Legal Proceedings
 
 On April
15, 2004, the Company’s former Chairman/CEO and President, both of whom resigned
on February 5, 2004, filed separate demands 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.  On September 26, 2007, a different arbitrator denied all of
the former Chairman/CEO’s claims, and instructed the former Chairman/CEO to pay
Comtex half of the fees charged by the American Arbitration Association
pertaining to the arbitration.  The Company is currently pursuing
collection of the amounts due to it by the former Chairman/CEO.  The
Company had accrued approximately $61,000 in expenses in previous periods, which
were reversed in the nine month period ended March 31, 2008 and recorded as a
reduction of general and administrative expenses.
  Item
2.  Unregistered Sales of Equity Securities and Use of
Proceeds
 
 None.
  Item
3.  Defaults Upon Senior Securities
 
 None.
  Item
4.  Submission of Matters to a Vote of Security Holders
 
 None.
  Item
5.  Other Information
 
 None.
  12
  Item
6.  Exhibits
 
 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.
  13
  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)May
      12, 2008
              By:
              /s/ Chip
      BrianChip
      BrianPresident
      and Chief Executive Officer(Principal
      Executive Officer)May
      12, 2008
              By:
              /s/ Paul
      SledzPaul
      SledzCorporate
      Controller & Treasurer(Principal
      Financial and Accounting
Officer)




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