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, 2007 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 small business issuer 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
                  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
      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
      4, 2007, 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




**Page
                  No.**Part
                  I
              Condensed
                  Financial Information:Item
                  1.
              Condensed
                  Financial StatementsCondensed
                  Balance Sheets as
                  of March 31, 2007 (unaudited) and
                  June 30, 2006
              2Condensed
                  Statements of Operations for
                  the Three and Nine Months Ended March
                  31, 2007 and 2006 (unaudited)
              3Condensed
                  Statements of Cash Flows for
                  the Nine Months Ended March
                  31, 2007 and 2006 (unaudited)
              4Notes
                  to Condensed Financial Statements
              5Item
                  2.
              Management’s
                  Discussion and Analysis or
                  Plan of Operation
              8Item
                  3.
              Controls
                  and Procedures
              13Part
                  II
              Other
                  Information:Item
                  1.
              Legal
                  Proceedings
              13Item
                  2.
              Unregistered
                  Sales of Equity Securities and Use of
                  Proceeds
              13Item
                  3.
              Defaults
                  Upon Senior Securities
              13Item
                  4.
              Submission
                  of Matters to a Vote of Security
                  Holders
              14Item
                  5.
              Other
                  Information
              14Item
                  6.
              Exhibits
              14SIGNATURES
              
              15


1




Part
      I
      Condensed Financial Information


Item
      1.
      Condensed Financial Statements




Comtex
        News Network Inc.
 Condensed
          Balance Sheet




**March
                  31, 2007**
              
              **June
                  30, 2006****(Unaudited)****ASSETS**Current
                  AssetsCash
              
              $
              448,257
              
              $
              1,881,739Marketable
                  Securities
              
              
              444,349
              
              
              0Accounts
                  Receivable, Net of Allowance for Doubtfulaccounts
                  of $115,396 and $79,396 at March 31, 2007and
                  June 30, 2006, respectively
              
              
              947,663
              
              
              843,644Prepaid
                  Expenses
              
              
              23,986
              
              
              27,982Total
                  Current Assets
              
              
              1,864,255
              
              
              2,753,365Property
                  and Equipment, Net
              
              
              185,066
              
              
              178,377Deposits
                  and Other Assets
              
              
              43,253
              
              
              36,922**Total
                  Assets**
              
              **$**
              **2,092,574**
              
              **$**
              **2,968,664****LIABILITIES
                  AND STOCKHOLDERS’ EQUITY**Current
                  LiabilitiesAccounts
                  Payable and other Accrued Expenses
              
              $
              853,361
              
              $
              1,160,924Accrued
                  Payroll Expenses
              
              
              200,474
              
              
              197,356Deferred
                  Revenue
              
              
              25,447
              
              
              14,214Capital
                  Lease Obligations, Current
              
              
              0
              
              
              6,633Total
                  Current Liabilities
              
              
              1,079,282
              
              
              1,379,127Long
                  Term LiabilitiesLong
                  Term Notes Payable
              
              
              0
              
              
              856,954Deferred
                  Rent
              
              
              0
              
              
              2,014Total
                  Long Term Liabilities
              
              
              
              
              
              858,968Total
                  Liabilities
              
              
              1,079,282
              
              
              2,238,095Commitments
                  and Contingencies**STOCKHOLDERS
                EQUITY**Common
                  Stock, $0.01 Par Value - 25,000,000Shares
                  Authorized: 15,294,200 and 13,700,247shares
                  outstanding as of March 31, 2007 andJune
                  30, 2006 respectively
              
              
              152,942
              
              
              137,002Additional
                  Paid in Capital
              
              
              13,552,628
              
              
              13,093,386Accumulated
                  Deficit
              
              
              (12,692,278
              )
              
              (12,499,819
              )Total
                  Stockholders Equity
              
              
              1,013,292
              
              
              730,569**Total
                  Liabilities and Stockholders Equity**
              
              **$**
              **2,092,574**
              ****
              **$**
              **2,968,664**




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




2


Comtex
      News Network Inc.


Condensed
        Statement of Operations
 (Unaudited)


**Three
                  Months Ended**
              ****
              **Nine
                  Months Ended**
              ********
              **March
                  31, 2007**
              ****
              **March
                  31, 2007**
              ********
              **2007**
              ****
              **2006**
              ****
              **2007**
              ****
              **2006**Revenues
              
              $
              1,796,473
              
              $
              1,966,772
              
              $
              5,246,675
              
              $
              5,895,815Cost
                  of Revenues(includes
                  depreciation and amortization expenseof
                  approximately $10,000, $28,000, $35,000 and$110,000
                  respectively)
              
              
              767,432
              
              
              902,204
              
              
              2,294,185
              
              
              2,777,038Gross
                  Profit
              
              
              1,029,041
              
              
              1,064,568
              
              
              2,952,490
              
              
              3,118,777Operating
                  Expenses:Technical
                  Operations & Support (inclusive of stock-basedcompensation
                  of $1,832, $7,626, $5,495 and $18,703 respectively)
              
              
              310,611
              
              
              309,183
              
              
              884,970
              
              
              974,063Sales
                  & Marketing (inclusive of stock-based compensation of$2,526,
                  $30,438, $7,618 and $72,141 respectively)
              
              
              175,818
              
              
              197,696
              
              
              560,275
              
              
              521,229General
                  & Administrative (inclusive of stock-based
                  compensation
              
              
              466,476
              
              
              633,377
              
              
              1,370,776
              
              
              1,658,174of
                  $6,355, $281,026, $20,260 and $666.021 respectively)Depreciation
                  & Amortization
              
              
              14,658
              
              
              32,460
              
              
              53,599
              
              
              131,411Total
                  Operating Expenses
              
              
              967,563
              
              
              1,172,716
              
              
              2,869,620
              
              
              3,284,877Operating
                  Income (Loss)
              
              
              61,478
              
              
              (108,148
              )
              
              82,870
              
              
              (166,100
              )Other
                  Expenses Net Debt Conversion ExpenseInterest
                  Income
              
              
              3,540
              
              
              1,813
              
              
              13,637
              
              
              1,813Realized
                  and Unrealized Gain on Marketable Securities
              
              
              7,962
              
              
              0
              
              
              281
              
              
              0Other
                  (Expense) Income
              
              
              (1,120
              )
              
              3,601
              
              
              8,721
              
              
              3,601Dept
                  Conversion Expense
              
              
              (234,336
              )
              
              0
              
              
              (234,336
              )
              
              0Interest
                  Expense
              
              
              (14,283
              )
              
              (22,234
              )
              
              (57,362
              )
              
              (69,677
              )Other
                  (Expense)
              
              
              (238,237
              )
              
              (16,820
              )
              
              (269,059
              )
              
              (64,263
              )Loss
                  Before Income Taxes
              
              
              (176,759
              )
              
              (124,968
              )
              
              (186,189
              )
              
              (230,363
              )Income
                  Tax Expense
              
              
              3,910
              
              
              300
              
              
              6,269
              
              
              16,200Net
                  Loss
              
              $
              (180,669
              )
              $
              (125,268
              )
              $
              (192,458
              )
              $
              (246,563
              )Basic
                  and Diluted Net Loss Per Common Share
              
              $
              (0.01
              )
              $
              (0.01
              )
              $
              (0.01
              )
              $
              (0.02
              )Basic
                  and Diluted Weighted Average Number of Common Shares
              
              
              14,232,898
              
              
              13,700,247
              
              
              13,878,464
              
              
              13,633,094




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




3


**Comtex
      News Network Inc.**


**CONSOLIDATEDSTATEMENTS
      OF CASH FLOW**


(Unaudited)


Nine
                  Months EndedMarch
                  31, 20072007
              
              2006Cash
                  Flows from Operating ActivitiesNet
                  Loss
              
              $
              (192,458
              )
              $
              (246,563
              )Adjustments
                  to reconcile Net Loss to Net Cash(Used
                  In) Provided By operating activities:Depreciation
                  and Amortization
              
              
              88,121
              
              
              241,258Realized
                  and Unrealized Gain on Marketable Securities
              
              
              (281
              )
              
              0Bad
                  Debt Expense
              
              
              19,528
              
              
              0Stock
                  Based Compensation
              
              
              33,373
              
              
              756,865Dept
                  Conversion Expense
              
              
              234,336
              
              
              0Changes
                  in Assets and LiabilitiesAccounts
                  Receivable
              
              
              (123,547
              )
              
              (125,894
              )Prepaid
                  Expenses and Other Current Assets
              
              
              3,996
              
              
              177,158Deposits
                  and Other Assets
              
              
              (6,331
              )
              
              5,000Accounts
                  Payable and Accrued Expenses
              
              
              (307,564
              )
              
              32,254Accrued
                  Payroll Expense
              
              
              3,118
              
              
              40,502Deferred
                  Revenue
              
              
              11,233
              
              
              (2,826
              )Deferred
                  Rent
              
              
              (2,014
              )
              
              (9,930
              )Net
                  Cash (Used In) Provided By Operating Activities
              
              
              (238,490
              )
              
              867,824Cash
                  Flows from Investing Activities:Purchase
                  of Marketable Securities
              
              
              (2,946,431
              )
              
              0Proceeds
                  from Sales of Marketable Securities
              
              
              2,502,363
              
              
              0Purchase
                  of Property and Equipment
              
              
              (94,811
              )
              
              (22,788
              )Net
                  Cash Used In Investing Activities
              
              
              (538,879
              )
              
              (22,788
              )Cash
                  Flows from Financing Activities:Repayments
                  - Capital Lease Obligations
              
              
              (6,633
              )
              
              0Repayment
                  of Note Payable
              
              
              (650,000
              )
              
              (12,153
              )Repayments
                  on Bank Financing Agreement
              
              
              0
              
              
              (151,713
              )Issuance
                  of Stock under Employee Stock PlanProceeds
                  from Exercise of Stock Options
              
              
              520
              
              
              10,000Net
                  Cash Used In Financing Activities
              
              
              (656,113
              )
              
              (153,866
              )Net
                  (Decrease) Increase in Cash
              
              
              (1,433,482
              )
              
              691,170Cash
                  at Beginning of Period
              
              
              1,881,739
              
              
              1,225,323Cash
                  at End of Period
              
              $
              448,257
              
              $
              1,916,493Supplemental
                  Disclosure of Cash Flow InformationCash
                  paid for income taxes
              
              $
              6,269
              
              $
              16,200Cash
                  paid for interest expense
              
              $
              57,362
              
              $
              69,678Non
                  Cash Financing ActivityConversion
                  of Note Payable into of Common Stock
              
              $
              206,954





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




4


COMTEX
      NEWS NETWORK, INC.


NOTES
      TO
      CONDENSED FINANCIAL STATEMENTS (UNAUDITED)


March
      31,
      2007





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 nine month periods ended March 31, 2007 and 2006
      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 gain before income taxes and net income for the three and nine month
      periods ended March 31, 2007 were increased by approximately $11,000, and
      $34,000, respectively, and the Company’s loss before income taxes and net loss
      for the three and nine month periods ended March 31, 2006 were increased by
      approximately $319,000, and $757,000, respectively. There would have been no
      effect on basic and diluted earnings per share, cash flow from operations and
      cash flow from financing activities for the three and nine month periods ended
      March 31, 2007 and 2006 if the Company had not adopted statement
      123(R).




5




Stock
      Option Plans




As
      of
      March 31, 2007, the Company had two share-based plans, the 1995 Plan (which
      expired in October 2005) and the 2003 Plan. 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.  The
      Company did not issue any stock options during the nine month period ended
      March
      31, 2007.





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




****
              **For
                  the Three Months ended**
              
              **For
                  the Nine Months ended****March
                  31,**
              
              **March
                  31,****2007**
              
              **2006**
              
              **2007**
              
              **2006**Technical
                  Operations & Support
              
              $
              1,832
              
              $
              7,626
              
              $
              5,495
              
              $
              18,703Sales
                  & Marketing
              
              
              2,526
              
              
              30,438
              
              
              7,618
              
              
              72,141General
                  and Administrative
              
              
              6,355
              
              
              281,026
              
              
              20,260
              
              
              666,021Total
                  Stock-Based Compensation Costs
              
              $
              10,713
              
              $
              319,090
              
              $
              33,373
              
              $
              756,865




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 base EPS for all periods presented since all potential dilutive
      securities are anti dilutive. The computation excludes outstanding options
      of
      approximately 3.3 million to purchase shares of common stock





2.
              Income
                  Taxes





There
      is
      no provision for regular income taxes for the three and nine month periods
      ended
      March 31, 2007 and 2006 due to the utilization of federal and state net
      operating loss carryforwards. The provision for state and Federal income tax
      for
      the three and nine month periods ended March 31, 2007 and 2006 was 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.





6





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 March 31, 2007.





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 March 31, 2007, 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 could have been 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 of $1.20 per share to $0.75 per share, which price increased
      by
      $0.05 every one hundred and eighty (180) days thereafter.





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.





On
      February 28, 2007, in order to save the Company the continuing costs of
      servicing the Note, Comtex entered into a Note Repayment Agreement to settle
      this Note for a combination of cash and restricted stock equal to the value
      of
      the Note. The total consideration paid was $650,000 in cash and the issuance
      of
      1,591,953 shares of restricted common stock of Comtex. In accordance with SFAS
      No. 84, *Induced
      Conversions of Convertible Debt* ,
      the
      Company recorded a non-cash expense in the amount of $234,336 for the three
      and
      nine month periods ended March 31, 2007. SFAS No. 84 prescribes the method
      by
      which value is ascribed to transactions in which the repayment of debt via
      the
      issuance of stock varies from its original terms.




7





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; successful trading of
      securities held by the Company; 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 March 31, 2007 to the three months ended March 31,
      2006





During
      the three months ended March 31, 2007, we reported a net loss of approximately
      $181,000 compared to a net loss of $125,000 for the three months ended March
      31,
      2006. The loss for the period results from the SFAS No. 84 accounting treatment
      of the Note Payment Agreement, as described above in Note 4 - Notes Payable.
      Excluding this transaction, the Company would have shown modest net income
      for
      the quarter due to a reduction in operating expenses.




8


Revenues
      consist primarily of royalty revenues and fees from the licensing of content
      products to information distributors. During the three months ended March 31,
      2007, total revenues were approximately $1,796,000 or approximately $171,000
      (9%) less than the total revenues of $1,967,000 for the three months ended
      March
      31, 2006. 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 March 31, 2007 was approximately $767,000
      or
      approximately $135,000 (15%) less than the cost of revenues of $902,000 for
      the
      three months ended March 31, 2006. 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 March 31, 2007 was approximately $1,029,000
      or
      approximately $36,000 (3%) less than the gross profit of $1,065,000 for the
      same
      period in the prior year. The gross profit as a percentage of revenue increased
      for the three months ended March 31, 2007 to approximately 57% from
      approximately 54% for the three months ended March 31, 2006, although the
      revenue base from which the gross profit was derived decreased. The increased
      gross profit margin was due to the negotiation of lower fixed costs and the
      decreased software amortization expense.





Total
      operating expenses for the three months ended March 31, 2007 were approximately
      $968,000 representing an approximate $205,000 (17%) decrease in operating
      expenses from $1,173,000 for the three months ended March 31, 2006. The decrease
      in expenses resulted primarily from a decrease in stock-based compensation,
      technical operations expenses, and depreciation and amortization expenses.





Technical
      operations and support expenses during the three months ended March 31, 2007
      remained fairly consistent with the three months ended March 31, 2006.





Sales
      and
      marketing expenses decreased by approximately $22,000 (11%) for the three months
      ended March 31, 2007 compared to the three months ended March 31, 2006. The
      decrease was primarily due to the reduction in stock based compensation cost.
      General and Administrative expenses for the three months ended March 31, 2007
      decreased approximately $167,000 (26%) over General and Administrative expenses
      for the comparable quarter of the prior year. The decrease was primarily
      attributed to an approximate $275,000 decrease in stock-based compensation
      charges as compared to the prior year and an increase in outside consulting
      services, other professional and legal fees and corporate expenses.





Depreciation
      and amortization expense for the three months ended March 31, 2007 decreased
      approximately $18,000 (55%) from the same period in the prior year. The decrease
      was due primarily to assets reaching the end of their depreciable
      lives.





9


Other
      expense, net of other income, for the three months ended March 31, 2007 was
      approximately $239,000, compared to approximately $17,000 for the three months
      ended March 31, 2006. The primary factors driving the change were a reduction
      in
      interest expense, a quarterly gain in securities investments and the recording
      of the debt conversion expense.





Comparison
      of the nine months ended March 31, 2007, to the nine months ended March 31,
      2006





During
      the nine months ended March 31, 2007, we reported a net loss of approximately
      $192,000 compared to a net loss of approximately $247,000 during the nine months
      ended March 31, 2006. As previously discussed and discussed further below,
      the
      net change was primarily due to the decrease in operating expenses offset by
      the
      adjustment resulting from SFAS No. 84 accounting treatment of the Note Payment
      Agreement.





Revenues
      consist primarily of royalty revenues and fees from the licensing of content
      products to information distributors. During the nine months ended March 31,
      2007, total revenues were approximately $5,247,000 or approximately $649,000
      (11%) less than the total revenues of $5,896,000 for the nine months ended
      March
      31, 2006. 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 nine months ended March 31, 2007 was approximately $2,294,000
      or approximately $483,000 (17%) less than the cost of revenues of $2,777,000
      for
      the nine months ended March 31, 2006. 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 nine months ended March 31, 2007 was approximately $2,952,000
      or
      approximately $166,000 (5%) less than the gross profit of $3,119,000 for the
      same period in the prior year. The gross profit as a percentage of revenue
      increased for the nine months ended March 31, 2007 to approximately 56% from
      approximately 53% for the nine months ended March 31, 2006, although the revenue
      base from which the gross profit was derived decreased. The increased gross
      profit margin, as noted in the above paragraphs, was due to the negotiation
      of
      lower fixed costs and the decrease in software amortization
      expense.





Total
      operating expenses for the nine months ended March 31, 2007 were approximately
      $2,870,000 representing an approximate $415,000 (13%) decrease in operating
      expenses of $3,285,000 from the nine months ended March 31, 2006. The decrease
      in expenses resulted primarily from a decrease in stock-based
      compensation.





Technical
      operations and support expenses during the nine months ended March 31, 2007
      decreased approximately $89,000 (9%) from the nine months ended March 31, 2006.
      The decrease was primarily due to a decrease in payroll expenses, plus decreased
      expenses related to technology. These decreases were slightly offset by
      increased use of outside consulting services.




10


Sales
      and
      marketing expenses increased by approximately $39,000 (7%) for the nine months
      ended March 31, 2007 compared to the nine months ended March 31, 2006. The
      increase was due to an approximate $90,000 increase in product development
      expenses and an increase in the use of consulting services, mainly offset by
      certain decreases in payroll expense from the same period in the prior
      year.





General
      and administrative expenses for the nine months ended March 31, 2007 decreased
      by approximately $287,000 (17%) over General and Administrative expenses for
      the
      comparable period of the prior year. The decrease, primarily attributable to
      decreases in stock-based compensation charges, was partially offset by an
      increase in payroll expenses, other professional and legal fees, outside
      consulting services and corporate expenses.





Depreciation
      and amortization expense for the nine months ended March 31, 2007 decreased
      approximately $78,000 (59%) 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, 2007 was
      approximately $269,000, compared to approximately $64,000 for the nine months
      ended March 31, 2006. This change from the prior year was mainly due to a
      decrease in interest expense and an increase in interest income and other income
      and the debt conversion expense.




FINANCIAL
      CONDITION, LIQUIDITY AND CAPITAL RESOURCES





For
      the
      nine months ended March 31, 2007, we had operating income of approximately
      $83,000 and a net loss of approximately $192,000. At March 31, 2007, we had
      working capital of approximately $785,000, compared to working capital of
      approximately $1,374,000 at June 30, 2006. Net stockholders’ equity increased to
      approximately $1,013,000 at March 31, 2007 from $731,000 at June 30, 2006.
      The
      increase in stockholders’ equity and the decrease in working capital were
      primarily attributable to additional paid in capital recognized from the Note
      Payment Agreement, before recording stock-based compensation.





We
      had
      cash and marketable securities of approximately $893,000 at March 31, 2007,
      compared to approximately $1,882,000 at June 30, 2006. For the nine months
      ended
      March 31, 2007, the Company used approximately $1,433,000 in cash, of which
      $650,000 was used for the Note Payment Agreement and the net balance was
      primarily used for the purchase of marketable securities.





We
      made
      capital expenditures of approximately $95,000 during the nine months ended
      March
      31, 2007, 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 March 31, 2007
      are as follows:





**Amount
                Due by Period****FY
                2007**
            
            **FY
                2008**
            
            **FY
                2009**
            
            **Beyond**
              **2009**
            
            **Total**Operating
                Leases
            
            $
            54,496
            
            $
            219,548
            
            $
            140,337
            
            $
            12,416
            
            $
            426,797




11


Currently
      we are dependent on our cash receipts and current reserve to fund operations.
      We
      have the option available to use accounts receivable financing through the
      Bank.
      Although the net loss for the nine month period ended March 31, 2007 was
      attributable to the adjustment resulting from SFAS No. 84 accounting treatment
      of the Note Payment Agreement, our revenue base has continued to decline.
      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,
      excluding the effects of stock-based compensation, as defined below, was
      approximately $204,000 for the nine months ended March 31, 2007 compared to
      EBITDA of approximately $831,000 for the nine months ended March 31, 2006.
      The
      decrease in EBITDA during the nine months ended March 31, 2007 compared to
      the
      nine month period in the prior year was the net result of decreased revenues
      and
      reduced cost of revenues, partially offset by decreased stock based compensation
      and depreciation and other items. The table below shows the reconciliation
      from
      net loss to EBITDA;




****
            **Nine
                Months**
            ********
            **Ended
                March 31,**
            ********
            **2007**
            
            **2006**Reconciliation
                to EBITDA:Net
                Loss
            
            $
            (192
            )
            $
            (247
            )Stock
                Based Compensation
            
            
            33
            
            
            757Depreciation
                and Amortization
            
            
            88
            
            
            241Interest/Other
                Expenses
            
            
            269
            
            
            64Income
                Taxes
            
            
            6
            
            
            16EBITDA
            
            $
            204
            
            $
            831





EBITDA
      consists of earnings before stock-based compensation, dept conversion expense
      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.





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.




12




Item
      3.CONTROLS
      AND PROCEDURES





The
      Company’s Chief Executive and Principal Accounting Officers 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
      during the last fiscal quarter that have materially affected, or are reasonably
      likely to materially affect the Company’s internal controls over financial
      reporting.




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.




Item
      3. Defaults Upon Senior Securities





None.





13




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)10.2
              Note
                  Payment Agreement dated February 28, 2007 among Comtex News Network,
                  Inc.,
                  Tepco Ltd. and Andrew S. Zamfotis (filed with the Securities and
                  Exchange
                  Commission on Form 8-K on March 6, 2007)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.




14


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
              15,
              2007
            By:
            /s/ Chip
              BrianChip
              BrianPresident and Chief Executive Officer(Principal Executive
              Officer)  May
              15,
              2007
            By:
            /s/ Paul
              SledzPaul
              SledzTreasurer and Controller(Principal Accounting
              Officer)




15