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

                                   FORM 10-Q
(Mark One)

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

For the quarterly period ended December 31, 2004 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 of                 (I.R.S. Employer
       incorporation or organization)                 Identification No.)

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

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

          ____________________________________________________________
                                 Former address:
                          4900 Seminary Road, Suite 800
                           Alexandria, Virginia 22311

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
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 an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).  Yes      No  X
                                                 ---     ---

As of February 1, 2005 13,600,247 shares of the Common Stock of the registrant,
par value $0.01 per share, were outstanding.


<PAGE>



                            COMTEX NEWS NETWORK, INC.
                                TABLE OF CONTENTS



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

        Item 1.  Financial Statements

                Balance Sheets                                               2
                 as of December 31, 2004 (unaudited)
                 and June 30, 2004

                Statements of Operations                                     3
                 for the Three and Six Months Ended
                 December 31, 2004 and 2003 (unaudited)

                Statements of Cash Flows                                     4
                 for the Six Months Ended
                 December 31, 2004 and 2003 (unaudited)

                Notes to Financial Statements                                5

        Item 2.  Management's Discussion and Analysis                        8
                  of Financial Condition and Results
                  of Operations

        Item 3.  Quantitative and Qualitative Disclosure about Market Risk  14

        Item 4.  Controls and Procedures                                    14

Part II  Other Information:

         Item 1.  Legal Proceedings                                         14
         Item 2.  Unregistered Sales of Equity Securities and Use of
                  Proceeds                                                  15
         Item 3.  Defaults Upon Senior Securities                           15
         Item 4.  Submission of Matters to a Vote of Security Holders       15
         Item 5.  Other Information                                         15
         Item 6.   Exhibits and Reports on Form 8-K                         15


SIGNATURES                                                                  16


                                       1
<PAGE>



                            Comtex News Network, Inc
                                 Balance Sheets

<TABLE>
<CAPTION>

                                                             (Unaudited)
                                                             December 31,         June 30,
                                                                2004                2004
                                                         ------------------  ----------------
ASSETS

 CURRENT ASSETS
<S>                                                      <C>                 <C>
 Cash                                                    $    810,340        $      461,419
 Accounts Receivable, Net of Allowance of
  approximately $194,000 and $155,961 at
  December 31, 2004 and June 30, 2004, respectively           653,189               807,079
 Prepaid Expenses and Other Current Assets                     37,642                38,397
                                                         ------------------  ----------------
    TOTAL CURRENT ASSETS                                    1,501,171             1,306,895

 PROPERTY AND EQUIPMENT, NET                                  652,751               975,620

 RESTRICTED CASH                                              360,000               360,000

  DEPOSITS AND OTHER ASSETS                                    28,617                28,617
                                                         ------------------  ----------------
 TOTAL ASSETS                                            $  2,542,539        $    2,671,132
                                                         ==================  ================

 LIABILITIES AND STOCKHOLDERS' DEFICIENCY

 CURRENT LIABILITIES:
 Accounts Payable and Other Accrued Expenses             $  1,101,716        $    1,260,669
 Accrued Payroll Expense                                      185,939               142,695
 Amount due under Bank Financing Agreement                     68,240               201,911
 Deferred Revenue                                              29,074               100,297
 Note Payable - Other, Current                                120,000                60,000
 Capital Lease Obligations, Current                            21,603                36,599
                                                         -----------------   ----------------
    TOTAL CURRENT LIABILITIES                               1,526,572             1,802,171

 LONG-TERM LIABILITIES:
  Capital Lease Obligations, Long Term                         15,501                23,355
  Long-Term Note Payable - Affiliate                          856,954               856,954
  Long-Term Note Payable - Other                              240,000               300,000
  Deferred Rent                                                10,185                11,290
                                                         -----------------   ----------------

     TOTAL LONG-TERM LIABILITIES                            1,122,640             1,191,599
                                                         -----------------   ----------------
  TOTAL LIABILITIES                                         2,649,212             2,993,770

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY

  Common Stock, $0.01 Par Value - 25,000,000
   Shares Authorized; Shares issued and outstanding:
   13,600,247 and 13,598,836 at December 31, 2004
   and June 30, 2004, respectively                            136,002               135,988
     Additional Paid-In Capital                            12,311,898            12,311,672
     Accumulated Deficit                                   (2,554,573)          (12,770,298)
                                                         -----------------   ----------------
      Total Stockholders' Deficiency                         (106,673)             (322,638)
                                                         -----------------   ----------------
   TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY         $ 2,542,539             2,671,132
                                                         =================   ================

</TABLE>

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

                                       2
<PAGE>


                            Comtex News Network, Inc
                            Statements of Operations
                                  (Unaudited)


<TABLE>
<CAPTION>

                                                              Three months ended            Six months ended
                                                                 December 31,                 December 31,
                                                          --------------------------  --------------------------
                                                              2004          2003          2004          2003
                                                          --------------------------  --------------------------


<S>                                                       <C>          <C>            <C>          <C>
Revenues                                                  $ 2,085,578  $  2,014,019   $ 4,072,927  $  4,186,940

Cost of Revenues
   (including depreciation and amortization expense
   of approximately 99,000, 99,000, $199,000 and
   $199,000)
                                                              967,016       914,524     1,946,798     1,846,781
                                                          --------------------------  --------------------------
     Gross Profit                                           1,118,562     1,099,495     2,126,129     2,340,159

Operating Expenses
 Technical Operations & Support
                                                              337,935       550,913       669,675     1,157,874
 Sales & Marketing
                                                              173,701       159,293       314,871       244,572
 General & Administrative
                                                              369,454       478,878       691,830     1,075,158
 Settlement with Former Landlord
                                                                    -       463,447             -       463,447
 Stock-based Compensation
                                                                    -        24,000             -        51,864
 Depreciation & Amortization
                                                               78,291       130,972       158,840       283,742
                                                          --------------------------  --------------------------
   Total Operating Expenses                                   959,381     1,807,503     1,835,216     3,276,657

   Operating Income / (Loss)
                                                              159,181      (708,008)      290,913      (936,498)

Other income/(expense)
 Interest Expense
                                                              (41,219)      (26,820)      (76,458)      (50,504)
 Interest Income/ (Other Expense)
                                                                1,485      (300,410)        1,270      (299,948)
                                                          --------------------------  --------------------------
   Other Expense, net
                                                              (39,734)     (327,230)      (75,188)     (350,452)


Income (Loss ) Before Income Taxes
                                                              119,447    (1,035,238)      215,725    (1,286,950)

Income Taxes
                                                                    -             -             -           425
                                                          --------------------------  --------------------------
Net Income (Loss)                                         $   119,447   $(1,035,238)  $   215,725  $ (1,287,375)
                                                          ==========================  ==========================

Basic Earnings (Loss) Per Common Share                    $      0.01   $     (0.08)  $      0.02  $      (0.10)
                                                          ==========================  ==========================

Weighted Average Number of Common Share                    13,600,247    13,582,960    13,599,542    13,545,406
                                                          ==========================  ==========================

Diluted Earnings (Loss ) Per Common Share                 $      0.01 $       (0.08)  $      0.01  $      (0.10)
                                                          ==========================  ==========================

Weighted Average Number of Shares Assuming Dilution        14,645,388    13,582,960    14,644,683    13,545,406
                                                          ==========================  ==========================

</TABLE>


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



                                       3

<PAGE>



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


<TABLE>
<CAPTION>

                                                                        Six Months Ended
                                                                          December 31,
                                                                  ------------------------------
                                                                       2004             2003
                                                                  --------------  --------------


Cash Flows from Operating Activities:
<S>                                                                   <C>         <C>
 Net Income (Loss)                                                    $  215,725  $   (1,287,375)
Adjustments to reconcile net income (Loss) to net cash
 (used in) provided by operating activities:

  Depreciation and Amortization                                          357,631         482,534
  Bad Debt Expense                                                        15,000         (25,066)
  Stock Based Compensation                                                     -          51,864
  Loss on Disposal of Assets                                                             300,670
  Settlement with Former Landlord                                                        360,000
  Changes in Assets and Liabilities:
     Accounts Receivable                                                 138,890          90,114
     Prepaid Expenses and Other Current Assets                               755          16,147
     Deposits and Other Assets                                                 -          46,371
     Accounts Payable and Accrued Expenses                              (158,713)        371,056
     Accrued Payroll Expense                                              43,244        (225,541)
     Deferred Revenue                                                    (71,223)        (86,291)
     Deferred Rent                                                        (1,105)        (64,959)
                                                                  --------------  --------------
  Net Cash provided by Operating Activities
                                                                         540,204          29,524

Cash Flows from Investing Activities:
  Proceeds from Sale of Assets                                                 -          52,445
 Increase in Restricted Cash                                                   -        (360,000)
 Purchases of Property and Equipment                                     (34,762)        (77,813)
                                                                  --------------  --------------
  Net Cash used in Investing Activities:                                 (34,762)       (385,368)
Cash Flows from Financing Activities:
  Repayments - Capital Lease Obligations                                 (22,850)        (29,932)
  Net Proceeds from (Repayments on) Bank Financing Agreement            (133,671)        414,688
  Issuance of Stock under Employee Stock Purchase Plan                         -             829
  Proceeds from Exercise of Stock Options                                      -          33,773
                                                                  --------------  --------------
  Net Cash provided by/(used in) Financing Activities:
                                                                        (156,521)        419,358


Net Increase in Cash                                                     348,921          63,514

Cash at Beginning of Period                                              461,419         464,981
                                                                  --------------  --------------


Cash at End of Period                                             $      810,340  $      528,495
                                                                  ==============  ==============
</TABLE>


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


                                       4
<PAGE>



                           COMTEX NEWS NETWORK, INC.
                   NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                               December 31, 2004

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

The accompanying 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  accruals) necessary for a
fair presentation of results for such periods.  In November of 2004, the company
sold it inactive wholly owned subsidiary nFactory Comtex, S.L. for an immaterial
amount.  The results of operations  for any interim  period are not  necessarily
indicative of results for the full year.  The balance sheet at June 30, 2004 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, 2004 ("2004 Form  10-K"),  filed with the  Securities
and Exchange  Commission  on September  28, 2004,  as amended and filed with the
Securities and Exchange Commission on October 28, 2004.

Had the  Company  determined  compensation  cost  based on the fair value at the
grant date for its stock options under SFAS 123, the Company's net income (loss)
and net  income  (loss)  per share  would  have been  adjusted  to the pro forma
amounts indicated below:

<TABLE>
<CAPTION>
                                                           Three months ended               Six months ended
                                                              December 31,                    December 31,
                                                       ----------------------------   -----------------------------
                                                            2004          2003             2004           2003
                                                       ----------------------------   -----------------------------
<S>                                                    <C>           <C>              <C>           <C>
Net Income (Loss), as reported                         $    119,447  $ (1,035,238)    $    215,725  $ (1,287,375)

Deduct:  Total stock-based employee compensation
expense determined under fair-value-based method for
all awards, net of related tax effects                            -        36,684           82,919       205,920
                                                       ----------------------------   -----------------------------
Pro Forma Net Income (Loss)                                 119,447    (1,071,922)         132,806    (1,493,295)
                                                       ============================   =============================

Basic Income (Loss) Per Share, as reported             $       0.01  $      (0.08)    $       0.02  $      (0.10)
                                                       ============================   =============================
Diluted Income (Loss) Per Share, as reported           $       0.01  $      (0.08)    $       0.01  $      (0.10)
                                                       ============================   =============================
Basic Income (Loss) Per Share, pro forma               $       0.01  $      (0.08)    $       0.01  $      (0.11)
                                                       ============================   =============================
Diluted Income (Loss) Per Share, pro forma             $       0.01  $      (0.08)    $       0.01  $      (0.11)
                                                       ============================   =============================
</TABLE>

The per share weighted-average fair value of stock options granted for the three
and six month periods ended December 31, 2004 and 2003 was $0.23 and $0.17, and
$0.14 respectively, on the grant date with the following weighted average
assumptions:

<TABLE>
<CAPTION>

                                                           Three months ended               Six months ended
                                                              December 31,                    December 31,
                                                       ----------------------------   -----------------------------
                                                               2004         2003           2004          2003
                                                       ----------------------------   -----------------------------
<S>                                                             <C>          <C>             <C>          <C>
Expected dividend yield                                         0            0%              0            0%
Risk-free interest rate                                   4.12% - 4.48%     4.5%       4.12% - 4.48%  3.5% - 4.5%
Expected life (in years)                                        10           10             10            10
                                                       ============================   =============================
Volatility                                                     1.5          1.5            1.5           1.5
                                                       ============================   =============================
</TABLE>

                                       5

<PAGE>

The Company accounts for non-employee stock-based awards in which goods or
services are the consideration received for the equity instruments issued based
on the fair value of the equity instruments issued in accordance with the EITF
96-18, Accounting For Equity Instruments That Are Issued To Other Than Employees
For Acquiring, or in Conjunction With Selling Goods or Services.

Income (loss) 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 (losses)
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 net loss per share is equal to basic net loss per share since all
potentially dilutive securities are anti-dilutive for each of the periods
presented with a net loss. Diluted net income (loss) per common share for the
three and six month periods ended December 31, 2004 and 2003 do not include the
effects of options to purchase approximately 1.2 million and 3.1 million shares
of common stock in 2004 and 2003, respectively, and approximately 1.1 million
shares of common stock in 2003 related to the note payable to AMASYS, on an "as
if" converted basis, since their inclusion would have an antidilutive effect.


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

There is no provision for income taxes for the six months ended December 31,
2004 due to the utilization of federal and state net operating loss
carryforwards.

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
        -----------------------------

In July 2003, the Company commenced negotiations with its landlord regarding the
proposed termination of the lease obligation at 4900 Seminary Road. On December
9, 2003, the Company and Plaza I-A executed a settlement agreement terminating
the subject lease and the above lawsuit was dismissed on or about December 17,
2003. The total remaining liability on the lease was approximately $2.6 million
prior to the settlement agreement. Pursuant to the terms of the settlement
agreement, the Company paid rent and legal fees of approximately $147,000 and
entered into a four-year note payable to Plaza I-A for $360,000, which is
secured by a $360,000 certificate-of-deposit-backed standby letter of credit
(Note 4).

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


                                       6
<PAGE>

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. The company denies the allegations and intends to
vigorously defend this action. Based upon events to date in the arbitration, the
company has accrued $80,000 in expenses as of December 31, 2004.

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, in connection with the lease termination discussed above (see
"Commitments and Contingencies"), the Company executed a four-year note payable
in the amount of $360,000 to Plaza I-A, effective November 1, 2003, with
interest payable monthly at 4% per annum and principal payments of $10,000 per
month, beginning January 1, 2005. The note is secured by a letter of credit
provided by Silicon Valley Bank (the "Bank"). The letter of credit is secured by
the Company's $360,000 certificate of deposit held by the Bank.

Also in December 2003, the Company entered into an Accounts Receivable Purchase
Agreement with the Bank (the "Financing Agreement"), which provides for a
revolving line of credit of up to $1 million collateralized by the Company's
accounts receivable. As of December 27, 2004, the Company entered into the
Second Amendment to the Accounts Receivable Purchase Agreement, dated as of
December 18, 2003, by and between the Bank and the Company. Under this Amended
Agreement, the applicable rates were lowered, certain covenants were amended and
the term was extended through the end of calendar 2005. At December 31, 2004,
$68,240 was due to the Bank related to advances under the Financing Agreement.

On December 9, 2003, the Company executed an amendment to the Amended,
Consolidated and Restated 10% Senior Subordinated Secured Note (the "Amended
Note"), payable to Amasys Corporation ("Amasys"), an affiliated company, (said
amendment the "Third Amendment") for the purpose of reducing the price at which
the Amended Note may be converted into common stock of the Company. Pursuant to
the Third Amendment, Amasys agreed to subordinate the Amended Note to both the
Company's note payable to its former landlord and to the Financing Agreement. In
consideration for these subordination agreements, the Company agreed to reduce
the conversion price stipulated in the Amended Note from the previously-stated
conversion price 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 December 31, 2004, the Amended Note had a
principal balance of $856,954.


                                       7

<PAGE>

Item 2.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                    ---------------------------------------
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

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-Q 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, 2004 filed with the Securities and Exchange
Commission on September 28, 2004, as amended and filed with the Securities and
Exchange Commission on October 28, 2004. Historical results and percentage
relationships among any amounts in the Consolidated Financial Statements are not
expected to be indicative of trends in operating results for any future period.


Forward-looking Statements

This Form 10-Q 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, as amended, for the year
ended June 30, 2004 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-Q, whether as a result of new information, future events or
circumstances or otherwise.



                                       8
<PAGE>

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

Comparison of the three months ended December 31, 2004, to the three months
---------------------------------------------------------------------------
ended December 31, 2003
-----------------------

During the three months ended December 31, 2004, we reported an operating profit
of  approximately  $159,000,  compared  to an  operating  loss of  approximately
$708,000  during the three  months ended  December  31, 2003.  We reported a net
profit of  approximately  $119,000  during the three months  ended  December 31,
2004,  compared to a net loss of  approximately  $1,035,000 for the three months
ended December 31, 2003. As discussed  below,  the  improvements in operating
and net income are due primarily to decreased operating expenses.

Revenues  consist  primarily of royalty  revenues and fees from the licensing of
content  products to  information  distributors.  During the three  months ended
December 31, 2004, total revenues were approximately $2,086,000 or approximately
$72,000 (4%) more than the total  revenues  for the three months ended  December
31, 2003. The increase is due to growth in database  customer revenue  partially
offset by a loss of clients as a result of business consolidations, primarily in
the Internet and personal investor markets.

Our cost of revenues consists primarily of content license fees and royalties to
information  providers,  depreciation and amortization expense on our production
software,  and data  communication  costs for the  delivery  of our  products to
customers. The cost of revenues for the three months ended December 31, 2004 was
approximately  $967,000  or  approximately  $52,000  (6%)  more than the cost of
revenues for the three months ended  December 31, 2003.  The increase in cost is
due to an increase in content  royalties  of  approximately  $80,000,  which was
offset by a  decrease  in  content  fixed fees of  approximately  $17,000  and a
decrease of approximately $15,000 in data transmission costs.

Gross  profit for the three months  ended  December  31, 2004 was  approximately
$1,119,000 or approximately $19,000 (2%) more than the gross profit for the same
period in the prior year.  The gross profit as a percentage of revenue  declined
for the  three  months  ended  December  31,  2004  to  approximately  54%  from
approximately  55% for the three months ended  December 31, 2003. The decline is
due to a net increase in content  royalty costs,  which was offset by a decrease
in data transmission costs and an increase in revenues, as discussed above.

Total operating expenses for the three months ended December 31, 2004 were
approximately $959,000 representing an approximate $848,000 (47%) decrease in
operating expenses from the three months ended December 31, 2003. The decrease
in expenses resulted from a decrease in technical operations support expenses, a
decrease in general and administrative expenses, a decrease in depreciation and
amortization expenses and partially offset by an increase in sales and marketing
expenses.  Moreover, in the second quarter of fiscal 2003, there was a $463,000
charge related to a settlement with the Company's former landlord and there was
no such expense this fiscal year.

Technical operations and support expenses during the three months ended December
31, 2004  decreased  approximately  $213,000  (39%) from the three  months ended
December  31,  2003.  The  decrease is  primarily  due to expenses  incurred for
outsourced  technology  services during the three months ended December 31, 2003
for technical consultants (to provide management,  systems  administration,  and
programming  services  and to move the  production  data  center to an  offsite,

                                       9

<PAGE>

hosted facility), and was partially offset by increases in personnel expenses in
the current period.

Sales and marketing expenses increased by approximately $14,000 (9%) for the
three months ended December 31, 2004 compared to the three months ended December
31, 2003. The increase is the result of increases in personnel and related
expenses over the same period in the prior year.

General and administrative expenses for the three months ended December 31, 2004
were  approximately  $109,000  (23%) less than these  expenses  during the three
months ended December 31, 2003. The decrease resulted  primarily from a decrease
in general  and  administrative  personnel  and related  expenses,  as well as a
decrease in rent  expense as a result of a  reduction  in leased  office  space.
During the quarter ended  December 31, 2003,  the company  settled with a former
landlord  and thereby  decreased  its leased  office  space from one location of
approximately  17,000 square feet to two locations totaling  approximately 5,000
square feet,  thereby  reducing its monthly  expense for leased  office space to
approximately $11,000 from approximately $40,000.

Stock-based compensation was approximately $24,000 during the three months ended
December 31, 2003 and was related to the vesting of warrants granted to a
consultant. There was no such activity during the same period in the current
year.

Depreciation and amortization expense for the three months ended December 31,
2004 was approximately $53,000 (40%) lower than the expense during the same
period in the prior year. The decrease was due primarily to the disposal of
assets related to the office move and the expenses associated with the move of
our data center to an offsite, hosted facility during the three months ended
December 31, 2003.

Other expense, net of other income, for the three months ended December 31, 2004
decreased approximately $287,000, or 88%, compared to the three months ended
December 31, 2003. This decrease was primarily due to the loss on disposal of
the assets associated with the office and data center move in 2003.


Comparison  of the six months ended  December 31, 2004,  to the six months ended
--------------------------------------------------------------------------------
December 31, 2003
-----------------

During the six months ended  December 31, 2004, we reported an operating  profit
of  approximately  $291,000,  compared  to an  operating  loss of  approximately
$936,000 during the six months ended December 31, 2003. We reported a net profit
of  approximately  $216,000  during  the six months  ended  December  31,  2004,
compared  to a net loss of  approximately  $1,287,000  for the six months  ended
December 31, 2003. As discussed below, the improvements in operating and net
income are due  primarily to  decreased  operating  expenses,  partially offset
by decreases in gross revenues and gross profit margins.

Revenues  consist  primarily of royalty  revenues and fees from the licensing of
content  products  to  information  distributors.  During the six  months  ended
December 31, 2004, total revenues were approximately $4,073,000 or approximately
$114,000 (3%) less than the total revenues for the six months ended December 31,
2003. The decrease in revenues is primarily due to a loss of clients as a result

                                       10
<PAGE>


of business  consolidations,  primarily in the  Internet  and personal  investor
markets, as well as reductions in our distributor  clients' royalty costs due to
a decline in their revenues.

Our cost of revenues consists primarily of content license fees and royalties to
information  providers,  depreciation and amortization expense on our production
software,  and data  communication  costs for the  delivery  of our  products to
customers.  The cost of revenues for the six months ended  December 31, 2004 was
approximately  $1,947,000 or  approximately  $100,000 (5%) more than the cost of
revenues for the six months ended December 31, 2003. The increase in cost is due
to an increase in content royalties of approximately $186,000,  which was offset
by a decrease in content fixed fees of  approximately  $50,000 and a decrease of
approximately $38,000 in data transmission costs.

Gross  profit for the six  months  ended  December  31,  2004 was  approximately
$2,126,000  or  approximately  $214,000  (9%) less than the gross profit for the
same  period in the prior  year.  The gross  profit as a  percentage  of revenue
declined for the six months ended  December 31, 2004 to  approximately  52% from
approximately 56% for the six months ended December 31, 2003. The decline is due
to a decrease in revenues and a net increase in content royalty costs, which was
offset by a decrease in data transmission costs as, discussed above.

Total operating expenses for the six months ended December 31, 2004 were
approximately $1,835,000 representing an approximate $1,441,000 (44%) decrease
in operating expenses from the six months ended December 31, 2003. The decrease
in expenses resulted from a decrease in technical operations support expenses, a
decrease in general and administrative expenses, a decrease in stock-based
compensation, and a decrease in depreciation and amortization expenses,
partially offset by an increase in sales and marketing expenses.  Moreover, in
six month period ended December 31, 2003, there was a $463,000 charge related to
a settlement with the Company's former landlord and there was no such expense
this fiscal year.

Technical  operations and support  expenses during the six months ended December
31,  2004  decreased  approximately  $488,000  (42%) from the six  months  ended
December  31,  2003.  The  decrease is  primarily  due to expenses  incurred for
outsourced technology services during the six months ended December 31, 2003 for
technical  consultants  (to  provide  management,  systems  administration,  and
programming  services  and to move the  production  data  center to an  offsite,
hosted facility), and was partially offset by increases in personnel expenses in
the current period.

Sales and marketing expenses increased by approximately $70,000 (29%) for the
six months ended December 31, 2004 compared to the six months ended December 31,
2003. The increase is the result of increases in personnel and related expenses
over the same period in the prior year.

General and  administrative  expenses for the six months ended December 31, 2004
were approximately $383,000 (36%) less than these expenses during the six months
ended December 31, 2003 due to decreases in general and administrative personnel
and  related  expenses  as well as a decrease  in rent  expense as a result of a
reduction in leased office space. During the six months ended December 31, 2003,
the company  settled with a former landlord and thereby reduced its leased space
from one location of approximately  17,000 square feet to two locations totaling
approximately 5,000 square feet, thereby reducing its monthly expense for leased
office space to approximately  $11,000 from  approximately  $40,000.  Additional
decreases  resulted  primarily from a decrease in personnel and recruiting costs
of  approximately  $36,000;  a decrease in  professional  and consulting fees of
approximately  $4,000; and a decrease in board of director fees of approximately
$16,000 due to a decrease in the number of meetings in the current period.

                                       11

<PAGE>

During the six months ended December 31, 2003, stock-based compensation of
approximately $52,000 consisted of $20,000 due to the conversion of an incentive
stock option to a non qualified stock option to a member of the Board of
Directors and $32,000 for the vesting of warrants granted to a consultant. There
was no such activity during the same period in the current year.

Depreciation and amortization expense for the six months ended December 31, 2004
was approximately $125,000 (44%) lower than the expense during the same period
in the prior year. The decrease was due primarily to the disposal of assets
related to the office move and the move of our data center to an off-site,
hosted facility during the six months ended December 31, 2003.

Other expense, net of other income, for the six months ended December 31, 2004
decreased approximately $275,000, or 79%, compared to the six months ended
December 31, 2003 mainly due to a loss on disposal of assets associated with the
office and data center in 2003.


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

For the six months  ended  December  31,  2004,  we had an  operating  profit of
approximately  $291,000 and a net profit of approximately  $216,000. At December
31, 2004, we had a working capital deficit of approximately $25,000, compared to
a working capital deficit of  approximately  $495,000 at June 30, 2004. We had a
net  stockholders'  deficiency of  approximately  $107,000 at December 31, 2004,
compared to a net  stockholders'  deficiency  at June 30, 2004 of  approximately
$323,000.  The decrease in stockholders'  deficiency is due to net income earned
during the six months ended December 31, 2004.

We had cash of approximately $810,000 at December 31, 2004, compared to $461,000
at June 30, 2004. For the six months ended December 31, 2004, operating
activities generated approximately $540,000 in cash.

We made capital  expenditures  of  approximately  $35,000  during the six months
ended December 31, 2004, primarily for computer and communications equipment for
new staff and product development.  Financing activities resulted in payments of
approximately  $157,000  made on  capital  leases and  repayment  of the Line of
Credit for Accounts  Receivable Purchase Agreement with Silicon Valley Bank (the
"Financing Agreement") described under Notes Payable above.

The Company's future contractual obligations and commitments as of December 31,
2004 are as follows:

<TABLE>
<CAPTION>

                                                           Amounts Due by Period
                            ------------------------------------------------------------------------------
                                                                                                2009
                                 2005           2006            2007            2008       and Thereafter
                            ------------------------------------------------------------------------------
<S>                         <C>            <C>             <C>             <C>             <C>
Operating Leases            $    63,720    $    80,731     $    23,865     $         -     $         -
Capital Leases                   17,129         20,219           6,834               -               -
Note Payable, Affiliate               -              -               -               -          856,954
Note Payable, Other              60,000        120,000         120,000          60,000
                            ------------------------------------------------------------------------------
   Total                    $   140,849    $   220,950     $   150,699     $    60,000     $    856,954
                            ==============================================================================
</TABLE>

                                       12
<PAGE>


Currently we are dependent on our cash reserves to fund operations; despite
making a profit for the quarter ended December 31, 2004, we incurred net losses
for the years ended June 30, 2004 and 2003 and our revenue base has been
declining. Assuming no immediate increase in revenue or an infusion of capital,
the Company is at risk of being unable to generate sufficient liquidity to meet
its obligations. The Company utilized and continues to utilize its Financing
Agreement 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 $648,000 for the six months ended
December 31, 2004 compared to EBITDA loss of approximately $402,000 for the six
months ended December 31, 2003. The increase in EBITDA during the six months
ended December 31, 2004 compared to the six-month period in the prior year is
the net result of reduced revenues, increased cost of revenues, and reduced
operating expenses. The table below shows the reconciliation from net income
(loss) to EBITDA.

<TABLE>
<CAPTION>

                                                                Six Months
                                                            Ended December 31,
                                                           2004            2003
                                                     --------------- ---------------
        Reconciliation to EBITDA:
<S>                                                  <C>             <C>
          Net Income (Loss)                          $        216    $     (1,287)
        Stock Based Compensation                                -              52
        Depreciation and Amortization                         357             483
        Interest/Other Expense                                 75             350
        Income Taxes                                            -               -
                                                     --------------- ---------------
        EBITDA                                       $        648    $       (402)

</TABLE>

EBITDA consists of earnings before 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.

                                       13

Item 3.
         QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
         ---------------------------------------------------------

         None.


Item 4.

         CONTROLS AND PROCEDURES
         -----------------------

         The Company's Chief Executive Officer and Controller have concluded,
 based on their evaluation within 90 days prior to the filing date of 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 in the Company's internal controls or in other factors that could
 significantly affect these controls subsequent to the date of the foregoing
 evaluation.


Part II. Other Information


 Item 1. Legal Proceedings

         In July 2003, the Company commenced negotiations with its former
landlord, Plaza I-A Associates ("Plaza I-A") regarding the proposed termination
of the lease obligation at 4900 Seminary Road, Alexandria, Virginia. As part of
the negotiations, on September 3, 2003, Plaza I-A filed a lawsuit in Alexandria
General District Court in the Commonwealth of Virginia for approximately $92,000
in unpaid rent and late fees through September 30, 2003.

         On December 9, 2003, the Company and Plaza I-A executed a settlement
agreement terminating the subject lease and the above lawsuit was dismissed on
or about December 17, 2003. The total remaining liability on the lease was
approximately $2.6 million prior to the settlement agreement. Pursuant to the
terms of the settlement agreement, the Company paid rent and legal fees of
approximately $147,000 and entered into a four-year note payable to Plaza I-A
for $360,000. Settlement expense with Plaza I-A for the nine months ended March
31, 2004 includes the $360,000 expense for the four-year note, approximately
$143,000 in commissions and legal fees, as well as an expense related to the
forfeiture of the Company's security deposit in the face amount of approximately
$62,000, partially offset by the recovery of deferred rent expense of
approximately $87,000.

         On April 15, 2004, the Company's former Chairman/CEO and President, who
both resigned on February 5, 2004, filed a


                                       14

<PAGE>

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. The
Company denies the allegations and intends to vigorously defend this action.
Based upon events to date in the arbitration, the Company has accrued $80,000 in
expenses as of December 31, 2004.

         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 and Reports on Form 8-K.

        (a)      Exhibits

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

        31.2   Certification of Chief Financial  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 Chief Financial  Officer pursuant to Section 906
               of the Sarbanes-Oxley Act of 2002.

        (b) Reports on Form 8-K

            None.


                                       15
<PAGE>


                                   SIGNATURES

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

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

February 14, 2005              By:  /S/   C.W. GILLULY
                                    ------------------
                                          C.W. Gilluly, Ed.D.
                                          Chairman and Interim
                                          Chief Executive Officer
                                          (Principal Executive Officer)

                               By:  /S/ HILDA KWENA
                                    ------------------
                                    Hilda Kwena
                                    Controller
                                    (Principal Financial and Accounting Officer)










                                      16