SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

________________

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~December~~September 3130, ~~2017~~2018

[ ] 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 0-26395

SALON MEDIA GROUP, INC.

(Exact name of Registrant as specified in its charter)

Delaware	94-3228750
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification Number)

870 Market Street

San Francisco, CA 94102

(Address of principal executive offices)

(415) 870-7566

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 Par Value

(Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Sections 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 [ X]

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes [ X ] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ [ ] Accelerated filer ☐ [ ] Non-accelerated filer ☐ [ ] Smaller reporting company [X] Emerging growth company ☐ [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ [ ]

Indicate by check mark whether the Registrant is a shell company as defined by Rule 12b-2 of the act. Yes [ ] No [X]

The number of outstanding shares of the Registrant's Common Stock, par value $0.001 per share, on ~~February~~June 1, ~~2018~~2019 was 151,056,477 shares.

FORM 10-Q

SALON MEDIA GROUP, INC.

INDEX

		Page Number
PART I	FINANCIAL INFORMATION	Page Number
PART I	FINANCIAL INFORMATION
ITEM 1:	Financial Statements
	Condensed Balance Sheets as of December 31, 2017 (unaudited) and March 31, 2017	3
	Condensed Balance Sheets as of September 30, 2018 (unaudited) and March 31, 2018	3
	Condensed Statements of Operations for the three months and nine months ended December 31, 2017 and 2016 (unaudited)	4
	Condensed Statements of Operations for the three months and six months ended September 30, 2018 and 2017 (unaudited)	4
	Condensed Statements of Cash Flows for the nine months ended December 31, 2017 and 2016 (unaudited)	5
	Condensed Statements of Stockholders’ Deficit for the three and six months ended September 30, 2018 and 2017 (unaudited)	5
	Notes to Condensed Financial Statements (unaudited)	6
	Condensed Statements of Cash Flows for the six months September 30, 2018 and 2017 (unaudited)	6
ITEM 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
	Notes to Condensed Financial Statements (unaudited)	7
ITEM 3:	Quantitative and Qualitative Disclosures About Market Risk	25
ITEM 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
ITEM 4:	Controls and Procedures	25
ITEM 3:	Quantitative and Qualitative Disclosures About Market Risk	29
ITEM 4:	Controls and Procedures	29
PART II	OTHER INFORMATION
ITEM 1:	Legal Proceedings	2630
ITEM 1A:	Risk Factors	26
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
ITEM 3.	Defaults upon Senior Securities	31
ITEM 3.	Defaults upon Senior Securities	36
ITEM 4.	Mine Safety and Disclosures	31
ITEM 4.	Mine Safety and Disclosures	36
ITEM 5.	Other Information	31
ITEM 5.	Other Information	36
ITEM 6:	Exhibits	33
ITEM 6:	Exhibits	36
	Signatures	34
	Signatures	38

PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


SALON MEDIA GROUP, INC.
CONDENSED BALANCE SHEETS
(in thousands, except share and par value amounts)

	December 31,			March 31,
	September 30,			March 31,
	2017			2017 (1)
	2018			2018 (1)
	(unaudited)
Assets
Current assets:
Cash	$	9963		$	~~183~~52
Accounts receivable, net of allowance of $15		~~772~~444			~~663~~433
Prepaid expenses and other current assets		7571			~~159~~65
Total current assets		~~946~~578			~~1,005~~550
Property and equipment, net		398			305
Property, software development and equipment, net		283			359
Other assets, principally deposits		38			3338
Total assets	$	~~1,382~~899		$	~~1,343~~947
Liabilities and Stockholders' Deficit
Liabilities and Stockholders’ Deficit
Current liabilities:
Short-term borrowings and accrued interest	$	1,~~424~~474		$	1,~~382~~439
Convertible promissory notes, net		~~336~~200			-200
Accounts payable		1,200			1,231
Convertible promissory notes – related party		645			535
Accrued liabilities		761			1,588
Unsecured advances – related party		115			-
Total current liabilities		3,721			4,201
Accounts payable		1,597			1,198
Deferred rent		-			58
Accrued liabilities		943			841
Total liabilities		3,721			4,259
Deferred Revenue		20			-
Commitments and contingencies (See Note 5)
Total current liabilities		4,994			4,213
Series A convertible preferred stock, $0.001 par value, 5,000,000 shares authorized, 0 and 1,427,229 shares issued and outstanding as of December 31, 2017 and March 31, 2017 (liquidation preference of $0 and $3,540 as of December 31, 2017 and March 31, 2017, respectively) (2)		-			6,862
Deferred rent		-			-
Total liabilities		4,994			4,213
Commitments and contingencies (See Note 7)
Stockholders’ deficit:
Series A convertible preferred stock, $0.001 par value, 5,000,000 shares authorized, 1,648,830 and 0 shares issued and outstanding as of December 31, 2017 and March 31, 2017 (liquidation preference of $4,089 and $0 as of December 31, 2017 and March 31, 2017, respectively)		7,412			-
Series A convertible preferred stock, $0.001 par value, 5,000,000 shares authorized, 1,648,830 shares issued and outstanding as of September 30, 2018 and March 31, 2018 (liquidation preference of $4,089 as of September 30, 2018 and March 31, 2018, respectively)		2			2
Common stock, $0.001 par value, 900,000,000 and 150,000,000 shares authorized as of December 31, 2017 and March 31, 2017, 151,056,477 shares issued and outstanding as of December 31, 2017 and 150,000,000 shares issued and outstanding as of March 31, 2017		151			150
Common stock, $0.001 par value, 900,000,000 shares authorized, 151,056,477 shares issued and outstanding as of September 30, 2018 and March 31, 2018		151			151
Additional paid-in capital		~~127~~135,~~141~~453			~~125~~134,~~053~~667
Accumulated deficit		(~~137~~139,~~043~~701	)		(~~134~~138,~~981~~086	)
Total stockholders' deficit		(24,~~339~~095	)		(93,~~778~~266	)
Total liabilities, mezzanine equity and stockholders' deficit	$	1,382		$	1,343
Total liabilities and stockholders' deficit	$	899		$	947

(1) Derived from the Company’s audited financial statements.

(2) Series A Mandatorily Convertible Preferred Stock at March 31, 2017 is classified as Mezzanine Equity, see Note 6.

The accompanying notes are an integral part of these condensed financial statements.

SALON MEDIA GROUP, INC.

CONDENSED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	Three Months Ended						~~Nine~~Six Months Ended
	December 31,						December 31,
	September 30,						September 30,
	2017			2016			2017			2016
	2018			2017			2018			2017
Revenues	$	~~1,247~~714		$	1,~~226~~160		$	31,~~868~~318		$	32,~~516~~621
Operating expenses:
Production and content		~~808~~565			1,~~152~~014			21,~~844~~207			32,~~093~~036
Sales and marketing		~~111~~-			~~209~~129			~~416~~-			~~708~~305
Technology		~~192~~136			~~283~~186			~~590~~300			~~890~~398
General and administrative		~~723~~592			~~562~~532			1,~~668~~346			~~1,498~~866
Total operating expenses		1,~~834~~293			21,~~206~~861			52,~~518~~853			63,~~189~~605
Loss from operations		(~~587~~579	)		(~~980~~701	)		(1,~~650~~535	)		(~~2,673~~984	)
Interest expense		(15	)		(12	)		(43	)		(34	)
Change in fair value of share based liability		-			(79	)		-			(79	)
Non-cash interest expense – beneficial conversion feature		(94	)		(4,420	)		(369	)		(4,420	)
Interest expense		(42	)		(14	)		(80	)		(28	)
Net loss		(696	)		(5,412	)		(2,062	)		(7,127	)
Non-cash interest expense – beneficial conversion feature		-			-			-			(275	)
Preferred deemed dividend		-			(860	)		-			(860	)
Net loss	$	(621	)	$	(794	)	$	(1,615	)	$	(1,366	)
Net loss attributable to common shareholders	$	(696	)	$	(6,272	)	$	(2,062	)	$	(7,987	)
Basic and diluted net loss per share	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.01	)
Basic and diluted net loss per share	$	(0.00	)	$	(0.06	)	$	(0.01	)	$	(0.09	)
Weighted average shares used in computing basic and diluted net loss per share		151,056			150,367			150,056			150,185
Weighted average shares used in computing basic and diluted net loss per share		151,056			113,938			150,476			88,859

The accompanying notes are an integral part of these ~~condensed~~ financial statements.

SALON MEDIA GROUP, INC. CONDENSED STATEMENTS OF ~~CASH~~STOCKHOLDERS’ ~~FLOWS~~DEFICIT (in thousands, except per share data) (unaudited)

	Nine Months Ended
	Three Months Ended September 30, 2018
	December 31,
	Preferred Stock						Common Stock				Additional Paid-In		Accumulated			Total Stockholders’
	2017			2016
	Shares			Amount			Shares		Amount		Capital		(Deficit)			Deficit
Cash flows from operating activities:
Balance, June 30, 2018		1,648,830		$	2			151,056,477	$	151	$	135,057	$	(139,080	)	$	(3,870	)
Net loss	$	(2,062	)	$	(7,127	)
Stock-based compensation		-			-			-		-		396		-			396
Adjustments to reconcile net loss to net cash used in operating activities:
Net loss		-			-			-		-		-		(621	)		(621	)
Loss from retirement of assets, net		5			-
Balance, September 30, 2018		1,648,830		$	2			151,056,477	$	151	$	135,453	$	(139,701	)	$	(4,095	)
Bad debt expense and change in allowance for doubtful accounts		6			(5	)
Depreciation		52			27
Stock-based compensation		880			412
Non-cash interest expense – beneficial conversion feature		369			4,420
Changes in operating assets and liabilities:
Accounts receivable		(115	)		560
Prepaid expenses and other current assets		79			37
Accounts payable, accrued liabilities and deferred rent		57			699
Net cash used in operating activities		(729	)		(977	)
Cash flows from investing activities:
Purchase of property and equipment		(150	)		(277	)
Net cash used in investing activities		(150	)		(277	)
Cash flows from financing activities:
Proceeds from convertible promissory notes		785			750
Proceeds from related party advances		40			450
Repayment of related party advances		(40	)		-
Net proceeds from issuance of common stock		10			2
Net cash provided by financing activities		795			1,202
Net decrease in cash		(84	)		(52	)
Cash, beginning of period		183			189
Cash, end of period	$	99		$	137
Supplemental schedule of non-cash financing activity:
Reclassification of stock options liability back to stockholders’ deficit	$	1,010		$	-
Conversion of convertible promissory note to common stock	$	275		$	-
Conversion of unsecured advances into preferred stock	$	-		$	2,688
Conversion of unsecured advances into common shares	$	-		$	5,653
Preferred deemed dividend in connection with preferred stock financing	$	-		$	860
Conversion of stock options to liabilities	$	-		$	818

	Three Months Ended September 30, 2017

	Preferred Stock				Common Stock				Additional Paid-In		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		(Deficit)			Deficit
Balance, June 30, 2017		-	$	-		150,000,000	$	150	$	125,328	$	(135,553	)	$	(10,075	)
Shares converted from convertible notes		1,648,830		2		-		-		7,135		-			7,137
Shares from options exercised		-		-		1,056,477		1		10		-			11
Stock-based compensation		-		-		-		-		353		-			353
Reclassification of options to liabilities		-		-		-		-		1,010		-			1,010
Net loss		-		-		-		-		-		(794	)		(794	)

Balance, September 30, 2017		1,648,830	$	2		151,056,477	$	151	$	133,836	$	(136,347	)	$	(2,358	)

	Six Months Ended September 30, 2018

	Preferred Stock				Common Stock				Additional Paid-In		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		(Deficit)			Deficit
Balance, March 31, 2018		1,648,830	$	2		151,056,477	$	151	$	134,667	$	(138,086	)	$	(3,266	)
Stock-based compensation		-		-		-		-		786		-			786
Net loss		-		-		-		-		-		(1,615	)		(1,615	)

Balance, September 30, 2018		1,648,830	$	2		151,056,477	$	151	$	135,453	$	(139,701	)	$	(4,095	)

	Six Months Ended September 30, 2017

	Preferred Stock				Common Stock				Additional Paid-In		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		(Deficit)			Deficit
Balance, March 31, 2017		-	$	-		150,000,000	$	150	$	125,053	$	(134,981	)	$	(9,778	)
Debt discount from convertible notes		-		-		-		-		275		-			275
Shares converted from convertible notes		1,648,830		2		-		-		7,135		-			7,137
Shares from options exercised		-		-		1,056,477		1		10		-			11
Stock-based compensation		-		-		-		-		353		-			353
Reclassification of options to liabilities		-		-		-		-		1,010		-			1,010
Net loss		-		-		-		-		-		(1,366	)		(1.366	)

Balance, September 30, 2017		1,648,830	$	2		151,056,477	$	151	$	133,836	$	(136,347	)	$	(2,358	)

The accompanying notes are an integral part of these condensed financial statements.

SALON MEDIA GROUP, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

	Six Months Ended
	September 30,
	2018			2017
Cash flows from operating activities:
Net loss	$	(1,615	)	$	(1,366	)

Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt expense and change in allowance for doubtful accounts		1			6
Depreciation		76			13
Stock-based compensation		786			353
Mark to market adjustment of options liability		-			79
Non-cash interest expense – beneficial conversion feature		-			275
Changes in operating assets and liabilities:
Accounts receivable		(12	)		279
Prepaid expenses and other current assets		(6	)		50
Accounts payable		399			237
Accrued liabilities		137			26
Deferred rent		-			(58	)
Deferred revenue		20			18
Net cash used in operating activities		(214	)		(88	)

Cash flows from investing activities:
Purchase of equipment and capitalized website development costs		-			(150	)
Net cash used in investing activities		-			(150	)

Cash flows from financing activities:
Proceeds from convertible promissory notes		-			275
Proceeds from convertible promissory notes – related party		110			-
Proceeds from unsecured advances – related party		115			-
Proceeds from related party advances		-			40
Repayments of related party advances		-			(40	)
Net proceeds from issuance of common stock		-			10
Net cash provided by financing activities		225			285

Net increase in cash		11			47
Cash, beginning of period		52			183
Cash, end of period	$	63		$	230

Amount paid for interest	$	-		$	-
Amount paid for taxes	$	-		$	-

Supplemental schedule of non-cash financing activity:
Reclassification of stock options liability back to stockholders’ deficit	$	-		$	1,010
Conversion of convertible promissory note to common stock	$	-		$	275

The accompanying notes are an integral part of these condensed financial statements.

SALON MEDIA GROUP, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(amounts in thousands, except share and per share data)

(unaudited)

1.	The Company and Significant Accounting Policies

The Company

Salon Media Group, Inc. (“Salon,” the “Company” or “We”) is an Internet media company that produces a content Website with various subject-specific sections. Salon was originally incorporated in July 1995 in the State of California and reincorporated in Delaware in June 1999. Salon operates in one business segment.

Basis of Presentation

These interim financial statements are unaudited and have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly Salon's financial position, results of operations and cash flows for the periods presented. These financial statements and related notes should be read in conjunction with the audited financial statements for the fiscal year ended March 31, ~~2017~~2018, which are included in Salon’s Annual Report on Form 10-K for the fiscal year ended March 31, ~~2017~~2018 filed with the Securities and Exchange Commission (“SEC”) on June 2310, ~~2017~~2019. Pursuant to the rules of the SEC, these financial statements do not include all disclosures required by generally accepted accounting principles (“GAAP”). The results for the ~~nine~~six months ended ~~December~~ 31September 30, ~~2017~~2018 are not necessarily indicative of the expected results for any other interim period or for the fiscal year ending March 31, ~~2018~~2019.

~~These~~Going financial statements contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. Salon has incurred losses and negative cash flows from operations since inception and had an accumulated deficit as of December 31, 2017 of $137,043. In addition, Salon expects to incur a net loss from operations for the fiscal year ending March 31, 2018. The Company has operated in the past principally with the assistance of interest-free advances from related parties, and more recently by financing rounds in fiscal years 2017 and 2018. The financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.Concern

~~Our~~These ~~operating~~financial ~~forecast~~statements ~~for~~contemplate the ~~remainder~~realization of ~~the~~assets ~~fiscal~~and ~~year~~the ~~ending March~~satisfaction ~~31,~~of ~~2018~~liabilities ~~anticipates~~in ~~smaller~~the ~~operating~~normal ~~losses~~course ~~than~~of ~~fiscal year 2017~~business. WeSalon ~~estimate~~has weincurred ~~will~~losses ~~require~~and ~~approximately~~negative ~~$0.3~~cash ~~million~~flows infrom ~~additional~~operations ~~funding~~since toinception ~~meet~~and ~~our~~had ~~operating~~an ~~needs~~accumulated ~~for~~deficit ~~the~~as ~~balance~~ of ~~our~~September ~~fiscal~~30, ~~year.~~2018 ~~Operating~~of ~~costs~~$139,701. ~~for~~In ~~the~~addition, ~~nine~~Salon ~~months~~expects ~~ended December~~to ~~31,~~incur ~~2017~~a ~~decreased~~net byloss ~~11%~~from ~~compared~~operations tofor the ~~same~~fiscal ~~period last~~ year, ~~reflecting~~ending ~~additional~~March ~~steps~~31, we2019. ~~have~~The ~~taken~~Company tohas ~~better~~operated ~~match~~in ~~our~~the ~~operating~~past ~~expense~~principally with ~~revenues.~~the ~~However,~~assistance weof ~~commenced~~interest-free ~~collective~~advances ~~bargaining~~from ~~with~~related ~~the~~parties, ~~Writers~~and ~~Guild~~more ofrecently ~~America,~~by ~~East,~~financing ~~Inc.~~rounds ~~(“WGAE”)~~ in ~~November~~ ~~2015,~~fiscal ~~and~~years ~~until~~2017 ~~the~~and ~~negotiations~~2018. ~~are~~The ~~finalized~~financial westatements ~~will~~do not ~~have~~include ~~a clear idea of~~ any ~~potential~~adjustments ~~increase~~relating into ~~our~~the ~~budget. If~~recoverability ~~planned~~and ~~revenues~~classification ~~continue~~of toasset beamounts ~~less~~or ~~than~~the ~~expected,~~amounts orand ifclassification ~~planned~~of ~~expenses~~liabilities ~~are~~that ~~more~~might ~~than~~be ~~expected,~~necessary ~~the~~should ~~cash~~we ~~shortfall may~~ be ~~higher,~~unable ~~which~~to ~~will~~continue ~~result~~as in a ~~commensurate~~going ~~increase in required financing~~concern.

~~Cash~~Our operating forecast for the remainder of the fiscal year ending March 31, 2019 anticipates smaller operating losses than fiscal year 2018. We estimate we will require approximately $0.5 million in additional funding to meet our operating needs for the balance of our fiscal year. Operating costs for the six months ended September 30, 2018 decreased by 17% compared to the same period last year, reflecting additional steps we have taken to better match our operating expense with revenues. However, we commenced collective bargaining with the Writers Guild of America, East, Inc. (“WGAE”) in November 2015, and until the negotiations are finalized we will not have a clear idea of any potential increase in our budget. If planned revenues continue to be less than expected, or if planned expenses are more than expected, the cash shortfall may be higher, which will result in a commensurate increase in required financing.

~~Cash consists of cash on deposit with banks and have original maturities of three months or less.~~7

SALON MEDIA GROUP, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(amounts in thousands, except share and per share data)

(unaudited)

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on deposit with banks and have original maturities of three months or less.

Concentration of Credit Risk

Financial instruments that potentially subject Salon to concentrations of credit risk consist primarily of trade accounts receivable. Salon performs ongoing credit evaluations of its customers, but does not require collateral. Salon provides an allowance for credit losses that it periodically adjusts to reflect management’s expectations of future losses.

~~Two~~Three customers accounted for approximately 3212%, 11% and 11% of revenues for the three months ended ~~December~~ 31September 30, ~~2017~~2018. ~~Four~~One ~~customers~~customer accounted for approximately 2754%, ~~17%, 13% and 11%~~ of revenues for the three months ended ~~December~~ 31September 30, ~~2016~~2017. ~~One~~Two ~~customer~~customers accounted for approximately 4712% and 11% of revenues for the ~~nine~~six months ended ~~December~~ 31September 30, ~~2017~~2018. ~~One~~Two ~~customer~~customers accounted for approximately 2554% and 10% of revenues for the ~~nine~~six months ended ~~December~~ 31September 30, ~~2016~~2017. ~~Four~~Two customers accounted for approximately ~~24%, 14%,~~ 13% and 1110% of trade accounts receivable as of ~~December~~ 31September 30, ~~2017~~2018. Three customers accounted for approximately 3516%, 1812% and 1510% of trade accounts receivable as of March 31, ~~2017~~2018.

Stock-Based Compensation

Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is the vesting period. Salon uses the Black-Scholes option-pricing model to determine the fair-value of stock-based awards. Salon recognizes compensation cost related to options granted on a straight-line basis over the applicable vesting period.

Reclassifications

Certain reclassifications, not affecting previously reported net income or loss or total assets, have been made to the previously issued financial statements to conform to the current period presentation.

~~Recently Issued Accounting Pronouncements~~8

In July 2017, the Financial Accounting Standards Board (“FASB”) issued a two-part Accounting Standards Update (“ASU”) 2017-11, “Earnings Per Share (Topic 260).” Part I addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Part II does not require any transition guidance because those amendments do not have an accounting effect. ASU 2017-11 is effective for public entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. We do not expect the adoption of this accounting standard to have a material impact on our financial position, results of operations, cash flows, or presentation thereof.

In February 2017, the FASB issued ASU 2017-05, “Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Topic 610-20)”, which clarifies the scope and application of ASC Topic 610-20 on accounting for the sale or transfer of nonfinancial assets, that is assets with physical value such as real estate, equipment, intangibles or similar property. ASU 2017-05 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. We do not expect the adoption of this accounting standard to have a material impact on our financial position, results of operations, cash flows, or presentation thereof.

SALON MEDIA GROUP, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(amounts in thousands, except share and per share data)

(unaudited)

~~In January~~Accounting ~~2017,~~Standards ~~the~~Not ~~FASB~~Yet issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which eliminates the requirement to calculate the implied fair value of goodwill in Step 2 of the goodwill impairment test. Under ASU 2017-04, goodwill impairment charges will be based on the excess of a reporting unit’s carrying amount over its fair value as determined in Step 1 of the testing. ASU 2017-04 is effective for interim and annual testing dates after January 1, 2019, with early adoption permitted for interim and annual goodwill impairment testing dates after January 1, 2017. We do not expect the adoption of this accounting standard to have a material impact on our financial position, results of operations, cash flows, or presentation thereof.Adopted

In ~~January~~ July 2017, the Financial Accounting Standards Board (“FASB”) issued a two-part Accounting Standards Update (“ASU”) 2017-0111, “~~Business~~Earnings ~~Combinations~~Per –Share ~~Clarifying~~(Topic 260).” Part I addresses the ~~Definition~~complexity of aaccounting ~~Business,”~~for ~~which~~certain ~~clarifies~~financial ~~the~~instruments ~~definition~~with down round features. Down round features are features of acertain ~~business~~equity-linked ~~for~~instruments ~~determining~~(or ~~whether~~embedded ~~transactions~~features) ~~should~~that beresult ~~accounted~~in ~~for~~the asstrike ~~acquisitions~~price orbeing ~~disposals~~reduced on the basis of ~~assets~~the orpricing ~~businesses~~of future equity offerings. Part II does not require any transition guidance because those amendments do not have an accounting effect. ASU 2017-0111 is effective for ~~fiscal~~public ~~years~~entities ~~beginning~~for ~~after December~~fiscal 15years, ~~2018,~~ and for interim periods within those fiscal years, ~~with~~beginning ~~early~~after December 15, 2018. Early adoption is permitted. We do not expect the adoption of ~~ASU~~this ~~2017-01~~accounting standard to have a material impact on our financial ~~position,~~statements ~~results~~as ofour ~~operations,~~agreements ~~cash~~with ~~flows,~~noteholders orcontaining ~~presentation~~equity ~~thereof~~linked instruments do not include down round provisions.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU modifies the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. ASU No. 2016-13 will be effective for the Company as of January 1, 2020. The Company is currently reviewing the impact of this new guidance ~~and does not believe adoption will have a material impact~~ on ~~its~~our condensed financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases” ~~intended~~(Topic 842). The main objective of this update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Topic ~~Under~~842 ~~the~~was ~~new~~subsequently ~~guidance,~~amended ~~lessees~~by ~~will~~ASU beNo. ~~required to recognize a right~~2018-~~of-use asset and a lease liability~~01, ~~measured~~Land onEasement aPractical ~~discounted~~Expedient ~~basis, at the commencement date~~ for ~~all~~Transition ~~leases~~to ~~with~~Topic ~~terms~~842; ~~greater~~ASU ~~than twelve months~~No. ~~Additionally~~2018-10, ~~this~~Codification ~~guidance~~Improvements ~~will require disclosures~~ to ~~help~~Topic ~~investors and other financial statement users to better understand the amount~~842, ~~timing,~~Leases; and ~~uncertainty~~ASU ofNo. ~~cash flows arising from leases~~2018-11, ~~including~~Targeted ~~qualitative and quantitative requirements~~Improvements. The ~~guidance~~new ~~should~~standard beestablishes ~~applied under~~ a ~~modified~~right-of-use ~~retrospective~~model ~~transition~~(“ROU”) ~~approach~~that ~~for~~requires ~~leases~~a ~~existing~~lessee atto ~~the~~recognize ~~beginning~~a ofROU ~~the~~asset ~~earliest~~and ~~comparative~~lease ~~period~~liability ~~presented~~on in the ~~adoption-period~~balance ~~financial~~sheet ~~statements.~~for ~~Any~~all leases ~~that~~with ~~expire~~a ~~before~~term ~~the~~longer ~~initial~~than ~~application~~12 ~~date will not require any accounting adjustment~~months. ~~This~~Leases ~~guidance~~will isbe ~~effective~~classified ~~for~~as ~~annual~~finance ~~reporting~~or ~~periods beginning after December 15~~operating, ~~2018, including interim periods within those annual periods,~~ with ~~early~~classification ~~adoption~~affecting ~~permitted. The Company is evaluating~~ the ~~full~~pattern ~~impact~~and ~~this~~classification ~~guidance~~of ~~will~~expense ~~have~~recognition onin ~~its~~the ~~financial~~income ~~statements~~statement.

~~In May~~This ~~2014~~ASU ~~(and~~is ~~subsequently~~effective ~~updated~~for ~~with clarifying standard),~~ the ~~FASB~~Company ~~issued~~on ~~2014-09~~April ~~“Revenue~~1, ~~from~~2019. We ~~Contracts~~expect ~~with Customers” related~~ to ~~new~~adopt ~~accounting requirements for~~ the ~~recognition~~new ofstandard ~~revenue~~on ~~from~~its ~~contracts~~effective ~~with customers~~date. ~~The~~A ~~core~~modified ~~principle~~retrospective oftransition ~~the~~approach ~~guidance~~ is ~~that~~required, anapplying ~~entity should recognize revenue to depict~~ the ~~transfer~~new ofstandard ~~promised goods or services~~ to ~~customers~~all inleases anexisting ~~amount~~at ~~that reflects~~ the ~~consideration~~date toof ~~which~~initial ~~the~~application. An entity ~~expects~~may tochoose ~~be entitled~~ to inuse ~~exchange~~either ~~for~~(1) ~~the~~its ~~goods~~effective date or ~~services.~~(2) ~~Subsequent to~~ the ~~release~~beginning of ~~this guidance,~~ the ~~FASB~~earliest ~~has~~comparative ~~issued~~period ~~additional~~presented ~~updates~~in ~~intended~~the tofinancial ~~provide~~statements ~~interpretive~~as ~~clarifications~~its ~~and~~date toof ~~reduce~~initial ~~the~~application. ~~cost~~We ~~and~~expect ~~complexity~~to ofadopt ~~applying~~ the new ~~revenue recognition~~ standard ~~both at transition and~~ on anApril ~~ongoing~~1, ~~basis.~~2019 ~~The new standard~~ and ~~related~~use ~~amendments~~the ~~are~~ effective ~~for~~date ~~annual~~as ~~reporting~~our ~~periods~~date ~~beginning~~of ~~after December~~initial ~~15,~~application. ~~2017~~Consequently, ~~and~~financial ~~interim~~information ~~periods.~~will ~~The~~not ~~Company~~be ~~expects~~updated toand ~~adopt~~the ~~this~~disclosures ~~standard~~required inunder the ~~first~~new ~~quarter~~standard ofwill ~~fiscal year 2019 and does~~ not ~~expect~~be itprovided tofor ~~have~~dates aand ~~material~~periods ~~impact~~before onApril ~~our financial position~~1, ~~results of operation, cash flow, or presentation thereof~~2019.

8The new standard provides a number of optional practical expedients in transition. We expect to elect the ‘package of practical expedients’, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We do not expect to elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to us.

SALON MEDIA GROUP, INC.

NOTES TO ONDENSED FINANCIAL STATEMENTS

(amounts in thousands, except share and per share data)

(unaudited)

2. Borrowing Agreements

Short-term Borrowings

In May 2007, Salon entered into a borrowing agreement with Deutsche Bank Securities, Inc. that allows Salon to borrow up to $1,000, plus accrued interest, at a rate of prime less 0.25%. In September 2016, this credit agreement was transferred to Raymond James and Associates, Inc. (“Raymond James”) after Deutsche Bank Securities, Inc. sold its accounts. The agreement is guaranteed in its entirety by Salon’s former Chairman, John Warnock. The line of credit has been fully drawn as of December 31, 2017. Raymond James may demand repayment of amounts borrowed at any time. Additionally, Mr. Warnock may also choose to terminate his guarantee, which would trigger a demand for repayment. As of December 31, 2017 and March 31, 2017, accrued interest on short-term borrowings totaled approximately $424 and $382, respectively.

As of December 31, 2017 and March 31, 2017, the weighted average interest rate on the Company’s short-term borrowings remained constant at approximately 3.5%.

Convertible Promissory Notes

During the nine months ended December 31, 2017, we issued $275 in interest-free demand promissory notes that were converted into 221,601 shares of Salon’s Series A Mandatorily Convertible Voting Preferred Stock (the “Series A Preferred Stock”). These 221,601 shares of Series A Preferred Stock will automatically convert into 22.16 million shares of Common Stock upon the filing with the Secretary of State of the State of Delaware of the Certificate of Amendment of Restated Certificate of Incorporation (the “Amendment”), which occurred on August 1, 2017 and increased the number of authorized shares of Common Stock, and the future delivery to the Company’s stockholders of an information statement, pursuant to the Purchase Agreement.

Additionally, $275 of the issued demand promissory notes contained a conversion price that is deemed beneficial to the holders of the notes. Accordingly, the Company recorded non-cash interest expense aggregating $275 for the additional value of the beneficial conversion feature during the nine months ended December 31, 2017 with an offsetting entry to Additional Paid-in Capital.

During the three months ended December 31, 2017, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with each of Spear Point Capital Fund, LP, Erika Tanenbaum, Hilary Tanenbaum, Eu Revocable Trust, TEC Opportunities, and Jordan Hoffner (each a “Bridge Note Purchaser”) pursuant to which the Company sold to the Bridge Note Purchasers an aggregate principal amount of $510 in mandatorily convertible notes. The notes have a one-year maturity and bear a 10% interest rate. The notes will convert at a discount into shares of Common Stock upon a qualified financing by the Company of at least $1 million. In the event of no conversion, the notes are payable in cash or convert into a number of shares of common stock of the Company, rounded down to the nearest whole share based on the Company’s as diluted price per share on the maturity date. The conversion price will equal to 70% of the price per share paid in the qualified financing if such financing occurs within four months from the date of the Securities Purchase Agreement, or 70% less 2% per each month after the fourth month anniversary; provided however that the Conversion Price will never be less than the greater of (A) sixty percent (60%) of the purchase price paid in the qualified financing and (B) the price per share paid by investors in the most recently consummated offerings of the Company’s common stock, or $0.0124 per share, the conversion price in the Series A Mandatorily Convertible Preferred Private Placement, if the financing occurs more than four months after the date of the Securities Purchase Agreement.

SALON MEDIA GROUP, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(amounts in thousands, except share and per share data)

(unaudited)

~~The~~While ~~Company~~we ~~recorded~~continue ato ~~beneficial~~assess ~~conversion~~all ~~feature~~of ~~based~~the oneffects ~~the~~of ~~above~~adoption, ~~conversion~~we ~~rate~~currently ~~that~~believe isthe most ~~beneficial~~significant effects relate to (1) the ~~holders~~recognition of ~~the~~new ~~notes~~ROU assets and lease liabilities on our balance sheet for our real estate operating leases and (2) providing significant new disclosures for our leasing activities. ~~Accordingly~~While we continue to assess our contracts, ~~the~~we ~~Company~~do ~~recorded~~not expect a ~~debt~~significant ~~discount~~change ofin ~~$268~~our ~~with~~leasing ~~corresponding~~activities ~~amortization~~between ofnow ~~$94,~~and ~~netting~~adoption. The new standard also provides practical expedients for an ~~aggregate~~entity’s ~~principal~~ongoing ~~amount~~accounting. We currently expect to elect the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, we will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of ~~$336~~those assets in ~~mandatorily~~transition. ~~convertible~~We ~~notes~~also ~~for~~currently expect to elect the ~~nine~~practical ~~months~~expedient ~~ended December~~to ~~31,~~not ~~2017~~separate lease and non-lease components for all of our leases.

~~Advances~~Accounting ~~from~~Standards ~~Related Parties~~Adopted

~~During~~In ~~each~~May of2014 ~~the~~(and ~~nine~~subsequently ~~months~~updated ~~ended December~~with 31clarifying standard), ~~2017~~the ~~and December~~FASB ~~31,~~issued ~~2016,~~2014-09 “Revenue from Contracts with Customers” related to new accounting requirements for the ~~Company~~recognition ~~received~~of revenue from ~~John~~contracts ~~Warnock~~with $0customers. The ~~and~~core ~~$350,~~principle ~~respectively,~~of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in ~~unsecured,~~an ~~interest-free~~amount ~~cash~~that ~~advances~~reflects asthe ~~working~~consideration ~~capital~~to which the entity expects to ~~fund~~be ~~operations~~entitled to in exchange for the goods or services. AsSubsequent to the release of ~~March~~ ~~31,~~this ~~2017~~guidance, ~~all~~the ~~outstanding~~FASB ~~advances~~has ~~were~~issued ~~exchanged~~additional ~~into~~updates ~~shares~~intended to provide interpretive clarifications and to reduce the cost and complexity of ~~Common~~applying ~~Stock~~the new revenue recognition standard both at transition and on an ongoing basis. The new revenue standard may be applied retrospectively to each period presented or ~~shares~~modified retrospectively with the cumulative effect recognized as of ~~Series~~the Adate ~~Preferred~~of ~~Stock~~adoption. The Company adopted the new revenue recognition standard on April 1, 2018, using the modified retrospective transition method.

~~On September~~The ~~26,~~cumulative ~~2017,~~impact ~~the~~of ~~Company~~adopting ~~received~~this ~~from~~new ~~Jordan~~standard ~~Hoffner,~~was ~~the~~immaterial ~~Company’s~~and ~~Chief~~no ~~Executive~~adjustments ~~Officer~~to ~~(“CEO”),~~the ~~$40~~opening inbalance aof ~~short-term,~~retained ~~unsecured,~~earnings ~~interest-free~~were ~~cash~~recorded. The ~~advance~~implementation asdid ~~working~~not ~~capital~~have toa ~~fund~~material ~~operations.~~impact ~~This~~on ~~advance~~the ~~was~~Company’s ~~repaid~~condensed ~~on September~~financial ~~29, 2017~~statements.

3.ASC ~~Employee~~606 ~~Stock~~outlines ~~Option~~a ~~Plans~~five-step process for recognizing revenue from contracts with customers: i) identify the contract with the customer, ii) identify the performance obligations in the contract, (iii) determine the transaction price, iv) allocate the transaction price to the separate performance obligations in the contract, and (v) recognize revenue associated with the performance obligations as they are satisfied.

~~Salon~~The Company only applies the five-step model to contracts ~~has~~when ~~two~~it ~~stock~~is ~~option~~probable ~~plans~~that ~~approved~~the byCompany ~~stockholders:~~will collect the ~~Salon~~consideration ~~Media~~it ~~Group,~~is ~~Inc.~~entitled ~~2004~~to ~~Stock~~in ~~Plan~~exchange ~~(the~~for ~~“2004~~services ~~Stock~~it ~~Plan”)~~transfers ~~and~~to the ~~Salon~~customer. ~~Media~~Once ~~Group,~~a ~~Inc.~~contract ~~2014~~is ~~Stock~~determined ~~Incentive~~to ~~Plan~~be (within the ~~“2014~~scope ~~Stock~~of ~~Incentive~~ASC ~~Plan”)~~606, asthe ~~described~~Company indetermines ~~Note~~the 7,performance ~~“Employee~~obligations ~~Stock~~that ~~Option~~are ~~Plans,”~~distinct. The Company recognizes as revenues the amount of the ~~notes~~transaction price that is allocated to ~~financial~~each ~~statements~~respective inperformance ~~Salon’s~~obligation ~~Annual~~when ~~Report~~the onperformance ~~Form~~obligation ~~10-K~~is ~~for~~satisfied ~~the~~or ~~fiscal~~as ~~year~~it ~~ended March~~is 31satisfied. Generally, ~~2017.~~the ~~The~~Company's ~~2004~~performance ~~Stock~~obligations ~~Plan~~are ~~expired~~transferred to customers at a point in ~~November~~ ~~2014~~time, ~~after~~typically ~~which~~upon noreceipt ~~further~~of ~~options~~the ~~were~~services ~~permitted~~by tothe ~~be granted~~customer.

~~Salon~~See ~~has granted options pursuant to plans not approved (~~“~~Non-Plan~~Revenue Recognition”) by shareholders. On June 9, 2016, we granted to our CEO an option to purchase 12,654,318 shares of Common Stock pursuant to the terms and conditions of the Salon Media Group, Inc. Non Plan Stock Option agreement, with vesting in ~~equal~~Note ~~monthly~~2 ~~installments~~for ~~over~~additional adiscussion ~~four-year period commencing with the grant date. On September 6, 2017, we granted to our CEO and to each member~~ of our ~~board~~revenue ofrecognition ~~directors~~accounting ~~(the~~policies ~~“Board”) an option to purchase 31,260,505~~ and ~~5,384,615~~expanded ~~shares of Common Stock, respectively~~disclosures.

During the nine months ended December 31, 2017, we granted options to all employees of the Company to acquire a total of 7,711,418 shares under the 2014 Stock Incentive Plan. The fair value of each option grant (2014 Stock Incentive Plan and Non-Plan) was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions and fair value per share:

	Nine months ended December 31,
	2017				2016
Risk-free interest rates		1.75	–	2.05%		1.10	–	1.15%
Expected lives (in years)		5.7	–	6.3		4.0	–	6.3
Expected volatility			453%				393%
Dividend yield			0%				0%

We applied the expected term of 6.3 years during the nine months ended December 31, 2017, to more appropriately estimate expectations of exercise behavior of the options. The expected stock price volatility is based on historical volatility of Salon’s stock over a period equal to the expected term of the options. The risk-free interest rate is based on the implied yield available on U.S. Treasury securities with a term equivalent to the service period of the stock options. We have not paid dividends in the past.

SALON MEDIA GROUP, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(amounts in thousands, except share and per share data)

(unaudited)

~~As of December 31, 2017, the aggregate stock compensation remaining to be amortized to expense was $4,697~~2. Revenue Salon expects this stock-based compensation balance to be amortized as follows: $340 during the remainder of fiscal year 2018; $1,400 during fiscal year 2019; $1,409 during fiscal year 2020; $1,116 during fiscal year 2021; and $432 during fiscal year 2022. The expected amortization reflects only outstanding stock option awards as of December 31, 2017.Recognition

~~Due~~Salon’s advertising revenue is principally dependent on the number of visits to ~~insufficient~~our ~~authorized~~Website ~~shares~~and the corresponding advertisement unit rates. Articles, videos and other forms of ~~Common~~content ~~Stock~~generate asadvertising revenue from a diverse mix of ~~November~~ ~~14,~~advertising ~~2016~~methods including display advertisements, ~~the~~where ~~vested~~revenue ~~options~~is asdependent upon the number of ~~November~~ 14advertising impressions delivered; pre-roll video advertisements, ~~2016~~where ~~with~~revenue ais ~~fair~~dependent ~~value~~on the number of ~~$818~~video views; native advertisements, ~~were~~which ~~reclassified~~are ~~from~~advertisements ~~equity~~created to ~~liabilities~~match the form and ~~re-measured~~function atof ~~fair~~the ~~value~~platform on which they appear and ~~presented~~sponsored ~~under~~content, ~~accrued~~in ~~liabilities~~which advertisers pay for adjacency to specific content. In ~~The~~the ~~balance~~past oftwo ~~this~~years, ~~option~~industry ~~liability~~trends ~~was~~have ~~$931~~shifted astoward increased use of ~~March~~ ~~31,~~agency ~~2017,~~and ~~respectively~~software-based approaches to buying online advertising. As ~~The~~a ~~Amendment~~result, ~~was~~we ~~filed~~have re-focused our advertising sales to rely on ~~August~~ 1,the ~~2017,~~rapidly ~~after~~growing programmatic advertising business in which ~~the~~we ~~$1,010~~directly ~~option~~sell ~~liability~~audience ~~was~~packages ~~reclassified~~based ~~back~~on real-time advertising demand and engage third-party agencies to ~~equity~~sell ~~during~~advertisement ~~the~~on ~~quarter~~our ~~ended September~~Website ~~30,~~through ~~2017~~programmatic advertising open marketplaces, ~~upon~~and ~~the~~we ~~resulting~~place ~~increased~~less ~~authorization~~emphasis ofon ~~shares~~a oftraditional ~~Common~~media ~~Stock~~sales efforts.

~~The~~Salon’s ~~following~~revenues ~~table~~are ~~summarizes~~primarily ~~activities~~from ~~under~~the sale of advertising space on its Website. Salon’s ~~plans~~recognizes ~~for~~revenue once persuasive evidence of an arrangement exists, the ~~nine~~fee ~~months~~is ~~ended December~~fixed 31or determinable, ~~2017:~~delivery has occurred, and collectability is reasonably assured. Revenues are recognized ratably over the period over in which Salon’s obligations to deliver advertisement impressions are fulfilled. Payments received before Salon’s obligations are fulfilled are classified as “deferred revenue” in Salon’s balance sheets.

				Weighted-
	Outstanding			Average		Aggregate
	Stock			Exercise		Intrinsic
	Options			Price		Value
Balance as of April 1, 2017		19,177,000		$	0.21	$	223
Granted		44,356,000		$	0.13
Exercised		(1,056,000	)	$	0.01
Expired and forfeited		(3,957,000	)	$	0.15
Outstanding at December 31, 2017		58,520,000		$	0.16	$	3,068
Exercisable as of December 31, 2017		8,519,000		$	0.20	$	1,518
Vested and expected to vest as of December 31, 2017		54,229,000		$	0.16	$	2,284

Advertisement sales agreements are generally short-term agreements, usually less than ninety days, and frequently have cancellation clauses. Revenues derived from such arrangements are recognized during the period the advertising space is provided, as long as no significant obligations remain at the end of the period. Salon’s obligations may include the guarantee of a minimum number of times that an advertisement appears in a page viewed by a visitor to Salon’s Website. To the extent the minimum guaranteed amounts are not delivered, Salon defers recognition of the corresponding revenue until the remaining guaranteed amounts are achieved, if mutually agreeable with an advertiser. If these “make good” impressions are not agreeable to an advertiser, no further revenue is recognized.

~~Options~~The todetermination ~~purchase~~of ~~44,356,538~~whether ~~shares~~revenue ofshould ~~Common~~be ~~Stock~~reported ~~and~~on ~~12,955,218~~a ~~shares~~gross ofor ~~Common~~net ~~Stock~~basis ~~were~~is ~~awarded~~based ~~during~~on an assessment of whether the ~~nine~~Company ~~months~~acts ~~ended December~~as ~~31,~~a ~~2017~~principal ~~and December~~or 31an agent in the transaction. In certain cases, ~~2016~~the Company is considered the agent, ~~respectively.~~and ~~The~~the ~~weighted-average~~Company ~~fair~~records ~~value~~revenue ofequal ~~options~~to ~~granted~~the ~~during~~net ~~each~~amount ofretained when the ~~nine~~fee ~~months~~is ~~ended December~~earned. In 31these cases, ~~2017~~costs ~~and December~~incurred ~~31,~~with ~~2016~~third-party ~~was~~suppliers ~~$0.13~~are ~~per~~excluded ~~share~~from ~~and~~the $0Company’s revenue.23 The ~~per~~Company ~~share,~~assesses ~~respectively.~~whether ~~The~~it ~~weighted~~or the third-~~average~~party ~~fair~~supplier ~~value~~is ofthe ~~options~~primary ~~vested~~obligor ~~during~~and ~~each~~evaluates the terms of ~~the~~its ~~nine~~customer ~~months~~arrangements ~~ended December~~as ~~31,~~part ~~2017~~of ~~and December~~this 31assessment. In addition, ~~2016~~the ~~was~~Company ~~$0.18~~considers ~~per~~other ~~share~~key ~~and~~indicators ~~$0.22~~such ~~per~~as ~~share,~~latitude ~~respectively.~~in Aestablishing ~~total~~price, ofinventory 1risk,~~056,477~~ ~~options~~nature ~~were~~of ~~exercised~~services ~~during~~performed, ~~the~~discretion ~~nine~~in ~~months~~supplier ~~ended December~~selection ~~31,~~and ~~2017~~credit risk.

Our Board also approved a resolution on June 12, 2014 to amend the 2014 Stock Incentive Plan to comply with certain California Code of Regulations and Internal Revenue Service regulations. As of December 31, 2017, options totaling 10,459,985 were awarded under the 2014 Stock Incentive Plan.

We recognized stock-based compensation expense of $880 and $412 during the nine months ended December 31, 2017 and 2016, respectively.

SALON MEDIA GROUP, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(amounts in thousands, except share and per share data)

(unaudited)

~~4. Net~~Our ~~Loss~~total ~~Per~~revenue ~~Share~~and ~~Attributable~~the tosources ~~Common~~thereof ~~Shareholders~~for the three and six months ended September 30, 2018 and 2017 were as follows (in thousands):

Basic net loss per share is computed using the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed using the weighted-average number of common and common stock equivalents outstanding during the period, as follows:

	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Advertising	$	565	$	988	$	1,029	$	2,201
Subscription Program		4		-		7		-
Referral and Other		145		172		282		420
Total	$	714	$	1,160	$	1,318	$	2,621

	Three Months Ended						Nine Months Ended
	December 31,						December 31,
	2017			2016			2017			2016
Numerator:
Net loss	$	(696	)	$	(6,272	)	$	(2,062	)	$	(7,987	)
Denominator:
Weighted average shares used in computing basic and diluted net loss per share		151,056,000			113,938,000			150,476,000			88,859,000
Basic and diluted net loss per share	$	(0.00	)	$	(0.06	)	$	(0.01	)	$	(0.09	)
Antidilutive securities including options and preferred stock not included in net loss per share calculation		223,403,000			116,388,000			223,403,000			116,388,000

3. Borrowing Agreements

~~5. Commitments~~Short-term ~~and Contingencies~~Borrowings

~~On October~~In ~~17,~~May ~~2017~~2007, Salon ~~signed~~entered into a ~~two-year~~borrowing ~~office~~agreement ~~lease~~with ~~agreement~~Deutsche ~~for~~Bank ~~its~~Securities, ~~San~~Inc. ~~Francisco~~that ~~headquarters~~allows atSalon ~~870~~to ~~Market~~borrow ~~Street~~up to $1,000, ~~San~~plus ~~Francisco~~accrued interest, ~~California~~at a rate of prime less 0.25%. ~~The~~In ~~two-year~~September ~~lease~~2016, ~~for~~this ~~approximately~~credit 1agreement was transferred to Raymond James and Associates,~~072~~ ~~square~~Inc. ~~feet~~(“Raymond James”) after Deutsche Bank Securities, ~~commenced~~Inc. ~~on December~~sold 1its accounts. The agreement is guaranteed in its entirety by Salon’s former Chairman, ~~2017~~John ~~and~~Warnock. ~~will~~The ~~terminate~~line ~~on November~~of credit has been fully drawn as of September 30, ~~2019~~2018. ~~The~~Raymond ~~outstanding~~James ~~lease~~may ~~obligation~~demand isrepayment ~~$113~~of ~~for~~amounts ~~the~~borrowed ~~remaining~~at 23any ~~months~~time. Additionally, Mr. Warnock may also choose to terminate his guarantee, which would trigger a demand for repayment. As of ~~the~~September ~~lease~~30, 2018 and March 31, 2018, accrued interest on short-term borrowings totaled approximately $474 and $439, respectively.

~~In August~~As ~~2016, we informed our landlord at our office space at 132 West 31st Street, New York, New York,~~ of ~~our intention to move out of the premises, and we engaged a property agent to find a sub-tenant for the space. The lease for New York space commenced on July 1, 2014 and will expire on~~ September 30, ~~2019. In January 2017~~2018, ~~we were asked to vacate the office space at 132 West 31st Street due to nonpayment of our monthly rent,~~ and ~~on January~~March 3031, ~~2017~~2018, ~~we released~~ the ~~letter~~weighted ofaverage ~~credit~~interest ofrate ~~$204~~on to the ~~landlord~~Company’s inshort-term ~~payment~~borrowings ofremained ~~the~~constant ~~past~~at ~~due~~approximately ~~rent. On August~~ 3~~, 2017, we received a notice of legal action (the “Complaint”) from the landlord~~. ~~This civil summons and complaint in New York State Court seeks to recover all unpaid rents for the remainder of our five-year lease, equal to approximately $918 plus damages and attorneys fees~~5%. ~~Counsel for Salon is currently evaluating potential defenses and counterclaims, based on the laws and facts.~~

Convertible Promissory Notes

Interest bearing convertible promissory notes

During the six months ended September 30, 2018, the Company received $110 from related parties in the form of Bridge Notes as part of the Securities Purchase Agreement. The notes have a one-year maturity and bear a 10% interest rate. The notes will convert at a discount into shares of Common Stock upon a qualified financing by the Company of at least $1 million. In the event of no conversion, the notes are payable in cash or convert into a number of shares of Common Stock of the Company, rounded down to the nearest whole share based on the Company’s as diluted price per share on the maturity date. The conversion price will equal to 70% of the price per share paid in the qualified financing if such financing occurs within four months from the date of the Securities Purchase Agreement, or 70% less 2% per each month after the fourth month anniversary; provided however that the conversion price will never be less than the greater of (A) sixty percent (60%) of the purchase price paid in the qualified financing and (B) the price per share paid by investors in the most recently consummated offering of the Company’s Common Stock, or $0.0124 per share, the conversion price in the Series A Mandatorily Convertible Preferred Private Placement, if the financing occurs more than four months after the date of the Securities Purchase Agreement.

Unsecured Advances

During the six months ended September 30, 2018, the Company received $114.5 in advances from related parties. These advances accrued interest at a rate of 10% per annum and within one year from the date of advance. On December 7, 2018, these advances and all accrued interest were exchanged for secured notes in the amount of approximately $118.9. These notes bear a 10% interest rate and are payable on June 30, 2019.

SALON MEDIA GROUP, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(amounts in thousands, except share and per share data)

(unaudited)

The potential amount of this contingent liability is indeterminate, since it is unknown whether the Landlord will lease the premises to a new tenant, in which case the rents from the new tenant are an off-set to this liability4. ~~While~~ Common counsel for Salon is evaluating potential defenses and counterclaims to the Complaint, we are unable to determine the foregoing liability, if any, with any degree of certainty, due to the uncertain nature of litigation matters. The parties are currently engaged in discovery proceedings and no trial date has been set. The landlord has moved for partial summary judgement as to liability, which motion has not yet been opposed, argued or decided by the Court. Stock

~~Our~~On ~~current~~September ~~office~~30, ~~space~~2018, in900,000,000 ~~New~~common ~~York~~shares, ~~located~~par ~~at 315~~value ~~West 36th Street~~$0,001, ~~New~~were ~~York~~authorized, ~~New~~of ~~York~~which is151,056,477 ~~rented~~shares onwere aissued ~~month-to-month basis~~ and ~~does not carry a lease agreement~~outstanding.

~~Total~~5. Employee ~~future~~Stock ~~minimum~~Option ~~payments under operating lease and short-term borrowing in effect as of December 31, 2017 are as follows:~~Plans

	Payments Due By Period
	Total		1 Year or Less		1 - 3 Years
Operating lease	$	113	$	58	$	55
Short-term borrowing		1,000		1,000		-
Short-term borrowing interest		424		424		-
Total	$	1,537	$	1,482	$	55

Salon has two stock option plans approved by stockholders: the Salon Media Group, Inc. 2004 Stock Plan (the “2004 Stock Plan”) and the Salon Media Group, Inc. 2014 Stock Incentive Plan (the “2014 Stock Incentive Plan”), as described in Note 7, “Employee Stock Option Plans,” of the notes to financial statements in Salon’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018. The 2004 Stock Plan expired in November 2014, after which no further options were permitted to be granted.

WeSalon ~~continue~~has ~~collective~~granted ~~bargaining~~options ~~with~~pursuant ~~the~~to ~~WGAE.~~plans Asnot weapproved do(“Non-Plan”) by stockholders. We did not ~~yet~~grant ~~have~~any anNon-Plan ~~agreement~~options ~~with~~during ~~our~~the ~~union~~six ~~employees,~~months weended ~~remain~~September ~~uncertain~~30, ~~how~~2018. itDuring ~~will~~the ~~impact~~six ~~our~~months ~~financial~~ended ~~status~~September 30, or2017 ifwe itgranted ~~will~~to ~~have~~our aCEO ~~negative~~and ~~impact~~to oneach member of our ~~ability~~board of directors (the “Board”) an option to ~~obtain~~purchase ~~additional~~31,260,505 ~~financing~~and 5,384,615 ifshares ~~necessary~~of Common Stock, respectively.

We did not grant any options during the six months ended September 30, 2018. During the six months ended September 30, 2017, we granted options to all employees of the Company to acquire a total of 7,633,918 shares under the 2014 Stock Incentive Plan.

The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions and fair value per share:

	Six months ended September 30,
	2018				2017
Risk-free interest rates		1.75	–	2.55%		1.75%
Expected lives (in years)		5.7	–	6.3	5.7	–	6.3
Expected volatility		437	–	453%		451%
Dividend yield			0%			0%

We applied the expected term of 6.3 years during the six months ended September 30, 2017, to more appropriately estimate expectations of exercise behavior of the options. The expected stock price volatility is based on historical volatility of Salon’s stock over a period equal to the expected term of the options. The risk-free interest rate is based on the implied yield available on U.S. Treasury securities with a term equivalent to the service period of the stock options. We have not paid dividends in the past.

As of September 30, 2018, the aggregate stock compensation remaining to be amortized to expense was $3,523. Salon expects this stock-based compensation balance to be amortized as follows: $589 during the remainder of fiscal year 2019; $1,398 during fiscal year 2020; $1,109 during fiscal year 2021; and $427 during fiscal year 2022. The expected amortization reflects only outstanding stock option awards as of September 30, 2018.

SALON MEDIA GROUP, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(amounts in thousands, except share and per share data)

(unaudited)

6.The ~~Preferred~~following ~~Stock~~table –summarizes ~~Mezzanine~~activities ~~Equity~~under Salon’s plans for the six months ended September 30, 2018:

As part of our committed efforts to raise capital, on January 24, 2017, Salon entered into a Purchase Agreement (the “Purchase Agreement”) with purchasers identified therein (each, a “Purchaser” and together, the “Purchasers”) to issue and sell to the Purchasers in the private placement (the “Private Placement”) an aggregate principal amount of at least $1 million of the Company’s Series A Preferred Stock that will automatically convert into shares of Common Stock, upon the filing of the Amendment with the Secretary of State of the State of Delaware after the final closing of the Private Placement and delivery of the information statement to the Company’s stockholders, pursuant to the Purchase Agreement. The Company has authorized the issuance and sale in the Private Placement of up to 2,417,471 shares of the Series A Preferred Stock, each of which is convertible into 100 shares of Common Stock, at the purchase price of $1.24 per share. The completion of the purchase and sale of the Series A Preferred Stock occurred in three stages, each a “Closing.”

				Weighted-
	Outstanding			Average		Aggregate
	Stock			Exercise		Intrinsic
	Options			Price		Value
Balance as of April 1, 2018		58,077,000		$	0.06	$	284
Granted		-			-
Exercised		-			-
Expired and forfeited		(4,127,000	)	$	0.06
Outstanding at September 30, 2018		53,950,000		$	0.06	$	-
Exercisable as of September 30, 2018		20,321,000		$	0.06	$	-
Vested and expected to vest as of September 30, 2018		66,652,000		$	0.06	$	-

~~The~~We ~~initial~~did ~~Closing~~not ~~(“Initial~~grant ~~Closing”)~~any ~~was~~options ~~completed~~during ~~on January~~the 26six months ended September 30, ~~2017~~2018. InDuring the ~~Initial~~six ~~Closing~~months ended September 30, 2017, we ~~sold~~granted options to all employees of the ~~Purchasers~~Company anto ~~aggregate~~acquire a total of ~~805~~7,~~824~~633,918 shares ofunder ~~Series~~the A2014 ~~Preferred~~ Stock ~~for~~Incentive aPlan. ~~total~~The ~~purchase~~weighted-average ~~price~~fair value of $1options ~~million.~~vested ~~The~~during ~~investors~~each inof the ~~Initial~~six ~~Closing~~month ~~included~~periods ~~Jordan~~ended ~~Hoffner~~September 30, 2018 and ~~certain~~September of30, ~~his~~2017 ~~family~~was ~~members,~~$0.15 ~~the~~per ~~Company’s~~share ~~Chief~~and ~~Financial~~$0.13 ~~Officer~~per ~~(“CFO”)~~share, ~~Elizabeth~~respectively. ~~Hambrecht,~~There ~~and~~were no options exercised during the ~~Company’s~~six ~~Director,~~months ~~William~~ended ~~Hambrecht~~September 30, 2018.

~~The~~Our ~~second~~Board ~~Closing~~also ~~(“Second~~approved ~~Closing”)~~a ~~was~~resolution ~~completed~~ on ~~March~~ ~~23,~~June ~~2017. In the Second Closing~~12, we2014 ~~sold~~ to amend the ~~Purchasers~~2014 anStock ~~aggregate~~Incentive ofPlan ~~173,252~~to ~~shares~~comply ofwith ~~Series~~certain ACalifornia ~~Preferred~~Code ~~Stock for a total purchase price~~ of ~~$0.215~~Regulations ~~million.~~and ~~The~~Internal ~~Second~~Revenue ~~Closing~~Service ~~included only investors who had previously indicated interest in participating in the Private Placement~~regulations. ~~The~~As ~~investors~~of inSeptember ~~the Second Closing included Jordan Hoffner~~30, ~~Elizabeth Hambrecht~~2018, ~~Ryan~~options ~~Nathanson,~~totaling ~~the Company’s Chief Operating Officer~~10,481,985 ~~and~~were ~~Jordana~~awarded ~~Brondo,~~under the ~~Company’s~~2014 ~~former~~Stock ~~Chief~~Incentive ~~Revenue Officer~~Plan.

~~The~~We ~~final~~recognized ~~Closing~~stock-based ~~(the~~compensation ~~“Final~~expense ~~Closing”) was completed on July 20, 2017. In the Final Closing, we sold to the Purchasers an aggregate~~ of ~~221,601~~$786 ~~shares~~and ~~of Series A Preferred Stock for a total purchase price of~~ $~~0.275~~432 ~~million.~~during ~~The Final Closing included only investors who had previously indicated interest in participating in~~ the ~~Private~~six ~~Placement.~~months ~~The~~ended ~~investors~~September ~~in the Final Closing included Jordan Hoffner~~30, ~~Elizabeth~~2018 ~~Hambrecht,~~ and ~~William~~2017, ~~Hambrecht~~respectively.

Due to insufficient authorized shares of our Common Stock prior to the quarter ended December 31, 2017, these Series A Preferred shares were previously disclosed under mezzanine equity on our Balance Sheet. The Amendment was filed and the resulting increase in authorized shares of Common Stock occurred on August 1, 2017. After filing of the Amendment, these Series A Preferred Stock of $6,862 were reclassified from mezzanine equity to stockholders’ deficit.

SALON MEDIA GROUP, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(amounts in thousands, except share and per share data)

(unaudited)

6. Net Loss Per Share Attributable to Common Shareholders

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Numerator:
Net loss	$	(621	)	$	(794	)	$	(1,615	)	$	(1,366	)

Denominator:
Weighted average shares used in computing basic and diluted net loss per share		151,056,000			150,367,000			151,056,000			150,185,000

Basic and diluted net loss per share	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.01	)

Antidilutive securities including options and preferred stock not included in net loss per share calculation		281,441,000			223,378,000			281,441,000			223,378,000

7. Commitments and Contingencies

On October 17, 2017, Salon signed a two-year office lease agreement for its San Francisco headquarters at 870 Market Street, San Francisco, California. The two-year lease, for approximately 1,072 square feet, commenced on December 1, 2017 and will terminate on November 30, 2019. On April 9, 2019 the Company terminated the lease effective June 30, 2019. The outstanding lease obligation is $44 for the remaining 9 months of the lease.

In August 2016, we informed our landlord at our office space at 132 West 31^st Street, New York, New York, of our intention to move out of the premises, and we engaged a property agent to find a sub-tenant for the space. The lease for New York space commenced on July 1, 2014 and will expire on September 30, 2019. In January 2017, we were asked to vacate the office space at 132 West 31^st Street due to nonpayment of our monthly rent, and on January 30, 2017, we released the letter of credit of $204 to the landlord in payment of the past due rent. On August 3, 2017, we received a notice of legal action (the “Complaint”) from the landlord. This civil summons and complaint in New York State Court seeks to recover all unpaid rents for the remainder of our five-year lease, equal to approximately $918 at the time of filing the initial lawsuit (and currently approximately $630 as of the date of this report) plus damages and attorneys fees. Counsel for Salon is currently evaluating potential defenses and counterclaims, based on the laws and facts.

The potential amount of this contingent liability is indeterminate, since it is unknown whether the Landlord will lease the premises to a new tenant, in which case the rents from the new tenant are an off-set to this liability. While counsel for Salon is evaluating potential defenses and counterclaims to the Complaint, we are unable to determine the foregoing liability, if any, with any degree of certainty, due to the uncertain nature of litigation matters. The parties are currently engaged in discovery proceedings and no trial date has been set. The landlord has moved for partial summary judgement as to liability, which motion has not yet been opposed, argued or decided by the Court.

On November 18, 2018, Jordana Brondo, a former employee of Salon Media Group, brought a formal claim against the Company for Judicial Arbitration and Mediation Services under JAMS in San Francisco, CA. Under her claim, Ms. Brondo alleges wrongful termination under the basis of gender discrimination pregnancy discrimination, wrongful termination in violation of public policy, and retaliation. Ms. Brondo seeks general damages, special damages, punitive damages, cost of fees and attorney fees in the amount of $1,600. The Company has denied the allegations and is actively defending the matter. In addition, the Company has insurance to cover any unexpected liability. The matter is currently pending.

Our current office space in New York, located at 253 W. 28^th Street, New York, New York is rented on a month-to-month basis and does not carry a lease agreement.

In October 2018, the Company entered into an agreement with the WGAE for a three-year period. As a result of the ongoing negotiations and accompanying legal fees as well as the higher cost structure per the negotiated agreement, the effect was detrimental to the company’s financial standing as we had to endure layoffs of management in order to accommodate the editorial staff. In addition, the agreement with the union had a seemingly negative impact on the Company’s ability to obtain additional financing.

SALON MEDIA GROUP, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(amounts in thousands, except share and per share data)

(unaudited)

8. Preferred Stock

As part of the Company’s committed efforts to raise capital, on January 24, 2017, Salon entered into a Purchase Agreement (the “Purchase Agreement”) with purchasers identified therein (each, a “Purchaser” and together, the “Purchasers”) to issue and sell to the Purchasers in the private placement (the “Private Placement”) an aggregate principal amount of at least $1 million of the Company’s Series A Preferred Stock. The Company has authorized the issuance and sale in the Private Placement of up to 2,417,471 shares of the Series A Preferred Stock, each of which is convertible into 100 shares of Common Stock, at the purchase price of $1.24 per share. The completion of the purchase and sale of the Series A Preferred Stock occurred in three stages, each a “Closing.”

The initial Closing (“Initial Closing”) was completed on January 26, 2017. In the Initial Closing, we sold to the Purchasers an aggregate of 805,824 shares of Series A Preferred Stock for a total purchase price of $1 million. The investors in the Initial Closing included Jordan Hoffner, director and then CEO (until May 3, 2019), and certain of his family members, the Company’s then Chief Financial Officer (“CFO” until September 28, 2018), Elizabeth Hambrecht, and the Company’s Director, William Hambrecht.

The second Closing (“Second Closing”) was completed on March 23, 2017. In the Second Closing, we sold to the Purchasers an aggregate of 173,252 shares of Series A Preferred Stock for a total purchase price of $215. The Second Closing included only investors who had previously indicated interest in participating in the Private Placement. The investors in the Second Closing included Jordan Hoffner, Elizabeth Hambrecht, Ryan Nathanson, the Company’s former Chief Operating Officer, and Jordana Brondo, the Company’s former Chief Revenue Officer.

The final Closing (the “Final Closing”) was completed on July 20, 2017. In the Final Closing, we sold to the Purchasers an aggregate of 221,601 shares of Series A Preferred Stock for a total purchase price of $275. The Final Closing included only investors who had previously indicated interest in participating in the Private Placement. The investors in the Final Closing included Jordan Hoffner, Elizabeth Hambrecht, and William Hambrecht.

In event of a liquidation, the holders of the Series A Preferred Stock are entitled to receive, prior and in preference to any distribution of any assets or property of Salon to the holders of Common Stock, and by reason of their ownership, an amount per share equal to two (2) times the original issue price of $1.24 per share of Series A Preferred Stock. If the assets and funds available for distribution are insufficient to permit the payment to the holders of Series A Preferred Stock of their full preferential amounts, then the entire assets and funds of Salon legally available for distribution to stockholders will be distributed among the holders of Series A Preferred Stock ratably in proportion to the full preferential amounts which they are entitled to receive. Holders of shares of Series A Preferred Stock are not entitled to receive dividends, pursuant to the Certificate Designation of Preferences, Rights and Limitations of the Series A Preferred Stock.

SALON MEDIA GROUP, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(amounts in thousands, except share and per share data)

(unaudited)

After payment of the full preferential amounts has been made to the holders of the shares of Series A Preferred Stock pursuant to the Certificate of Designation, if any remaining assets of the Company are available for distribution to stockholders, the holders of shares of Common Stock and Series A Preferred Stock shall be entitled to receive the remaining assets of the Company available for distribution to stockholders ratably in proportion to the shares of Common Stock then held by them and the shares of Common Stock to which they have the right to acquire upon conversion of the shares of Series A Preferred Stock held by them. Following the Final Closing of the Private Placement on July 20, 2017, the Series A Preferred Stock accounts for approximately 52% of outstanding shares on an as converted basis to Common Stock.

The holders of the shares of Series A Preferred Stock are entitled to vote together with the holders of the shares of Common Stock as though part of that class, and they are entitled to vote on all matters and to that number of votes equal to the largest number of whole shares of Common Stock into which the shares of Series A Preferred Stock could be converted.

Neither the shares of Series A Preferred Stock nor the underlying shares of Common Stock have been registered for sale under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration under such act or an applicable exemption from registration requirements.

The exchange rate and common equivalent shares of our Series A Preferred Stock as of ~~December~~ 31September 30, ~~2017~~2018 are as follows:

Preferred Stock

Shares Outstanding

Per Share

Exchange Rate

Common Equivalent Shares

Series A

1,648,830

100

164,883,000

Total

1,648,830

164,883,000

15The Company intends to fully convert the Series A Preferred Stock into 164,883,000 shares of Common Stock prior to June 30, 2019.

SALON MEDIA GROUP, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(amounts in thousands, except share and per share data)

(unaudited)

79. Subsequent Events

~~On January~~Interest ~~10,~~bearing ~~2018~~convertible ~~the~~promissory Company received $75 from a related party in the form of a Bridge Note as part of the Securities Purchase Agreement. The note has a one-year maturity and bears a 10% interest rate. The note will convert at a discount into shares of Common Stock upon a qualified financing by the Company of at least $1 million. In the event of no conversion, the notes ~~are~~& ~~payable~~senior insecured cash or convert into a number of shares of common stock of the Company, rounded down to the nearest whole share based on the Company’s as diluted price per share on the maturity date. The conversion price will equal to 70% of the price per share paid in the qualified financing if such financing occurs within four months from the date of the Securities Purchase Agreement, or 70% less 2% per each month after the fourth month anniversary; provided however that the Conversion Price will never be less than the greater of (A) sixty percent (60%) of the purchase price paid in the qualified financing and (B) the price per share paid by investors in the most recently consummated offering of the Company’s common stock, or $0.0124 per share, the conversion price in the Series A Mandatorily Convertible Preferred Private Placement, if the financing occurs more than four months after the date of the Securities Purchase Agreement. notes

16On December 7, 2018, the Company exchanged the advances received during the six months ended September 30, 2018 of $114.5 and all accrued interest were exchanged for secured notes in the amount of approximately $118.9. These notes bear a 10% interest rate and are payable on June 30, 2019. In addition, on December 7, 2018, the Company issued warrants to the secured note holders to purchase 11,312,600 shares of our common stock at an exercise price of $0.01 per share. The warrants expire five years from the issuance date and can be exercised with cash or cancellation of the secured notes referenced above.

The Company received $500 from PubLife, LLC upon execution of a term sheet for the sale of the Salon.com business, which is the basis for the Asset Purchase Agreement discussed below. Upon closing of the Asset Purchase Agreement, this $500 is to be credited against the purchase price. If the Company fails to close the Asset Purchase Agreement or breaches the term sheet with PubLife related to the Asset Purchase Agreement, this $500 will convert into a 10% secured promissory note payable within 90-days of issuance, secured by all of the Company’s assets and senior to all indebtedness of the Company.

Technology Support Agreement

On October 25, 2018 the Company entered into a Technology Support Agreement (the "Technology Agreement") with PubLife LLC under which PubLife agreed to provide certain technology support to the Company, including all web development activities for a six month term in consideration of $1 per month. The payment terms under this agreement were amended under the terms of the Asset Purchase Agreement (as set forth below).

General Advertising Services Agreement

On October 25, 2018, the Company entered into a General Advertising Services Agreement (the "Advertising Agreement") with Proper Media LLC ("Agent") under which the Company retained Agent to provide advertisement sales and trafficking services for our websites, including salon.com and related sites. The term of this agreement is for one -year, which term shall be extended for successive one-year periods under terminated by either party within 30 days’ notice prior to the end of any term. The Company agreed to pay agent its revenue share of all revenue invoiced by Agent in connection with Agent's performance of the services under this agreement. In addition, if the Company refers a 3rd party publishing partner and Agent executes an advertising services agreement with such 3rd party, Agent agrees to pay us 25% of the monthly revenue earned by Agent due to such 3rd party agreement for the first six-months of any such agreement. The payment terms under this agreement were amended under the terms of the Asset Purchase Agreement (as set forth below).

WGAE Agreement

SALON MEDIA GROUP, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(amounts in thousands, except share and per share data)

(unaudited)

Asset Purchase Agreement

On March 6, 2019, the Company entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Salon.com, LLC (“Buyer”) under which the Company agreed to sell substantially all of our assets (the "Asset Sale"), including all pertinent intellectual property rights comprising the Company’s business of owning, operating and publishing the website known as Salon.com, (the “Business”), but excluding our cash, cash equivalents and marketable securities and certain contracts and right related to those contracts and tax refunds and insurance policies and rights related to excluded assets, to the Buyer for an aggregate Purchase Price of $5 million payable plus the amount of the Earn-Out Payment (as described below) and the assumption of certain assumed liabilities, all pursuant to the terms of the Asset Purchase Agreement. The purchase price is payable in cash as follows: (i) $550 in payable in cash at closing; (ii) $100 shall be deposited with the Escrow Agent, which amount shall be released to the Company in accordance with the terms of the Asset Purchase Agreement; (iii) $500 of which was previously paid to the Company as a deposit concurrent with execution of the term sheet for the Asset Purchase Agreement (the "Deposit") and (iv) $3,850 via issuance of a 10% secured promissory note, which note shall be paid in 2 equal installments on the 12 month and 24 month anniversary of the closing date. This note shall be secured by all of the assets being sold to Buyer under the Asset Purchase Agreement.

First Amendment to Asset Purchase Agreement

On April 15, 2019, the Company entered into a First Amendment to Asset Purchase Agreement ("First Amendment") with Buyer. The primary purpose of the First Amendment was to amend the payment terms under the Technology Agreement and the Advertising Agreement as set forth below:

(a) for the month of March 2019: (i) ad fees under the Advertising Agreement shall be payable at 6.5%, and (ii) tech management fees payable pursuant to the Technology Agreement shall be $5 plus costs per the Technology Agreement;

(b) for the month of April 2019: (i) ad fees under the Advertising Agreement shall be payable at 6.5%, and (ii) tech management fees payable pursuant to the Technology Agreement shall be $10 plus costs per the Technology Agreement; and

(c) for the month of May 2019 and for each month thereafter: (i) ad fees under the Advertising Agreement shall be payable at 6.5%, (ii) tech management fees payable pursuant to the Technology Agreement shall be $10 plus costs per the Technology Agreement and (iii) an amount equal to 10% APR applied to the Deposit.

The Company also amended Section 10.9 of the Asset Purchase Agreement to include the term sheet related to the acquisition for the documents related to the entire agreement of the parties.

Departure of Directors or Principal Officers

Effective May 3, 2019, Jordan Hoffner resigned as the Company’s Chief Executive Officer.

Effective as of September 28, 2018, Elizabeth Hambrecht resigned as the Company’s Chief Financial Officer.

SALON MEDIA GROUP, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(amounts in thousands, except share and per share data)

(unaudited)

Appointment of Officers

Effective May 3, 2019, in connection with Mr. Hoffner’s resignation as Chief Executive Officer, the board appointed Richard MacWilliams as the Company’s acting Chief Executive Officer and the board also appointed Trevor Colhoun as the Company’s acting Chief Financial Officer to fill the vacancy from Ms. Elizabeth Hambrecht’s prior resignation. Messrs. MacWilliams and Colhoun both currently serve as Directors of the Company. Mr. MacWilliams will receive $7.5 per month for his role as acting CEO and Mr. Colhoun will receive $2.5 per month for his role as acting CFO.

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

This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that involve risks and uncertainties, including but not limited to statements regarding our strategy, plans, objectives, expectations, intentions, financial performance, cash-flow breakeven timing, financing, economic conditions, Internet advertising market performance, social media and other non-web opportunities and revenue sources. Although Salon believes its plans, intentions and expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such plans, intentions or expectations will be achieved. Salon’s actual results may differ significantly from those anticipated or implied in these forward-looking statements as a result of the factors set forth above and in Salon’s public filings. Salon assumes no obligation to update any forward-looking statements except as required by law.

Salon’s actual results may differ significantly from those anticipated or implied in these forward-looking statements as a result of the factors set forth in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors That May Affect Salon’s Future Results and Market Price of Stock." In this report, the words “anticipates,” “believes,” “expects,” “estimates,” “intends,” “future,” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this Form 10-Q should be considered in conjunction with the audited financial statements, which are included in Salon’s Annual Report on Form 10-K for the fiscal year ended March 31, ~~2017~~2018 (the “Fiscal ~~2017~~2018 Annual Report”) filed with the Securities and Exchange Commission. Matters of interest therein include, but are not limited to, our disclosure of critical accounting policies.

Overview

Salon is a technology-based advertising media business that wholly owns and operates an online news website, salon.com (“Salon.com”). Our award-winning website is committed to fearless journalism and combines original investigative stories and provocative personal essays along with quick-take commentary, articles, podcasts and original video about politics, culture, entertainment, sustainability, innovation, technology and business.

We have a history of significant losses and expect to incur a loss from operations for our fiscal year ending March 31, 2018 and potentially for future years. ~~BPM~~M&K ~~LLP~~CPA’s, PLLC, Salon’s independent registered public accounting firm for the fiscal years ended March 31, ~~2017,~~2018 ~~2016~~ and ~~2015~~2017, included a “going-concern” audit opinion on the financial statements for those years. The audit opinions report substantial doubt about our ability to continue as a going concern, citing issues such as the history of losses and absence of current profitability. As a result of the factors noted in the going-concern opinions, our stock price and investment prospects have been and will continue to be adversely affected, thus limiting financing choices and raising concerns about the realization of value on assets and operations.

During the quarter ended December 31, 2017, we continued to execute our business strategy to refine and broaden our editorial products in order to attract both a premier audience and additional advertising, which would increase revenues. We face increased competition, however, from both new and larger websites for online advertising campaigns, while industry trends continue a shift toward increased use of agency and software-based approaches to buying online advertising. As a result, we have re-focused our advertising sales to rely on the rapidly growing programmatic advertising business. Through our programmatic advertising efforts, we directly sell audience packages based on real-time advertising demand and engage third-party agencies to sell advertisements on our Website through programmatic advertising open marketplaces, thereby placing less emphasis on a traditional media sales effort. The highlights of our December 2017 quarter are listed below: 21

17During the quarter ended September 30, 2018, we continued to execute our business strategy to refine and broaden our editorial products in order to attract both a premier audience and additional advertising, which would increase revenues. We face increased competition, however, from both new and larger websites for traffic and online advertising campaigns, while industry trends continue a shift toward increased use of agency and software-based approaches to buying online advertising. As a result, we have re-focused our advertising sales to rely on the rapidly growing programmatic advertising business. Through our programmatic advertising efforts, we directly sell audience packages based on real-time advertising demand and engage third-party agencies to sell advertisements on our Website through programmatic advertising open marketplaces, thereby placing less emphasis on a traditional media sales effort. The highlights of our September 2018 quarter are listed below:

Highlights from Quarter ended ~~December~~September 3130, ~~2017~~2018

● Net revenues ~~were~~decreased ~~consistent~~40% atto $10.27 million in the quarter ended ~~December~~September 3130, ~~2017~~2018 versus $1.2 million in the same period in ~~2016~~2017. For the ~~nine~~six-month period ended ~~December~~September 3130, ~~2017~~2018, net revenues ~~increased~~decreased 1050% to $31.93 million, versus $32.56 million in the same period in ~~2016~~2017. The ~~increase~~decrease in revenue was a result of a continued significant industry shift in online advertising from advertising sold by a direct sales team to advertising increasingly being sold through software-based “programmatic” technology. Our advertising sold through networks that access these programmatic buys accounted for 8468% of our advertising revenues for the ~~December~~September ~~2017~~2018 quarter. We have been making changes to our advertising footprint to capture the greater programmatic opportunity for our display and video advertising inventory, and will continue to focus our efforts to allow better management of our advertising inventory and targeting for our advertisers. This has allowed us to improve our cost-per-thousand impression (“CPMs”) from our programmatic advertising by over 50% in the December 2017 quarter as compared to the December 2016 quarter. However, the higher programmatic CPMs were offset by a smaller ad footprint due to redesign of the Website, which led to a smaller inventory of ad products to sell, so a smaller relative increase in revenues.

● Net losses from operations were $0.6 million during the three months ended ~~December~~September 3130, ~~2017~~2018, and $1.76 million for the ~~nine~~six months ended ~~December~~September 3130, ~~2017~~2018, a decrease from $1.0.7 million during the three months ended September 30, 2017 and an increase from $21.74 million, ~~respectively,~~ during the ~~same~~six ~~periods~~months ~~last~~ended ~~year~~September 30, 2017. The ~~decrease~~increase in losses resulted from adecreases ~~nominal increase~~ in revenues ~~and~~offset by a decrease in operating expenses. Operating expense in the ~~December~~September ~~2017~~2018 quarter was $1.83 million as compared to $21.29 million in the ~~December~~September ~~2016~~2017 quarter, and $52.59 million for the ~~nine~~six months ended ~~December~~September 3130, ~~2017~~2018 as compared to $63.26 million for the corresponding period in ~~2016~~2017. The financials included several non-recurring items, including $0.43 million non-cash interest expense recorded for the beneficial ~~conversion~~ feature of capital raising transactions ~~during~~for the ~~nine~~six months ended ~~December~~September 3130, 2017~~, as well as $4~~.4 ~~million non-cash interest expense recorded for the beneficial feature of capital raising transactions for the nine months ended December 31, 2016.~~ We will continue to look for ways to reduce expenses in areas that we expect can help reduce losses and accelerate a path to profitability.

● Average unique visitors to the Salon.com Website during the quarter ended ~~December~~September 3130, ~~2017~~2018 was 135.17 million, ~~flat~~a 35% decrease compared to the quarter ended ~~December~~September 3130, ~~2016~~2017, and an increase of 1122% compared to the quarter ended ~~September~~June 30, ~~2017~~2018, according to data compiled by Google Analytics. Our focus on ~~growing~~more ~~traffic~~breaking ~~has~~news ~~shifted~~and ~~from~~new ~~volume~~categories attributed to the quarter over quarter increase along with the ongoing strategy of growing quality traffic, in order to maximize our ability to monetize our page views with higher CPM video and display advertising. We attribute the ~~flat~~year over year decreased traffic to a combination of events, including the changes in the algorithms used by Facebook to promote news content, which led to lower referral traffic from Facebook, increased competition from other sites for breaking political news and reduced referral traffic from other major websites like Yahoo and Twitter.

● We have continued to roll out our strategy to produce original video content focused on news, politics, and entertainment under the banner of Salon TV, Salon Talks and Salon Stage. Our goal is to add high quality diversified content to our Website, and to attract premium video advertising that commands higher CPMs as compared to display advertising. Featured guests on Salon Talks this quarter have included ~~Senator~~Alan ~~Al Franken~~Dershowitz, ~~scientist~~Martin ~~Bill Nye~~O’Malley, ~~Deepak~~The ~~Chopra~~Jayhawks, ~~Dan~~Lawrence ~~Rather~~O’Donnell, ~~Pearl~~Neil ~~Jam~~deGrasse ~~guitarist~~Tyson ~~Mike McCready~~ and ~~Van~~Lori ~~Jones~~Loughlin, among others~~, while Salon Stage hosted acoustic sets by, among others, the Revivalists, Josh Ritter, Lukas Nelson, Bela Fleck, Wyclef Jean and more~~.

18● We continue to offer a paid subscription program that is targeted at our mobile users who prefer not to see advertisements. The offering is a Salon ad-free app for mobile and tablet, available on Apple, Google Play, Amazon Fire and Roku. We are also exploring the potential of gated premium content, where a user will have an option to pay per piece of content. Finally, we are exploring the prospect of expanding our subscription product to the desktop and mobile browsers.

● WeThe ~~have~~quarter ~~been~~ended ~~implementing~~September ~~our~~30, ~~plan~~2018 tofeatured ~~launch~~great ajournalism ~~subscription~~— ~~program,~~including ~~which~~original wereporting ~~expect~~and toanalysis ~~launch~~— as Salon covered in-depth the ~~March~~top ~~2018~~stories ~~quarter~~in news, ~~that~~politics ~~will~~and beentertainment. ~~targeted~~Our atdaily ~~our~~coverage ~~users~~of ~~who~~the ~~prefer~~Trump ~~not~~Administration, tothe ~~see~~#MeToo ~~advertisements. Initially~~movement, wecontinued ~~will~~investigation ~~offer~~of athe ~~Salon~~alleged ~~ad-free~~Russian ~~app~~interference ~~for~~in ~~mobile~~the ~~and~~U. ~~tablet~~S. WePresidential ~~are~~race, ~~also exploring~~ the ~~potential~~2018 ofCongressional ~~gated premium content~~elections, ~~where~~the aopioid ~~user~~epidemic, ~~will~~immigration ~~have~~reform anand ~~option~~summer tomovies ~~pay~~generated ~~per~~the ~~piece~~most ~~of content~~interest. We ~~plan~~have toalso ~~launch~~continued ~~gated~~our ~~premium~~broadened, ~~content~~thoughtful ~~initially~~and tosmart ~~international~~coverage ~~users~~on relationships, aslifestyle, ~~user~~food ~~adoption~~and isbusiness ~~higher~~that ~~for~~have ~~this~~been ~~service~~popular inwith ~~countries~~our ~~in Europe~~users.

● The quarter ended December 31, 2017 featured great journalism — including original reporting and analysis — as Salon covered in-depth the top stories in news, politics and entertainment. Our daily coverage of the Trump Administration, the #MeToo movement, continued investigation of the alleged Russian interference in the U. S. Presidential race, legalization of marijuana, and yearend reviews of music, TV and movies generated the most interest. The intersection of culture and politics also continued to drive user interest, including stories about Queen Elizabeth’s reference to The Crown in her Christmas Day broadcast, and Vanity Fair’s suggestion that Hillary Clinton take up knitting. We have also provided broadened, thoughtful and smart coverage on relationships, lifestyle and business that have been popular with our users.22

● In mid-September 2017, we launched a new mobile-first website that was built to give our users a faster and better experience. We have re-built our Website to capitalize on mobile user behavior and to allow for maximum flexibility to deploy future technologies and features. One immediate benefit is that our Website speed, as measured before ads are loaded, is over 120% faster than the old website. The Website also was built to increase user engagement and allows us to release community functions such as a like and unlike button, that has led to an immediate increase in comments, which generates more page views and revenue opportunities. We will be launching additional community features, including community pages focused by topic, to support our mission to Make the Conversation Smarter.

●

We continued collective bargaining with WGAE. As we do not yet have an agreement with our union employees, we remain uncertain on how it will impact our financial status, or if it will have a negative impact on our ability to obtain additional financing, if necessary.

● Social media and referral traffic from other websites continue to be major drivers of traffic, at approximately 2636% of Website visitors as of ~~December~~September 3130, ~~2017~~2018, and are a significant focus across the Company. We make regular updates to the Website to optimize content to be shared on social media with a special focus on our mobile platforms. InAcross ~~December~~all ~~2017~~social platforms, we ~~surpassed~~average ~~990,000~~over ~~Facebook~~2 ~~“likes” and one~~ million ~~Twitter~~ followers. ~~In December 2016, we had approximately 945,000 Facebook “likes,” and 910,000 Twitter followers.~~

● Mobile users accounted for 7066% of all users in ~~December~~September ~~2017~~2018, which is ~~stable~~slightly up from ~~September~~64% ~~2017~~from June 2018. We continue to have a company-wide focus on our users’ mobile needs, especially quick and easy access to fast-loading content optimized for better readability on smaller screens. We also have increased focus on monetization of mobile traffic through implementation of native and other mobile-optimized advertising.

19● We continually work toward leaner, more efficient technological systems through automation, improved architecture and adoption of emerging best practices.

●Material WeAgreements ~~continually~~entered ~~work~~into ~~toward~~during ~~leaner,~~Fiscal more efficient technological systems through automation, improved architecture and adoption of emerging best practices. During the quarter, we launched a newly redesigned Website to maximize speed and navigation, and enhance our revenue capabilities.2019

Advances/Secured Notes from Related Parties

From June 2018 through August 2018, we received $114.5 in advances from related parties. These advances accrued interest at a rate of 10% per annum and payable on the one-year anniversary of such advances. On December 7, 2018, these advances and all accrued interest were exchanged for secured notes in the amount of approximately $118.9. These notes bear a 10% interest rate and are payable on June 30, 2019. In addition, on December 7, 2018, we issued warrants to the secured note holders to purchase 11,312,600 shares of our common stock at an exercise price of $0.01 per share. The warrants expire five years from the issuance date and can be exercised with cash or cancellation of the secured notes referenced above.

Technology Support Agreement

On October 25, 2018 we entered into a Technology Support Agreement (the "Technology Agreement") with PubLife LLC under which PubLife agreed to provide certain technology support to us, including all web development activities for a six month term in consideration of $1 per month. The payment terms under this agreement were amended under the terms of the Asset Purchase Agreement (as set forth below).

General Advertising Services Agreement

On October 25, 2018, we entered into a General Advertising Services Agreement (the "Advertising Agreement") with Proper Media LLC ("Agent") under which we retained Agent to provide advertisement sales and trafficking services for our websites, including salon.com and related sites. The term of this agreement is for one -year, which term shall be extended for successive one-year periods under terminated by either party within 30 days’ notice prior to the end of any term. We agreed to pay agent its revenue share of all revenue invoiced by Agent in connection with Agent's performance of the services under this agreement. In addition, if we refer a 3rd party publishing partner and Agent executes an advertising services agreement with such 3rd party, Agent agrees to pay us 25% of the monthly revenue earned by Agent due to such 3rd party agreement for the first six-months of any such agreement. The payment terms under this agreement were amended under the terms of the Asset Purchase Agreement (as set forth below).

WGAE Agreement

In October 2018, we entered into an agreement with the WGAE for a three-year period. As a result of the ongoing negotiations and accompanying legal fees as well as the higher cost structure per the negotiated agreement, the effect was detrimental to the company’s financial standing as we had to endure layoffs of management in order to accommodate the editorial staff. In addition, the agreement with the union had a seemingly negative impact on our ability to obtain additional financing.

Asset Purchase Agreement

On March 6, 2019, we entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Salon.com, LLC (“Buyer”) under which we agreed to sell substantially all of our assets (the "Asset Sale"), including all pertinent intellectual property rights comprising the Company’s business of owning, operating and publishing the website known as Salon.com, (the “Business”), but excluding our cash, cash equivalents and marketable securities and certain contracts and right related to those contracts and tax refunds and insurance policies and rights related to excluded assets, to the Buyer for an aggregate Purchase Price of $5 million payable plus the amount of the Earn-Out Payment (as described below) and the assumption of certain assumed liabilities, all pursuant to the terms of the Asset Purchase Agreement. The purchase price is payable in cash as follows: (i) $550 in payable in cash at closing; (ii) $100 shall be deposited with the Escrow Agent, which amount shall be released to us in accordance with the terms of the Asset Purchase Agreement; (iii) $500 of which was previously paid to the Company as a deposit concurrent with execution of the term sheet for the Asset Purchase Agreement (the "Deposit") and (iv) $3,850 via issuance of a 10% secured promissory note, which note shall be paid in 2 equal installments on the 12 month and 24 month anniversary of the closing date. This note shall be secured by all of the assets being sold to Buyer under the Asset Purchase Agreement.

First Amendment to Asset Purchase Agreement

On April 15, 2019, we entered into a First Amendment to Asset Purchase Agreement ("First Amendment") with Buyer. The primary purpose of the First Amendment was to amend the payment terms under the Technology Agreement and the Advertising Agreement as set forth below:

We also amended Section 10.9 of the Asset Purchase Agreement to include the term sheet related to the acquisition for the documents related to the entire agreement of the parties.

Sources of Revenue

Most of Salon’s revenues are derived from advertising from the sale of promotional space on its Website. The sale of promotional space is generally for less than ninety days in duration. Advertisers pay for advertising on a CPM basis. The primary factors in our ability to increase our advertising revenues in future periods are the addition of higher CPM ad products, such as pre-roll video, and growth in our audience. Attracting more unique visitors to our Website is important because these returning users generate additional page views, and each page view becomes a potential platform for advertisements. Advertising comprises banners, video, rich media and other interactive ads. CPMs vary by platform and CPMs for mobile have been less than those for desktop; however, in the recent quarter they have been increasing. Videos and sponsored content on mobile devices continue to grow in popularity and can demand a higher CPM. We believe that continuing to add videos and sponsored content to our mobile platform and improving and optimizing the platform’s design will help increase revenues from our mobile platform.

In addition, Salon generates revenue from referring users to third-party websites, and we also generate nominal revenue from the licensing of content that previously appeared in our Website.

Expenses

Production and content expenses consist primarily of salaries and related expenses for Salon’s editorial and production staff, payments to freelance writers and artists, bandwidth costs associated with serving pages on our Website and ad serving costs.

Sales and marketing expenses consist primarily of salaries, ~~commissions, bonuses~~ and related personnel costs, ~~travel, and other costs~~ associated with Salon’s sales team and our business development efforts. ~~They also include marketing promotions.~~

Technology expenses consist primarily of salaries and related personnel costs, and contractor fees, associated with the development, testing and enhancement of our software to manage our Website, as well as to support our marketing and sales efforts.

General and administrative expenses consist primarily of salaries and related personnel costs, accounting and legal fees, rents, and other fees associated with operating a publicly traded company. Certain shared overhead expenses are allocated to other departments.

Interest expense includes accrued interest on our outstanding debt and non-cash charges from the beneficial conversion feature of convertible debt.

In accordance with Accounting Standards Codification (“ASC”) 718, “Stock Compensation” (ASC 718), our expenses include stock-based compensation expenses related to stock option and restricted stock grants to employees, non-employee directors and consultants. These costs are included in the various departmental expenses.

Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires Salon to utilize accounting policies and make estimates and assumptions that affect our reported amounts. Salon’s significant accounting policies are described in Note 2 to the financial statements in our Fiscal ~~2017~~2018 Annual Report. We believe accounting policies and estimates related to revenue recognition and accounting for debt and equity are the most critical to our financial statements. Future results may differ from current estimates if different assumptions are used or different conditions were to prevail.

Revenue Recognition

Salon recognizes revenues once persuasive evidence of an arrangement exists, the fee is fixed or determinable, delivery has occurred, and collectability is reasonably assured. Revenues are recognized ratably over the period in which our obligations to deliver advertisement impressions are fulfilled. The duration of the advertisements is generally short-term and frequently have cancellation clauses. Payments received before our obligations are fulfilled are classified as “deferred revenues” in Salon’s balance sheet.

We generate advertising revenue from advertisements displayed on our Website. Advertising revenue comprised 7978% and 8084% of our revenues for the ~~nine~~six months ended ~~December~~September 3130, ~~2017~~2018 and ~~December~~September 3130, ~~2016~~2017, respectively. Salon’s advertising revenue is principally dependent on the number of visits to our Website and the corresponding advertisement unit rates. Articles, videos and other forms of content generate advertising revenue from a diverse mix of advertising methods including display advertisements, where revenue is dependent upon the number of advertising impressions delivered; pre-roll video advertisements, where revenue is dependent on the number of video views; native advertisements, which are advertisements created to match the form and function of the platform on which they appear and sponsored content, in which advertisers pay for adjacency to specific content. In the past two years, industry trends have shifted toward increased use of agency and software-based approaches to buying online advertising. As a result, we have re-focused our advertising sales to rely on the rapidly growing programmatic advertising business in which we directly sell audience packages based on real-time advertising demand and engage third-party agencies to sell advertisement on our Website through programmatic advertising open marketplaces, and we place less emphasis on a traditional media sales effort.

Accounting for Stock-Based Compensation

Salon accounts for stock-based compensation under ASC 718 and recognize the fair value of stock awards on a straight-line basis over the requisite service period of the award, which is the standard vesting term of four years.

We recognized stock-based compensation expense of $~~880,000~~786 and $~~412,000~~432 during the ~~nine~~six months ended ~~December~~September 3130, ~~2017~~2018 and ~~December~~September 3130, ~~2016~~2017, respectively. As of ~~December~~September 3130, ~~2017~~2018, we had an aggregate of $43,~~697,000~~523 of stock-based compensation remaining to be amortized to expense over the remaining requisite service period of the underlying awards. We currently expect this stock-based compensation balance to be amortized as follows: $~~340,000~~589 during the remainder of fiscal ~~2018; $1,400,000 during fiscal~~ 2019; $1,~~409,000~~398 during fiscal 2020; $1,~~116,000~~109 during fiscal 2021; and $~~432,000~~427 during fiscal 2022. The expected amortization reflects only outstanding stock option awards as of ~~December~~September 3130, ~~2017~~2018. We expect to continue to issue stock-based awards to our employees in future periods.

Due to insufficient authorized shares of Common Stock as of November 14, 2016, the vested options as of this date with a fair value of $818,000, were reclassified from equity to liabilities and re-measured at fair value. The vested options were presented in Salon’s March 31, 2017 financial statements under accrued liabilities. The balance of the option liability was $931,000 as of March 31, 2017. Upon the increased authorization of shares of Common Stock, which took place upon the filing of the Amendment with the Secretary of State of the State of Delaware on August 1, 2017, the option liability of $1,010,000 was reclassified back to equity.

The full impact of stock-based compensation in the future is dependent upon, among other things, the timing of when we hire additional employees, the effect of new long-term incentive strategies involving stock awards in order to continue to attract and retain employees, the total number of stock-awards granted, achievement of specific goals for performance-based grants, the fair value of the stock awards at the time of grant and the tax benefit that we may or may not receive from stock-based expenses. Additionally, stock-based compensation requires the use of an option-pricing model to determine the fair value of stock option awards. This determination of fair value is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, our expected stock price volatility over the term of the awards.

~~Results of Operations for the Three and Nine Months Ended December 31, 2017 Compared to the Three and Nine Months Ended December 31, 2016~~26

Results of Operations for the Three and Six Months Ended September 30, 2018 Compared to the Three and Six Months Ended September 30, 2017

Revenues

Revenues ~~remained~~decreased ~~flat~~42% atto approximately $10.27 million for the three months ended ~~December~~September 3130, ~~2017~~2018 ~~and~~from ~~December~~approximately 31$1.2 million for the three months ended September 30, ~~2016~~2017. Revenues ~~increased~~decreased 1050% to approximately $31.93 million for the ~~nine~~six months ended ~~December~~September 3130, ~~2017~~2018 from approximately $32.56 million for the ~~nine~~six months ended ~~December~~September 3130, ~~2016~~2017. ~~The increase is primarily due to an 11% increase in overall advertising revenue as a result of higher average CPMs year over year.~~

Advertising revenues ~~remained~~decreased ~~flat~~40% atto approximately $0.96 million for the three months ended ~~December~~September 3130, ~~2017~~2018 ~~and~~from ~~December~~approximately 31$1.0 million for the three months ended September 30, ~~2016~~2017. Direct advertisement sales were approximately 1632% and programmatic advertisement sales were approximately 8468% of total advertising revenue for the three months ended ~~December~~September 3130, ~~2017~~2018.

Advertising revenues ~~increased~~decreased 1155% to approximately $3.1.0 million for the ~~nine~~six months ended ~~December~~September 3130, ~~2017~~2018 from approximately $2.82 million for the ~~nine~~six months ended ~~December~~September 3130, ~~2016~~2017. ~~The increase is a result of higher average CPMs year over year.~~ Direct advertisement sales were approximately 1223% and programmatic advertisement sales were approximately 8776% of total advertising revenue for the ~~nine~~six months ended ~~December~~September 3130, ~~2017~~2018.

Revenues from all other sources, mostly referral fees, ~~remained~~decreased ~~constant~~50% atto approximately $0.31 million for the three months ended ~~December~~September 3130, ~~2017~~2018 from approximately $0.2 million for the ~~same~~three ~~period~~months aended ~~year~~September ~~ago~~30, 2017. Revenues from all other sources, ~~remained~~decreased ~~constant~~25% atto approximately $0.73 million for the ~~nine~~six months ended ~~December~~September 3130, ~~2017~~2018 from approximately $0.4 million for the ~~same~~six ~~period~~months aended ~~year~~September ~~ago~~30, 2017. The overall decreases were attributed to lower revenues from a renewed referral fee customer agreement.

Expenses

Production and content

Production and content expenses decreased 3044% to approximately $0.86 million for the three months ended ~~December~~September 3130, ~~2017~~2018 from approximately $1.20 million for the three months ended ~~December~~September 3130, ~~2016~~2017. Production and content expenses decreased 841% to approximately $21.82 million for the ~~nine~~six months ended ~~December~~September 3130, ~~2017~~2018 from approximately $32.10 million for the ~~nine~~six months ended ~~December~~September 3130, ~~2016~~2017. The ~~decreases~~decrease ~~were~~was mainly attributed to ~~decreased~~personnel ~~costs~~changes ~~associated~~and ~~with~~a decrease in internet hosting and ~~market~~ad ~~research~~serving fees.

Sales and marketing

Sales and marketing expenses decreased 46100% to approximately $0.10 million for the three months ended ~~December~~September 3130, ~~2017~~2018 from approximately $0.21 million for the three months ended ~~December~~September 3130, ~~2016~~2017. Sales and marketing expenses decreased 41100% to approximately $0.40 million for the ~~nine~~six months ended ~~December~~September 3130, ~~2017~~2018 from approximately $0.73 million for the ~~nine~~six months ended ~~December~~September 3130, ~~2016~~2017. The ~~decreases~~decrease ~~were~~was mainly attributed to personnel reductions.

Technology

Technology expenses decreased 3227% to approximately $0.21 million for the three months ended ~~December~~September 3130, ~~2017~~2018 from approximately $0.32 million for the three months ended ~~December~~September 3130, ~~2016~~2017. Technology expenses decreased 3425% to approximately $0.63 million for the ~~nine~~six months ended ~~December~~September 3130, ~~2017~~2018 from approximately $0.94 million for the ~~nine~~six months ended ~~December~~September 3130, ~~2016~~2017. The ~~decreases~~decrease ~~were~~was mainly attributed to personnel reductions.

General and administrative

General and administrative expenses increased 2911% to approximately $0.76 million for the three months ended ~~December~~September 3130, ~~2017~~2018 from approximately $0.65 million for the three months ended ~~December~~September 3130, ~~2016.~~2018 and 2017. General and administrative expenses increased 1155% to approximately $1.73 million for the ~~nine~~six months ended ~~December~~September 3130, ~~2017~~2018 from approximately $10.59 million for the ~~nine~~six months ended ~~December~~September 3130, ~~2016~~2017. The ~~increases~~increase ~~were~~was mainly attributed to non-cash stock-based compensation ~~for new options granted during the nine months ended December 31, 2017~~.

Interest expense

Interest expense ~~decreased~~increased ~~99.7~~200% to approximately $0.0104 million for the three months ended ~~December~~September 3130, ~~2017~~2018 from approximately $40.401 million for the three months ended ~~December~~September 3130, ~~2016~~2017. Interest expense decreased 9174% to approximately $0.408 million for the ~~nine~~six months ended ~~December~~September 3130, ~~2017~~2018 from approximately $40.53 million for the ~~nine~~six months ended ~~December~~September 3130, ~~2016~~2017. ~~These~~The ~~decreases~~decrease ~~were~~was primarily attributed to the decrease of non-cash charges from the beneficial conversion feature of convertible promissory notes ~~in the December 2016 quarter~~.

Liquidity and capital resources

Net cash used in operations was approximately $0.72 million for the ~~nine~~six months ended ~~December~~September 3130, ~~2017~~2018. The principal uses of cash during the ~~nine~~six months ended ~~December~~September 3130, ~~2017~~2018 were to fund the $21.06 million net loss, inclusive of $0.48 million ~~non-cash interest expense, $0.9 million~~ stock-based compensation expense, and the net activities from various working capital for the period. The accounts receivable, net as of ~~December~~September 3130, ~~2017~~2018 of approximately $0.84 million, represent primarily advertising sales during the period, and are expected to be collected within the next four months.

Net cash provided by financing activities was approximately $0.82 million and $10.23 million for the ~~nine~~six months ended ~~December~~September 3130, ~~2017~~2018 and ~~December~~September 3130, ~~2016~~2017, ~~respectively,~~ reflecting proceeds from convertible promissory notes, ~~short-term advances from related parties~~ and ~~issuances~~unsecured ~~of common stock, offset by repayments of related party~~ advances.

We estimate that we will require approximately $0.35 million in additional funding to meet our operating needs for the remaining ~~three~~nine months of fiscal ~~2018~~year 2019, ending March 31, ~~2018~~2019. Until the collective bargaining negotiations with WGAE are finalized, however, we will not have a clear idea of any potential increase in our budget. If planned revenues are less than expected, or if planned expenses are more than expected, the cash shortfall may be higher, which will result in a commensurate increase in required financing.

During the ~~nine~~six months ended ~~December~~September 3130, ~~2017~~2018, we issued $~~275~~0.11 million in ~~interest-free~~10% ~~demand~~convertible promissory notes and $~~510~~0.115 million in 10% ~~convertible~~senior ~~promissory~~secured notes payable. If we were not able to obtain additional funding from related parties or others, we would be required to curtail or discontinue operations, or consider other alternatives.

23Off-Balance-Sheet Arrangements and Contractual Obligations

~~During~~We ~~the~~have three months ended December 31, 2017, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with each of Spear Point Capital Fund, LP, Erika Tanenbaum, Hilary Tanenbaum, Eu Revocable Trust, TEC Opportunities, and Jordan Hoffner (each a “Bridge Note Purchaser”) pursuant to which the Company sold to the Bridge Note Purchasers an ~~aggregate~~operating ~~principal~~lease ~~amount~~primarily offor ~~$510~~office inspace mandatorily convertible notes. The notes have a one-year maturity and bear a 10% interest rate. The notes will convert at a discount into shares of Common Stock upon a qualified financing by the Company of at least $1 million. In the event of no conversionfacilities, ~~the~~this ~~notes~~lease ~~are~~expires ~~payable~~ in cash or convert into a number of shares of common stock of the Company, rounded down to the nearest whole share based on the Company’s as diluted price per share on the maturity date. The notes will convert at a discount into shares of Common Stock upon a qualified financing by the Company of at least $1 million. The conversion price will equal to 70% of the price per share paid in the qualified financing if such financing occurs within four months from the date of the Securities Purchase Agreement, or 70% less ~~2% per each month after the fourth month anniversary; provided however that the Conversion Price will never be less~~ than ~~the~~12 ~~greater~~months ~~of (A) sixty percent (60%) of the purchase price paid in the qualified financing~~ and ~~(B)~~is ~~the~~not ~~price~~recorded ~~per~~on ~~share paid by investors in~~ the ~~most~~balance ~~recently consummated offering of the Company’s common stock~~sheet, orwe ~~$0.0124~~recognize ~~per~~lease ~~share,~~expense ~~the~~for ~~conversion~~this ~~price~~lease inon ~~the~~a ~~Series~~straight-line Abasis ~~Mandatorily~~over ~~Convertible Preferred Private Placement, if~~ the ~~financing~~lease ~~occurs more than four months after the date of the Securities Purchase Agreement~~term.

~~Off-Balance-Sheet Arrangements~~28

We have no off-balance-sheet arrangements.

Contractual Obligations

The following summarizes our contractual obligations as of December 31, 2017:

	Payments Due By Period
	Total		1 Year or Less		1 - 3 Years
Operating lease	$	113	$	58	$	55
Short-term borrowing		1,000		1,000		-
Short-term borrowing interest		424		424		-
Total	$	1,537	$	1,482	$	55

Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~Salon~~As ~~maintains all of its cash in immediately available cash deposits at its bank. These funds are not subject to market risk and no interest is paid on such funds. In May 2007, we entered into~~ a ~~credit~~“smaller ~~agreement~~reporting ~~with~~company” ~~Deutsche~~as ~~Bank~~defined ~~Securities,~~by ~~Inc.~~Item ~~that~~10 ~~allows us to borrow up to $1.0 million at a rate~~ of ~~prime~~Regulation ~~less 0.25% which subjects Salon to interest rate risk. In September 2016~~S-K, ~~this~~we ~~credit~~are ~~agreement~~not ~~was~~required ~~sold~~ to ~~Raymond~~provide ~~James.~~information ~~Our~~required ~~obligations under this agreement are guaranteed in their entirety~~ by ~~former Chairman of the Board, John Warnock. As of December 31, 2017, we had $1.0 million in principal and $0.4 million of accrued interest outstanding under~~ this ~~agreement, payable on demand~~item. The interest rate under the agreement may increase, though management does not believe that the impact of a potential rate increase will materially affect the financial condition of the Company. As Salon conducts all of its business in the United States, Salon is not subject to foreign exchange risk.

Item 4. Controls and Procedures

Evaluation of Our Disclosure Controls and Internal Controls

Our management, with the participation of ~~our~~the ~~CEO~~Company’s executive and ~~CFO~~principal financial officers, ~~conducted~~or anpersons ~~evaluation~~performing ofsimilar functions, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Form 10-Q (~~December~~September 3130, ~~2017~~2018), as is defined in Rule 13a-15(e) promulgated under the Exchange Act. Our disclosure controls and procedures are intended to ensure that the information we are required to disclose in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including the ~~CEO~~Company’s ~~and CFO~~management, as the principal executive and financial officers, respectively, to allow timely decisions regarding required disclosures.

Based on that evaluation, our ~~CEO~~management ~~and CFO~~ concluded that, as of the end of the period covered by this Form 10-Q, our disclosure controls and procedures were not effective. due to the following material weaknesses:

Lack of segregation of duties;

Failure to implement accounting controls

To the extent reasonably possible given our limited resources, we intent to take measures to cure the aforementioned weaknesses.

Our management has concluded that the financial statements included in this Form 10-Q present fairly, in all material respects our financial position, results of operations and cash flows for the periods presented in conformity with GAAP.

To address the material weaknesses, we performed additional analysis and other post-closing procedures in an effort to ensure our financial statements included in this report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in the report fairly present in all material aspects our financial condition, results of operations and cash flows for the years presented.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events.

Changes in Internal Controls Over Financial Reporting

There was no change in our internal controls over financial reporting that occurred during the period covered by this Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

2529

PART II: OTHER INFORMATION

Item 1. Legal Proceedings.

In August 2016, we informed our landlord at our office space at 132 West 31st Street, New York, New York, of our intention to move out of the premises, and we engaged a property agent to find a sub-tenant for the space. The lease for New York space commenced on July 1, 2014 and will expire on September 30, 2019. In January 2017, we were asked to vacate the office space at 132 West 31st Street due to nonpayment of our monthly rent, and on January 30, 2017, we released the letter of credit of $204 to the landlord in payment of the past due rent. On August 3, 2017, we received a Complaint from the landlord. This civil summons and complaint in New York State Court seeks to recover all unpaid rents for the remainder of our five-year lease, equal to approximately $918, plus damages and attorneys fees (and currently approximately $630 as of the date of this report). Counsel for Salon is currently evaluating potential defenses and counterclaims, based on the laws and facts.

The potential amount of this contingent liability is indeterminate, since it is unknown whether the Landlord will lease the premises to a new tenant, in which case the rents from the new tenant are an off-set to this liability. While counsel for Salon is evaluating potential defenses and counterclaims to the Complaint, we are unable to determine the foregoing liability, if any, with any degree of certainty, due to the uncertain nature of litigation matters. The parties are currently engaged in discovery proceedings and no trial date has been set. The landlord has moved for partial summary judgement as to liability, which motion has not yet been opposed, argued or decided by the Court.

~~Item~~On 1ANovember 18, 2018, Jordana Brondo, a former employee of Salon Media Group, brought a formal claim against the Company for Judicial Arbitration and Mediation Services under JAMS in San Francisco, CA. Under ~~Risk~~her ~~Factors~~claim, Ms. Brondo alleges wrongful termination under the basis of gender discrimination pregnancy discrimination, wrongful termination in violation of public policy, and retaliation. Ms. Brondo seeks general damages, special damages, punitive damages, cost of fees and attorney fees in the amount of $1,600. The Company has denied the allegations and is actively defending the matter. In addition, the Company has insurance to cover any unexpected liability. The matter is currently pending.

Salon’s business faces significant risks. The risks described below may not be the only risks Salon faces. Additional risks that are not yet known or that are currently immaterial may also impair its business operations or have a negative impact on its stock price. If any of the events or circumstances described in the following risks actually occurs, its business, financial condition or results of operations could suffer, and the trading price of its Common Stock could decline. The Risk Factors set forth below have not materially changed from those included in our Fiscal 2017 Annual Report.30

Salon has historically lacked significant revenues and has a history of losses.

We have a history of significant losses and expect to incur a loss from operations, based on U.S. GAAP, for our fiscal year ending March 31, 2018 and to be determined in future years. Even if we attain profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. If revenues grow more slowly than we anticipate or operating expenses exceed expectations, financial results will most likely be severely harmed and our ability to continue operations will be seriously jeopardized.

BPM LLP, Salon’s independent registered public accounting firm for the fiscal years ended March 31, 2015 through 2017 included a “going-concern” audit opinion on the financial statements for each of those years. The audit opinions report substantial doubt about our ability to continue as a going concern, citing issues such as the history of losses and absence of current profitability. As a result of the factors noted in the going concern opinions, our stock price and investment prospects have been and will continue to be adversely affected, thus limiting financing choices and raising concerns about the realization of value on assets and operations.

The Company has operated in the past principally with the assistance of interest-free advances from related parties, and more recently by financing rounds. The financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

Salon’s projected cash flows may not meet expectations.

We rely on cash projections to run our business and change such projections as new information is made available or events occur. The most significant component of our cash projections is cash to be generated from advertising sales. Forecasting advertising revenues and resulting cash receipts for an extended period of time is problematic due to the short duration of most advertising sales contracts. If projected cash inflows and outflows do not meet expectations, our ability to continue as a going concern may be adversely affected.

If we forecast or experience periods of limited, or diminishing cash resources, we may need to sell additional securities or borrow additional funds. There is no guarantee that we will be able to issue additional securities in future periods or borrow additional funds on commercially reasonable terms to meet our cash needs. Our ability to continue as a going concern will be adversely affected if we are unable to raise additional cash from sources we have relied upon in the past or from new sources.

We have relied on related parties for significant investment capital.

We have relied on cash infusions from related parties to fund operations for many years. The related parties are primarily John Warnock, former Chairman of the Board, and William Hambrecht. William Hambrecht is a Director and the father of our CFO, Elizabeth Hambrecht.

On January 24, 2017, Salon entered into the Purchase Agreement with various investors to issue and sell to the investors in a Private Placement shares of the Company’s Series A Preferred Stock that will automatically convert into shares of Common Stock, upon the filing of the Amendment and resulting increase in authorized shares of Common Stock, which occurred on August 1, 2017, and the delivery to the Company’s stockholders of an information statement, pursuant to the Purchase Agreement. As reported in Salon’s Current Reports on Form 8-K, filed with the SEC on January 27, 2017, March 27, 2017 and July 26, 2017, the Initial Closing of $1 million, the Second Closing of $0.215 million and the Final Closing of $0.275 million were completed on January 26, 2017, March 23, 2017, and July 20, 2017, respectively.

William Hambrecht, Elizabeth Hambrecht, Jordan Hoffner and Larry Hoffner, the father of our CEO Jordan Hoffner, were purchasers in the Initial Closing of the Private Placement. Jordan Hoffner, CEO, Ryan Nathanson, Chief Operating Officer, and Jordana Brondo, former Chief Revenue Officer, were also purchasers in the second closing of the Private Placement. William Hambrecht, Elizabeth Hambrecht and Jordan Hoffner were purchasers in the Final Closing of the Private Placement. Jordan Hoffner and Elizabeth Hambrecht were also purchasers in the Bridge Note.

Curtailment of cash investments and borrowing guarantees by related parties would detrimentally impact our cash availability and our ability to fund our operations.

We started collective bargaining with our non-supervisory editorial employees, and the results of this process are uncertain.

On August 3, 2015, the WGAE became the collective bargaining representative of Salon’s non-supervisory editorial employees. We commenced collective bargaining with the WGAE in November 2015. Should this collective bargaining process result in an agreement that would not permit us to obtain additional funding, there can be no assurance that we will be able to continue our current business.

Our principal stockholders exercise a controlling influence over our business affairs and may make business decisions with which non-principal stockholders disagree, which may affect the value of non-principal stockholders’ investments.

As of July 20, 2017, after the Closing of the Private Placement of an aggregate principal amount of $1.69 million of the Series A Preferred Stock, approximately 67% of our voting securities are controlled, directly or indirectly by John Warnock, William Hambrecht and Spear Point Capital Fund, LP. These three investors, if aligned, could combine to make business decisions with which non-principal stockholders disagree, and which may affect the value of the non-principal stockholders’ investments.

Future sales of significant number of shares of our Common Stock by principal stockholders could cause our stock price to decline.

As of December 31, 2017, our directors and officers owned approximately 155 million shares of Common Stock, on an as converted basis, and upon the increase in authorized share capital upon the filing of the Amendment with the Secretary of State of Delaware after the Final Closing of the Private Placement. The increased authorized share capital will allow the shares of Series A Preferred Stock to convert into shares of Common Stock, pursuant to the terms of the Purchase Agreement. The 155 million shares, as converted, represent approximately 49% of post-offering fully diluted ownership, following the Initial, Second and Final Closings of the Private Placement. As our shares of Common Stock are normally thinly traded, if our principal stockholders were to sell their shares of Common Stock, the price per share of our shares of Common Stock could be adversely affected.

Existing stockholders may experience significant dilution from the issuance of our common stock pursuant to our recently issued convertible notes.

We currently have $585,000 in convertible notes issued as part of a bridge note financing. These notes will convert at a discount into shares of Common Stock upon a qualified financing by the Company of at least $1 million. The conversion price will equal to 70% of the price per share paid in the qualified financing if such financing occurs within four months from the date of the Securities Purchase Agreement, or 70% less 2% per each month after the fourth month anniversary; provided however that the Conversion Price will never be less than the greater of (A) sixty percent (60%) of the purchase price paid in the qualified financing and (B) the price per share paid by investors in the most recently consummated offering of the Company’s common stock, or $0.0124 per share, the conversion price in the Series A Mandatorily Convertible Preferred Private Placement, if the financing occurs more than four months after the date of the Securities Purchase Agreement. The issuance and sale of our common stock to these bridge note holders for any conversions may have a dilutive impact on our shareholders.

Our stock has been, and will likely continue to be, subjected to substantial price and volume fluctuations due to a number of factors, many of which are beyond our control and which may prevent our stockholders from reselling Common Stock at a profit.

The securities markets can experience significant price and volume fluctuations. This market volatility, as well as general economic, market or political conditions, could affect the market price of our shares of Common Stock, regardless of our operating performance. In addition, our stock is thinly traded. Even a few transactions, whether in response to disappointment in our expected operating results or for any other reason, could cause the market price of our shares of Common Stock to decrease significantly.

Holders of our shares of Series A Preferred Stock are entitled to potentially significant liquidation preferences of Salon’s assets over holders of our shares of Common Stock in the event of a liquidation event.

Holders of shares of Series A Preferred Stock have liquidation preferences over holders of shares of Common Stock of the first approximately $4.0 million in potential sales proceeds as of December 31, 2017. If a liquidation event were to occur, the holders of shares of Series A Preferred Stock would be entitled to receive the first $4.0 million of cash distributions. Holders of shares of Series A Preferred Stock are not entitled to receive dividends, pursuant to the Certificate Designation of Preferences, Rights and Limitations of the Series A Preferred Stock. Upon the filing of the Amendment and resulting increase in our authorized share capital, which occurred on August 1, 2017, and the future delivery to the Company’s stockholders of the information statement, the shares of Series A Preferred Stock will automatically convert into shares of Common Stock.

We depend on advertising sales for substantially all of our revenues, and our inability to maintain or increase advertising revenues would harm our business.

Our ability to maintain or increase our advertising revenues depends upon many factors, including whether we will be able to:

● attract and maintain additional visitors to our Website and increase brand awareness;

● sell and market our Website or other rich media advertisements;

● maintain a significant number of sellable impressions generated from Website visitors available to advertisers;

● increase the dollar amount of our advertising orders;

● improve our Website’s technology for serving advertising;

● handle temporary high volume traffic spikes to our Website;

● measure accurately the number and demographic characteristics of our users; and

● attract and retain key sales personnel.

As more of our users access our Website using mobile devices rather than PCs, if we do not continue to grow our mobile users and revenue, our business will be adversely impacted.

Internet users increasingly use mobile devices rather than PCs to access the Internet. Approximately 70% of our monthly users are now visiting our Website on mobile devices. As mobile platforms encompass a larger share of our readers, our ability to grow advertising revenue is increasingly dependent on our ability to generate revenue from advertisements displayed on mobile devices. While we plan to continue to devote technology resources to support our mobile browser product and advertising products, if our mobile browser product and advertising products for mobile devices do not attract and retain users and advertisers to generate mobile revenue, our operating and financial results will be adversely impacted. We are dependent upon our products operating on mobile operating systems we do not control. The mobile phone manufacturer and its operating systems might block access to our Website or make it hard for users to find our Website through their devices, or block certain advertisements or charge us for delivery of advertisements, all of which would harm our operations and suppress revenue potential.

Technologies and software applications could block our advertisements, which could harm our operating results.

Technologies and software applications have been developed for PC and mobile devices that can block or allow users to opt out of display advertising, delete or block cookies used to deliver advertising, or move advertising to less optimal placements to suppress view-ability. Most of our advertising revenue is derived from display or video advertisements on our Website. As a result, ad-blocking technologies or software could reduce the number of display or video advertisements, which could result in decreased revenue.

If we cannot increase referrals from social media platforms, our ability to attract new unique visitors and maintain the engagement of existing unique visitors could be adversely affected.

As the behavior of internet consumers continues to change, distribution of our content, products and services via traditional methods may become less effective, and new distribution strategies may need to be developed. Consumers are increasingly using social networking sites, such as Facebook and Twitter, to communicate and to acquire and disseminate information. As consumers migrate towards social networks, we continue to build social elements into our content, products and services in order to make them available on social networks and to attract and engage consumers on our Website and mobile platforms. There is no guarantee that we will be able to successfully integrate our content with such social networking or other new consumer trends. Even if we are able to distribute our content, products and services effectively through social networking or other new or developing distribution channels, this does not assure that we will be able to attract new unique visitors or generate additional page views that can be monetized by our advertising platform.

Hackers may attempt to penetrate our security system and online security breaches could harm our business.

Consumer and supplier confidence in our Website depends on maintaining strong security features. Experienced programmers or “hackers” have penetrated sectors of our systems, and we expect that these attempts will continue to occur from time to time. To our knowledge, there has been no outward harm to us or our users as a result of hacking attempts. Furthermore, Salon has engaged the services of a third-party web application security-testing company, which conducts regular comprehensive searches for any vulnerabilities that may exist, allowing us to address and fix any issues before they can be exploited. This minimizes the risk of damage; however, because a hacker who is able to penetrate network security could misappropriate proprietary information or cause interruptions in our products and services, we may have to expend significant capital and resources to protect against or to alleviate problems caused by hackers. Additionally, we may not have a timely remedy against a hacker who is able to penetrate our network security. Such security breaches could materially affect our operations, damage our reputation and expose us to risk of loss or litigation. In addition, the transmission of computer viruses resulting from hackers or otherwise could expose us to significant liability. Our insurance policies may not be adequate to reimburse us for losses caused by security breaches. We also face risks associated with security breaches affecting third parties with whom we have relationships.

We must promote the Salon brand to attract and retain users, advertisers and strategic partners.

The success of the Salon brand depends largely on our ability to provide high quality content and services. If Internet users do not perceive our existing content and services to be of high quality, or if we introduce new content and services or enter into new business ventures that are not favorably perceived by users, we may not be successful in promoting and maintaining the Salon brand. Any change in the focus of our operations creates a risk of diluting our brand, confusing consumers and decreasing the value of our user base to advertisers. If we are unable to maintain or grow the Salon brand, our business would be severely harmed.

We must hire, integrate and/or retain qualified personnel to support our business plans.

Our success significantly depends on key personnel. In addition, because our users must perceive the content of our Website as having been created by credible and notable sources, our success also depends on the name recognition and reputation of our editorial staff. Due to our history of losses, we may experience difficulty in hiring and retaining highly skilled employees with appropriate qualifications. We may be unable to retain our current key employees or attract, integrate or retain other qualified employees in the future. If we do not succeed in attracting new personnel or retaining and motivating our current personnel, our business would be harmed.

Our success depends on our key personnel, including our executive officers, and the loss of key personnel, including our CEO, could disrupt our business.

Our success greatly depends on the continued contributions of our senior management and other key sales, marketing and operations personnel. While we have employment agreements with some key management, these employees may voluntarily terminate their employment at any time. We may not be able to successfully retain existing personnel or identify, hire and integrate new personnel. We do not have key person insurance policies in place for these employees.

We may expend significant resources to protect our intellectual property rights or to defend claims of infringement by third parties, and if we are not successful we may lose rights to use significant material or be required to pay significant fees.

Our success and ability to compete are dependent on our proprietary content. We rely exclusively on copyright law to protect our content. While we actively take steps to protect our proprietary rights, these steps may not be adequate to prevent the infringement or misappropriation of our content, which could severely harm our business. We also license content from various freelance providers and other third-party content providers. While we attempt to ensure that such content may be freely licensed to us, other parties may assert claims of infringement against us relating to such content.

We may need to obtain licenses from others to refine, develop, market and deliver new services. We may not be able to obtain any such licenses on commercially reasonable terms or at all or rights granted pursuant to any licenses may not be valid and enforceable.

In April 1999, we acquired the Internet address www.salon.com. Because www.salon.com is the address of the main home page to our Website and incorporates Salon’s name, it is a vital part of our intellectual property assets. We do not have a registered trademark on the address, and therefore it may be difficult for us to prevent a third party from infringing on our intellectual property rights to the address. If we fail to adequately protect our rights to the Website address, or if a third party infringes our rights to the address, or otherwise dilutes the value of www.salon.com, our business could be harmed.

Our technology development efforts may not be successful in improving the functionality of our network, which could result in reduced traffic on our Website or reduced advertising revenues.

We are constantly upgrading our technology to manage our Website. During the last several years, we redesigned our Website homepage and vertical sections. In addition, we are creating new technology for new products that we expect to launch on an ongoing basis. If these systems do not work as intended, or if we are unable to continue to develop these systems to keep up with the rapid evolution of technology for content delivery, our Website may not operate properly, which could harm our business. Additionally, software product design, development and enhancement involve creativity, expense and the use of new development tools and learning processes. Delays in software development processes are common, as are project failures, and either factor could harm our business. Moreover, complex software products such as our online publishing platform frequently contain undetected errors or shortcomings, and may fail to perform or scale as expected. Although we have tested and will continue to test our systems, errors or deficiencies may be found in these systems that could adversely impact our business.

We rely on third parties to provide the technologies necessary to deliver content, advertising and services to our users, and any change in the licensing terms, costs, availability, or acceptance of these formats and technologies could adversely affect our business.

We rely on third parties to provide the technologies that we use to deliver content, advertising, and services to our users. There can be no assurance that these providers will continue to license their technologies or intellectual property to us on reasonable terms, or at all. Providers may change the fees they charge users or otherwise change their business models in a manner that slows the widespread acceptance of their technologies. In order for our services to be successful, there must be a large base of users of the technologies to deliver our content, advertising, and services. We have limited or no control over the availability or acceptance of those technologies, and any change in licensing terms, costs, availability, or user acceptance of these technologies could adversely affect our business.

We may be held liable for content or third party links on our Website or content distributed to third parties.

As a publisher and distributor of content over the Internet, including links to third-party websites that may be accessible through our Website, or content that includes links or references to a third-party’s website, we face potential liability for defamation, negligence, copyright, patent or trademark infringement and other claims based on the nature, content or ownership of the material that is published on or distributed from our Website. These types of claims have been brought, sometimes successfully, against online services, websites and print publications in the past. Other claims may be based on errors or false or misleading information provided on linked websites, including information deemed to constitute professional advice such as legal, medical, financial or investment advice. Other claims may be based on links to sexually explicit websites. Although we carry general liability and media insurance, our insurance may not be adequate to indemnify us for all liabilities imposed. Any liability that is not covered by our insurance or is in excess of our insurance coverage could severely harm our financial condition and business. Implementing measures to reduce our exposure to these forms of liability may require us to spend substantial resources and limit the attractiveness of our service to users.

Our systems may fail due to natural disasters, telecommunications failures and other events, any of which would limit user traffic.

Our Website, Salon.com, and content management system run on cloud computing hosted by Amazon Web Services, which are in facilities located in Virginia, Washington and Ireland. Any disruption of Amazon’s cloud computing platform could result in a service outage. Fire, floods, earthquakes, power loss, telecommunications failures, break-ins, supplier failure to meet commitments, and similar events could damage these systems and cause interruptions in our services. Computer viruses, electronic break-ins or other similar disruptive problems could cause users to stop visiting our Website and could cause advertisers to terminate any agreements with us. In addition, we could lose advertising revenues during these interruptions and user satisfaction could be negatively impacted if the service is slow or unavailable. If any of these circumstances occurred, our business could be harmed. Our insurance policies may not adequately compensate us for losses that may occur due to any failures of or interruptions in our systems. We do not presently have a formal disaster recovery plan.

Our Website must accommodate a high volume of traffic and deliver frequently updated information. It is possible that we will experience systems failures in the future and that such failures could harm our business. In addition, our users depend on Internet service providers, online service providers and other website operators for access to our Website. Many of these providers and operators have experienced significant outages in the past, and could experience outages, delays and other difficulties due to system failures unrelated to our systems. Any of these system failures could harm our business.

Privacy concerns could impair our business.

We have a policy against using personally identifiable information obtained from users of our Website and services without the user’s permission. In the past, the Federal Trade Commission has investigated companies that have used personally identifiable information without permission or in violation of a stated privacy policy. If we use personal information without permission or in violation of our policy, we may face potential liability for invasion of privacy for compiling and providing information to our corporate customers and electronic commerce merchants. In addition, legislative or regulatory requirements may heighten these concerns if businesses must notify Internet users that the data may be used by marketing entities to direct product promotion and advertising to the user. Other countries and political entities, such as the European Union, have adopted such legislation or regulatory requirements. The United States may adopt similar legislation or regulatory requirements in the future. If consumer privacy concerns are not adequately addressed, our business, financial condition and results of operations could be materially harmed.

Due to the volatility of the price of our Common Stock, we may be the target of securities litigation, which is costly and time-consuming to defend.

The price of our Common Stock has experienced volatility in the past, and may continue to do so in the future. In the past, following volatility in the price of a company’s securities, securities holders have instituted class action litigation against such company. Many companies have been subjected to this type of litigation. If the market value of our Common Stock experiences adverse fluctuations and we become involved in this type of litigation, regardless of the merits or outcome, we could incur substantial legal costs and our management’s attention could be diverted, causing our business, financial condition and operating results to suffer. To date, we have not been subject to such litigation.

Our quarterly operating results are volatile and may adversely affect the price of our Common Stock.

Our future revenues and operating results are likely to fluctuate significantly from quarter to quarter due to a number of factors, many of which are outside our control, and any of which could severely harm our business. These factors include:

● our ability to attract and retain advertisers;

● our ability to attract and retain a large number of users;

● our ability to increase referrals from our social media presence;

● the introduction of new websites, services or products by us or by our competitors;

● our ability to maximize our mobile presence;

● the timing and uncertainty of our advertising sales cycles;

● the mix of advertisements sold by us or our competitors;

● economic and business cycles;

● our ability to attract, integrate and retain qualified personnel;

● technical difficulties or system downtime affecting the Internet generally or the operation of our Website; and

● the amount and timing of operating costs.

Due to the factors noted above and the other risks discussed in this section and in our Annual Report, one should not rely on quarter-to-quarter comparisons of our results of operations as an indication of future performance. It is possible that some future periods’ results of operations may be below the expectations of public market analysts and investors. If this occurs, the price of our Common Stock may decline.

We have no immediate plans to pay dividends.

We have not paid any cash dividends to date and do not expect to pay dividends for the foreseeable future. We intend to retain earnings, if any, as necessary to finance the operation and expansion of our business.

There is a limited trading market for our common stock.

Our common stock is traded on the OTC Markets (QB Marketplace Tier) under the symbol “SLNM.” During the three-months ended January 31, 2018, the average daily trading volume of our common stock was approximately 2,780 shares. There has been limited trading activity in our stock recently, and when it has traded, the price has fluctuated widely. We consider our common stock to be “thinly traded” and any last reported sale prices may not be a true market-based valuation of the common stock. A consistently active trading market for our stock may not develop at any time in the future. Stockholders may experience difficulty selling their shares if they choose to do so because of the illiquid market and limited public float for our stock.

Our common stock is considered to be a “penny stock” and, as such, the market for our common stock may be further limited by certain SEC rules applicable to penny stocks.

As long as the price of our common stock remains below $5.00 per share or we have net tangible assets of $2,000,000 or less, our shares of common stock are likely to be subject to certain “penny stock” rules promulgated by the SEC. Those rules impose certain sales practice requirements on brokers who sell penny stock to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000). For transactions covered by the penny stock rules, the broker must make a special suitability determination for the purchaser and receive the purchaser’s written consent to the transaction prior to the sale. Furthermore, the penny stock rules generally require, among other things, that brokers engaged in secondary trading of penny stocks provide customers with written disclosure documents, monthly statements of the market value of penny stocks, disclosure of the bid and asked prices and disclosure of the compensation to the brokerage firm and disclosure of the sales person working for the brokerage firm. These rules and regulations make it more difficult for brokers to sell our shares of our common stock and limit the liquidity of our securities.

Transfers of our securities may be restricted by virtue of state securities “blue sky” laws which prohibit trading absent compliance with individual state laws. These restrictions may make it difficult or impossible to sell shares in those states.

Transfers of our common stock may be restricted under the securities or securities regulations laws promulgated by various states and foreign jurisdictions, commonly referred to as “blue sky” laws. Absent compliance with such individual state laws, our common stock may not be traded in such jurisdictions. Because the securities registered hereunder have not been registered for resale under the blue-sky laws of any state, the holders of such shares and persons who desire to purchase them should be aware that there may be significant state blue sky law restrictions upon the ability of investors to sell the securities and of purchasers to purchase the securities. These restrictions may prohibit the secondary trading of our common stock. Investors should consider the secondary market for our securities to be a limited one.

We have the ability to issue additional shares of our common stock and shares of preferred stock without asking for stockholder approval, which could cause your investment to be diluted.

Our Certificate of Incorporation authorizes the Board of Directors to issue up to 900,000,000 shares of common stock and up to 5,000,000 shares of preferred stock. The power of the Board of Directors to issue shares of common stock, preferred stock or warrants or options to purchase shares of common stock or preferred stock is generally not subject to stockholder approval. Accordingly, any additional issuance of our common stock, or preferred stock that may be convertible into common stock, may have the effect of diluting your investment.

By issuing preferred stock, we may be able to delay, defer or prevent a change of control.

Our Certificate of Incorporation permits us to issue, without approval from our shareholders, a total of 5,000,000 shares of preferred stock. Our Board of Directors can determine the rights, preferences, privileges and restrictions granted to, or imposed upon, the shares of preferred stock and to fix the number of shares constituting any series and the designation of such series. It is possible that our Board of Directors, in determining the rights, preferences and privileges to be granted when the preferred stock is issued, may include provisions that have the effect of delaying, deferring or preventing a change in control, discouraging bids for our common stock at a premium over the market price, or that adversely affect the market price of and the voting and other rights of the holders of our common stock.

Provisions in Delaware law and our charter, stock option agreements and offer letters to executive officers may prevent or delay a change of control.

We are subject to the Delaware anti-takeover laws regulating corporate takeovers. These anti-takeover laws prevent a Delaware corporation from engaging in a merger or sale of more than 10% of its assets with any stockholder, including all affiliates and associates of the stockholder, who owns 15% or more of the corporation’s outstanding voting stock, for three years following the date that the stockholder acquired 15% or more of the corporation’s assets unless:

● the Board approved the transaction in which the stockholder acquired 15% or more of the corporation’s assets;

● after the transaction in which the stockholder acquired 15% or more of the corporation’s assets, the stockholder owned at least 85% of the corporation’s outstanding voting stock, excluding shares owned by directors, officers and employee stock plans in which employee participants do not have the right to determine confidentially whether shares held under the plan will be tendered in a tender or exchange offer; or

● on or after such date, the merger or sale is approved by the Board and the holders of at least two-thirds of the outstanding voting stock that is not owned by the stockholder.

A Delaware corporation may opt out of the Delaware anti-takeover laws if its certificate of incorporation or bylaws so provide. We have not opted out of the provisions of the anti-takeover laws. As such, these laws could prohibit or delay mergers or other takeovers or changes of control of Salon and may discourage attempts by other companies to acquire us.

Our certificate of incorporation and bylaws include a provision relating to special meetings of our shareholders that may deter or impede hostile takeovers or changes of control or management. Special meetings of stockholders may be called only by the Board pursuant to a resolution adopted by a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any such resolution is presented to the Board for adoption) or by the holders of not less than 10% of all of the shares entitled to cast votes at the meeting. This provision may have the effect of delaying or preventing a change of control.

In addition, employment agreements with certain executive officers provide for the payment of severance and acceleration of the vesting of options and restricted stock in the event of termination of the executive officer following a change of control of Salon. These provisions could have the effect of discouraging potential takeover attempts.

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

~~From September 1, 2017 to January 10, 2018, we issued $585,000 in convertible notes issued as part of a bridge note financing~~None. These notes will convert at a discount into shares of Common Stock upon a qualified financing by the Company of at least $1 million. The conversion price will equal to 70% of the price per share paid in the qualified financing if such financing occurs within four months from the date of the Securities Purchase Agreement, or 70% less 2% per each month after the fourth month anniversary; provided however that the Conversion Price will never be less than the greater of (A) sixty percent (60%) of the purchase price paid in the qualified financing and (B) the price per share paid by investors in the most recently consummated offering of the Company’s common stock, or $0.0124 per share, the conversion price in the Series A Mandatorily Convertible Preferred Private Placement, if the financing occurs more than four months after the date of the Securities Purchase Agreement. The proceeds from this bridge financing were used to fund operations. The issuances were exempt pursuant to Section 4(a)(2) and/or Rule 506 of Regulation D of the Securities Act of 1933, as amended.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

OnAdvances/Secured ~~August~~Notes 1,from ~~2017,~~Related ~~we filed a Certificate of Amendment to our Certificate of Incorporation increasing our authorized common stock to nine hundred million (900,000,000) shares.~~Parties

Technology Support Agreement

General Advertising Services Agreement

WGAE Agreement

Asset Purchase Agreement

First Amendment to Asset Purchase Agreement

We also amended Section 10.9 of the Asset Purchase Agreement to include the term sheet related to the acquisition for the documents related to the entire agreement of the parties.

Item 6. Exhibits

(a) Exhibits.

331.1 ~~Certificate~~Certification of ~~Amendment~~Richard toMacWilliams, ~~Restated~~acting ~~Certificate~~Chief ofExecutive ~~Incorporation~~Officer ~~filed~~of ~~with~~ the ~~Delaware~~Registrant ~~Secretary~~pursuant ofto ~~State~~Section ~~on August 1~~302, ~~2017. The form of Amendment was filed~~ as ~~Exhibit~~adopted ~~3.2~~pursuant to the ~~Company’s Current Report on Form 8~~Sarbanes-KOxley ~~filed~~Act onof ~~January 27, 2017; which is incorporated herein by reference.~~2002

1031.12 ~~Securities~~Certification ~~Purchase~~of ~~Agreement~~Trevor Colhoun, ~~dated~~acting ~~October~~Chief 26Financial Officer of the Registrant pursuant to Section 302, ~~2017~~as adopted pursuant to the Sarbanes-Oxley Act of 2002

1032.21 ~~Office~~Certification ~~lease~~of ~~dated~~Richard ~~October 17~~MacWilliams, ~~2017~~acting ~~for~~Chief ~~the~~Executive ~~premises~~Officer ~~located~~of atthe ~~870~~Registrant ~~Market~~pursuant ~~Street,~~to ~~San~~Section ~~Francisco~~906, ~~California.~~as adopted pursuant to the Sarbanes-Oxley Act of 2002

3132.12 Certification of ~~Jordan~~Trevor ~~Hoffner~~Colhoun, acting Chief ~~Executive~~Financial Officer of the Registrant pursuant to Section ~~302~~906, as adopted pursuant to the Sarbanes-Oxley Act of 2002

31.2 Certification of Elizabeth Hambrecht, Chief Financial Officer of the Registrant pursuant to Section 302, as adopted pursuant to the Sarbanes-Oxley Act of 2002

32.1 Certification of Jordan Hoffner, Chief Executive Officer of the Registrant pursuant to Section 906, as adopted pursuant to the Sarbanes-Oxley Act of 2002

32.2 Certification of Elizabeth Hambrecht, Chief Financial Officer of the Registrant pursuant to Section 906, as adopted pursuant to the Sarbanes-Oxley Act of 2002

101.INS**

XBRL Instance

101.SCH**

XBRL Taxonomy Extension Schema

101.CAL**

XBRL Taxonomy Extension Calculation

101.DEF**

XBRL Taxonomy Extension Definition

101.LAB**

XBRL Taxonomy Extension Labels

101.PRE**

XBRL Taxonomy Extension Presentation

** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections

3733

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.

SALON MEDIA GROUP, INC.
Dated: February 8, 2018		/s/ Jordan Hoffner Jordan Hoffner Chief Executive Officer
Dated: February 8, 2018		/s/ Elizabeth Hambrecht Elizabeth Hambrecht Chief Financial Officer

SALON MEDIA GROUP, INC.


Dated: June 11, 2019	By:	/s/ Richard MacWilliams
		Richard MacWilliams
		Acting Chief Executive Officer (Principal Executive Officer)

/s/ Trevor Colhoun

Trevor Colhoun

Chief Financial Officer

(Principal Financial and Accounting Officer)

Filing Compare · SALON MEDIA GROUP INC