<PAGE>

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

                                   FORM 10-QSB
(Mark One)

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


For the quarterly period ended September 30, 2006 or

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

For the transition period from __________ to ___________

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

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

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

       625 North Washington Street, SUITE 301, ALEXANDRIA, VIRGINIA 22314
       ------------------------------------------------------------------
                     (Address of principal executive 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
         ----   ----

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

As of November 14, 2006, 13,702,247 shares of the Common Stock of the
registrant, par value $0.01 per share, were outstanding.


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


<PAGE>

<TABLE>
<CAPTION>

                            COMTEX NEWS NETWORK, INC.
                                TABLE OF CONTENTS



Part I   Condensed Financial Information:                                      PAGE NO.
                                                                               --------
       <S>                                                                     <C>
         Item 1.  Condensed Financial Statements

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

                  Condensed Statements of Income                                 3
                  for the Three Months Ended
                  September 30, 2006 and 2005 (unaudited)

                  Condensed Statements of Cash Flows                             4
                  for the Three Months Ended
                  September 30, 2006 and 2005 (unaudited)

                  Notes to Condensed Financial Statements                        5

         Item 2.  Management's Discussion and Analysis                           9
                  or Plan  of Operation


         Item 3.  Controls and Procedures                                       12

Part II  Other Information:

         Item 1.  Legal Proceedings                                             13
         Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds   13
         Item 3.  Defaults Upon Senior Securities                               13
         Item 4.  Submission of Matters to a Vote of Security Holders           13
         Item 5.  Other Information                                             14
         Item 6.  Exhibits                                                      14


SIGNATURES                                                                      15

</TABLE>

                                       1

<PAGE>


<TABLE>
<CAPTION>

Part I   Condensed Financial Information
Item 1. Condensed Financial Statements
                                    Comtex News Network, Inc.
                                    Condensed Balance Sheets


                                                                September 30,         June 30,
                                                                    2006                2006
                                                                ------------       ------------
ASSETS                                                           (Unaudited)
<S>                                                             <C>                <C>
 CURRENT ASSETS
  Cash                                                          $  1,725,977       $  1,881,739
  Accounts Receivable, Net of Allowance of $79,396
  at September 30, 2006 and June 30, 2006                            844,979            843,644
  Prepaid Expenses and Other Current Assets                           36,267             27,982
                                                                ------------       ------------

     TOTAL CURRENT ASSETS                                          2,607,223          2,753,365

 PROPERTY AND EQUIPMENT, NET                                         168,844            178,377

 DEPOSITS AND OTHER ASSETS                                            70,448             36,922

                                                                ------------       ------------
TOTAL ASSETS                                                    $  2,846,515       $  2,968,664
                                                                ============       ============

LIABILITIES AND STOCKHOLDERS' EQUITY

 CURRENT LIABILITIES:
 Accounts Payable and Other Accrued Expenses                    $    995,972       $  1,160,924
 Accrued Payroll Expense                                             171,793            197,356
 Deferred Revenue                                                     15,168             14,214
 Capital Lease Obligations, Current                                    1,810              6,633
                                                                ------------       ------------
    TOTAL CURRENT LIABILITIES                                      1,184,743          1,379,127

 LONG-TERM LIABILITIES:
  Long-Term Note Payable                                             856,954            856,954
  Deferred Rent                                                          288              2,014
                                                                ------------       ------------

     TOTAL LONG-TERM LIABILITIES                                     857,242            858,968
                                                                ------------       ------------

TOTAL LIABILITIES                                                  2,041,985          2,238,095

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY

  Common Stock, $0.01 Par Value - 25,000,000 Shares Authorized;
  13,702,247 and 13,700,247 Shares issued and outstanding,
  as of September 30, 2006 and June 30, 2006, respectively           137,022            137,002
  Additional Paid-In Capital                                      13,105,834         13,093,386
  Accumulated Deficit                                            (12,438,326)       (12,499,819)
                                                                ------------       ------------
      Total Stockholders' Equity                                     804,530            730,569

                                                                ------------       ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                      $  2,846,515       $  2,968,664
                                                                ============       ============

 The accompanying "Notes to Financial Statements" are an integral part of these financial statements
</TABLE>


                                       2

<PAGE>
<TABLE>
<CAPTION>


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

                                                                  Three months ended
                                                                     September 30,
                                                         ----------------------------------
                                                              2006                 2005
                                                         ----------------------------------

<S>                                                      <C>                <C>
Revenues                                                 $  1,750,975       $  1,996,431

Cost of Revenues
 (including depreciation and amortization expense
 of approximately $14,000 and $45,000, respectively)
                                                              762,288            936,427
                                                         ----------------------------------
     Gross Profit                                             988,687          1,060,004

Operating Expenses:
 Technical Operations and Support (Inclusive of
      stock-based compensation of $ 1,851 and
      $8,138, for the three months ended
      September 30, 2006 and 2005, respectively)              286,675            328,253
 Sales and Marketing (Inclusive of stock-based
      compensation of $ 2,327and $5,663, for the
      three months ended September 30, 2006
      and 2005, respectively)                                 178,057            149,225
 General and Administrative (Inclusive of
      stock-based compensation of $ 7,770 and
      $102,921, for the three months ended
      September 30, 2006 and 2005, respectively)              438,202            417,922
 Depreciation and Amortization                                 21,157             60,839
                                                         ----------------------------------
   Total Operating Expenses                                   924,091            956,239

   Operating Income                                            64,596            103,765

Other Income (Expense), net
 Interest Expense, net of interest income
   of $4,916 in 2006                                          (16,740)           (24,983)

 Other Income                                                  18,896                  -
                                                         ----------------------------------
   Other Income (Expense), net                                  2,156            (24,983)

Income Before Income Taxes                                     66,752             78,782

Income Taxes                                                    5,259             15,900
                                                         ----------------------------------
Net Income                                               $     61,493       $     62,882
                                                         ==================================

Basic Earnings Per Common Share                          $       0.00       $       0.01
                                                         ==================================

Weighted Average Number of Common Shares                   13,700,334         13,600,247
                                                         ==================================

Diluted Earnings Per Common Share                        $       0.00       $       0.01
                                                         ==================================

Weighted Average Number of Shares Assuming Dilution        14,862,450         14,784,325
                                                         ==================================

 The accompanying "Notes to Financial Statements" are an integral part of these financial statements
</TABLE>

                                       3

<PAGE>

<TABLE>
<CAPTION>

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



                                                              Three Months Ended
                                                                 September 30,
                                                       ------------      ------------
                                                           2006               2005
                                                       ------------      ------------

<S>                                                    <C>               <C>
Cash Flows from Operating Activities:
 Net Income                                            $    61,493       $    62,882
Adjustments to reconcile net income to net cash
  (used in) provided by operating activities:
  Depreciation and Amortization                             35,037           105,639
  Stock Based Compensation                                  11,948           116,722
  Changes in Assets and Liabilities:
     Accounts Receivable                                    (1,335)         (193,359)
     Prepaid Expenses and Other Current Assets              (8,285)          189,867
     Deposits & Other Assets                               (33,526)            5,000
     Accounts Payable and Accrued Expenses                (164,952)           51,703
     Accrued Payroll Expense                               (25,563)           15,931
     Deferred Revenue                                          954             1,183
     Deferred Rent                                          (1,726)           (3,078)
                                                       ------------      ------------

  Net Cash (Used in) Provided by Operating                (125,955)          352,490
Activities

Cash Flows used in Investing Activity -
  Purchases of Property and Equipment                      (25,504)          (18,519)
                                                       ------------      ------------

Cash Flows from Financing Activities:
  Repayments - Capital Lease Obligations                    (4,823)           (3,783)
  Repayments on Bank Financing Agreement                         -          (151,713)
  Proceeds from Exercise of Stock Options                      520                 -
                                                       ------------      ------------
  Net Cash (Used in) Financing Activities                   (4,303)         (155,496)

Net (Decrease) Increase in Cash                           (155,762)          178,475

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


Cash at End of Period                                  $ 1,725,977       $ 1,403,798
                                                       ============      ============


Supplemental Disclosure of Cash Flow Information:
  Cash paid for income taxes                           $     2,359       $    15,900
  Cash paid for interest                               $    21,656       $    24,983


 The accompanying "Notes to Financial Statements" are an integral part of these financial statements
</TABLE>

                                       4

<PAGE>


                            COMTEX NEWS NETWORK, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
                               September 30, 2006

1.      Basis Of Presentation
        ---------------------

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

On December 16, 2004, the FASB issued SFAS No. 123(R), SHARE-BASED PAYMENT. SFAS
No. 123(R) which 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
month periods ended September 30, 2006 and 2005 includes: (a) compensation costs
for all share based payments granted prior to, but not yet vested as of July 1,
2005, based on grant-date fair value estimated in accordance with the original
provisions of Statement 123, and (b) compensation cost for all share-based
payments granted subsequent to July 1, 2005, based on the grant-date fair value
estimated in accordance with the provisions of Statement 123(R). Results for
prior periods have not been restated. As a result of adopting Statement 123(R)
on July 1, 2005, the Company's income before income taxes and net income for the
three month periods ended September 30, 2006 and September 30, 2005 were
approximately $12,000 and $117,000 lower, respectively, than if it had continued
to account for share-based compensation under APB Opinion 25. 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 month periods
ended September 30, 2006 and September 30, 2005, if the Company had not adopted
statement 123(R).

The Company did not issue any stock options during the three month period ended
September 30, 2006.

                                       5

<PAGE>


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

Information regarding the 1995 and 2003 Plans is summarized below.
<TABLE>
<CAPTION>

                                                                   Weighted
                                               Number of           Average
                                               Options          Exercise Price
                                             ------------    -------------------
<S>                                            <C>                  <C>
Outstanding at June 30, 2006                   3,312,249            $     0.30
  Granted                                              -                     -
  Exercised                                       (2,000)           $     0.26

  Forfeited                                      (33,650)           $     0.34
                                             ------------    -------------------
Outstanding at September 30, 2006              3,276,599            $     0.30
                                             ============    ===================

Exercisable at September 30, 2006              3,166,129            $     0.30
                                             ============    ===================
</TABLE>

As of September 30, 2006, 3,166,129 stock option grants had vested. Of this
total, 1,576,829 were granted prior to July 1, 2005, and 1,589,300 were granted
subsequent to July 1, 2005. During the three months ended September 30, 2006,
2,000 options were exercised.


As of September 30, 2006, the Company had two share-based plans, the 1995 Plan
and the 2003 Plan, which are described above. The 1995 Plan expired as of
October 12, 2005 and the Company currently has no plan to renew it or replace it
with a new stock option plan. The compensation cost charged against income for
the 1995 Plan was $11,948 for the three months ended September 30, 2006. This
number includes (a) $7,259 of cost from compensation costs for all share based
payments granted prior to, but not yet vested as of July 1, 2005, based on the
grant-date fair value estimated in accordance with the original provisions of
Statement 123(R), and (b) $4,689 of 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), net of 5%
discount for post vesting forfeitures based on an overall low turnover. No
income tax benefits are recognized in the income statement for share-based
arrangements due to the utilization of federal and state net operating loss
carryforwards.

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

                                     For the Three Months ended
                                           September 30,
                                           -------------

                                          2006        2005
                                        --------    --------

 Technical Operations & Support         $  1,851    $  8,138
 Sales & Marketing                         2,327       5,663
 General & Administrative                  7,770     102,921
                                        --------    --------

Total Stock-Based Compensation Costs    $ 11,948    $116,722
                                        ========    ========

                                       6

<PAGE>


As of September 30, 2006, the total compensation cost related to non-vested
options not yet recognized is $35,231. The period over which this cost will be
recognized is 11 months.

Total 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,
equal to $0.00 and $0.01 for the three month periods ended September 30, 2006
and 2005, respectively do not include the effects of options to purchase
approximately 0.8 million and 1.8 million shares as the inclusion of these
options would have been anti-dilutive 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
        ------------

There is no provision for regular income taxes for the three month periods ended
September 30, 2006 and 2005 due to the utilization of federal and state net
operating loss carryforwards. The provision for income tax for the three month
periods ended September 30, 2006 and 2005 is due to the alternative minimum tax.

The Company accounts for income taxes in accordance with SFAS No. 109,
ACCOUNTING FOR INCOME TAXES. Under this method, deferred tax 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 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.


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 September 30, 2006.

                                       7

<PAGE>


The Company is also involved in routine legal proceedings occurring in the
ordinary course of business, which in the aggregate are believed by management
to be immaterial to our financial condition.


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 September 30, 2006, the balance due
to the Bank related to advances under the Financing Agreement was fully repaid.

On December 9, 2003, the Company executed an amendment to the Amended,
Consolidated and Restated 10% Senior Subordinated Secured Note (the "Amended
Note"), payable to AMASYS Corporation ("AMASYS"), an affiliated Company, (said
amendment the "Third Amendment") for the purpose of reducing the price at which
the Amended Note may be converted into common stock of the Company. Pursuant to
the Third Amendment, AMASYS agreed to subordinate the Amended Note to both the
Company's note payable to its former landlord and to the Financing Agreement. In
consideration for these subordination agreements, the Company agreed to reduce
the conversion price stipulated in the Amended Note from the previously-stated
conversion price of $1.20 per share to $0.75 per share, and to increase this
conversion price by $0.05 every one hundred and eighty (180) days thereafter. At
the date of the transaction the conversion price of the Amended Note was in
excess of the stock price. As of September 25, 2006, the Amended Note had a
principal balance of $856,954 and the conversion rate was $1.00. AMASYS executed
an agreement on September 26, 2006 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. Therefore, as of September 26, 2006 AMASYS no
longer holds the Comtex Note and does not own any shares of Comtex common stock.



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.

                                       8

<PAGE>


FORWARD-LOOKING STATEMENTS

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

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


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

Comparison of the three months ended September 30, 2006, to the three months
ended September 30, 2005

During the three months ended September 30, 2006, we reported net income of
approximately $61,000 compared to net income of approximately $63,000 during the
three months ended September 30, 2005. As discussed below, net income decreased
slightly with an increase in other income and a decrease in income tax expense
slightly offsetting a decline in operating income.

Revenues consist primarily of royalty revenues and fees from the licensing of
content products to information distributors. During the three months ended
September 30, 2006, total revenues were approximately $1,751,000 or
approximately $245,000 (12%) less than the total revenues for the three months
ended September 30, 2005. The decline in revenues was the direct result of
consolidation among customers, primarily in the Internet and personal investor
markets.

Our cost of revenues consists primarily of content license fees and royalties to
information providers, depreciation 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 September 30, 2006 was approximately
$762,000 or approximately $174,000 (19%) less than the cost of revenues for the
three months ended September 30, 2005. The decrease in cost was primarily due to
a decrease in royalty revenue, renegotiation of fixed costs associated with
certain content providers, and a decrease in software depreciation expense.

Gross profit for the three months ended September 30, 2006 was approximately
$989,000 or approximately $71,000 (7%) less than the gross profit for the same
period in the prior year. The gross profit as a percentage of revenue increased
for the three months ended September 30, 2006

                                       9

<PAGE>


to approximately 56% from approximately 53% for the three months ended September
30, 2005. The increase, as noted in the above paragraphs, is due to the
negotiation of lower fixed costs and the decreased software depreciation
expense.

Total operating expenses for the three months ended September 30, 2006 were
approximately $924,000 representing an approximate $32,000 (3.4%) decrease in
operating expenses from the three months ended September 30, 2005. The decrease
in expenses resulted primarily from a decrease in stock-based compensation and
depreciation and amortization expenses partially offset by an increase in
general and administrative expenses.

Technical operations and support expenses during the three months ended
September 30, 2006 decreased approximately $42,000 (13%) from the three months
ended September 30, 2005. The decrease is primarily due to a change in
allocation of expenses between the technical operations and support category and
the sales and marketing category, and a decrease in payroll expenses. Also,
decreased expenses related to technology have contributed to this reduction.

Sales and marketing expenses increased by approximately $29,000 (19%) for the
three months ended September 30, 2006 compared to the three months ended
September 30, 2005. The increase is due to the change in expense allocation
between technical operations and support category and the sales and marketing
category as described above, an increase in the use of consulting services,
partially offset by a decrease in payroll expense resulting from decreases in
personnel and related commission expenses over the same period in the prior
year.

General and administrative expenses for the three months ended September 30,
2006 increased approximately $20,000 (5%) over G&A expenses for the comparable
quarter of the prior year. The increase resulted primarily from an increase in
professional fees, payroll expenses, rent and expenses associated with sales
efforts by senior executives. These increases were partially offset by an
approximate $95,000 decrease in stock-based compensation charges as compared to
the prior year.

Depreciation and amortization expense for the three months ended September 30,
2006 decreased approximately $40,000 (65%) from the same period in the prior
year. The decrease was due primarily to the disposal of assets in prior years
and the continued efforts of management not to invest in major fixed asset
acquisitions.

Other income, net of other expense, for the three months ended September 30,
2006 was approximately $2,000, compared to other expense, net of other income
amount of approximately $25,000 the three months ended September 30, 2005. This
change from the prior year was mainly due to a decrease in interest expense and
recovery of previously recorded bad debts.


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

For the three months ended September 30, 2006, we had operating income of
approximately $65,000 and net income of approximately $61,000. At September 30,
2006, we had working capital of approximately $1,422,000, compared to working
capital of approximately $1,374,000 at June 30, 2006. We had net stockholders'
equity of approximately $805,000 and $731,000 at September 30, 2006 and June 30,
2006 respectively. The increase in stockholders' equity is due

                                       10

<PAGE>

primarily to the net income for the three months ended September 30, 2006 before
recording stock-based compensation.

We had cash of approximately $1,726,000 at September 30, 2006, compared to
approximately $1,882,000 at June 30, 2006. For the three months ended September
30, 2006, the Company used approximately $156,000 in cash.

We made capital expenditures of approximately $26,000 during the three months
ended September 30, 2006, primarily for computer and communications equipment to
replace outdated equipment. Financing activities resulted in payments of
approximately $5,000 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 September 30,
2006 are as follows:

                                  AMOUNTS DUE BY PERIOD
                      -------------------------------------------
                         2007             2008            2009           TOTAL
                      ----------------------------------------------------------
Operating Leases      $  159,997      $  214,892      $  135,681      $  510,570
Capital Leases             1,779            --              --             1,779
Note Payable                --              --           856,954         856,954
                      ----------------------------------------------------------
   Total              $  161,776      $  214,892      $  992,635      $1,369,303
                      ==========================================================


Currently we are dependent on our cash reserves to fund operations. We have the
option available to use accounts receivable financing through the Bank. Although
we recorded a greater net income for the quarter ended September 30, 2006 than
the prior year period, our revenue base declined compared to the first quarter
of the prior fiscal year. 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 utilized and will
utilize its Financing Agreement, should the need arise, to meet its liquidity
needs. Further corporate consolidation or market deterioration affecting our
customers could impair our ability to generate such revenues. No assurance may
be given that we will be able to maintain the revenue base or the profitable
operations that may be necessary to achieve our liquidity needs.

EBITDA, as defined below, was approximately $111,000 for the three months ended
September 30, 2006 compared to EBITDA, of approximately $327,000 for the three
months ended September 30, 2005. The decrease in EBITDA during the three months
ended September 30, 2006 compared to the three-month period in the prior year is
the net result of decreased revenues and stock based compensation, as well as
increased operating expenses, partially offset by reduced cost of revenues.

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<PAGE>




The table below shows the reconciliation from net income to EBITDA (in
thousands);

                                              Three Months
                                          Ended September 30,
                                          2006          2005
                                      --------------------------
Reconciliation to EBITDA:
 Net Income                              $  61          $  63

 Stock Based Compensation                   12            117

 Depreciation and Amortization              35            106

 Interest/Other (Income) Expense            (2)            25

 Income Taxes                                5             16
                                      --------------------------
 EBITDA                                  $ 111          $ 327


EBITDA consists of earnings before stock-based compensation, interest expense,
interest and other income, income taxes, 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.



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

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

                                       12

<PAGE>


in other factors that could significantly affect these controls subsequent to
the date of the foregoing evaluation.


Part II.  Other Information


Item 1. Legal Proceedings

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

The Company is also involved in routine legal proceedings occurring in the
ordinary course of business, which in the aggregate are believed by management
to be immaterial to our financial condition.



 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.


Item 6.   Exhibits

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

                                       13

<PAGE>


          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

<PAGE>


                                   SIGNATURES

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

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

November 14, 2006                   By: /s/Chip Brian
                                        --------------------------
                                    Chip Brian
                                    President and Chief Executive Officer
                                    (Principal Executive Officer)


November 14, 2006                   By: /s/Richard D.Henderson
                                        ----------------------
                                    Richard D. Henderson, CPA.
                                    Treasurer & Controller
                                    (Principal Accounting Officer)


                                       15