SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

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

For the fiscal year ended March 31, ~~2018~~2019

[ ] 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 of Incorporation)	(IRS Employer Identification No.)

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 if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]

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 [ ]

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. [ ]

Indicate by check mark whether the registrant is 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 ☑

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 Exchange Act Rule 12b-2).Yes [ ] No [X]

The aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $2,954,000 based on the closing sale price of the registrant’s Common Stock on June 1, 2017. Shares of Common Stock held by each then current executive officer and director and by each person who is known by the registrant to own 5% or more of the outstanding Common Stock have been excluded from this computation in that such persons may be deemed to have been affiliates of Salon Media Group, Inc. This determination of affiliate status is not a conclusive determination for other purposes.

The number of outstanding shares of the Registrant's Common Stock, par value $0.001 per share, on ~~June~~July 1, 2019 was ~~151~~ 315,~~056~~939,477 shares.

FORM 10-K SALON MEDIA GROUP, INC. INDEX

SALON MEDIA GROUP, INC.

PART I		Page Number

ITEM 1.	Business	3

ITEM 1A.	Risk Factors	13

ITEM 1B.	Unresolved Staff Comments	27

ITEM 2.	Properties	27

ITEM 3.	Legal Proceedings	28

ITEM 4.	Mine Safety Disclosures	28

PART II

ITEM 5.	Market for Registrant’s Common Equity and Related Stockholder Matters, and Issuer Purchases of Equity Securities	29

ITEM 6.	Selected Financial Data	31

ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32

ITEM 7A.	Quantitative and Qualitative Disclosures about Market Risk	41

ITEM 8.	Financial Statements and Supplementary Data	42

ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	70

ITEM 9A.	Controls and Procedures	70

ITEM 9B.	Other Information	71

PART III

ITEM 10.	Directors, Executive Officers and Corporate Governance	72

ITEM 11.	Executive Compensation	74

ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	81

ITEM 13.	Certain Relationships and Related Transactions, and Director Independence	83

ITEM 14.	Principal Accountant Fees and Services	86

PART IV

ITEM 15.	Exhibits, Financial Statement Schedules	87

SIGNATURES		90

INDEX

		Page
PART I		Number
ITEM 1.	Business	3
ITEM 1A.	Risk Factors	12
ITEM 1B.	Unresolved Staff Comments	26
ITEM 2.	Properties	26
ITEM 3.	Legal Proceedings	27
ITEM 4.	Mine Safety Disclosures	27
PART II
ITEM 5.	Market for Registrant’s Common Equity and Related Stockholder Matters, and Issuer Purchases of Equity Securities	28
ITEM 6.	Selected Financial Data	30
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
ITEM 7A.	Quantitative and Qualitative Disclosures about Market Risk	39
ITEM 8.	Financial Statements and Supplementary Data	40
ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	72
ITEM 9A.	Controls and Procedures	72
ITEM 9B.	Other Information	73
PART III
ITEM 10.	Directors, Executive Officers and Corporate Governance	74
ITEM 11.	Executive Compensation	76
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	84
ITEM 13.	Certain Relationships and Related Transactions, and Director Independence	86
ITEM 14.	Principal Accountant Fees and Services	89

PART IV
ITEM 15.	Exhibits, Financial Statement Schedules	90
SIGNATURES		93

PART I

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 Media Group, Inc. (“Salon”, the “Company”, “Our” or “We”) 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 “Risk Factors.” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are elsewhere in this Annual Report. In this Annual 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.

ITEM 1. Business

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 journalism 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.

Salon was originally incorporated in July 1995 in the State of California and reincorporated in Delaware in June 1999. In 1999, we had our initial public offering. In 2001, we adopted the name Salon Media Group, Inc. In March 2019, we entered into an asset purchase agreement to sell substantially all of our assets. Our common stock is ~~traded~~quoted inon the ~~over-the-counter~~OTC ~~market~~Markets and our stock symbol is SLNM.~~PK.~~

~~Highlights~~Material ~~from~~Agreements ~~Fiscal~~Entered ~~Year~~into ~~2018~~during Fiscal 2019 and ~~Fiscal~~First ~~Year~~Quarter ~~2019~~of ~~(the~~Fiscal ~~“Period”)~~2020

~~During~~Asset ~~the~~Purchase ~~fiscal~~Agreement year ended March 31, 2018 (“fiscal year 2018”), we continued to execute our business strategy to refine and broaden our editorial products in order both to attract an engaged audience and premium advertising, which would increase revenues. However, we faced increased competition from both new and larger websites for online advertising campaigns during the year, and in the quarter ended March 31, 2018, significant changes to the algorithms used by Google and Facebook led to sharp decreases in traffic. Despite changes to our advertising footprint to capture the greater programmatic opportunity for our display and video advertising inventory, and resulting higher CPMs from our programmatic advertising compared to the fiscal year ended March 2017, the reduced traffic led to a smaller ad footprint and suppressed our revenues. The highlights of our fiscal year 2018 are listed below:

●On ~~Total~~March ~~revenue~~6, in2019, ~~the~~we ~~fiscal~~entered ~~year~~into ~~ended~~an ~~March~~asset ~~31,~~purchase ~~2018~~agreement ~~was~~(the ~~flat~~“Asset atPurchase ~~$4.5~~Agreement”) ~~million~~with Salon.com, ~~compared~~LLC to(“Buyer”) ~~$4.6~~under ~~million~~which inwe ~~the~~agreed ~~fiscal~~to ~~year~~sell ~~ended~~substantially ~~March~~all ~~31,~~of ~~2017~~our assets (~~“fiscal~~the ~~year~~"Asset ~~2017”~~Sale")., Weincluding ~~have~~all ~~been~~pertinent ~~working~~intellectual onproperty ~~strategies~~rights tocomprising ~~better~~the ~~monetize~~Company’s ~~our~~business ~~Website~~of owning, operating and ~~increase~~publishing ~~advertising~~the ~~revenues.~~website Aknown ~~continued~~as ~~significant~~Salon.com, ~~industry~~(the ~~shift~~“Business”), inbut ~~online~~excluding ~~advertising~~our ~~from~~cash, ~~advertising~~cash ~~sold~~equivalents byand amarketable ~~direct~~securities ~~sales~~and ~~team~~certain tocontracts ~~advertising~~and ~~being~~right ~~sold~~related ~~through~~to ~~software-based~~those ~~“programmatic”~~contracts ~~technology~~and ~~has~~tax ~~taken~~refunds ~~place.~~and ~~Our~~insurance ~~advertising~~policies ~~sold~~and ~~through~~rights ~~networks~~related ~~that~~to ~~access~~excluded ~~these~~assets, ~~programmatic~~to ~~buys~~the ~~accounted~~Buyer for ~~88%~~an aggregate Purchase Price of ~~our~~$5 ~~advertising~~million ~~revenue~~payable ~~for~~plus the ~~fiscal~~amount ~~year~~of ~~2018.~~the WeEarn-Out ~~have~~Payment ~~been~~(as ~~making~~described ~~changes~~below) toand ~~our~~the ~~advertising~~assumption ~~footprint~~of tocertain ~~capture~~assumed ~~the~~liabilities, ~~greater~~all ~~programmatic~~pursuant ~~opportunity~~to ~~for~~the ~~our~~terms ~~display~~of ~~and~~the ~~video~~Asset ~~advertising~~Purchase ~~inventory,~~Agreement. ~~and~~The wepurchase ~~will~~price ~~continue~~is topayable ~~focus~~in ~~our~~cash ~~efforts~~as tofollows: ~~allow~~(i) ~~better~~$550,000 ~~management~~in ofpayable ~~our~~in ~~advertising~~cash ~~inventory~~at ~~and~~closing; ~~targeting~~(ii) ~~for~~$100,000 ~~our~~shall ~~advertisers.~~be ~~This~~deposited ~~has~~with ~~allowed~~the usEscrow toAgent, ~~improve~~which ~~our~~amount ~~cost-per-thousand-impression~~shall ~~(“CPMs”)~~be ~~from~~released ~~our~~to ~~programmatic~~us ~~advertising~~in byaccordance ~~over~~with ~~22%~~the interms of the ~~month~~Asset ofPurchase ~~March~~Agreement; ~~2018~~(iii) as$500,000 ~~compared~~of towhich ~~March~~was ~~2017.~~previously ~~However,~~paid to the ~~higher~~Company ~~programmatic~~as ~~CPMs~~a ~~were~~deposit ~~offset~~concurrent bywith aexecution ~~smaller~~of adthe ~~footprint~~term ~~due~~sheet tofor athe ~~decline~~Asset inPurchase ~~traffic,~~Agreement ~~which~~(the ~~led~~"Deposit") toand a(iv) ~~smaller~~$3,850,000 ~~inventory~~via issuance of ada ~~products~~10% tosecured ~~sell~~promissory note, sowhich anote ~~smaller~~shall ~~relative~~be ~~increase~~paid in ~~revenues.~~2 Weequal ~~are~~installments ~~now~~on ~~focusing~~the ~~our~~12 ~~efforts~~month onand ~~re-building~~24 ~~our~~month ~~Website~~anniversary ~~traffic,~~of tothe ~~take~~closing ~~advantage~~date. This note shall be secured by all of the ~~higher~~assets ~~CPMs~~being ~~and~~sold ~~increase~~to ~~our~~Buyer ~~revenues~~under inthe ~~fiscal~~Asset ~~year~~Purchase ~~2019~~Agreement.

●First ~~Net~~Amendment ~~loss for the fiscal year 2018 was $3.1 million, a 70% decrease from $10.4 million in the fiscal year 2017. The decrease in net loss was mainly attributed~~ to ~~higher~~Asset ~~non-cash~~Purchase expenses in fiscal year 2017, including $5.6 million non-cash interest expense and an approximate $0.9 million non-cash preferred deemed dividends, both recorded for the beneficial conversion feature of capital raising transactions during the fiscal year 2017, compared to a $0.3 beneficial conversion feature of capital raising transactions during the fiscal year 2018. Operating expenses in fiscal year 2018 were 13% lower, at $7.4 million in fiscal year 2018 compared to $8.5 million for the fiscal year 2017. 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.Agreement

●On ~~We were proud to be honored for our excellence in journalism during the 2018 fiscal year. In~~ April ~~2017~~15, ~~Salon was named an honoree for the 2016 Webby Awards for its Online Film & Video~~2019, ~~Video Remixes and Mashups category, for our Donald Trump/Big Lebowski mashup. We received further positive critical recognition for our video as~~ we ~~were~~entered ~~selected~~into as a ~~finalist~~First ~~for~~Amendment ~~min’s~~to ~~2017~~Asset ~~Magazine~~Purchase ~~Media~~Agreement ~~Awards~~("First ~~for~~Amendment") ~~Video~~with ~~Excellence - original video~~Buyer. The ~~2018~~primary ~~fiscal~~purpose ~~year featured great journalism, including original reporting and analysis, as we covered in-depth the top stories in news, politics and entertainment. Our daily coverage~~ of the ~~Trump~~First ~~Administration,~~Amendment ~~the~~was ~~#MeToo~~to ~~movement,~~amend ~~gun control,~~ the ~~alleged~~payment ~~Russian~~terms ~~interference~~under in the U.Technology S.Agreement ~~Presidential race, climate change~~ and the ~~natural~~Advertising ~~disasters~~Agreement ~~in the Caribbean and Texas, legalization of marijuana, and film and TV reviews and commentary drove the most views. The intersection of culture and politics also continued to drive user interest, such~~ as ~~stories~~set ~~about~~forth why college may not be worth the cost, Colin Kaepernick’s national anthem protest to raise awareness of racism, George Clooney speaking out about President Trump’s attacks against the “Hollywood Elite,” and Rihanna seeking additional aid to Puerto Rico. We have also provided broadened, thoughtful and smart coverage on relationships, lifestyle and business that have been popular with our users.below:

●(a) Wefor ~~have~~the ~~continued~~month toof ~~roll~~March ~~out~~2019: ~~our~~(i) ~~strategy~~ad tofees ~~produce original video content focused on news, politics, and entertainment~~ under the ~~banner~~Advertising ofAgreement ~~Salon~~shall ~~TV,~~be ~~Salon~~payable ~~Talks~~at ~~and Salon Stage~~6. ~~Our goal is to add high quality diversified content to our Website~~5%, and to(ii) ~~attract~~tech ~~premium~~management ~~video~~fees ~~advertising~~payable ~~that~~pursuant ~~commands higher CPMs as compared~~ to display advertising. Featured guests on Salon Talks have included Senator Al Franken, scientist Bill Nye, Deepak Chopra, Dan Rather, Pearl Jam guitarist Mike McCready and Van Jones, among others, while Salon Stage hosted acoustic sets by, among others, the ~~Revivalists,~~Technology ~~Josh~~Agreement ~~Ritter,~~shall ~~Lukas~~be ~~Nelson~~$5,000 ~~Bela~~plus ~~Fleck,~~costs ~~Wyclef~~per ~~Jean and more. Furthermore, to monetize our growing library of original video programming, we will begin distributing our video programming across key Over-~~the~~-Top~~ ~~(OTT)~~Technology ~~channels such as Apple TV, Amazon, and Roku in the quarter ending June 2018.~~Agreement;

4(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 $10,000 plus costs per the Technology Agreement; and

●(c) ~~Our peak monthly users~~ for ~~Salon.com~~the ~~traffic~~month inof ~~fiscal~~May ~~year~~2019 ~~2018~~and ~~was~~for ineach ~~November~~month ~~2017~~thereafter: ~~when~~(i) wead ~~recorded~~fees 15under ~~million users, as measured by Google Analytics. In total,~~ the ~~average~~Advertising ~~number~~Agreement ofshall ~~monthly~~be ~~users~~payable inat ~~fiscal year 2018 was 10.~~6 ~~million, compared to 12~~.~~7 million in fiscal year 2017~~5%, a(ii) ~~decrease~~tech ofmanagement ~~17%.~~fees Wepayable ~~attribute~~pursuant ~~the decline in overall traffic~~ to ~~a combination of events, including~~ the ~~changes~~Technology inAgreement ~~the~~shall ~~algorithms~~be ~~used by Facebook to promote news content~~$10,000 ~~which~~plus ~~led~~costs toper ~~lower~~the ~~referral~~Technology ~~traffic~~Agreement ~~from Facebook,~~ and ~~reduced~~(iii) ~~referral~~an ~~traffic~~amount ~~from~~equal ~~other major websites like Yahoo and Twitter. Our focus on growing traffic has shifted from volume~~ to ~~quality,~~10% inAPR ~~order~~applied to ~~maximize~~the ~~our ability to monetize our page views with higher CPM video and display advertising~~Deposit. ~~As a result, we are making changes to our editorial mix in order to publish more content that attract higher CPMs, such as pre-roll video and native advertising.~~

●We ~~Social~~also ~~media~~amended ~~and~~Section ~~referral~~10.9 ~~traffic~~of ~~from~~the ~~other~~Asset ~~websites~~Purchase ~~continue~~Agreement to beinclude athe ~~major~~term ~~driver~~sheet ofrelated ~~traffic,~~to atthe ~~approximately~~acquisition ~~29%~~for ofthe ~~Website~~documents ~~visitors~~related ~~as of March 2018. We make regular updates~~ to the ~~Website~~entire toagreement ~~optimize~~of ~~content~~the ~~to be shared on social media with a special focus on our mobile platforms~~parties. ~~In March 2018, we surpassed 995,000 Facebook “likes” and over one million Twitter followers. In March 2017, we had approximately 965,000 Facebook “likes,” and 953,000 Twitter followers.~~

●Second InAmendment August 2015, Salon recognized the Writers Guild of America, East, Inc. (“WGAE”) as the collective bargaining representative of our non-supervisory editorial staff. We continued collective bargaining with the WGAE during the year. As we do not yet have an agreement with our union employees, we remain uncertain how it will impact our financial status, or if it will have a negative impact on our ability to ~~obtain~~Asset ~~additional~~Purchase ~~financing, if necessary.~~Agreement

●On WeJune launched a subscription program in March 2018 that is targeted at our users who prefer not to see advertisements. We offer a monthly or yearly subscription plan in exchange for an ad-free experience using a Salon app for the phone. In the initial weeks from launch30, 2019, we ~~signed~~entered upinto ~~less~~a ~~than~~Second ~~1,000~~Amendment ~~subscribers, but we will begin~~ to ~~market~~Asset ~~the~~Purchase ~~subscription~~Agreement ~~program~~with ~~more~~Buyer ~~actively~~under inwhich ~~fiscal~~the ~~year~~parties ~~2019,~~revised ~~as we establish additional benefits for subscribers. We are also exploring~~ the ~~potential~~Asset ofPurchase ~~gated~~Agreement ~~premium content, where a user will have an option~~ to ~~pay~~provide ~~per~~that ~~piece~~amounts ofdelivered ~~content.~~into Weescrow ~~plan~~upon toexecution ~~launch~~would ~~gated~~not ~~premium~~be ~~content~~used ~~initially~~ to ~~international~~compensate ~~users,~~any asBuyer ~~user~~Indemnified ~~adoption~~Parties ~~is higher~~ for ~~this~~any ~~service~~losses inunder ~~countries~~the inAsset ~~Europe~~Purchase Agreement.

●Settlement ~~Mobile~~Agreements ~~users~~with ~~accounted~~Jordan ~~for~~Hoffner ~~66% of all users in March 2018, which is up slightly from 60% in March 2017. We continue to have a company-wide focus on our users’ mobile needs, especially quick~~ and ~~easy~~Elizabeth 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.Hambrecht

●On WeJuly 1, ~~continually~~2019, ~~work~~we ~~toward~~entered ~~leaner~~into a Settlement Agreement and Release with each of Jordan Hoffner, ~~more~~our ~~efficient~~former ~~technological~~CEO ~~systems~~and ~~through~~Elizabeth ~~automation~~Hambrecht, ~~improved~~our ~~architecture~~former CFO. Under the terms of each agreement, we agreed to pay Mr. Hoffner and ~~adoption~~Ms. Hambrecht, as applicable, the total sum of ~~emerging~~Thirty ~~best~~Thousand ~~practices~~dollars ($30,000.00) ~~During~~(the “Settlement Payment”) on the ~~fiscal~~earlier ~~year~~of ~~2018~~(i) 2 business days after the Closing of that certain Asset Purchase Agreement and (ii) December 31, we2019 ~~launched~~(the a“Payment ~~newly~~Date”). ~~redesigned~~Each ~~Website~~of toMr. ~~maximize~~Hoffner ~~speed~~and Ms. Hambrecht Claimant acknowledges that, upon receipt of the Settlement Payment, they will have been paid all wages, severance, all unreimbursed business expenses, and ~~navigation~~all accrued but unused vacation pay due and owing to them further waived any additional claims for unpaid salary or wage amounts, unreimbursed business expenses, and ~~launched~~accrued but unused vacation pay. Each of Mr. Hoffner and Ms. Hambrecht executed a ~~subscription~~general ~~app,~~release ~~both~~of ~~focused~~all onclaims ~~enhancing~~under ~~our~~their ~~revenue~~respective ~~capabilities~~agreements.

Material Agreements Entered into during the Period

Advances/Secured Notes from Related Parties

From June 2018 through August 2018, we received $114.5,500 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 $118,899.9. 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 $1,000 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~~Highlights ~~Purchase~~from ~~Agreement~~Fiscal Year 2019

OnDuring ~~March~~the 6,fiscal ~~2019,~~year weended ~~entered~~March ~~into~~31, an2019 ~~asset purchase agreement~~ (~~the~~ “~~Asset~~fiscal ~~Purchase~~year ~~Agreement~~2019”) ~~with Salon.com~~, ~~LLC (“Buyer”) under which~~ we ~~agreed~~continued to ~~sell~~execute ~~substantially all of~~ our ~~assets~~business ~~(the~~strategy ~~"Asset~~to ~~Sale"),~~refine ~~including~~and ~~all~~broaden ~~pertinent~~our ~~intellectual~~editorial ~~property~~products ~~rights~~in ~~comprising~~order ~~the~~both ~~Company’s~~to ~~business~~attract ofan ~~owning,~~engaged ~~operating~~audience and ~~publishing~~premium ~~the~~advertising, ~~website~~which ~~known~~would asincrease ~~Salon~~revenues.~~com,~~ ~~(the “Business”)~~However, ~~but~~now ~~excluding~~that ~~our~~the ~~cash,~~landscape ~~cash~~for ~~equivalents~~publishers ~~and~~has ~~marketable~~permanently ~~securities~~changed, ~~and~~we ~~certain~~faced ~~contracts~~increased ~~and~~competition ~~right~~from ~~related~~both tonew ~~those contracts~~ and ~~tax~~larger ~~refunds~~websites ~~and insurance policies and rights related to excluded assets, to the Buyer~~ for anonline ~~aggregate~~advertising ~~Purchase~~campaigns ~~Price~~during ~~of $5 million payable plus~~ the ~~amount~~year, ~~of the Earn-Out Payment (as described below)~~ and in the ~~assumption~~quarter ofended ~~certain~~March ~~assumed~~31, ~~liabilities~~2018, ~~all~~significant ~~pursuant~~changes to the ~~terms~~algorithms ofused ~~the~~by ~~Asset~~Google ~~Purchase~~and ~~Agreement.~~Facebook ~~The~~led ~~purchase~~to ~~price~~sharp isdecreases ~~payable~~ in ~~cash~~traffic. Despite aschanges ~~follows:~~to ~~(i)~~our ~~$550,000~~advertising infootprint ~~payable~~to incapture ~~cash~~the atgreater ~~closing;~~programmatic ~~(ii)~~opportunity ~~$100,000~~for ~~shall~~our bedisplay ~~deposited~~and ~~with~~video ~~the~~advertising ~~Escrow Agent~~inventory, ~~which~~and ~~amount~~resulting ~~shall~~higher beCPMs ~~released~~from toour usprogrammatic inadvertising ~~accordance~~compared ~~with~~to the ~~terms~~fiscal ofyear ~~the~~ended ~~Asset~~March ~~Purchase~~31, ~~Agreement;~~2018 (~~iii)~~“fiscal ~~$500~~year 2018”),~~000~~ ofthe ~~which~~reduced ~~was~~traffic ~~previously~~led ~~paid~~ to ~~the Company as~~ a ~~deposit~~smaller ~~concurrent~~ad ~~with~~footprint ~~execution~~and ofsuppressed ~~the~~our ~~term~~revenues. In ~~sheet~~addition, ~~for~~in ~~the~~March ~~Asset~~2019, ~~Purchase~~we ~~Agreement~~entered ~~(the~~into ~~"Deposit")~~an ~~and~~agreement ~~(iv)~~to ~~$3,850,000~~sell ~~via~~substantially ~~issuance~~all of aour ~~10%~~assets. Upon ~~secured~~consummation ~~promissory~~of ~~note~~this transaction, ~~which~~if ~~note~~consummated, ~~shall~~we bewill ~~paid~~cease into 2be ~~equal~~an ~~installments~~operating ~~on the 12 month and 24 month anniversary of the closing date~~company. ~~This~~The ~~note~~highlights ~~shall be secured by all~~ of ~~the~~our ~~assets~~fiscal ~~being~~year ~~sold~~2019 relating to ~~Buyer~~current ~~under~~operations ~~the~~are ~~Asset~~listed ~~Purchase Agreement.~~ below:

●

Total revenue in the fiscal year 2019, as it related to discontinued operations, decreased 33% to $3.0 million, compared to $4.5 million in the fiscal year 2018. We have been working on strategies to better monetize our Website and increase advertising revenues per session. A continued significant industry shift in online advertising from advertising sold by a direct sales team to advertising being sold through software-based “programmatic” technology has taken place. Our advertising sold through networks that access these programmatic buys accounted for 72% of our advertising revenue for the fiscal year 2019. We have been making changes to our advertising footprint to capture the greater programmatic opportunity for our display and video advertising inventory, and we will continue to focus our efforts to allow better management of our advertising inventory and targeting for our advertisers.

●

Net loss for the fiscal year 2019 was $2.7 million, a 13% decrease from $3.1 million in the fiscal year 2018. This included a net loss from continuing operations for the fiscal year 2019 of $2.8 million, a 4% increase from $2.7 million in the fiscal year 2018. Net income from discontinue operations for the fiscal year 2019 was $0.2 million compared to a net loss from discontinued operations of $0.4 million for fiscal year 2018.

●

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 have included Senator Doug Jones, Janet Napolitano, Stacey Abrams, Matthew Broderick, Kathy Griffin, Jesse Eisenberg and Tina Brown. Furthermore, to monetize our growing library of nearly one thousand episodes of original video programming, we have been distributing our video programming across key Over-the-Top (OTT) channels such as Apple TV, Amazon and Roku.

●

Our peak monthly users for Salon.com traffic in fiscal year 2019 was in November 2018 when we recorded 7 million users, as measured by Google Analytics. In total, the average number of monthly users in fiscal year 2019 was 6.2 million, compared to 10.6 million in fiscal year 2018, a decrease of 41%. We attribute the decline in overall 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, and reduced referral traffic from other major websites like Yahoo and Twitter. Our focus on growing traffic has shifted from volume to quality, in order to maximize our ability to monetize our page views with higher CPM video and display advertising. In order to achieve that, we made changes to our editorial mix in order to publish more content in the categories of Food, Science, Innovation and Health that attract higher CPMs, such as pre-roll video and native advertising.

●

Social media platforms such as Twitter and Facebook and referral traffic from other websites continue to be major drivers of traffic, at approximately 34.6% of Website visitors as of March 2019. In fiscal year 2019, we made a concerted effort to increase the number of platforms to distribute Salon content so that we can be less reliant on Facebook’s volatility in traffic. New traffic partners include Quora, LinkedIn, Smartnews, News360 and Flipboard. As a result, we increased our social media followers 9% from 2.0 million in 2018 to 2.2 million in 2019.

●

In August 2015, Salon initially recognized the Writers Guild of America, East, Inc. (“WGAE”) as the collective bargaining representative of our non-supervisory editorial staff. 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.

●

We expanded our paid subscription program in October 2018 that is targeted at our users who prefer not to see advertisements on both mobile applications as well as the web browser. We offer a monthly or yearly subscription plan in exchange for an ad-free experience using a Salon app for the phone or through the browser on both the phone and desktop. In March of 2019, we began our program of gated premium content, initially in the Sex and Love category.

~~First~~● ~~Amendment~~Mobile users accounted for 74% of all users in March 2019, which is up slightly from 66% in March 2018. We continue to ~~Asset~~have ~~Purchase~~a ~~Agreement~~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.

On● ~~April~~We ~~15,~~continually ~~2019~~work toward leaner, wemore ~~entered~~efficient ~~into~~technological asystems ~~First~~through ~~Amendment~~automation, toimproved ~~Asset~~architecture ~~Purchase~~and ~~Agreement~~adoption ~~("First~~of ~~Amendment")~~emerging ~~with~~best ~~Buyer~~practices. ~~The~~During ~~primary~~the ~~purpose~~fiscal ofyear ~~the~~2019, ~~First~~we ~~Amendment~~rebuilt ~~was~~our tobackend ~~amend~~and ~~the~~content ~~payment~~management ~~terms~~systems ~~under~~in ~~the~~order ~~Technology~~to ~~Agreement~~keep ~~and~~pace with the ~~Advertising~~industry ~~Agreement~~and asreduce ~~set~~site ~~forth below:~~latency.

~~(a)~~● ~~for~~During 2019, we recognized the ~~month~~desirability ofto ~~March~~either ~~2019:~~merger ~~(i)~~with adanother ~~fees~~company ~~under~~or pursue other strategic options. In this regard, we engaged the ~~Advertising~~services ~~Agreement~~of ~~shall~~an beinvestment ~~payable~~bank atand 6opened discussions with other interested parties.~~5%,~~ ~~and~~Changes ~~(ii)~~in ~~tech~~the ~~management~~overall ~~fees~~digital ~~payable~~publishing ~~pursuant~~industry required us to make investments in technology that were beyond our financial capability. In the ~~Technology~~absence ~~Agreement~~of ~~shall~~making bethose $5investments,~~000~~ ~~plus~~and ~~costs~~following ~~per~~ the ~~Technology~~substantial ~~Agreement;~~adjustments we had already implemented, it was clear we could not continue in our present form.

~~(b)~~● ~~for~~Consistent ~~the~~with ~~month~~this ofview ~~April~~we ~~2019:~~entered ~~(i)~~into adtechnology ~~fees~~and ~~under~~advertising ~~the~~relationships ~~Advertising~~with ~~Agreement~~Proper ~~shall~~Media beand ~~payable at 6~~PubLife.~~5%,~~ ~~and~~The ~~(ii)~~impact ~~tech~~of ~~management~~these ~~fees~~changes ~~payable~~confirmed ~~pursuant~~our tobelief ~~the~~that ~~Technology~~improving ~~Agreement~~our ~~shall~~advertising betechnology ~~$10,000~~platform ~~plus~~would ~~costs~~improve ~~per~~our ~~the~~revenues ~~Technology~~and ~~Agreement;~~user ~~and~~experience.

~~(c)~~● ~~for~~Following ~~the~~a three month oftrial ~~May~~period ~~2019~~of ~~and~~working ~~for~~closely ~~each~~with ~~month~~Proper ~~thereafter:~~Media ~~(i)~~and adPubLife, ~~fees~~and ~~under~~after ~~the~~considering ~~Advertising~~other ~~Agreement~~strategic ~~shall be payable at 6.5%~~options, ~~(ii)~~we ~~tech~~decided ~~management~~to ~~fees~~sell ~~payable~~all ~~pursuant~~of to the ~~Technology~~operating ~~Agreement~~assets ~~shall~~of ~~be $10,000 plus costs per~~ the ~~Technology~~company ~~Agreement~~to ~~and~~Salon, ~~(iii)~~LLC, ana ~~amount~~company ~~equal~~related to ~~10%~~Proper ~~APR~~Media ~~applied~~and ~~to the Deposit~~PubLife.

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.

Salon Strategy

~~In May 2016, we adopted a new strategy alongside the appointment of Jordan Hoffner as Chief Executive Officer (“CEO”).~~ Our strategy ~~focuses~~has focused on improving monetization of our user base by innovating our ad technology in order to better match our highly educated and affluent users with advertisers. In the past few years, we have successfully attracted a sizeable user base, which in fiscal year ~~2018~~2019 averaged ~~10.~~6.2 million users per month who consumed an average of 2515.32 million page views per month. Our number of page views translates to our number of viewer impressions that can be sold to our advertisers and offers opportunities to develop business relationships with companies that want access to our attractive user base. We currently sell our impressions to advertisers programmatically based on Run of Site private marketplaces, or at times, based on editorial content that falls in a particular category such as “Movies” or “Innovation.” The CPM is driven by market demand for each category of content we offer and the demographics of our audience. During the ~~2018~~2019 fiscal year we have ~~shifted~~continued to shift our focus to growing higher value traffic that maximizes our ability to monetize our page views with higher CPM video and display advertising. As a result, we have continued to adjust our editorial mix and products in order to publish more content to attract a wider universe of advertising clients and products. Going forward, the CPM that we can charge our advertisers will increasingly be based on our ability to deliver highly targeted and defined users to our advertiser. In addition, in March 2019, we signed the Asset Purchase Agreement to consummate the Asset Sale. If we consummate the Asset Sale, we will cease to be an operating company. The strategies discussed in this section only apply prior to consummation of the Asset Sale (and upon any failure to close the Asset Sale).

Our strategy is predicated on the following core principles: (1) create high quality diversified content that meets our users’ and advertisers’ interests; (2) hire the best possible talent to create centers of excellence and (3) innovate to bring great products to our users and advertisers. Our focus on these core principles underpins our goal to continue to grow our user base, and to develop new strategies around Website monetization that will provide opportunity for future growth.

7In fiscal year 2020, our goal is to continue our mission of creating fearless journalism and making the conversation smarter, while anticipating continued shifts in the online advertising market to better monetize our Website until consummation of the Asset Sale discussed above. Following the Asset Sale, we intend to cease to do business and intend to not engage in any business activities except for dealing with post-closing matters (in the event the Asset Sale is consummated) and for the purpose of liquidating our remaining assets, paying any debts and obligations, distributing the remaining assets to stockholders, and doing other acts required to liquidate and wind up our business and affairs. We will pay or make provision for payment of our known or reasonably ascertainable liabilities that have been incurred or are expected to be incurred prior to liquidation. After that, we will distribute the remaining assets to our stockholders in proportion to their respective stockholder interest in the Company. To reach our goals, and to achieve profitability in advance of the Asset Sale, we will push ahead in the following areas:

In fiscal year 2019, our goal is to continue our mission of creating high quality journalism and making the conversation smarter, while anticipating continued shifts in the online advertising market to better monetize our Website. To reach our goals, and to achieve profitability, we will push ahead in the following areas:

●

Develop a broader mix of provocative content in addition to the core areas of news and politics, building off the original definition of a “salon” as a center of intellectual discussion

●

Develop new strategies to attract new readers, and decrease reliance on specific social media websites or search engines

●

Integrate into our advertising approach a deeper focus on new advertising products that match our high-quality user with appropriate advertisers using data and innovative ad products

● ~~Assess~~Continue ~~new~~to ~~possible~~drive new revenue streams, including subscription, TV programming, e-commerce and book publishing to supplement advertising revenues, while keeping a keen eye on costs.

Develop a Broader Mix of Provocative Content

We target an educated, culturally engaged audience interested in original thinking and smart commentary. We pursue that audience by featuring a diverse array of voices and perspectives, and by covering a wide range of topics including News & Politics, Life Stories, the Economy & Innovation, Culture, Health & Science, and Food. Twenty-four hours a day, 365 days per year, Salon invites users to immerse themselves in thought-provoking content that impassions and empowers them to be the intellectual and cultural leaders of our time.

While we continue to focus on breaking news coverage with a focus on politics, culture and world events, weour ~~recently~~new ~~began~~categories ~~broadening~~have ~~our~~been ~~coverage~~building up to ~~include~~a ~~new~~critical ~~categories~~mass of content over the past year. These new categories include Food, Health & Science, and Economy & Innovation, and aim to give our users a wider variety of topics to choose from. The focus on these categories ~~should~~gave ~~also give~~ our advertisers more category-focused inventory, which ~~should~~has inshown ~~turn~~a ~~allow~~year anover year increase in ~~advertising~~our ~~opportunities~~revenue per thousand pageviews (“RPM”) of 36. 6% in March 2019 from March 2018.

As we continue to focus our editorial to our users’ needs, weour ~~seek~~primary goal is to grow visitors to our Website since the resulting page views serve as a platform for advertising impressions, a key driver of our revenue generation. Using data analytics in real-time, we can assess where our users’ interests are shifting, and respond by determining content, site layout and structure to best suit their needs in the moment. In fiscal year ~~2019~~2020, we intend to respond to users’ interests by ~~hosting~~expanding ~~more~~our ~~dynamic~~news ~~content,~~coverage ~~such~~in asWashington ~~increased~~DC ~~numbers~~for ofthe ~~video,~~upcoming ~~slideshows~~Presidential election and ~~images,~~key asSenate ~~well as by expanding further into content areas such as innovation and lifestyle~~races. We will expand into ~~new~~Washington ~~content areas~~ by reallocating internal resources, making some key hires as well as ~~continue~~continuing to have content partnerships to diversify our content offerings across various verticals. We are continually evaluating the needs of our users and trying to adjust and create new solutions to meet their needs.

Attract New Readers

We continually need fresh content and new ideas to attract readers to our Website. We plan to continue to focus on developing our audience through a combination of editorial enhancements, increased dynamic content and new user-focused functionalities and products.

InOne ~~addition~~area toof ~~editorial~~growth ~~initiatives~~will be to attract ~~new~~more female users,. weAs ~~have~~of ~~been~~March ~~testing~~2019, ~~other~~women ~~opportunities~~accounted ~~that~~for ~~could~~37.2% ~~attract~~of ~~new~~our ~~readers~~readership, ~~including~~down ~~using~~from ~~marketing~~37.9% ~~dollars~~in toMarch ~~push~~of ~~our~~2018. ~~content~~We tobelieve ~~new~~that ~~users~~our onoverall ~~platforms~~tone ~~such~~of asthe ~~Facebook~~site, ~~develop~~our ~~traffic~~community ~~partnerships with other digital media brands,~~ and ~~engage~~social inaudience ~~distribution~~has ~~deals~~begun ~~with~~to ~~syndication~~change ~~partners.~~to Inembrace ~~addition,~~more wefemale ~~have~~readers ~~developed~~and ~~Salon TV shows~~ that ~~could~~will be ~~picked up by broadcast partners, and as~~ a ~~result~~continued bearea ~~distributed~~of onfocus ~~larger~~in ~~broadcast~~the ~~and~~next ~~cable platforms~~year.

The importance in Website traffic from social media and third party distribution platforms was underpinned by the significant number of Facebook “likes” at more than 995,000, and Twitter followers at 1,005,000 as of March 2018. However, social media traffic can be variable due to changes in each platform’s approach to news content, a high number of fake accounts on these platforms, and the large number of “likes” and “followers” lost some of its prior ability to drive traffic to our website. Therefore, we have focused on building audience segments on other distribution platforms in order to diversify away from Facebook. In fiscal year 2020, we plan to continue our efforts to build our audience on social media, and place more emphasis on other emerging platforms such as Quora, Flipboard and Reddit, through a continuation of the strategies we have employed in the past two years.

The importance in Website traffic from social media was underpinned by the significant number of Facebook “likes” at more than 995,000, and Twitter followers at 1,005,000 as of March 2018. However, social media traffic can be variable due to changes in each platform’s approach to news content, and the large number of “likes” and “followers” lost some of its prior ability to drive traffic to our website. Despite our Facebook “likes” growing to more than 995,000 in March 2018 versus 965,000 in March 2017, the portion of our traffic from Facebook has declined to 13% from 25%, respectively. In fiscal year 2019, we plan to continue our efforts to build our audience on social media, and place more emphasis on other emerging platforms, through a continuation of the strategies we have employed in the past two years.

Develop New Revenue Streams

In March 2018, we launched a subscription product that allows users to pay for ad-free content. We offer a monthly or yearly subscription plan in exchange for an ad-free experience using a Salon app for the phone. In ~~the~~October ~~initial~~2018, ~~weeks~~we ~~from~~added ~~launch,~~onto weour ~~signed~~subscription upproduct ~~less~~a ~~than~~browser-based ~~1,000~~offering ~~subscribers,~~for ~~but~~those weusers ~~will~~who ~~begin~~did not want to ~~market~~download an app and can see the ~~subscription~~full ~~program~~Salon ~~more~~offering ~~actively~~off inof ~~fiscal~~their ~~year~~web browsers. In March 2019, as we ~~establish~~added ~~additional~~on ~~benefits~~premium ~~for~~content ~~subscribers~~in the Love and Sex category that is only offered through the paid service.

WeAlso, ~~have~~as ~~also launched~~ a ~~pilot~~result toof ~~explore~~solid aconversion ~~strategic~~ratios ~~partnership~~in ~~for a co~~e-~~branded~~commerce, ~~Salon~~we ~~webinar~~have ~~and~~also ~~live~~made ~~events business. The initial results of~~ our ~~pilot~~Salon ~~were~~e-commerce ~~sufficiently~~partnership ~~positive~~more toprominent ~~begin~~on toour ~~draw~~Website upby ~~more~~placing ~~detailed~~it ~~plans~~on ~~for~~our atop ~~joint~~navigation ~~venture,~~bar ~~with~~in ~~the~~order ~~goal~~ to ~~launch~~drive ~~the~~additional ~~business in June 2018~~revenues. ~~Also,~~We ashave aexpanded ~~result~~our ofproduct ~~solid~~categories ~~conversion~~to ~~ratios,~~CBD weproducts ~~have~~and ~~also~~productivity ~~made~~software ~~our~~and ~~Salon~~plan ~~e-commerce~~to ~~partnership~~add more ~~prominent~~product oncategories ~~our~~that ~~Website~~are byin ~~placing~~line itwith onsome of our ~~top~~editorial ~~navigation~~strategies ~~bar~~such inas ~~order~~food toand ~~drive additional revenues~~health.

WeIn ~~are~~addition ~~also~~to ~~working~~these ~~toward~~existing ~~the launch of a gated premium content product~~initiatives, ~~where~~we aare ~~user~~exploring ~~will~~possible ~~have~~business anopportunities ~~option~~in toother ~~pay~~areas ~~per~~such ~~piece~~as ~~of content. We plan to launch gated premium content initially to international users~~podcasting, asbook ~~user~~publishing ~~adoption~~and isa ~~higher~~possible ~~for~~Salon ~~this~~TV ~~service in countries in Europe~~show.

In addition to these existing initiatives, we are exploring possible business opportunities in other areas, including a book publishing partnership that would support Salon writers, and a possible Salon TV show.

A Deeper Focus on New Advertising Products that Match our User with Appropriate Advertisers

In order to expand our base of advertisers and increase our advertising revenues, we plan to integrate into our advertising approach a deeper focus on new advertising products that match our high-quality user with appropriate advertisers using data and innovative ad products. This includes entering possible partnerships with advertising technology companies that can offer highly tailored products that leverage new advertising technology and add software and data capabilities to understand our users better. This will allow us to match our readers’ interests with advertisers more closely.

Path to Profitability

Our operating losses in fiscal year ~~2018~~2019 decreased compared to fiscal year ~~2017~~2018, a result of our continued attempts to make adjustments to our revenue model in order to increase advertising revenues, and keep costs low in order to get closer to profitability. Due to an industry shift in advertising dollars toward programmatic and video advertising, and a decline in traffic during the year, our direct advertising ~~declined~~increased 2976% and programmatic advertising ~~modestly~~decreased ~~increased 7~~43% leading to total decrease in advertising revenues ~~remaining~~of ~~constant~~30% in fiscal year 2019 as compared to fiscal year 2018. At the same time, our production costs decreased 1424% from a year ago, which resulted in smaller losses.

Entering fiscal year ~~2019~~2020, we plan to build on the progress we made in increasing CPMs and advertising rates at programmatic marketplaces, and take advantage of marketing opportunities and an active news cycle to increase our page views and video views. Furthermore, in ~~April~~October 2018, we took steps to reduce further our expense base and shift resources to create content that will generate higher CPM advertising. Given these changes, we anticipate that fiscal year ~~2019~~2020 will better align production costs with our revenue potential in an effort to reach profitability.

OUR BUSINESS

We target an educated, culturally engaged audience interested in original thinking and reporting on the day’s big stories. We pursue that audience by featuring a diverse array of voices and perspectives, and covering a wide range of topics including politics, race, religion, culture, entertainment, sustainability, innovation, technology and business. In addition, in March 2019, we executed the Asset Purchase Agreement relating to the Asset Sale. If the Asset Sale is consummated, we will cease to be an operating company.

Salon.com Website

News & Politics	Breaking news fast – and what it means. Whether it's the mid-term Congressional election, the #MeToo movement, the ~~firing~~Mueller ~~of FBI Director James Comey~~investigation, or analysis about Supreme Court nominations, we surround stories as they happen – with dedicated writers, videos, and smart columnists who put important news into immediate context. Fearless, independent and sophisticated coverage of the most important stories from Washington and around the world, delivered by respected veterans like Amanda Marcotte and D. Watkins, and the brightest analysts on the Web (Heather Digby Parton, Lucian Truscott III, and more.) Our political coverage starts early in the morning and is updated all day with new pieces, all designed to drive the conversation – and keep our readers ahead of it.
Life Stories	Our popular life essays go in-depth on the most complicated and deeply personal topics – sex, parenting, family, relationships, religion, work and so many more – and are written both by famous writers as well as the most daring and interesting new voices.
Culture	Our writers and critics are just as obsessed with the latest offerings on Netflix, Amazon and HBO, and the coolest and hottest new books and movies as our readers are. Our entertainment coverage is edgy, exhaustive, fast as we mine the intersections between culture and politics. Our writers include ~~Andrew~~Matt ~~O’Hehir~~Rozsa (~~politics~~film), Melanie McFarland (TV), and Mary Beth Williams.
Economy & Innovation	Our Economy & Innovation section explores the world of commerce and global financial trends. Innovation is all about thinking differently and cultivating those ideas to make progress. This is where users find the latest big ideas, both inside and outside the world of technology, and other amazing stories designed to make readers go wow.
Science & Health	Our Science & Health section combines the personal and political – issues of climate change, the future of energy and transportation, and politicization of science all receive authoritative coverage.
Food	From the best recipes for pizza or potato salad, tocultural ~~the~~food ~~#MeToo accusations against Chef Mario Batali~~trends, and confessions of a Kombucha obsession, we cover what’s trendy and tasty with celebrity chefs and critics.
Salon TV	Launched in July 2016, Salon TV includes our Salon Talks interview series, Salon Stage musical performances, and our current events oriented Salon Series and Salon Now. Airing first on Facebook Live, the interviews and shows are cut into approximately 2 minute highlights that are shown on the Salon website. Featured guests on Salon Talks have included ~~Senator~~Senators AlDoug ~~Franken,~~Jones ~~scientist~~and ~~Bill~~Sheldon ~~Nye~~Whitehouse, Deepak Chopra, Katie Couric, ~~Cecile~~Tina ~~Richards~~Brown, Dan Rather, ~~Pearl~~Stacey ~~Jam~~Abrams ~~guitarist Mike McCready~~ and ~~Van~~Mark ~~Jones~~Bittman, ~~among~~Matthew ~~others~~Broderick, ~~while~~Jeffrey ~~Salon Stage hosted acoustic sets by~~Wright, among others~~, the Revivalists, Josh Ritter, Lukas Nelson, Bela Fleck, Wyclef Jean and more~~.

Revenue Sources, From Discontinue Operations

Most of Salon’s revenues are derived from advertising from the sale of promotional space on its Website. Internet advertising revenues accounted for 79% of revenues in fiscal year ~~2018~~2019. Revenue from referring users to third party websites primarily accounted for the remaining 2115% of revenues in fiscal year ~~2018~~2019.

Internet advertising is affected by broad economic conditions, like other forms of advertising, but overall it has continued its upward trend even through economic turbulence. According to the ~~2017~~2018 IAB Internet Advertising Revenue Report conducted by PwC Advisory Services LLC, the compound annual growth rate (“CAGR”) over the past ten years for Internet advertising in the United States was 1516.38%, ~~far~~which ~~outpacing~~over ~~every~~the ~~other~~past ~~media.~~few ~~Furthermore,~~years onhas abeen ~~year-over-year~~largely ~~basis,~~driven ~~mobile~~by ~~advertising~~the ~~revenues~~growth ~~increased~~of 36mobile.~~2%,~~ ~~increasing~~The ~~its~~rapid ~~share~~growth of ~~total~~the ~~revenue~~mobile ~~from~~advertising ~~50.5%~~platform has resulted in ~~FY2016~~a toCAGR 56of 53.78% inover ~~fiscal~~the ~~year~~past ~~2017~~five years. Internet advertising revenue in the United States totaled $88107.05 billion in ~~2017~~2018, a 21.48% increase from $7288.53 billion in ~~2016~~2017. In ~~the quarter ended December 2017~~2018, the sources for advertising revenues were search (4445%), banner (including banners, sponsorships, and rich media) (3231%), video (1415%) and other (109%).

The bulk of online advertising remains concentrated in a relatively small number of dominant Internet companies, with the top ten companies accounting for 7475% of online advertising in the December ~~2017~~2018 quarter, and another 87% captured by the next tier of companies ranked 11th through 25th. Therefore, we believe our market opportunity falls roughly at 18% of the online advertising market, or $1519.83 billion.

The primary factors in our ability to increase our advertising revenues in future periods are growth in our audience and the addition of higher CPM ad products, such as pre-roll video. Attracting more unique visitors to our Website is important because these 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 across our desktop, tablet, mobile browser and apps platforms. Advertisers pay for advertising based on a CPM, and different platforms attract different CPMs. CPMs for mobile have been less than for desktop. 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.

Overall, monthly unique visitors to our Website have grown from 6.3 million in March 31, 2011 to a peak of 19.6 million in June 30, 2015, and has reverted to 6.26 million in March 31, ~~2018~~2019. Our full year average monthly unique visitors were 6.4 million, 10.6 million, 11.2 million, 16.9 million, 16.6 million, 12.7 million, ~~and~~ 10.6 million and 6.2 million in fiscal years 2012, 2013, 2014, 2015, 2016, 2017, 2018 and ~~2018~~2019, respectively. These fluctuations reflect changes in content areas on our Website over this period, and adjustments to search engine optimization and social media algorithms. The table below reflects unique monthly visitors to our Website from fiscal year 2011 through fiscal year 2018. Unique visitors in the period from March 2011 to May 2013 included traffic to an affiliated website that has since been shut down.

Sales and Marketing

As a news and lifestyle Website that competes against much larger websites, we have sought to distinguish ourselves in the marketplace by offering customized, innovative and integrated advertising products that appeal to users and seamlessly and organically incorporate our advertising clients and their objectives into our Website. We work with our programmatic advertising partners to launch advertisements that match our high-quality audience, and innovate with new products as they become available.

Our sales and marketing office is located in both San Francisco and New York, with one advertising sales and operations employee who actively solicits orders as of March 31, 2018.

Sales and Marketing

Our sales and marketing operation are located in New York, with one advertising sales and operations employee who actively solicits orders as of March 31, 2019.

Infrastructure and Product Development

We recognize that users come to the site for online news, reporting, opinion and an engaging, active community of writers, users and commenters. Users engage with the site through desktop computers, mobile phones and social networking platforms and other referral partners. To meet users’ rapidly evolving online media needs, we are continually innovating and developing our Website, mobile Website and social media presence – by adding new features, design updates and technologies that improve the user experience, speed and search engine optimization. We have developed an internal culture of innovation where the Edit, Technology and Sales teams collaborate on product development.

Our Website is hosted on cloud-based virtual servers running open-source Linux operating systems and various open-source web and network software packages. Our top technical priority is the fast and reliable delivery of pages to our users. Our systems are designed to handle traffic growth and network failures by balancing the requests among several pools of servers across the globe that automatically scale to match traffic demands. We rely on multiple tiers of redundancy/failover and third-party Content Delivery Network to achieve our goal of 24 hours, seven-days-a-week Website uptime. Regular automated backups protect the integrity of our data. Our servers are continuously monitored by numerous third-party and open-source monitoring and alerting tools.

In fiscal year 2017, we launched a Website redesign that put in place a publishing infrastructure that better takes advantage of current technologies. The redesign allows a better user experience as a result of quicker load time, and improved re-circulation of Salon content on each page, and improved monetization due to improved viewability of ads on our website. As a part of this redesign, we continued building new products for video and mobile, expanded our social media integration, and improved security and scaling capabilities.

In fiscal year 2018, we completed our Website and advertising architecture redesign from the previous year aimed at improving the user experience. As part of this effort, we will continue to explore new products that meet the immediate needs of our mobile users, build out new advertising products for video and mobile and improve our security and scaling capabilities.

In fiscal year 2019, we completed our backend systems and content management system upgrade to allow for faster speeds that allow us to be more competitive for programmatic advertising fill rates and prices as latency time decreased by 75%.

Competition

The bulk of online advertising remains concentrated in a relatively small number of dominant Internet companies, with the top ten companies accounting for 7475% of U.S. online advertising in ~~the~~2018 ~~December 2017 quarter,~~ and another 8% captured by the next tier of companies ranked 11th through 25th. Therefore, we believe our market opportunity falls roughly at 18% of the online advertising market, or $1519.83 billion. We compete for advertising revenues with numerous websites, including major portals such as Yahoo/AOL, major search engines such as Google, major social networks such as Facebook and Twitter, and other online large media publications such as Buzzfeed, Huffington Post, New York Times, Washington Post, MSNBC and CNN.com. We also compete with many smaller news and politics-oriented websites, such as Slate, The Daily Beast, The Atlantic, Talking Points Memo, Politico and Axios for staff, audience and advertising sales.

Proprietary Rights

Our success and ability to compete is dependent in part on the goodwill associated with our trademarks, trade names, service marks and other proprietary rights and on our ability to use U.S. laws to protect our intellectual property, including our original content, content provided by third parties, and content provided by columnists. We have a registered trademark on our Salon name and logo.

Employees

As of March 31, ~~2018~~2019, Salon has 3424 full-time employees and 21 part-time ~~employees~~employee. We believe our relations with our employees are good. We commenced collective bargaining with our non-supervisory editorial employees in November 2015, and signed a three-year agreement with the ~~results~~Writers Guild of ~~this~~America ~~process~~East ~~are~~(WGAE) ~~uncertain~~in October 2018. Our future success is highly dependent on our ability to attract, hire, retain and motivate talented personnel.

ITEM 1A. Risk Factors

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 shares of common stock (the “Common Stock”) could decline. The Risk Factors set forth below have not materially changed from those included in our Fiscal ~~2017~~2018 Annual Report filed with the Securities and Exchange Commission on June 10, 2019.

1213

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 accounting principles generally accepted in the United States of America, for our fiscal year ending March 31, 2019 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.

M&K CPA’s, PLLC, Salon’s independent registered public accounting firm for the fiscal years ended March 31, 2017 ~~and~~through ~~2018~~2019 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 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 in fiscal year ~~2018~~2019. 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 new sources.

We have relied on related parties for significant investment 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 a private placement (the “Private Placement”) shares of Salon’s Series A Mandatorily Convertible Voting Preferred Stock (the “Series A Preferred Stock”). The Series A Preferred Stock will automatically convert into shares of Common Stock upon the filing of the Amendment of Restated Certificate of Incorporation (the “Amendment”) and resulting increase in authorized shares of Common Stock, which occurred on August 1, 2017. As reported in Salon’s Current Reports on Form 8-K, filed with the Securities and Exchange Commission (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.

13William Hambrecht, Elizabeth Hambrecht, Jordan Hoffner and Larry Hoffner, the father of our former CEO Jordan Hoffner, were purchasers in the Initial Closing of the Private Placement. Jordan Hoffner, former CEO, Ryan Nathanson, former 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.

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, former Chief Operating Officer, and Jordana Brondo, former Chief Revenue Officer, were also purchasers in the Second Closing of the Private Placement. William Hambrecht, Elizabeth Harmbrecht and Jordan Hoffner were purchasers in the Final Closing of the Private Placement.

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.~~14

On We ~~August~~completed 3,a ~~2015, the WGAE became the~~ collective bargaining ~~representative~~agreement ofwith ~~Salon’s~~our 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.

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. 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 and operations staff 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.

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 ~~June~~July 1, 2019, ~~after~~approximately ~~the~~66% ~~Closing~~ of ~~the~~our ~~Private~~outstanding ~~Placement~~common ofstock anare ~~aggregate~~controlled, ~~principal~~directly ~~amount~~or ofindirectly ~~$1.69~~by ~~million~~John ofWarnock, ~~the~~William ~~Series~~Hambrecht, Aa ~~Preferred~~director ~~Stock~~ and ~~the~~Humilis ~~conversion~~Capital ofFund, ~~advances into Series A Preferred Stock~~LP, ~~approximately~~an ~~67%~~entity ~~of our voting securities are~~ controlled, ~~directly or indirectly~~ by ~~John~~Trevor ~~Warnock~~Colhoun, ~~William~~our ~~Hambrecht~~acting ~~and~~Chief ~~Spear~~Financial ~~Point~~Officer ~~Capital~~and ~~Fund, LP~~director. 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 ~~June~~July 1, 2019, our directors and officers beneficially owned approximately 200 million shares of Common Stock, ~~on a fully diluted basis,~~ including ~~107 million shares issuable upon conversion our Series A Preferred Stock,~~ 24 million shares of Common Stock upon exercise of presently exercisable options ~~and~~ ,11 million shares of Common Stock upon exercise of presently exercisable warrants and 27 million shares of common stock upon conversion of convertible notes. The approximate 200 million shares, asof ~~converted,~~Common Stock represent beneficial ownership of approximately 4652% of ~~fully~~our ~~diluted~~Common ~~ownership~~Stock. 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.

There can be no guarantees that the Asset Sale will be completed and, if not completed, we may have to file for bankruptcy and liquidation.

The consummation of the Asset Sale is subject to the satisfaction or waiver of various conditions, including the approval of the Asset Sale by our stockholders. We cannot guarantee that the closing conditions set forth in the Asset Purchase Agreement will be satisfied. If we are unable to satisfy the closing conditions in Buyer’s favor or if other mutual closing conditions are not satisfied, Buyer will not be obligated to complete the Asset Sale. If the Asset Sale is not completed, our board of directors, in discharging its fiduciary obligations to our stockholders, will evaluate other strategic alternatives that may be available, which alternatives may not be as favorable to our stockholders as the Asset Sale and may include a bankruptcy and liquidation of the Company.

1415

There can be no guarantee that Buyer will make its payments under the $3.8 million secured note delivered to us at closing, the failure of it do so which will reduce any amounts available for distribution to our stockholders.

A substantial portion of the consideration to be received in connection with Asset Sale is the issuance by the Buyer thereunder of $3.8 million in secured notes, which amounts are due to be paid in equal installments on the 12- and 24 -month anniversary of closing. Failure of the Buyer to make either of these payments will substantially reduce the amounts payable to our stockholders. While these notes are secured by our assets being sold in the Asset Sale, there is no guarantee that Buyer will make such payments.

Even if the Asset Sale is consummated, we cannot assure you the amount of liquidating distributions, if any, that will be made to our stockholders or the exact timing of distributions.

Our liquidation, dissolution and winding up process will be subject to uncertainties. The amount and timing of any liquidating distribution to our stockholders will depend on the following factors, among others:

●

whether any potential claimants against us and currently unknown to us could present claims relating to our pre-dissolution operations that we may ultimately have to satisfy;

●

the costs we may have to incur to defend new claims and claims existing as of the date of this proxy statement, including possible claims against us relating to our dissolution and possible tax audits;

●

the payment of expenses incurred in connection with the Asset Sale and transaction expenses;

●

the amounts that we will need to pay for general administrative and overhead costs and expenses as an operating company before our dissolution and the amounts that we will need to pay in connection with our post-dissolution survival period;

●

the expenses that we may incur to terminate the leases for our offices;

●

the costs attendant on us as a publicly held reporting company under SEC regulations, including legal and auditing fees, especially if we are unable to obtain relief from requirements to continue preparing and filing our annual, quarterly and current reports; and

●

how much of our funds we will be required to reserve to provide for contingent liabilities, and how long it may take to finally determine whether and how much of those liabilities may have to be paid.

We may continue to incur expenses that will reduce any amounts available for distribution to our stockholders.

Claims, liabilities and expenses from operations, such as operating costs, salaries, directors’ and officers’ insurance, payroll and local taxes, legal, accounting and consulting fees and offices expenses will continue to be incurred by us pursuant to the terms of the asset purchase agreement and as we wind down. We cannot estimate what the aggregate of these expenses will be, but they will reduce the amount of funds available for distribution to our stockholders.

1516

While the Asset Sale is pending, it creates uncertainty about our future, which could materially and adversely affect our business, financial condition and results of operations.

While the Asset Sale is pending, it creates uncertainty about our future. Therefore, our current or potential business partners may decide to delay, defer or cancel entering into new business arrangements with us pending consummation of the Asset Sale or termination of the Asset Purchase Agreement. In addition, while the Asset Sale is pending, we are subject to a number of risks, including:

●

the diversion of management and employee attention from our day-to-day business, which impacts our ability to operate our business in the ordinary course and generate revenues;

●

the loss of employees who may depart due to their concern about losing their jobs following the Asset Sale or a shift in loyalty of employees of the Company who see the Buyer as their de facto employer even before the consummation of the Asset Sale; and

●

our inability to respond effectively to competitive pressures, industry developments and future opportunities.

The occurrence of any of these events individually or in combination could materially and adversely affect our business, financial condition and results of operations. We have also incurred substantial transaction costs in connection with the Asset Sale, and we will continue to do so until the consummation of the Asset Sale. Following the consummation of the Asset Sale, we will continue to incur substantial operating expenses to comply with our obligations to perform transition services pursuant to the terms of the asset purchase agreement.

The Asset Purchase Agreement limits our ability to pursue alternatives to the Asset Sale.

The Asset Purchase Agreement contains provisions that make it substantially more difficult for us to sell the Company’s assets to a party other than the Buyer. Specifically, we agreed not to solicit any acquisition proposals until the date of closing or the proper termination of the Asset Purchase Agreement except that, in response to a superior proposal or a highly material intervening event, our board may, among other actions, withdraw or materially modify its recommendation contained in this proxy statement to adopt the Asset Purchase Agreement or recommend the adoption of an alternative acquisition proposal, if our board concludes in good faith (after consultation with outside legal and financial advisors) that the failure to take such action would reasonably be expected to cause our board to breach its fiduciary duties under applicable law.

The failure to consummate the Asset Sale may materially and adversely affect our business, financial condition and results of operations.

The Buyer’s obligation to close the Asset Sale is subject to a number of conditions, including our stockholders’ approval of the Asset Sale Proposal. We cannot control some of these conditions and we cannot assure you that they will be satisfied or that the Buyer will waive any that are not satisfied. If the Asset Sale is not consummated, we may be subject to a number of risks, including the following:

●

we may not be able to identify an alternate transaction, or if an alternate transaction is identified, such alternate transaction may not result in an equivalent price to what is proposed in the Asset Sale;

●

the trading price of our common stock may decline to the extent that the then current market price reflects a market assumption that the Asset Sale will be consummated;

●

our relationships with our customers, suppliers and employees may be damaged beyond repair and the value of our assets will likely significantly decline; and

1617

The occurrence of any of these events individually or in combination will likely materially and adversely affect our business, financial condition and results of operations, cause the market value of our common stock to significantly decline or become worthless and force us to file for bankruptcy protection, liquidate and windup our operations.

The failure to consummate the Asset Sale by the prescribed deadline will likely result in the Asset Sale being abandoned.

Either the Buyer or the Company may terminate the Asset Purchase Agreement without penalty if (i) our stockholders do not approve the Asset Sale Proposal or (ü) if the Asset Sale is otherwise not completed by September 2, 2019 (unless such deadline is missed due to a breach by the party seeking termination of a representation, warranty, covenant or agreement in the Asset Purchase Agreement). In the event the Asset Purchase Agreement is terminated, the potential adverse effects from failing to consummate the Asset Sale discussed above would be implicated.

Our executive officers and directors may have interests in the Asset Sale other than, or in addition to, the interests of our stockholders generally.

Members of our board of directors and our executive officers may have interests in the Asset Sale that are different from, or are in addition to, the interests of our stockholders generally. Our board of directors was aware of these interests and considered them, among other matters, in approving the Asset Purchase Agreement.

We will no longer be an operating company following the closing of the Asset Sale.

If the stockholders approve the Asset Purchase Agreement and we complete the Asset Sale, we intend to cease to do business and intend to not engage in any business activities except for dealing with post-closing matters (in the event the Asset Sale is consummated) and for the purpose of liquidating our remaining assets, paying any debts and obligations, distributing the remaining assets to stockholders, and doing other acts required to liquidate and wind up our business and affairs. We will pay or make provision for payment of our known or reasonably ascertainable liabilities that have been incurred or are expected to be incurred prior to liquidation. After that, we ~~intend~~will to distribute the remaining assets to our stockholders in proportion to their respective stockholder interest in the Company. In considering how to vote on the Asset Sale Proposal, stockholders should not assume that they will receive any distributions from the Company.

The tax treatment of the Asset Sale or any liquidating distributions may vary from stockholder to stockholder, and the discussions in this proxy statement regarding such tax treatment are general in nature.

WeYou ~~have~~should ~~not~~consult ~~requested~~your aown ~~ruling from the Internal Revenue Service (“IRS”) with respect to the anticipated~~ tax ~~consequences~~advisor ofinstead ~~the Asset Sale, and we will not seek an opinion~~ of ~~counsel~~relying ~~with~~on ~~respect to~~ the ~~anticipated~~discussions ~~tax consequences~~ of ~~the~~tax ~~Asset~~treatment ~~Sale.~~in ~~Tax~~this ~~considerations~~proxy ~~applicable~~statement tofor ~~particular~~tax ~~stockholders may vary with and be contingent upon the stockholder’s individual circumstances~~advice.

17We have not requested a ruling from the Internal Revenue Service (“IRS”) with respect to the anticipated tax consequences of the Asset Sale, and we will not seek an opinion of counsel with respect to the anticipated tax consequences of the Asset Sale or any liquidating distributions. If any of the anticipated tax consequences described in this proxy statement proves to be incorrect, the result could be increased taxation at the corporate and/or stockholder level, thus reducing the benefit to our stockholders and us from the liquidation and distributions. Tax considerations applicable to particular stockholders may vary with and be contingent upon the stockholder’s individual circumstances.

The recent resignation of Jordan Hoffner as our Chief Executive Officer may affect our ability to successfully close the Asset Sale.

Jordan Hoffner resigned as our Chief Executive Officer on May 3, 2019. This may affect our ability to successfully close the Asset Sale, the failure of which may materially and adversely affect our business, financial condition and results of operations.

We may be subject to securities litigation, which is expensive and could divert our attention.

We may be subject to securities class action litigation in connection with the Asset Sale. Securities litigation against us could result in substantial costs and divert our management’s attention from closing the Asset Sale, which could harm our business and increase our expenses, which could decrease the amount available for distribution to our stockholders.

Following consummation of the Asset Sale, we may no longer be required to file reports with the SEC.

We may file a notice terminating our reporting obligations under the Exchange Act following completion of the Asset Sale. Once effective, we may no longer be required to file any annual, quarterly or other current reports with the SEC. If we are no longer required to file reports with the SEC, stockholders will have very little public information available about us and our operations which will further affect the trading and liquidity of our Common Stock.

Existing stockholders may experience significant dilution from the issuance of our Common Stock pursuant to our recently issued convertible notes, Series A Preferred Stock, and warrants.

As of ~~June~~July 1, 2019, we have $845,000 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.

~~From~~As ~~June~~of ~~2018~~July ~~through~~1, ~~August 2018~~2019, we ~~received~~have $~~114.5~~118,899 in ~~advances~~convertible notes 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.

In addition, if we fail to close the Asset Purchase Agreement or breach the term sheet related to such Asset Purchase Agreement, the $500,000 advanced by PubLife, LLC will convert into a senior secured convertible promissory note, which note would bear interest and be due 90 days from issue and at the election of the PubLife, the outstanding principal amount and all accrued unpaid interest on the note would be convertible into fully paid and non-assessable shares of the our Common Stock at a price per share equal to $0.03.

We currently have 1,648,830 shares of Series A Preferred Stock outstanding. We intend to convert these shares of Series A Preferred Stock into 164,883,000 shares of our Common Stock prior to June 30, 201919

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.

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 6675% 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 pageviews that can be monetized by our advertising sales team.

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 ~~acting~~ 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,~~Los ~~Washington~~Angeles and ~~Ireland~~Virginia. 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.

We have secured debt outstanding. If we were unable to service our debt, our business would be adversely affected.

We currently have secured notes issued to certain of our directors in the amount of approximately $118,~~836~~ 899 which is due on June 30, 2019. If we were unable obtain an extension or if we fail to pay our debt obligations in a timely fashion, we will be in default under these secured notes. If we default on these notes, such could exercise its rights and remedies under the secured notes, which could include seizing all of our assets. Any such action would have a material adverse effect on our business and prospects.

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 throughout this Annual Report on Form 10-K (the “Form 10-K”), 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.

Our internal controls over financial reporting were determined to be ineffective at March 31, ~~2018~~2019 and we identified material weaknesses in our internal controls over financial reporting as of March 31, ~~2018~~2019, which may adversely affect investor confidence in our company and, as a result, the value of our common stock.

We are required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting.

Complying with Section 404 requires a rigorous compliance program as well as adequate time and resources. As a result of developing, improving and expanding our core information technology systems as well as implementing new systems to support our sales, engineering, supply chain and manufacturing activities, all of which require significant management time and support, we may not be able to complete our internal control evaluation, testing and any required remediation in a timely fashion. For the period ended March 31, ~~2018~~2019, we identified material weaknesses in our internal control over financial reporting. As such we were unable to assert that our internal controls are effective. This could result in the loss of investor confidence in the accuracy and completeness of our financial reports, which would have a material adverse effect on the price of our common stock.

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 30-days prior to filing of this Report, the average daily trading volume of our common stock was approximately 105,~~177~~ 974 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.

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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 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 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 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, 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.

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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 1B. Unresolved Staff Comments

None.

ITEM 2. Properties

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 approximately $~~73,000~~15 for the remaining ~~fifteen~~three months of the lease.

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ITEM 3. Legal Proceedings

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 $204,000 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 $918,000 plus damages and attorney fees (and currently approximately $630,000 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.

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 $1,600,000. 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.

Except as disclosed above, we are not currently subject to any material legal proceedings. However, we are subject to legal proceedings and claims from time to time in the ordinary course of business. Regardless of the outcome, litigation is time consuming and expensive to resolve, and ~~its~~it diverts management resources.

ITEM 4. Mine Safety Disclosures

None.

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PART II

ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

Information with respect to the quarterly high and low sales prices for Salon’s Common Stock, ticker symbol SLNM~~.PK~~, for its fiscal years 2019, ~~2018~~ and ~~2017~~2018, based on sales transactions reported by the OTC ~~(Over-The-Counter) Bulletin Board~~ Markets is provided below:

	Fiscal Year Ended				Fiscal Year Ended				~~Fiscal Year Ended~~
	March 31, 2019				March 31, 2018				~~March 31, 2017~~
For the quarter ended	High		Low		High		Low		~~High~~		~~Low~~
June 30	$	0.10	$	0.01	$	0.20	$	0.09	$	~~0.24~~	$	~~0.10~~
September 30		0.04		0.01		0.20		0.08		~~0.34~~		~~0.12~~
December 31		0.04		0.02		0.11		0.05		~~0.29~~		~~0.06~~
March 31	$	0.03	$	0.02	$	0.10	$	0.05	$	~~0.35~~	$	~~0.08~~

Such over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

There were 7498 total stockholders of record of Salon Common Stock as of ~~June~~July 1, 2019. This number was derived from Salon’s stockholder records, and does not include beneficial owners of Salon’s voting Common Stock whose shares are held in the names of various dealers, clearing agencies, banks, brokers and other fiduciaries. The closing price of Salon’s Common Stock on ~~June~~July 1, 2019 was $0.0302 per share.

Salon has never declared or paid any cash dividends on its capital stock and does not expect to pay any cash dividends in the foreseeable future.

Salon has never repurchased any of its equity securities.

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Equity Compensation Plan Information

The following table provides information about Salon’s Common Stock that may be issued upon the exercise of options and rights under all of Salon’s existing equity compensation plans as of March 31, ~~2018~~2019, including the Salon Media Group, Inc. 2004 Stock Plan (the “2004 Stock Plan”), the Salon Media Group, Inc. 2014 Stock Incentive Plan (the “2014 Stock Incentive Plan”) and the Salon Media Group, Inc. Non Plan Stock Option agreement (“Non-Plan”). Non-Plans are equity compensation plans not approved by stockholders.

Plan category	Number of securities to	Weighted-average	Number of securities
	be issued upon exercise	exercise price of	remaining available for
	of outstanding options	outstanding options	future issuance under
	and rights	and rights (1)	equity compensation
			plans, excluding
			securities reflected in
			column (a)
	(a)	(b)	(c)
Equity compensation plans	82,~~777~~790,~~681~~516	$0.0607	310,~~813~~529,~~385~~550
approved by security
holders
Equity compensation plans	4948,~~299~~145,~~438~~592	$0.06	None
not approved by security
holders
Total	5850,~~077~~936,~~119~~108	$0.06	310,~~813~~529,~~385~~550

(1) On March 14, 2018, the Board approved a stock option repricing program (the “Reprice”), authorizing Salon’s officers to reprice certain outstanding stock options held by active employees and directors that have option exercise prices above the current fair market value of Salon’s Common Stock. Salon believes the repricing of such stock options will encourage the continued service of valued employees and directors, and motivate such service providers to perform at high levels, both of which are critical to Salon’s continued success. Salon does not expect to incur any additional stock -based compensation charges as a result of this repricing.

Equity Compensation Plans Not Approved by Security Holders

We have granted options pursuant to Non-Plans. On June 9, 2016, we granted to our former 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 monthly installments over a four-year period commencing with the grant date.

On September 6, 2017, we granted to our former CEO an option to purchase 31,260,505 shares of Common Stock pursuant to the terms and conditions of the Salon Media Group, Inc. Non Plan Stock Option agreement, with our standard vesting of 25% of the option shares one year from the date of grant and then ratably over the following 36 months (1/48 per month).

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On September 6, 2017, we granted to each of the four members of our Board an option to collectively purchase 5,384,615 shares of Common Stock pursuant to the terms and conditions of the Salon Media Group, Inc. Non Plan Stock Option agreement, with vesting of 25% of the option shares one year from their service commencement and then ratably over the following 36 months (1/48 per month).

Recent Sales of Unregistered Securities

~~From~~Effective 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, 28 2019~~. In addition~~, ~~on December 7, 2018,~~ we issued ~~warrants to the secured note holders to purchase 11~~164,~~312,600~~ 883.000 shares of our common stock atupon anmandatory ~~exercise~~conversion ~~price~~ of ~~$0.01~~1,648,830 shares ~~per share. The warrants expire five years from the issuance date and can be exercised with cash or cancellation~~ of ~~the~~our ~~secured~~Series ~~notes~~A ~~referenced~~Preferred ~~above~~Stock. The issuances ~~of the secured notes and warrants~~ were exempt ~~from~~pursuant ~~registration~~to ~~under~~Sections ~~Rule~~3(a)(9) ~~506~~ and/or ~~Section~~ 4(a)(2) of the Securities Act of 1933, as amended. We did not receive any proceeds from the issuance of these shares.

ITEM 6. Selected Financial Data

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange At and are not required to provide the information required under this item.

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ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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. In our editorial product we balance two crucial missions: (1) providing original and provocative content on topics that the mainstream media overlook, and (2) filtering through the media chatter and clutter to help readers find the stories that matter.

~~Sources~~Looking forward, we are in the midst of ~~Revenue~~satisfying the conditions to close on the Asset Purchase Agreement discussed under “Material Agreements entered into during Fiscal 2019 and First Quarter Fiscal 2020” below. We expect to complete such transaction in the last week of August 2019. Following the Asset Sale, if consummated, we intend to cease to do business and intend to not engage in any business activities except for dealing with post-closing matters (in the event the Asset Sale is consummated) and for the purpose of liquidating our remaining assets, paying any debts and obligations, distributing the remaining assets to stockholders, and doing other acts required to liquidate and wind up our business and affairs. We will pay or make provision for payment of our known or reasonably ascertainable liabilities that have been incurred or are expected to be incurred prior to liquidation. After that, we will distribute the remaining assets to our stockholders in proportion to their respective stockholder interest in the Company

~~Most~~Sources of ~~Salon’s~~Revenue ~~revenues are derived~~ from ~~advertising~~Discontinued 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.Operations

InMost ~~addition,~~of Salon’s ~~generates~~revenues ~~revenue~~were derived from ~~referring~~advertising ~~users~~from the sale of promotional space on its Website, which as a result of our executing the Asset Purchase Agreement have been characterized as “Discontinued Operations” in our financial statements. 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 ~~third~~increase our advertising revenues in future periods are the addition of higher CPM ad products, such as pre-~~party~~roll ~~websites~~video, and growth in our audience. Attracting ~~For~~more ~~fiscal~~unique ~~year~~visitors ~~2018~~to our Website is important because these returning users generate additional page views, ~~referral~~and ~~fees~~each ~~totaled~~page $0view becomes a potential platform for advertisements.9 Advertising ~~million~~comprises banners, anvideo, 8%rich ~~decrease~~media ~~from~~and $1other interactive ads.0 CPMs ~~million~~vary by platform and CPMs for mobile have been less than those for desktop; however, in ~~fiscal~~the ~~year~~recent ~~2017~~quarter they have been increasing. Videos and sponsored content on mobile devices continue to grow in popularity and can demand a higher CPM. We ~~also~~believe ~~generated~~that ~~nominal~~continuing ~~revenue~~to ~~from~~add ~~the~~videos ~~licensing~~and ofsponsored content ~~that~~to ~~previously~~our ~~appeared~~mobile inplatform ~~Salon~~and improving and optimizing the platform’s design will help increase revenues from our mobile platform.

~~Our~~In ~~total~~addition, ~~net~~Salon generates revenue ~~and~~from ~~the~~referring ~~sources~~users ~~thereof~~to ~~for~~third-party ~~the~~websites. ~~years~~For ~~ended~~fiscal ~~March~~year 312019, referral fees totaled $0.5 million, a 44% decrease from $0.9 million in fiscal year 2018. ~~and 2017~~We ~~were~~also asgenerated ~~follows~~nominal (revenue from the licensing of content that previously appeared in ~~thousands):~~Salon.

	Year Ended March 31,
	2018					2017
	Amount		%			Amount		%
Advertising	$	3,595		79	%	$	3,542		78	%
Subscription Program		4		<1	%		6		<1	%
Referral and Other		938		20	%		1,022		21	%
Total	$	4,537		100	%	$	4,570		100	%

Our total net revenue and the sources thereof for the years ended March 31, 2019 and 2018 were as follows (in thousands):

	Year Ended March 31,
	2019					2018
	Amount		%			Amount		%
Advertising	$	2,524		84	%	$	3,595		79	%
Subscription Program		29	<1		%		4	<1		%
Referral and Other		447		15	%		938		20	%
Total	$	3,000		100	%	$	4,537		100	%

~~Material Agreement entered into during Fiscal 2018 and 2019~~32

~~Advances/Secured~~Material ~~Notes~~Agreements ~~from~~entered ~~Related~~into ~~Parties~~during Fiscal 2019 and First Quarter Fiscal 2020

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

General Advertising Services Agreement

WGAE Agreement

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) $550,000 in payable in cash at closing; (ii) $100,000 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) $500,000 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) $3,850,000 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:

(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 $5,000 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 $10,000 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 $10,000 plus costs per the Technology Agreement and (iii) an amount equal to 10% APR applied to the Deposit.

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.

~~Operating~~Second ~~Expenses~~Amendment to Asset Purchase Agreement

~~Production~~On ~~and~~June ~~content~~30, ~~expenses~~2019, ~~consist~~we ~~primarily~~entered ofinto ~~salaries~~a ~~and~~Second ~~related~~Amendment ~~expenses~~to ~~for~~Asset ~~Salon’s~~Purchase ~~editorial~~Agreement ~~and~~with ~~production~~Buyer ~~staff,~~under ~~payments~~which the parties revised the Asset Purchase Agreement to ~~freelance~~provide ~~writers~~that ~~and~~amounts ~~artists,~~delivered ~~bandwidth~~into ~~costs~~escrow ~~associated~~upon ~~with~~execution ~~serving~~would ~~pages~~not onused ~~our~~to ~~Website~~compensate ~~and~~any adBuyer ~~serving~~Indemnified ~~costs~~Parties for any losses under the Asset Purchase Agreement.

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. It also includes marketing promotions.33

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

On July 1, 2019, we entered into a Settlement Agreement and Release with each of Jordan Hoffner, our former CEO and Elizabeth Hambrecht, our former CFO. Under the terms of each agreement, we agreed to pay Mr. Hoffner and Ms. Hambrecht, as applicable, the total sum of Thirty Thousand dollars ($30,000.00) (the “Settlement Payment”) on the earlier of (i) 2 business days after the Closing of that certain Asset Purchase Agreement and (ii) December 31, 2019 (the “Payment Date”). Each of Mr. Hoffner and Ms. Hambrecht Claimant acknowledges that, upon receipt of the Settlement Payment, they will have been paid all wages, severance, all unreimbursed business expenses, and all accrued but unused vacation pay due and owing to them further waived any additional claims for unpaid salary or wage amounts, unreimbursed business expenses, and accrued but unused vacation pay. Each of Mr. Hoffner and Ms. Hambrecht executed a general release of all claims under their respective agreements.

Advances/Secured Notes from Related Parties

From June 2018 through August 2018, we received $114,500 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 $118,899. 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 $1,000 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

WGAE Agreement

Continuing Operating Expenses

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 grants 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 generally accepted accounting principles (“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 included elsewhere in this Form 10-K. 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 or conditions were to prevail.

Revenue Recognition

~~Salon~~We ~~recognizes~~recognize ~~revenues~~advertising ~~once~~revenue ~~persuasive~~from ~~evidence~~a ofdiverse anmix ~~arrangement~~of ~~exists,~~advertising ~~the~~methods ~~fee~~including isdisplay ~~fixed or determinable~~advertisements, ~~delivery~~where ~~has~~revenue ~~occurred, and collectability~~ is ~~reasonably~~dependent ~~assured.~~upon ~~Revenues~~the ~~are~~number ~~recognized~~of ~~ratably~~advertising ~~over~~impressions ~~the~~delivered; ~~period~~native inadvertisements, which ~~our obligations to deliver advertisement impressions~~ are ~~fulfilled.~~advertisements ~~The~~created ~~duration~~to ofmatch the ~~advertisements~~form ~~is generally short-term~~ and ~~frequently~~function ~~have~~of ~~cancellation~~the ~~clauses.~~platform ~~Payments~~on ~~received~~which ~~before~~they ~~our~~appear; ~~obligations~~or ~~are~~sponsored ~~fulfilled are classified as “deferred revenues” in Salon’s balance sheet~~content.

We generate advertising revenue from advertisements displayed on our Website. Advertising revenue comprised 7984% and 7879% of our revenues for the fiscal years ended March 31, ~~2018~~2019 and ~~2017~~2018, 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 efforts.

Stock Based Compensation

Salon accounts for stock-based compensation under ASC 718 and recognizes 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 $1,~~262~~526,000 and $~~525~~1,262,000 during the years ended March 31, ~~2018~~2019 and ~~2017~~2018, respectively. As of March 31, ~~2018~~2019, we had an aggregate of $42,~~427~~888,000 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: $1,~~406~~310,000 during fiscal year ~~2019; $1,434,000 during fiscal year~~ 2020; $1,~~143~~133,000 during fiscal year 2021 and $~~444~~445,000 during fiscal year 2022. The expected amortization reflects only outstanding stock option awards as of March 31, ~~2018~~2019. 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 November 14, 2016 with a fair value of $818,000, were reclassified from equity to liabilities and re-measured at fair value and presented under accrued liabilities. The balance of this option liability was $931,000 as of March 31, 2017, respectively. The Amendment with the Secretary of State of the State of Delaware was filed on August 1, 2017, after which the $1,010,000 option liability was reclassified back to equity during the quarter ended September 30, 2017 and upon the resulting increased authorized shares of our Common Stock.

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.

Liquidity

Salon has incurred significant net losses and negative cash flows from operations since its inception. As of March 31, ~~2018~~2019, Salon had an accumulated deficit of $~~138~~140.0 8 million. These losses have been funded primarily through the issuance of Common Stock from Salon’s initial public offering in June 1999, issuances of Preferred Stock, bank debt, the issuance of convertible notes payable and other advances from related parties. Salon is in discussion with potential investors, including related parties, to obtain additional funding. There can be no assurance that the Company will be able to raise additional funds on commercially reasonable terms, if at all.

M&K CPA’s, PLLC, Salon’s independent registered public accounting firm for the years ended March 31, ~~2018and~~2019, 2018 and 2017 has included a paragraph in their report indicating that substantial doubt exists as to Salon’s ability to continue as a going concern because of Salon’s recurring operating losses, negative cash flow and accumulated deficit.

Income Taxes

Salon has not recorded a provision for federal or state income taxes since inception due to recurring operating losses. As of March 31, 2018, Salon had net operating loss carryforwards of $94.8 million for federal income tax purposes that begin to expire in ~~March~~fiscal ~~2019~~2020, and $27.8 million for state income tax purposes. ~~As Salon has been incurring tax losses, $2.7 million of California net operating loss carryforwards expired as of March 31, 2018.~~ Utilization of Salon’s net operating loss carryforwards may be subject to a substantial annual limitation due to ownership change limitations provided by the Internal Revenue Code and similar California State provisions. Such an annual limitation could result in the expiration of the net operating loss carryforwards before utilization. ~~A valuation allowance has been established and~~However, ~~accordingly,~~with nothe ~~benefit~~sale ~~has~~of ~~been~~substantially ~~recognized~~all ~~for~~its ~~such operating losses and other deferred tax~~ assets. ~~The net valuation allowance decreased $11.7 million~~ during ~~the~~fiscal year ~~ended~~2020 ~~March 31, 2018 to $22.4 million.~~ Salon ~~believes~~doe ~~that,~~not ~~based~~believe onits aremaining ~~number~~net ofoperating ~~factors,~~loss ~~the~~will ~~availability~~be ofutilized ~~objective~~in ~~evidence~~any ~~creates sufficient uncertainty regarding the realization of the deferred tax assets such that a full valuation allowance has been recorded~~event. These factors include Salon’s history of net losses since inception, expected losses in 2020 and ~~expected~~the ~~near-term~~wind ~~future~~up ~~losses~~of the Company’s business.

3536

Results of Operations

Fiscal Years Ended March 31, 2019 and 2018

Continued Operations

General and Administrative Expenses

General and administrative expenses increased 13% to approximately $2.6 million during the fiscal year ended March 31, 2019, compared to $2.3 million in the fiscal year ended March 31, 2018. The increase was primarily attributed to non-cash stock-based compensation for new options granted during the year.

Interest Expense

Interest expense (including non-cash interest expense) decreased 33% to approximately $0.2 million during the fiscal year ended March 31, 2019, compared to $0.4 million for the fiscal year ended March 31, 2018. The decrease was primarily attributed to the decrease of non-cash charges from the beneficial conversion feature of convertible promissory notes one year ago.

Discontinued Operations

Revenues

Salon’s revenue from operations decreased 33% to $3.0 million for the fiscal year ended March 31, 2019, from $4.5 million for the fiscal year ended March 31, 2018. The decrease is primarily due to a 30% decrease in overall advertising revenue and a 53% decrease in referral fees.

Advertising revenues overall decreased 28% to $2.6 million for the fiscal year ended March 31, 2019, from $3.6 million for the fiscal year ended March 31, 2018. The decrease is primarily the result of a 43% decrease in programmatic advertising revenue to $1.8 million for the fiscal year ended March 31, 2019 compared to $3.2 million one year ago.

Two primary factors in our ability to increase advertising revenues in future periods are growth in our audience, and an increase in targeted advertising products that attract a higher CPM. Attracting more unique visitors to our Website is important because these users generate additional page views, and each page view becomes a potential platform for serving advertisements. Offering a targeted advertising product allows us to charge more for ad placement on our website. Advertisers pay for advertising based on a CPM, and different platforms attract different CPMs.

Due to various factors mainly attributed to shifts in how news media is promoted in the social media landscape, the annual average number of monthly unique Website visitors during fiscal year ended March 31, 2019 decreased approximately 42% from one year ago to approximately 6 million. We reached an all-time high of approximately 17 million annual average number of monthly unique Website visitors during fiscal years ended March 31, 2015 and 2016. Aiding the growth in unique visitors to Salon’s Website during prior fiscal years is the migration of users to the Internet from print newspapers.

All other sources of revenue were approximately $0.5 million for the fiscal year ended March 31, 2019 and $0.9 million for the fiscal year ended March 31, 2018. This $0.4 million decrease was mainly attributed to a 53% decrease in referral fees revenue during the fiscal year ended March 31, 2019.

Production and Content Expenses

Production and content expenses decreased 1435% to $32.74 million during the fiscal year ended March 31, ~~2018~~2019, compared to $4.3.7 million for the fiscal year ended March 31, ~~2017~~2018. The decrease was primarily attributed to personnel reductions and decreased costs associated with internet hosting and market research.

Sales and Marketing Expenses

Sales and marketing expenses decreased 4492% to $0.504 million during the fiscal year ended March 31, ~~2018~~2019, compared to $0.95 million for the fiscal year ended March 31, ~~2017~~2018. The decrease was primarily attributed to personnel reductions.

Information Technology Support Expenses

Information technology support expenses decreased 3538% to approximately $0.85 million during the fiscal year ended March 31, ~~2018~~2019, compared to $10.28 million in the fiscal year ended March 31. ~~2017~~2018. The decrease was primarily attributed to personnel reductions.

General and Administrative Expenses

General and administrative expenses increased 10% to approximately $2.3 million during the fiscal year ended March 31, 2018, compared to $2.1 million in the fiscal year ended March 31, 2017. The increase was primarily attributed to non-cash stock-based compensation for new options granted during the year.

Interest Expense

Interest expense (including non-cash interest expense) decreased 93% to approximately $0.4 million during the fiscal year ended March 31, 2018, compared to $5.6 million for the fiscal year ended March 31, 2017. The decrease was primarily attributed to the significant decrease of non-cash charges from the beneficial conversion feature of convertible promissory notes one year ago.

Liquidity and Capital Resources

Net cash used in operations was $1.0.5 million for the fiscal year ended March 31, ~~2018~~2019 and $1.50 million for the fiscal year ended March 31, ~~2017~~2018. The principal use of cash during each of the fiscal years ended March 31, ~~2018~~2019 and ~~2017~~2018 was to meet the Company’s operating deficits.

Net cash used in investing activities was immaterial for each of the fiscal years ended March 31, ~~2018~~2019 and ~~2017~~2018 and was used primarily to fund the re-design of our Website and, to a lesser extent, purchase of computing equipment.

Net cash provided from financing activities was $1.0.7 million and $1.80 million in proceeds primarily from convertible promissory notes, senior secured notes, issuance of preferred stock and short-term advances from related parties for each of the fiscal years ended March 31, 2019 and 2018, ~~2017~~ respectively.

Indemnification of Officers and Directors

Salon, as permitted under Delaware law and in accordance with its Bylaws, indemnifies its officers and directors for certain events or occurrences, subject to certain limits, while the officer is or was serving at Salon’s request in such capacity. The term of the indemnification period is for the officer's, or director's lifetime. The maximum amount of potential future indemnification is unlimited; however, Salon maintains a Director and Officer Insurance Policy that limits Salon's exposure and enables Salon to recover a portion of any future amounts paid. As a result of the insurance policy coverage, Salon believes the fair value of these indemnification agreements is minimal.

Contractual Obligations

The following table summarizes Salon’s contractual obligations as of March 31, ~~2018~~2019, and the effect these contractual obligations are expected to have on Salon’s liquidity and cash flows in future periods (in thousands):

	Total		1 Year or less		1 - 3 Years
Operating lease	$	7315	$	5815	$	15-
Short-term borrowing		1,000		1,000		-
Short-term borrowing interest		~~439~~512		~~439~~512		-
Total	$	1,512	$	1,497	$	15
Convertible promissory notes, net		700		700		-
Convertible promissory notes – related party, net		711		711		-
Total	$	2,938	$	2,938	$	-

Capital Requirements

Salon has a history of significant losses and expects to incur a net loss from operations for its fiscal year ending March 31, ~~2019~~2020. Because of past losses, an anticipated loss next year and a history of negative cash flows from operations, Salon’s independent registered public accounting firm for each of the years ended March 31, ~~2018~~2019 and 2018 2017 have included a paragraph in its reports indicating substantial doubt as to Salon’s ability to continue as a going concern. During the last ~~three~~two years, Salon has relied on cash from related party advances and rounds of financing to meet its cash requirements.

37Based on current cash projections, which contemplate a smaller operating loss, Salon estimates that it will require approximately $1.5 to $2.0 million in additional funding to meet operating needs. Operating costs in fiscal year 2019 decreased 24% compared to fiscal year 2018, respectively. Subsequent to the end of fiscal year 2017, we took steps to reduce our operating expenses by reducing headcount and not rehiring positions in which we had attrition, and ending certain non-core contracts. However, if planned revenues are less than expected, then we will not meet our operating targets and the projected cash shortfall may be higher. Salon is in discussions with potential investors, including related parties, to obtain additional funding.

Based on current cash projections, which contemplate a smaller operating loss, Salon estimates that it will require approximately $2.0 million in additional funding to meet operating needs. Operating costs in fiscal year 2018 decreased 14% compared to fiscal year 2017, respectively. Subsequent to the end of fiscal year 2017, we took steps to reduce our operating expenses by reducing headcount and not rehiring positions in which we had attrition, and ending certain non-core contracts. However, if planned revenues are less than expected, then we will not meet our operating targets and the projected cash shortfall may be higher. Salon is in discussions with potential investors, including related parties, to obtain additional funding.

There can be no assurance that the Company will be able to raise additional funds on commercially reasonable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Off-Balance Sheet Arrangements

Salon has an operating lease primarily for office space facilities.

Recent Accounting Pronouncements

Accounting Standards Not Yet Adopted

In June 2018, the FASB issued Accounting Standard Update No. 2018-07, Compensation—Stock Compensation (“ASU 2018-07”), to simplify the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments for employees, with certain exceptions. Under the new guidance, the cost for nonemployee awards may be lower and less volatile than under current GAAP because the measurement generally will occur earlier and will be fixed at the grant date. This update is effective for the fiscal year ended March 31, 2020.

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 ~~January~~June ~~2017~~2016, the FASB issued ~~ASU~~Accounting ~~2017~~Standard Update No. 2016-0113, Financial ~~“Business~~Instruments ~~Combinations~~ – ~~Clarifying~~Credit ~~the~~Losses ~~Definition of a Business,~~(“ASU 2016-13” ), which ~~clarifies~~requires ~~the~~companies ~~definition~~to ofconsider ahistorical ~~business~~experiences, ~~for~~current ~~determining~~market ~~whether~~conditions ~~transactions~~and ~~should~~reasonable beand ~~accounted~~supportable ~~for~~forecasts asin ~~acquisitions~~the ormeasurement ~~disposals~~ of ~~assets~~expected orcredit ~~businesses~~losses. ~~ASU~~This ~~2017-01~~update is effective for fiscal years beginning after December 15, ~~2018,~~2019 and for interim periods within those fiscal years, ~~with~~although early adoption is permitted. We doare ~~not~~currently ~~expect~~evaluating the ~~adoption~~impact ofit ~~ASU~~will ~~2017-01 to~~ have ~~a material impact~~ on our financial ~~position, results of operations, cash flows, or presentation thereof~~statements.

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 April 1, 2020. The Company is currently evaluating the impact of this new guidance on our financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases” (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 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

InThis ~~May~~ASU ~~2014~~is ~~(and~~effective ~~subsequently~~for ~~updated 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~~ ~~core~~A ~~principle~~modified ofretrospective ~~the~~transition ~~guidance~~approach 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~~on atApril ~~transition~~1, 2019 and onuse anthe ~~ongoing~~effective ~~basis.~~date ~~The~~as ~~new~~our ~~revenue~~date ~~standard~~of ~~may~~initial beapplication. ~~applied~~Consequently, ~~retrospectively~~financial toinformation ~~each~~will ~~period~~not ~~presented~~be orupdated ~~modified~~and ~~retrospectively with~~ the ~~cumulative~~disclosures ~~effect~~required ~~recognized~~under ~~as of~~ the ~~date~~new ofstandard ~~adoption. The~~will ~~Company~~not ~~adopted~~be ~~the~~provided ~~new~~for ~~revenue~~dates ~~recognition~~and ~~standard~~periods onbefore April 1, ~~2018, using the modified retrospective transition method~~ 2019.

The 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.

While we continue to assess all of the effects of adoption, we currently believe the most significant effects relate to (1) the recognition of new 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. While we continue to assess our contracts, we do not expect a significant change in our leasing activities between now and adoption. The new standard also provides practical expedients for an entity’s ongoing 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 those assets in transition. We also currently expect to elect the practical expedient to not separate lease and non-lease components for all of our leases.

Accounting Standards Adopted

In May 2014, the Financial Accounting Standards Board (FASB) issued Topic 606, which supersedes the revenue recognition requirements in Topic 605. We adopted Topic 606 as of April 1, 2018 using the modified retrospective transition method applied to those contracts which were not completed as of April 1, 2018. See “Revenue Recognition” in Note 3 of this Annual Report on Form 10-K for further details.

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange At and are not required to provide the information required under this item.

3941

ITEM 8. Financial Statements and Supplementary Data

ITEM 8. Financial Statements and Supplementary Data

	Page

Report of Independent Registered Public Accounting Firm	43

Balance Sheets as of March 31, 2019 and 2018	44

Statements of Operations for the years ended March 31, 2019 and 2018	45

Statements of Stockholders’ Deficit for the years ended March 31, 2019 and 2018	46

Statements of Cash Flows for the years ended March 31, 2019 and 2018	47

Notes to Financial Statements	48

	Page
Report of Independent Registered Public Accounting Firm	41
Balance Sheets as of March 31, 2018 and 2017	42
Statements of Operations for the years ended March 31, 2018 and 2017	43
Statements of Stockholders’ Deficit for the years ended March 31, 2018 and 2017	44
Statements of Cash Flows for the years ended March 31, 2018 and 2017	45
Notes to Financial Statements	46

40Report Of Independent Registered Public Accounting Firm

~~Report~~To Ofthe ~~Independent~~Board ~~Registered~~of ~~Public~~Directors ~~Accounting~~and ~~Firm~~Stockholders of Salon Media Group, Inc.

ToOpinion on the ~~Board~~Financial ~~of Directors and Stockholders of Salon Media Group, Inc.~~Statements

~~Opinion~~We onhave audited the ~~Financial~~accompanying ~~Statements~~balance sheets of Salon Media Group, Inc. (“the Company”) as of March 31, 2019 and 2018, and the related statements of operations, stockholders’ deficit and cash flows, for each of the years ended March 31, 2019 and 2018, and the related notes and schedules (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2019 and 2018, and the results of its operations and its cash flows for the year March 31, 2019 and 2018, in conformity with accounting principles generally accepted in the United States of America.

WeBasis have audited the accompanying balance sheets of Salon Media Group, Inc. (“the Company”) as of March 31, 2018 and 2017, and the related statements of operations, stockholders’ deficit and cash flows, for each of the years ended March 31, 2018 and 2017, and the related notes and schedules (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2018 and 2017, and the results of its operations and its cash flows for the year March 31, 2018 and 2017, in conformity with accounting principles generally accepted in the United States of America.Opinion

~~Basis~~These ~~for~~financial ~~Opinion~~statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

~~These~~We ~~financial~~conducted ~~statements~~our ~~are~~audits in accordance with the ~~responsibility~~standards of the ~~Company’s management~~PCAOB. ~~Our~~Those ~~responsibility~~standards isrequire tothat ~~express~~we anplan ~~opinion~~and onperform the ~~Company’s~~audit to obtain reasonable assurance about whether the financial statements ~~based~~are onfree ~~our~~of ~~audits~~material misstatement, whether due to error or fraud. WeThe ~~are~~Company ais ~~public~~not ~~accounting~~required ~~firm~~to ~~registered~~have, ~~with~~nor ~~the~~were ~~Public~~we ~~Company~~engaged ~~Accounting~~to ~~Oversight~~perform, ~~Board~~an ~~(United~~audit ~~States)~~of ~~(“PCAOB”)~~its ~~and~~internal control over financial reporting. As part of our audits, we are required to beobtain ~~independent~~an ~~with~~understanding ~~respect~~of tointernal ~~the~~control ~~Company~~over infinancial ~~accordance~~reporting, ~~with~~but ~~the~~not ~~U.S.~~for ~~federal~~the ~~securities~~purpose ~~laws~~of ~~and~~expressing ~~the~~an ~~applicable~~opinion ~~rules~~on ~~and~~the ~~regulations~~effectiveness of the ~~Securities~~Company’s ~~and~~internal ~~Exchange~~control ~~Commission~~over ~~and~~financial ~~the~~reporting. ~~PCAOB~~Accordingly, we express no such opinion.

WeOur ~~conducted~~audits ~~our~~included ~~audits~~performing inprocedures ~~accordance~~to ~~with~~assess the ~~standards~~risks of ~~the~~material ~~PCAOB. Those~~misstatement ~~standards~~of ~~require that we plan and perform~~ the ~~audit to obtain reasonable assurance about whether the~~ financial statements ~~are free of material misstatement~~, whether due to error or fraud~~. The~~, ~~Company~~and isperforming ~~not~~procedures ~~required~~that respond to ~~have,~~those ~~nor~~risks. ~~were~~Such weprocedures ~~engaged~~included toexamining, ~~perform~~on a test basis, anevidence ~~audit~~regarding ofthe ~~its~~amounts ~~internal~~and ~~control~~disclosures ~~over~~in the financial ~~reporting~~statements. As ~~part~~Our ~~of our~~ audits, wealso ~~are~~included ~~required~~evaluating tothe ~~obtain~~accounting anprinciples ~~understanding~~used ofand ~~internal~~significant ~~control~~estimates ~~over~~made ~~financial~~by ~~reporting~~management, ~~but~~as ~~not~~well ~~for~~as evaluating the ~~purpose~~overall presentation of ~~expressing an opinion on~~ the ~~effectiveness~~financial ofstatements. ~~the~~We ~~Company’s~~believe ~~internal~~that ~~control~~our ~~over~~audits ~~financial~~provide ~~reporting. Accordingly,~~a wereasonable ~~express~~basis nofor ~~such~~our opinion.

~~Our~~The ~~audits~~accompanying ~~included~~financial ~~performing~~statements ~~procedures~~have tobeen ~~assess~~prepared ~~the~~assuming ~~risks~~that ~~of material misstatement of~~ the ~~financial~~Company ~~statements,~~will ~~whether~~continue ~~due~~as toa ~~error~~going orconcern. ~~fraud,~~As ~~and~~discussed ~~performing~~in ~~procedures~~Note ~~that~~2 ~~respond~~ to ~~those~~the ~~risks. Such~~financial ~~procedures~~statements, ~~included~~the ~~examining,~~Company onsuffered a ~~test~~net ~~basis,~~loss ~~evidence~~from ~~regarding~~operations ~~the~~and ~~amounts~~has ~~and~~a ~~disclosures~~net incapital ~~the~~deficiency, ~~financial~~which ~~statements. Our~~raises ~~audits~~substantial ~~also~~doubt ~~included~~about ~~evaluating~~its ~~the~~ability ~~accounting~~to ~~principles~~continue ~~used~~as ~~and~~a ~~significant~~going ~~estimates~~concern. ~~made~~Management’s byplans ~~management,~~regarding asthese ~~well~~matters asare ~~evaluating~~also ~~the~~described ~~overall~~in ~~presentation~~Note of2. ~~the~~The financial statements~~. We~~ ~~believe~~do ~~that~~not ~~our~~include ~~audits~~any ~~provide~~adjustments athat ~~reasonable~~might ~~basis~~result ~~for~~from ~~our~~the ~~opinion~~outcome of this uncertainty.

~~The~~/s/ ~~accompanying~~M&K financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company suffered a net loss from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. ManagementCPA’s, ~~plans regarding these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.~~PLLC

~~/s/~~We ~~M&K~~have ~~CPA~~served as the Company’s, ~~PLLC~~auditor since 2019.

WeHouston, ~~have served as the Company’s auditor since 2019.~~Texas

~~Houston~~July 10, ~~Texas~~2019

~~June 7, 2019~~43

41SALON MEDIA GROUP, INC. BALANCE SHEETS (in thousands, except share and per share amounts)

SALON MEDIA GROUP, INC.

	March 31,
	2019			2018
ASSETS
Current assets:
Cash	$	269		$	67
Prepaid expenses and other current assets		52			50
Current assets held for sale (Note 4)		439			433
Total current assets		760			550

Non-current assets held for sale (Note 4)		210			397
Total assets	$	970		$	947

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Short-term borrowings and accrued interest	$	1,512		$	1,439
Convertible promissory notes, net		700			200
Convertible promissory note – related party, net		711			535
Accrued liabilities		904			752
Current liabilities held for sale (Note 4)		1,431			1,287
Total current liabilities		5,258			4,213

Non-current assets held for sale (Note 4)		-			-
Total liabilities		5,258			4,213

Commitments and contingencies (Note 13)

Stockholders’ deficit:
Series A convertible preferred stock, $0.001 par value, 5,000,000 shares authorized, 1,648,830 and outstanding in 2019 and 2018 (liquidation value of $4,089 in 2019)		2			2
Common stock, $0.001 par value, 900,000,000 shares authorized in 2019 and 2018, 151,056,477 shares issued and outstanding in 2019 and 2018		151			151
Additional paid-in capital		136,312			134,667
Accumulated deficit		(140,753	)		(138,086	)
Total stockholders’ deficit		(4,288	)		(3,266	)
Total liabilities and stockholders' deficit	$	970		$	947

~~BALANCE~~See ~~SHEETS~~accompanying notes to financial statements.

~~(in thousands, except share and per share amounts)~~44

	March 31,
	2018			2017
ASSETS
Current assets:
Cash	$	52		$	183
Accounts receivable, net of allowance of $15 and $15		433			663
Prepaid expenses and other current assets		65			159
Total current assets		550			1,005
Property, software development and equipment, net		359			305
Other assets, principally intangibles		38			33
Total assets	$	947		$	1,343
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Short-term borrowings and accrued interest	$	1,439		$	1,382
Convertible promissory notes, net		200			-
Convertible promissory notes – related party		535			-
Accounts payable		1,198			1,231
Accrued liabilities		841			657
Share based liability		-			931
Total current liabilities		4,213			4,201
Deferred rent		-			58
Total liabilities		4,213			4,259
Commitments and contingencies (Note 10)
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 March 31, 2018 and March 31, 2017 (liquidation value of $3,540 as of March 31, 2017) (1)		-			6,862
Stockholders’ deficit:
Series A convertible preferred stock, $0.001 par value, 5,000,000 shares authorized, 1,648,830 and 0 shares outstanding in 2018 and 2017 (liquidation value of $4,089 in 2018)		2			-
Common stock, $0.001 par value, 900,000,000 and 150,000,000 shares authorized in 2018 and 2017, 151,056,477 shares issued and outstanding in 2018 and 150,000,000 shares issued and outstanding in 2017		151			150
Additional paid-in capital		134,667			125,053
Accumulated deficit		(138,086	)		(134,981	)
Total stockholders’ deficit		(3,266	)		(9,778	)
Total liabilities, mezzanine equity and stockholders' deficit	$	947		$	1,343

SALON MEDIA GROUP, INC.
STATEMENTS OF OPERATIONS
(in thousands, except per share data)

(1) Series A Mandatorily Convertible Preferred Stock at March 31, 2017 is classified as Mezzanine Equity, see Note 12.

	Years Ended March 31,
	2019			2018

Revenues	$	-		$	-

Operating expenses:
General and administrative		2,596			2,292
Total general and administrative		2,596			2,292

Loss from operations		(2,596	)		(2,292	)
Change in fair value of share-based liability		-			(79	)
Interest expense		(172	)		(80	)
Warrant discount		(66	)		-
Non-cash interest expense – beneficial conversion feature		-			(275	)
Net loss from continuing operations	$	(2,834	)	$	(2,726	)
Income (Loss) from discontinued operations (Note 4)		167			(379	)
Net loss	$	(2,667	)	$	(3,105	)

Basic and diluted net loss per share from continuing operations	$	(0.02	)	$	(0.02	)

Basic and diluted net loss per share from discontinued operations	$	(0.00	)	$	(0.00	)

Weighted average shares used in computing basic and diluted net loss per share from continuing operations		151,056			150,619

Weighted average shares used in computing basic and diluted net loss per share from discontinued operations		151,056			150,619

See accompanying notes to financial statements.

4245

SALON MEDIA GROUP, INC.

STATEMENTS OF ~~OPERATIONS~~STOCKHOLDERS’ DEFICIT

(in thousands, except ~~per~~preferred ~~share~~and ~~data~~common stock shares)

	Years Ended March 31,
	Preferred						Common				Additional					Total
	2018			2017
	Stock						Stock				Paid-In		Accumulated			Stockholders’
Revenues	$	4,537		$	4,570
	Shares			Amount			Shares		Amount		Capital		(Deficit)			Deficit
Operating expenses:
Balance, March 31, 2017		-			-			150,000,000		150	$	125,053		(134,981	)		(9,778	)
Production and content		3,748			4,250
Shares converted from convertible notes		1,648,830			2			-		-		7,135		-			7,137
Sales and marketing		489			878
Shares from options exercised		-			-			1,056,477		1		11		-			12
Technology		763			1,181
Stock-based compensation		-			-			-		-		1,183		-			1,183
General and administrative		2,292			2,081
Debt discount from convertible notes		-			-			-		-		275		-			275
Total operating expenses		7,292			8,390
Reclassification of options to liabilities		-			-			-		-		1,010		-			1,010
Loss from operations		(2,755	)		(3,820	)
Net loss		-			-			-		-		-		(3,105	)		(3,105	)
Change in fair value of share based liability		(79	)		(113	)
Balance, March 31, 2018		1,648,830			2			151,056,477		151		134,667		(138,086	)		(3,266	)
Interest expense		(80	)		(52	)
Stock-based compensation		-			-			-		-		1,526		-			1,526
Non-cash interest expense – beneficial conversion feature		(275	)		(5,585	)
Issuance of warrants in connection with convertible notes		-			-			-		-		119		-			119
Gain on settlement of accounts payable		84			-
Net loss		-			-			-		-		-		(2,667	)		(2,667	)
Net loss		(3,105	)		(9,570	)
Balance, March 31, 2019		1,648,830		$	2			151,056,477	$	151	$	136,312	$	(140,753	)	$	(4,288	)
Preferred deemed dividend		-			(860	)
Net loss attributable to common stockholders	$	(3,105	)	$	(10,430	)
Basic and diluted net loss per share	$	(0.02	)	$	(0.10	)
Weighted average shares used in computing basic and diluted net loss per share		150,619			103,935

See accompanying notes to financial statements.

4346

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

STATEMENTS OF STOCKHOLDERS’ DEFICIT

	Years Ended March 31,
	2019			2018
Cash flows from operating activities:
Net loss from continuing operations	$	(2,834	)	$	(2,726	)

Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		1,526			1,183
Mark to market adjustment of options liability		-			79
Amortization of debt discount		66			-
Non-cash interest expense – beneficial conversion feature		-			275
Changes in assets and liabilities:
Prepaid expenses and other current assets		(2	)		109
Other assets		-			-
Accrued liabilities		229			810
Deferred rent		-			(58	)
Net cash (used in) operating activities – continuing operations		(1,015	)		(328	)
Net cash provided by (used in) operating activities – discontinued operations		492			(621	)
Net cash (used in) operating activities		(523	)		(949	)

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

Cash flows from financing activities:
Proceeds from convertible promissory notes		500			200
Proceeds from convertible promissory notes – related party		225			812
Repayments of convertible promissory notes - related party		-			(40	)
Proceeds from issuance of common stock		-			11
Net cash provided by financing activities		725			983

Net increase (decrease) in cash		202			(116	)
Cash, beginning of year		67			183
Cash, end of year	$	269		$	67

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

Supplemental schedule of non-cash financing activities:
Issuance of warrants in connection with convertible notes	$	119		$	-
Conversion of accrued interest to convertible notes	$	4		$	-
Reclassification of options back to stockholders’ equity	$	-		$	1,010
Reclassification of mezzanine equity to stockholders’ equity	$	-		$	6,862
Conversion of convertible promissory note to common stock	$	-		$	275
Beneficial conversion feature	$	-		$	275
Accounts payable paid directly by related-party through issuance of promissory note	$	-		$	38

~~(in~~See ~~thousands,~~accompanying ~~except~~notes ~~preferred~~to ~~stock~~financial ~~shares)~~statements.

	Preferred					Common				Additional						Total
	Stock					Stock				Paid-In			Accumulated			Stockholders’
	Shares			Amount		Shares		Amount		Capital			(Deficit)			Deficit
Balance, March 31, 2016		1,075			-		76,245		76		116,192			(124,551	)		(8,283	)
Shares converted from preferred stock		(1,075	)		-		17,200		17		(17	)		-			-
Shares converted from related party advances		-			-		56,526		57		5,596			-			5,653
Shares converted from convertible notes		-			-		-		-		2,826			-			2,826
Preferred deemed dividend on conversion of Series C convertible preferred stock ($800 per share)		-			-		-		-		860			(860	)		-
Shares from options exercised		-			-		29		-		2			-			2
Stock-based compensation		-			-		-		-		412			-			412
Reclassification of options to liabilities		-			-		-		-		(818	)		-			(818	)
Net loss		-			-		-		-		-			(9,570	)		(9,570	)
Balance, March 31, 2017		-			-		150,000		150		125,053			(134,981	)		(9,778	)
Shares converted from convertible notes		1,648,830			2		-		-		7,135			-			7,137
Shares from options exercised		-			-		1,056		1		11			-			11
Stock-based compensation		-			-		-		-		1,183			-			1,183
Debt discount from convertible notes		-			-		-		-		275			-			276
Reclassification of options to liabilities		-			-		-		-		1,010			-			1,010
Net loss		-			-		-		-		-			(3,105	)		(3,105	)
Balance, March 31, 2018		1,648,830		$	2		151,056	$	151	$	134,667		$	(138,086	)	$	(3,266	)

~~See~~SALON ~~accompanying~~MEDIA ~~notes~~GROUP, ~~to financial statements~~INC.

44NOTES TO FINANCIAL STATEMENTS

~~SALON~~(amounts ~~MEDIA~~in ~~GROUP~~thousands, ~~INC.~~except share and per share data)

~~STATEMENTS~~Note OF1. The ~~CASH FLOWS~~Company

Salon Media Group, Inc. (in“Salon”, ~~thousands~~“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.

	Years Ended March 31,
	2018			2017
Cash flows from operating activities:
Net loss	$	(3,105	)	$	(9,570	)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss from retirement of equipment, net		5			11
Bad debt expense and change in allowance for doubtful accounts		6			(5	)
Depreciation		91			35
Stock-based compensation		1,183			412
Mark to market adjustment of options liability		79			113
Non-cash interest expense – beneficial conversion feature		275			5,585
Changes in assets and liabilities:
Accounts receivable		224			690
Prepaid expenses and other current assets		94			(32	)
Other assets		(5	)		268
Accounts payable		5			838
Accrued liabilities		242			174
Deferred rent		(58	)		(10	)
Net cash used in operating activities		(964	)		(1,491	)
Cash flows from investing activities:
Purchase of equipment and capitalized website development costs		(150	)		(282	)
Net cash used in investing activities		(150	)		(282	)
Cash flows from financing activities:
Proceeds from convertible promissory notes		200			435
Proceeds from convertible promissory notes – related party		812			1,080
Repayments of convertible promissory notes - related party		(40	)		(100	)
Proceeds from related party advances		-			350
Proceeds from issuance of common stock		11			2
Net cash provided by financing activities		983			1,767
Net decrease in cash		(131	)		(6	)
Cash, beginning of year		183			189
Cash, end of year	$	52		$	183
Amount paid for interest	$	-		$	-
Amount paid for income taxes	$	-		$	-
Supplemental schedule of non-cash financing activities:
Reclassification of options back to stockholders’ equity	$	1,010		$	-
Reclassification of mezzanine equity to stockholders’ equity	$	6,862		$	-
Conversion of convertible promissory note to common stock	$	275		$	-
Conversion of unsecured advances into preferred stock	$	-		$	4,103
Conversion of unsecured advances into common shares	$	-		$	5,653
Conversion of preferred stock into common stock	$	-		$	17
Beneficial conversion feature	$	275		$	5,585
Preferred deemed dividend in connection with preferred stock financing	$	-		$	860
Conversion of stock options to liabilities	$	-		$	818
Accounts payable paid directly by related-party through issuance of promissory note	$	38		$	-

Note 2. Summary of Significant Accounting Policies

~~See~~Basis ~~accompanying~~of ~~notes to financial statements.~~presentation

45The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States.

~~SALON~~Going ~~MEDIA GROUP, INC.~~Concern

~~NOTES~~These TOfinancial ~~FINANCIAL~~statements ~~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 has an accumulated deficit as of March 31, 2019 of $140,753. In addition, Salon expects to incur a net loss from operations for its year ending March 31, 2020. During the last two years, Salon has relied on cash from related-party advances and rounds of financing to meet its cash requirements. Based on current cash projections, which contemplate a smaller operating loss, Salon estimates it will require between $1.5 and $2.0 million in additional funding to meet operating needs. Operating costs in fiscal year 2019 decreased 24% compared to fiscal year 2018, respectively. Subsequent to the end of fiscal year 2018, we took steps to reduce our operating expenses by reducing headcount and not rehiring positions in which we had attrition, and ending certain non-core contracts. However, if planned revenues are less than expected, then we will not meet our operating targets and our projected cash shortfall may be higher. Salon is in discussions with potential investors, including related parties, to obtain additional funding. In addition, in March 2019, the Company entered into an asset purchase agreement with Salon.com, LLC pursuant to which it agreed to sell substantially all of its assets for an aggregate purchase price of $5 million. Following consummation of this agreement, it is intended that the Company will cease to be an operating company. As the Company will cease to have any revenue generating activities at that time, it is unlikely that the Company will raise additional funds on commercially reasonable terms, if at all. Further, there is no guarantee that the proceeds from the asset sale will be sufficient to satisfy all of the Company’s creditors. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

~~(amounts~~Use inof ~~thousands, except share and per share data)~~estimates

~~Note~~The 1preparation 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. ~~The~~ ~~Company~~Actual results could differ from those estimates.

~~Salon~~Revenue 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.Recognition

~~Note~~We ~~2. Summary~~recognize revenue when we transfer control of ~~Significant~~promised ~~Accounting~~goods ~~Policies~~or services to our customer in an amount that reflects the consideration we expect to be entitled to in exchange for those good or services.

~~Basis of presentation~~48

~~The~~SALON ~~financial~~MEDIA ~~statements~~GROUP, ~~of the Company have been prepared in accordance with generally accepted accounting principles in the United States~~INC.

~~Going~~NOTES ~~Concern~~TO FINANCIAL STATEMENTS

~~These~~(amounts ~~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 has an accumulated deficit as of March 31~~thousands, ~~2018~~except ofshare ~~$138,086. In addition, Salon expects to incur a net loss from operations for its year ending March 31, 2019. During the last three years, Salon has relied on cash from related-party advances~~ and ~~rounds~~per ofshare financing to meet its cash requirements. Based on current cash projections, which contemplate a smaller operating loss, Salon estimates it will require approximately $2.0 million in additional funding to meet operating needs. Operating costs in fiscal year 2018 decreased 14% compared to fiscal year 2017, respectively. Subsequent to the end of fiscal year 2017, we took steps to reduce our operating expenses by reducing headcount and not rehiring positions in which we had attrition, and ending certain non-core contracts. However, if planned revenues are less than expected, then we will not meet our operating targets and our projected cash shortfall may be higher. Salon is in discussions with potential investors, including related parties, to obtain additional funding. There can be no assurance that the Company will be able to raise additional funds on commercially reasonable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.data)

~~Use~~Our contracts with customers may include multiple performance obligations. For such arrangements, we allocate the transaction price to each performance obligation based on the estimated standalone selling price of ~~estimates~~the promised good or service.

~~The~~Segment ~~preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates~~ and ~~assumptions~~enterprise-wide 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.~~

~~Segment~~Salon ~~and~~discloses segment enterprise-wide ~~reporting~~information in accordance with ASC 280, “Segment Reporting.” Based upon definitions contained within ASC 280, management has determined that Salon operates in one segment. In addition, substantially all revenues are in the United States, and all of the long-lived assets are located within the United States.

~~Salon~~Cash discloses segment enterprise-wide information in accordance with ASC 280, “Segment Reporting.” Based upon definitions contained within ASC 280, management has determined that Salon operates in one segment. In addition, substantially all revenues are in the United States, and ~~all~~cash ~~of the long-lived assets are located within the United States.~~equivalents

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

~~Cash~~Accounts ~~and~~receivable, ~~cash equivalents consist of cash on deposit with banks and have original maturities of three months or less.~~net

46Accounts receivable are stated net of doubtful accounts. Salon estimates the collections of the accounts receivable balance and maintains allowances for estimated losses. Salon analyzes accounts receivable, historical bad debts, receivable aging, customer credit-worthiness and current economic trends when evaluating the adequacy of the allowance for doubtful accounts. The Company’s allowance for doubtful accounts at March 31, 2019 and 2018 was $15, respectively. We believe that our allowance for doubtful accounts is sufficient to cover uncollectible receivables as of March 31, 2019 and 2018.

~~SALON~~Property ~~MEDIA~~and ~~GROUP~~equipment, ~~INC.~~net

~~NOTES~~Property TOand ~~FINANCIAL~~equipment ~~STATEMENTS~~are recorded at cost. Maintenance, repairs and minor renewals are expensed as incurred. Depreciation is provided on a straight-line basis over the useful lives of the asset, principally three years for computer hardware and software, and five years for furniture and office equipment. Amortization of leasehold improvements is provided on a straight-line basis over the useful life of the asset or the term of the lease, whichever is shorter. When property and equipment is retired or otherwise disposed of, the cost and accumulated depreciation and amortization are relieved from the accounts and the net gain or loss is included in the determination of income or loss.

~~(amounts~~Software ~~in thousands, except share~~ and ~~per~~website ~~share~~development ~~data)~~costs

~~Accounts~~The ~~receivable~~Company accounts for website development costs in accordance with “ASC” 350-50 “Website Development Costs”. Accordingly, ~~net~~all costs incurred in the planning stage are expensed as incurred, costs incurred in the website application and infrastructure development stage that meet specific criteria are capitalized and costs incurred in the day-to-day operation of the website are expensed as incurred. Information technology support expenses to develop new product offerings for internal use are capitalized as software and website development costs and are amortized over the expected useful life, beginning in the period the redesigned Website was launched.

Accounts receivable are stated net of doubtful accounts. Salon estimates the collections of the accounts receivable balance and maintains allowances for estimated losses. Salon analyzes accounts receivable, historical bad debts, receivable aging, customer credit-worthiness and current economic trends when evaluating the adequacy of the allowance for doubtful accounts. Our allowance for doubtful accounts at March 31, 2018 and 2017 was $15, respectively. We believe that our allowance for doubtful accounts is sufficient to cover uncollectible receivables as of March 31, 2018.49

~~Property~~SALON ~~and~~MEDIA ~~equipment~~GROUP, ~~net~~INC.

~~Property~~NOTES ~~and~~TO ~~equipment~~FINANCIAL are recorded at cost. Maintenance, repairs and minor renewals are expensed as incurred. Depreciation is provided on a straight-line basis over the useful lives of the asset, principally three years for computer hardware and software, and five years for furniture and office equipment. Amortization of leasehold improvements is provided on a straight-line basis over the useful life of the asset or the term of the lease, whichever is shorter. When property and equipment is retired or otherwise disposed of, the cost and accumulated depreciation and amortization are relieved from the accounts and the net gain or loss is included in the determination of income or loss.STATEMENTS

~~Software~~(amounts in thousands, except share and ~~website~~per ~~development~~share ~~costs~~data)

~~The~~Comprehensive Company accounts for website development costs in accordance with “ASC” 350-50 “Website Development Costs”. Accordingly, all costs incurred in the planning stage are expensed as incurred, costs incurred in the website application and infrastructure development stage that meet specific criteria are capitalized and costs incurred in the day-to-day operation of the website are expensed as incurred. Information technology support expenses to develop new product offerings for internal use are capitalized as software and website development costs and are amortized over the expected useful life, beginning in the period the redesigned Website was launched.loss

~~Revenue~~Comprehensive ~~recognition~~loss is defined as the change in equity of a business enterprise during a period from non-owner sources. There were no differences between the net loss for the years ended March 31, 2019 and 2018 and comprehensive loss for those periods.

~~Salon’s~~Stock-based revenues are primarily from the sale of advertising space on its Website. Salon recognizes revenue 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 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.compensation

~~Advertisement sales agreements are generally short~~Stock-~~term~~based ~~agreements,~~compensation ~~usually~~cost ~~less~~is ~~than~~measured ~~ninety~~at ~~days,~~the ~~and~~grant ~~frequently~~date ~~have~~based ~~cancellation~~on ~~clauses.~~the ~~Revenues~~fair ~~derived~~value ~~from~~of ~~such arrangements are recognized during~~ the ~~period~~award ~~the~~and ~~advertising space~~ is ~~provided,~~recognized as ~~long~~expense asover nothe ~~significant~~requisite ~~obligations~~service ~~remain~~period, atwhich ~~the~~is ~~end of~~ the vesting period. Salon’s ~~obligations~~uses ~~may include~~ the ~~guarantee~~Black-Scholes ofoption-pricing amodel ~~minimum number of times that an advertisement appears in a page viewed by a visitor~~ to ~~Salon’s~~determine ~~Website. To~~ the ~~extent~~fair-value ~~the~~of ~~minimum~~stock-based ~~guaranteed~~awards. ~~amounts are not delivered,~~ Salon ~~defers~~recognizes ~~recognition~~compensation ofcost ~~the~~related ~~corresponding~~to ~~revenue~~options ~~until~~granted ~~the~~on ~~remaining~~a ~~guaranteed~~straight-line ~~amounts~~basis ~~are~~over ~~achieved,~~the ifapplicable ~~mutually~~vesting ~~agreeable with an advertiser~~period. ~~If these “make good” impressions are not agreeable to an advertiser, no further revenue is recognized.~~

~~The~~Common ~~determination~~Stock ofPurchase whether revenue should be reported on a gross or net basis is based on an assessment of whether the Company acts as a principal or an agent in the transaction. In certain cases, the Company is considered the agent, and the Company records revenue equal to the net amount retained when the fee is earned. In these cases, costs incurred with third-party suppliers are excluded from the Company’s revenue. The Company assesses whether it or the third-party supplier is the primary obligor and evaluates the terms of its customer arrangements as part of this assessment. In addition, the Company considers other key indicators such as latitude in establishing price, inventory risk, nature of services performed, discretion in supplier selection and credit risk.Warrants

47 The Company accounts for common stock purchase warrants in accordance with FASB ASC Topic 815, Accounting for Derivative Instruments and Hedging Activities (“ASC 185”). As is consistent with its handling of stock compensation and embedded derivative instruments, the Company’s cost for stock warrants is estimated as the grant date based on each warrant’s fair-value as calculated by the Black-Scholes-Merton (“BSM”) option-pricing model value method for valuing the impact of the expense associated with these warrants.

~~SALON~~Net ~~MEDIA~~loss ~~GROUP,~~per ~~INC.~~share attributable to common shareholders

~~NOTES~~Basic TOnet ~~FINANCIAL~~loss ~~STATEMENTS~~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 year, as follows:

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

	Years Ended March 31,
	2019			2018
Numerator:
Net loss from continuing operations	$	(2,834	)	$	(2,726	)
Net income (loss) from discontinued operations	$	167		$	(379	)

Denominator:
Weighted average shares used in computing basic and diluted net loss per share		151,056,000			150,619,000

Basic and diluted net loss per share from continuing operations	$	(0.02	)	$	(0.02	)

Basic and diluted net loss per share from discontinued operations	$	(0.00	)	$	(0.00	)

Antidilutive securities including options, convertible debts and preferred stock not included in net loss per share calculation		280,812,000			271,858,000

~~Comprehensive~~Financial ~~loss~~instruments

~~Comprehensive~~The ~~loss~~carrying isamounts ~~defined as the change in equity~~ of aSalon’s ~~business~~financial ~~enterprise~~instruments, ~~during~~including acash, ~~period~~accounts ~~from~~receivable, ~~non-owner~~and ~~sources.~~accounts ~~There~~payable ~~were~~and noaccrued ~~differences between the net loss for the years ended March 31~~liabilities, ~~2018~~approximate ~~and 2017~~fair ~~and comprehensive~~value ~~loss~~because ~~for~~of ~~those~~their ~~periods~~short maturities.

~~Stock-based~~Fair ~~compensation~~Value of Financial Instruments

~~Stock-based~~Fair ~~compensation~~value ~~cost~~ is ~~measured~~defined atas the ~~grant~~price ~~date~~that ~~based~~would onbe ~~the~~received ~~fair~~upon ~~value~~sale of ~~the~~an ~~award~~asset ~~and~~or ispaid ~~recognized~~upon astransfer ~~expense~~of ~~over~~a ~~the~~liability ~~requisite~~in ~~service~~an ~~period,~~orderly ~~which~~transaction isbetween market participants at the ~~vesting~~measurement ~~period.~~date ~~Salon~~and ~~uses~~in the ~~Black-Scholes~~principal ~~option-pricing~~or ~~model~~most toadvantageous ~~determine~~market ~~the~~for that asset or liability. The fair- value ofshould ~~stock-~~be calculated based ~~awards.~~on ~~Salon~~assumptions ~~recognizes~~that ~~compensation~~market ~~cost~~participants ~~related~~would touse ~~options~~in ~~granted~~pricing the asset or liability, not on aassumptions ~~straight-line~~specific ~~basis~~to ~~over~~the entity. In addition, the ~~applicable~~fair ~~vesting~~value ~~period~~of liabilities should include consideration of non-performance risk including our own credit risk.

~~Net~~In ~~loss~~addition ~~per~~to ~~share~~defining ~~attributable~~fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs is expanded. The hierarchy prioritizes the inputs into three levels based on the extent to ~~common~~which ~~shareholders~~inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels and which is determined by the lowest level input that is significant to the fair value measurement in its entirety.

~~Basic~~These ~~net~~levels 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 year, as followsare:

	Years Ended March 31,
	2018			2017
Numerator:
Net loss	$	(3,105	)	$	(10,430	)
Denominator:
Weighted average shares used in computing basic and diluted net loss per share		150,619,000			103,935,000
Basic and diluted net loss per share	$	(0.02	)	$	(0.10	)
Antidilutive securities including options, convertible debts and preferred stock not included in net loss per share calculation		271,858,000			161,900,000

Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

~~Financial~~Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

~~The~~Level ~~carrying~~3 ~~amounts~~– ofinputs ~~Salon~~are generally unobservable and typically reflect management’s ~~financial~~estimates ~~instruments,~~of ~~including~~assumptions ~~cash,~~that ~~accounts~~market ~~receivable,~~participants ~~and~~would ~~accounts~~use ~~payable~~in ~~and~~pricing ~~accrued~~the ~~liabilities,~~asset ~~approximate~~or liability. The fair ~~value~~values ~~because~~are oftherefore ~~their~~determined ~~short~~using ~~maturities~~model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

4850

SALON MEDIA GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

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

~~Fair~~The ~~Value~~following table represents the Company’s financial instruments that are measured at fair value on a recurring basis as of ~~Financial~~March ~~Instruments~~31, 2018 and 2017 for each fair value hierarchy level:

Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.

March 31, 2019	Share Based Liability		Total
Level 1	$	-	$	-
Level 2	$	-	$	-
Level 3	$	-	$	-

In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs is expanded. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels and which is determined by the lowest level input that is significant to the fair value measurement in its entirety.

March 31, 2018	Share Based Liability		Total
Level 1	$	-	$	-
Level 2	$	-	$	-
Level 3	$	-	$	-

~~These~~In ~~levels~~management’s ~~are:~~opinion, the fair value of stock-based compensation is approximate to the trading price of the Company’s stock. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, exchange or credit risks arising from these financial instruments. As of March 31, 2019 and 2018, the balances reported for cash, accounts receivable, prepaid expenses, accounts payable, and accrued liabilities, approximate the fair value because of their short maturities.

~~Level~~Income ~~1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.~~taxes

~~Level~~Salon 2recognizes –deferred ~~inputs~~taxes ~~are~~using ~~based~~the ~~upon~~asset ~~quoted~~and ~~prices~~liability method of accounting for ~~similar~~income ~~instruments~~taxes. inUnder ~~active~~the ~~markets~~asset and liability method, ~~quoted~~deferred ~~prices~~income taxes are recognized for ~~identical~~differences orbetween ~~similar~~the ~~instruments~~financial instatement ~~markets~~and ~~that~~tax ~~are~~basis ~~not~~of ~~active,~~assets and ~~model-based~~liabilities ~~valuation~~at ~~techniques~~enacted ~~for~~statutory ~~which~~tax ~~all~~rates ~~significant~~in ~~assumptions~~effect ~~are~~for ~~observable~~the years in which the ~~market~~differences orare ~~can~~expected beto ~~corroborated~~reverse. byThe ~~observable~~effect ~~market~~on ~~data~~deferred ~~for~~taxes ~~substantially~~of a change in tax rates is recognized in income in the ~~full~~period ~~term~~that ofincludes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets orto ~~liabilities~~the amounts expected to be realized.

~~Level~~Concentrations ~~3 – inputs are generally unobservable and typically reflect management’s estimates~~ of ~~assumptions~~credit that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.risk

~~The~~Financial ~~following~~instruments ~~table~~that ~~represents~~potentially ~~the~~subject ~~Company~~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 ~~financial~~expectations ~~instruments~~of ~~that~~future ~~are~~losses. ~~measured~~Two atcustomers ~~fair~~accounted ~~value~~for onapproximately a72%, ~~recurring~~and ~~basis~~14% of accounts receivable as of March 31, 2019. Three customers accounted for approximately 16%, 12% and 10% of accounts receivable as of March 31, 2018. Two customers accounted for approximately 19% and ~~2017~~13% of revenues for ~~each~~the ~~fair~~fiscal ~~value~~year ~~hierarchy~~ended ~~level:~~March 31, 2019. One customer accounted for approximately 41% of revenues for the fiscal year ended March 31, 2018.

March 31, 2018	Share Based Liability		Total
Level 1	$	-	$	-
Level 2	$	-	$	-
Level 3	$	-	$	-

Accounting Standards Not Yet Adopted

March 31, 2017	Share Based Liability		Total
Level 1	$	931	$	931
Level 2	$	-	$	-
Level 3	$	-	$	-

In ~~management’s~~July ~~opinion~~2017, the ~~fair~~Financial ~~value~~Accounting ofStandards ~~stock~~Board ~~based~~(“FASB”) ~~compensation~~issued isa ~~approximate~~two-part toAccounting ~~the~~Standards ~~trading~~Update ~~price~~(“ASU”) of2017-11, “Earnings Per Share (Topic 260).” Part I addresses the ~~Company’s~~complexity ~~stock~~of accounting for certain financial instruments with down round features. ~~Unless~~ ~~otherwise~~Down ~~noted,~~round itfeatures isare ~~management’s~~features ~~opinion~~of certain equity-linked instruments (or embedded features) that ~~the~~result ~~Company~~in isthe ~~not~~strike ~~exposed~~price tobeing ~~significant~~reduced ~~interest,~~on ~~exchange~~the orbasis ~~credit~~of ~~risks~~the ~~arising~~pricing ~~from~~of ~~these~~future ~~financial~~equity ~~instruments~~offerings. AsPart ofII ~~March~~does ~~31,~~not ~~2018~~require ~~and~~any transition guidance because those amendments do not have an accounting effect. ASU 2017,-11 ~~the~~is ~~balances~~effective ~~reported~~for public entities for ~~cash~~fiscal years, ~~accounts~~and ~~receivable,~~for ~~prepaid~~interim ~~expenses,~~periods ~~accounts~~within ~~payable~~those fiscal years, ~~and~~beginning ~~accrued~~after ~~liabilities~~December 15, ~~approximate~~2018. Early adoption is permitted. We do not expect the ~~fair~~adoption ~~value~~of ~~because~~this accounting standard to have a material impact on our financial position, results of ~~their~~operations, ~~short~~cash ~~maturities~~flows, or presentation thereof.

49In June 2016, the FASB issued Accounting Standard Update No. 2016-13, Financial Instruments – Credit Losses (“ASU 2016-13”), which requires companies to consider historical experiences, current market conditions and reasonable and supportable forecasts in the measurement of expected credit losses. This update is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years, although early adoption is permitted. We are currently evaluating the impact it will have on our financial statements.

~~SALON~~In ~~MEDIA~~February ~~GROUP~~2016, ~~INC~~the FASB issued ASU 2016-02, “Leases” (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 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

~~NOTES TO FINANCIAL STATEMENTS~~51

~~(amounts~~SALON inMEDIA ~~thousands~~GROUP, ~~except share and per share data)~~INC.

~~Income~~NOTES ~~taxes~~TO FINANCIAL STATEMENTS

~~Salon~~(amounts ~~recognizes~~in ~~deferred taxes using the asset and liability method of accounting for income taxes. Under the asset and liability method~~thousands, ~~deferred~~except ~~income~~share ~~taxes are recognized for differences between the financial statement~~ and ~~tax~~per ~~basis~~share of assets and liabilities at enacted statutory tax rates in effect for the years in which the differences are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.data)

~~Concentrations~~This ASU is effective for the Company on April 1, 2019. We expect to adopt the new standard on its effective date. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of ~~credit~~initial ~~risk~~application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. We expect to adopt the new standard on April 1, 2019 and use the effective date as our date of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before April 1, 2019.

~~Financial~~The ~~instruments~~new ~~that~~standard ~~potentially~~provides ~~subject~~a ~~Salon~~number ~~to concentrations~~ of ~~credit~~optional ~~risk~~practical ~~consist~~expedients ~~primarily~~in ~~of trade accounts receivable~~transition. ~~Salon~~We ~~performs~~expect ~~ongoing credit evaluations of its customers, but does not require collateral. Salon provides an allowance for credit losses that it periodically adjusts~~ to ~~reflect~~elect ~~management’s~~the ~~expectations~~‘package of ~~future~~practical ~~losses. Three customers accounted for approximately 16%~~expedients’, ~~12%~~which ~~and~~permits ~~10%~~us ofnot ~~accounts~~to ~~receivable~~reassess asunder ofthe ~~March~~new ~~31,~~standard ~~2018.~~our ~~Three~~prior ~~customers~~conclusions ~~accounted~~about ~~for~~lease ~~approximately 35%~~identification, ~~18%~~lease classification and ~~15%~~initial ofdirect ~~accounts receivable as of March 31, 2017~~costs. ~~One~~We ~~customer~~do ~~accounted~~not ~~for~~expect ~~approximately~~to ~~41%~~elect the use-of-hindsight ~~revenues~~or ~~for~~ the ~~fiscal~~practical ~~year~~expedient ~~ended~~pertaining ~~March~~to ~~31,~~land ~~2018.~~easements; ~~Two customers accounted for approximately 23% and 10% of revenues for~~ the ~~fiscal~~latter ~~year~~not ~~ended~~being ~~March~~applicable ~~31,~~to ~~2017~~us.

~~Recent~~While we continue to assess all of the effects of adoption, we currently believe the most significant effects relate to (1) the recognition of new 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. While we continue to assess our contracts, we do not expect a significant change in our leasing activities between now and adoption. The new standard also provides practical expedients for an entity’s ongoing accounting. ~~pronouncements~~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 those assets in transition. We also currently expect to elect the practical expedient to not separate lease and non-lease components for all of our leases.

~~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.Adopted

In ~~January~~May ~~2017~~2014, the ~~FASB~~Financial ~~issued~~Accounting ~~ASU~~Standards ~~2017-01,~~Board ~~“Business~~(FASB) ~~Combinations~~issued –Topic ~~Clarifying the Definition of a Business~~606,” which ~~clarifies~~supersedes the ~~definition~~revenue ofrecognition arequirements ~~business~~in ~~for~~Topic ~~determining~~605. ~~whether~~We ~~transactions~~adopted ~~should~~Topic be606 ~~accounted~~as ~~for~~of asApril ~~acquisitions~~1, or2018 ~~disposals~~using ofthe ~~assets~~modified orretrospective ~~businesses.~~method ~~ASU~~applied ~~2017-01~~to isthose ~~effective~~contracts ~~for~~which ~~fiscal~~were ~~years~~not ~~beginning~~completed ~~after~~as ~~December~~of 15April 1, 2018,. ~~and~~The ~~interim~~cumulative ~~periods~~impact ~~within~~of ~~those~~adopting ~~fiscal~~Topic ~~years,~~606 ~~with~~was ~~early~~immaterial ~~adoption~~and ~~permitted.~~no Weadjustments doto ~~not expect~~ the ~~adoption~~opening balance of ~~ASU~~retained ~~2017-01~~earnings towere ~~have~~recorded. aThere ~~material~~was no impact onto ~~our~~revenues ~~financial~~for ~~position,~~the ~~results~~year ofended ~~operations~~March 31, ~~cash~~2019 ~~flows,~~as ora ~~presentation~~result ~~thereof~~of applying Topic 606.

InCertain ~~February 2016~~reclassifications, ~~the~~not ~~FASB~~affecting ~~issued~~previously ~~ASU~~reported ~~2016-02~~net loss, ~~“Leases”~~have ~~(Topic~~been ~~842).~~made ~~The main objective of this update is~~ to ~~increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on~~ the ~~balance~~previously ~~sheet~~issued ~~and~~financial ~~disclosing~~statements ~~key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition~~ to ~~Topic~~conform ~~842; ASU No. 2018-10, Codification Improvements~~ to ~~Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on~~ the ~~balance~~current ~~sheet~~period ~~for all leases with a term longer than 12 months~~presentation. ~~Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.~~

~~This~~Note ~~ASU is effective for the Company on April 1, 2019~~3. We expect to adopt the new standard on its effective date. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. We expect to adopt the new standard on April 1, 2019 and use the effective date as our date of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before April 1, 2019.Revenue

50Adoption of ASC Topic 606, “Revenue from Contracts with Customers”

~~SALON~~On ~~MEDIA~~April ~~GROUP~~1, ~~INC~~2018, we adopted Topic 606, Revenue from Contracts with Customers, using the modified retrospective method applied to those contracts that were not completed as of April 1, 2018. Results for reporting periods beginning after April 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 605.

~~NOTES TO FINANCIAL STATEMENTS~~52

~~(amounts~~SALON inMEDIA ~~thousands~~GROUP, ~~except share and per share data)~~INC.

~~The~~NOTES ~~new~~TO ~~standard~~FINANCIAL 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.STATEMENTS

~~While we continue to assess all of the effects of adoption, we currently believe the most significant effects relate to~~ (1)amounts the recognition of new 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. While we continue to assess our contracts, we do not expect a significant change in our leasing activities between now and adoption. The new standard also provides practical expedients for an entity’s ongoing accounting. We currently expect to elect the short-term lease recognition exemption for all leases that qualify. This meansthousands, ~~for~~except ~~those~~share ~~leases that qualify, we will not recognize ROU assets or lease liabilities,~~ and ~~this~~per ~~includes~~share not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. We also currently expect to elect the practical expedient to not separate lease and non-lease components for all of our leases.data)

In May 2014 (and subsequently updated with clarifying standard), the FASB issued 2014-09 “Revenue from Contracts with Customers” related to new accounting requirements for the recognition of revenue from contracts with customers. The ~~core~~cumulative ~~principle~~impact of ~~the~~adopting ~~guidance~~Topic is606 ~~that~~was animmaterial ~~entity~~and ~~should~~no ~~recognize~~adjustments ~~revenue~~ to ~~depict~~ the ~~transfer~~opening balance of ~~promised~~retained ~~goods~~earnings orwere ~~services~~recorded. toThere ~~customers~~was inno animpact ~~amount that reflects the consideration~~ to ~~which~~revenue ~~the entity expects to be entitled to in exchange~~ for the ~~goods~~year orended ~~services.~~March ~~Subsequent to the release of this guidance~~31, ~~the~~2019 ~~FASB~~as ~~has~~a ~~issued~~result ~~additional updates intended to provide interpretive clarifications and to reduce the cost and complexity~~ of applying ~~the~~Topic ~~new revenue recognition standard both at transition and on an ongoing basis~~606. The new revenue standard may be applied retrospectively to each period presented or modified retrospectively with the cumulative effect recognized as of the date of adoption. The Company adopted the new revenue recognition standard on April 1, 2018, using the modified retrospective transition method.

~~The~~Disaggregation ~~cumulative impact~~ of adopting this new standard was immaterial and no adjustments to the opening balance of retained earnings were recorded. The implementation did not have a material impact on the Company’s condensed financial statements. Revenue

~~ASC~~Revenues ~~606~~are ~~outlines~~recognized awhen ~~five-step~~control ~~process~~of ~~for~~the ~~recognizing~~promised ~~revenue~~goods ~~from~~or ~~contracts~~services ~~with~~is ~~customers:~~transferred i)to ~~identify~~our ~~the contract with the customer~~customers, ~~ii) identify the performance obligations~~ in ~~the~~an ~~contract,~~amount ~~(iii)~~that ~~determine~~reflects the ~~transaction~~consideration ~~price,~~we ~~iv)~~expect ~~allocate~~to ~~the~~be ~~transaction~~entitled ~~price~~ to ~~the separate performance obligations~~ in ~~the~~exchange ~~contract,~~for ~~and~~those ~~(v)~~good ~~recognize~~or ~~revenue associated with the performance obligations as they are satisfied~~services.

The ~~Company only applies the five-step model to contracts~~ ~~when~~following ittable ispresents ~~probable~~our that the Company will collect the consideration it is entitled to in exchange for services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606, the Company determines the performance obligations that are distinct. The Company recognizes as revenues ~~the~~disaggregated ~~amount~~by ofrevenue ~~the~~source transaction price that is allocated to each respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company's performance obligations are transferred to customers at a point (in ~~time, typically upon receipt of the services by the customer.~~thousands):

See “Revenue Recognition” below for additional discussion of our revenue recognition accounting policies and expanded disclosures.

	Year Ended March 31,
	2019					2018
	Amount		%			Amount		%
Advertising	$	2,524		84	%	$	3,595		79	%
Subscription Program		29	<1		%		4	<1		%
Referral and Other		447		15	%		938		20	%
Total	$	3,000		100	%	$	4,537		100	%

~~Reclassifications~~Advertising

~~Certain~~Advertising ~~reclassifications~~revenue is generated from advertisements displayed on our website and mobile applications. Articles, ~~not~~videos ~~affecting~~and ~~previously~~other ~~reported~~forms ~~net~~of ~~loss~~content generate advertising revenue from a diverse mix of advertising methods including display advertisements, ~~have~~where ~~been~~revenue ~~made~~is todependent upon the ~~previously~~number ~~issued~~of ~~financial~~advertising ~~statements~~impressions todelivered; ~~conform~~native advertisements, which are advertisements created to match the ~~current~~form ~~period~~and ~~presentation~~function of the platform on which they appear; or sponsored content. Revenue is recognized on a cost-per-impression basis, which means a customer pays us based on the number of times their ads are displayed on Salon Media Groups properties.

51We enter into revenue-sharing arrangements with our partners, such as those relating to our advertiser network, we report revenue on a gross or net basis depending on whether we are considered the principal in the transaction. In addition, we consider which party controls the service, including which party is primarily responsible for fulfilling the promise to provide the service. We also consider which party has the latitude to establish the sales prices to advertisers. In certain cases, the Company is considered the agent, and the Company records revenue equal to the net amount retained when the fee is earned. In these cases, costs incurred with third-party suppliers are excluded from the Company’s revenue.

~~SALON~~Subscription ~~MEDIA GROUP, INC.~~Program

~~NOTES~~Subscription TOrevenue ~~FINANCIAL~~is ~~STATEMENTS~~generated by users who pay for ad-free content. We offer a monthly or yearly subscription plan in exchange for an ad-free experience. The subscription service is available for users who read Salon on a web browser, and for users using a Salon app for the phone.

~~(amounts in thousands, except share and per share data)~~53

~~Note~~SALON 3.MEDIA ~~Property~~GROUP, ~~Software Development and Equipment~~INC.

	March 31,
	2018			2017
Property, software development and equipment, net
Computer hardware and software	$	170		$	898
Software and website development		649			499
Furniture and office equipment		21			37
		840			1,434
Less accumulated depreciation		(481	)		(1,129	)
	$	359		$	305

NOTES TO FINANCIAL STATEMENTS

~~Qualifying~~(amounts ~~website development costs incurred during the application development stage, which consist primarily of outside services and design of our Website, are capitalized and included~~ in ~~property~~thousands, ~~software~~except ~~development~~share and ~~equipment,~~per ~~net~~share in the balance sheets. Website development costs of $150 and $263 were capitalized and the related amortization expense of $69 and $0 was reported during the fiscal years ended March 31, 2018 and 2017, respectively.data)

~~Depreciation~~Referral and ~~amortization~~Other ~~expense for the fiscal years ended March 31, 2018 and 2017 was $91 and $35, respectively.~~Fees

~~Note~~Referral 4income is generated when a user clicks on an ad that sends a Salon user to a participating third-party website. ~~Borrowing~~We ~~Agreements~~contract with third party content discovery companies who pay us a pre-determined CPM for traffic that clicks through into their network of websites.

~~Short-term~~Deferred ~~borrowings~~Revenue

InDeferred ~~May~~revenue ~~2007,~~consists ~~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~~amounts ~~less~~received ~~0.25%.~~from Inor ~~September~~invoiced ~~2016, this credit agreement was transferred~~ to ~~Raymond~~customers ~~James and Associates, Inc. (“Raymond James”) after Deutsche Bank Securities Inc. sold its accounts. The agreement is guaranteed~~ in ~~its~~advance ~~entirety by Salon’s former Chairman, John Warnock. The line~~ of ~~credit~~our ~~has~~performance ~~been~~obligations ~~fully~~being ~~drawn as of March 31~~satisfied, ~~2018~~including and 2017. Salon and its former Chairman have agreed to lift previously agreed restrictions on the timing of borrowing to permit borrowing to continue under the agreement with the guarantee of the former Chairman. Raymond James may demand repayment of amounts ~~borrowed at any time. Additionally, Mr. Warnock may also choose to terminate his guarantee,~~ which ~~would~~are ~~trigger a demand for repayment~~refundable. As of March 31, 2018 and 2017, accrued interest on bank debt totaled $439 and $382, respectively. During the fiscal years ended March 31, 2018 and 2017, the weighted average interest rate on the Company’s short-term borrowings remained constant at approximately 3.5%.

52Our payment terms vary by the type and location of our customer and the products or services offered. The term between invoicing and when payment is due is not significant. For certain products or services and customer types, we require payment before the products or services are delivered to the customer.

~~SALON~~Practical ~~MEDIA~~Expedients ~~GROUP,~~and ~~INC.~~Exemptions

~~NOTES~~We TOgenerally ~~FINANCIAL~~expense ~~STATEMENTS~~sales commissions, when incurred because the amortization period would have been one year or less. These costs are recorded within sales and marketing on our statements of operation. We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

~~(amounts~~Note in4. ~~thousands,~~Discontinued ~~except share and per share data)~~Operations

~~Convertible~~On March 6, 2019, the Company entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Salon.com, LLC (“Buyer”) under which it agreed to sell substantially all of its 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 its 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 ~~notes~~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. As a result of the Company entering into the Asset Purchase Agreement, the Company’s operations have been characterized as discontinued operations in its financial statements pursuant to Regulation

~~Non-interest~~The ~~bearing~~following ~~notes~~table summarizes the results of discontinued operations:

During the fiscal year ended March 31, 2018, 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”). Interest was no imputed due to the immateriality of the amount.

	Years Ended March 31,
	2019		2018
Revenues	$	3,000	$	4,537

Expenses:
Production and content		2,426		3,748
Sales and marketing		46		489
Technology		486		763
Total expenses		2,958		5,000

Income (Loss) from discontinued operations		42		(463	)
Gain on settlement of accounts payable		125		84
Net Income (Loss) from discontinued operations	$	167	$	(379	)

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 fiscal year ended March 31, 2018 with an offsetting entry to Additional Paid-in Capital.54

~~Interest~~SALON ~~bearing~~MEDIA ~~notes~~GROUP, INC.

~~During~~NOTES ~~the~~TO ~~fiscal~~FINANCIAL year ended March 31, 2018, the Company also 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 $735 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.STATEMENTS

~~Advances~~(amounts ~~from~~in ~~related~~thousands, ~~parties~~except share and per share data)

~~During~~The ~~the~~following ~~fiscal~~table ~~year~~summarizes ~~ended March 31, 2018,~~ the ~~Company~~assets ~~did not receive any unsecured, interest-free cash advances from John Warnock~~ and ~~William~~liabilities Hambrecht, as working capital. During the fiscal year ended March 31, 2017, the Company received $350 and $100 in unsecured, interest-free cash advances from John Warnock and William Hambrecht. On November 14, 2016 the Company, Mr. Warnock and Mr. Hambrecht entered into a Stock Exchange Agreement to exchange the related party advances for Common Stock or shares of ~~Series~~discontinued A Preferred Stock. Interest was not imputed due to the immateriality of the amount. No gain or loss was recorded due to the conversion occurring within the terms of the agreement. As of March 31, 2017, all outstanding advances were exchanged into shares of Common Stock or shares of Series A Preferred Stock. See Note 5. Related party Transactions for further discussion.operations:

	March 31,
	2019		2018
ASSETS
Current Assets
Accounts receivable, net	$	439	$	433
Total current assets held for sale		439		433

Non-current Assets
Property, software development and equipment, net		210		359
Other assets, principally intangibles		-		38
Total non-current assets held for sale		210		397
Total Assets Held for Sale	$	649	$	830

LIABILITES
Current Liabilities
Accounts payable	$	1,344	$	1,198
Accrued liabilities		87		89
Total current liabilities held for sale		1,431		1,287

Non-current Liabilities
Other liabilities		-		-
Total non-current assets held for sale		-		-
Total Liabilities Held for Sale	$	1,431	$	1,287

~~SALON MEDIA GROUP, INC.~~55

~~NOTES~~SALON TOMEDIA ~~FINANCIAL~~GROUP, ~~STATEMENTS~~INC.

~~(amounts~~NOTES inTO ~~thousands,~~FINANCIAL ~~except share and per share data)~~STATEMENTS

On(amounts ~~September 26, 2017, the Company received from Jordan Hoffner, the Company’s CEO, $40~~ in ~~a short-term~~thousands, ~~unsecured,~~except ~~interest-free~~share ~~cash~~and ~~advance~~per asshare ~~working capital to fund operations. This advance was repaid on September 29, 2017.~~data)

~~Gain~~Note on5. ~~Settlement~~Property, ofSoftware ~~Accounts~~Development ~~Payable~~and Equipment, included in Assets Held for Sale

During the fiscal year ended March 31, 2018, the Company came to a settlement with a vendor who the Company had outstanding invoices totaling $122. Both parties came to a settlement of $38 which was paid directly by our former CEO. The Company entered into a convertible promissory note dated December 12, 2017 with the former CEO for this settlement amount of $38. This 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. If that qualified financing isn’t obtained, the note is payable in cash or converted 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 unpaid balance of $84 is recorded as a gain on settlement of accounts payable in the financial statements.

	March 31,
	2019			2018
Property, software development and equipment, net
Computer hardware and software	$	151		$	170
Software and website development		413			649
Furniture and office equipment		19			21
		583			840
Less accumulated depreciation		(373	)		(481	)
	$	210		$	359

~~Note~~Qualifying 5website development costs incurred during the application development stage, which consist primarily of outside services and design of our Website, are capitalized and included in property, software development and equipment, net in the balance sheets. ~~Related~~Website ~~Party~~development ~~Transactions~~costs of $0 and $150 were capitalized and the related amortization expense of $138 and $69 was reported during the fiscal years ended March 31, 2019 and 2018, respectively.

~~Cash~~Depreciation ~~Advances~~and amortization expense for the fiscal years ended March 31, 2019 and 2018 was $149 and $91, respectively.

OnNote ~~September 26, 2017, Salon received $40 in cash, unsecured and interest-free, from our CEO as working capital and was repaid on September 29, 2017~~6. ~~Interest~~ ~~was~~Borrowing not imputed due to the immateriality of the amount. The Company did not receive any other cash advances during the fiscal year ended March 31, 2018. During the fiscal year ended March 31, 2017, the Company received $350 and $100 in unsecured, interest-free cash advances from former Chairman, Mr. Warnock, and Mr. Hambrecht, respectively, as working capital.Agreements

~~Promissory~~Short-term ~~Notes~~borrowings

~~Various~~In ~~related~~May ~~parties~~2007, ~~have~~Salon ~~provided~~entered ~~immediately~~into ~~available~~a ~~funds~~borrowing agreement with Deutsche Bank Securities, Inc. that allows Salon to ~~serve~~borrow asup to $1,000, plus accrued interest, at a ~~bridge~~rate of prime less 0.25%. In September 2016, this credit agreement was transferred to ~~the~~Raymond ~~Company~~James and Associates, Inc. (“Raymond James”) after Deutsche Bank Securities Inc. sold its accounts. The agreement is guaranteed in its entirety by Salon’s ~~2017~~former Chairman, John Warnock. The line of credit of $1,000 has been fully drawn as of March 31, 2019 and 2018. ~~equity~~Salon ~~capital~~and ~~raises~~its ~~through~~former ~~the~~Chairman ~~issuance~~have ~~and~~agreed ~~sale~~to lift previously agreed restrictions on the timing of ~~interest~~borrowing ~~bearing~~to ~~convertible~~permit ~~promissory~~borrowing ~~notes~~to ~~that~~continue ~~are~~under ~~convertible~~the ~~into~~agreement ~~shares~~with the guarantee of the ~~Company’s~~former ~~Common~~Chairman. ~~Stock~~Raymond inJames ~~accordance~~may ~~with~~demand ~~the~~repayment ~~terms~~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 ~~these~~March ~~notes~~31, 2019 and ~~their~~2018, ~~securities~~accrued ~~purchase~~interest ~~agreements~~on bank debt totaled $512 and $439, respectively. During the fiscal years ended March 31, 2019 and 2018, the weighted average interest rate on the Company’s short-term borrowings remained constant at approximately 3.6% and 3.5%, respectively.

~~The following is a summary of these related party bridge convertible promissory notes issued during the fiscal year ended March 31, 2018:~~56

Note Date	Related Party Purchasers	Principal Amount		Interest Rate		Maturity Date	Purchase Agreement	Equity Capital Raise
10/26/17	Spear Point Capital Fund LP (1)	$	125		10%	10/26/18	10/26/17		2017
11/30/17	Eu Revocable Trust (2)	$	50		10%	11/30/18	11/30/17		2017
11/30/17	Jordan Hoffner (3)	$	75		10%	11/30/18	11/30/17		2017
12/12/17	Jordan Hoffner (3)	$	38		10%	12/12/18	12/12/17		2017
12/12/17	Jordan Hoffner (3)	$	22		10%	12/12/18	12/12/17		2017
01/09/18	Jordan Hoffner (3)	$	75		10%	01/09/19	01/09/18		2017
02/26/18	Jordan Hoffner (3)	$	100		10%	02/26/19	02/26/18		2018
03/29/18	Jordan Hoffner (3)	$	50		10%	03/29/19	03/29/18		2018
	Total	$	535

SALON MEDIA GROUP, INC.

~~(1)~~NOTES ~~Trevor~~TO ~~Colhoun,~~FINANCIAL ~~Director, is one of the Managing Members of Spear Point Capital Management LLC which provides management services to Spear Point Capital Fund LP.~~STATEMENTS

(2)amounts ~~Elizabeth~~in ~~Hambrecht~~thousands, ~~CFO,~~except isshare ~~the~~and ~~trustee~~per ofshare ~~the Trust.~~data)

~~(3)~~Convertible ~~Jordan~~promissory ~~Hoffner was the CEO of the Company until May 3, 2019, he is currently a Director.~~notes

54Interest bearing convertible promissory notes

~~SALON~~During ~~MEDIA~~the ~~GROUP~~fiscal year ended March 31, ~~INC~~2019, 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.

~~NOTES~~Interest TObearing ~~FINANCIAL~~senior ~~STATEMENTS~~secured notes

~~(amounts~~During the fiscal year ended March 31, 2019 the Company received $114.5 in ~~thousands~~advances from related parties. These advances accrued interest at a rate of 10% per annum and payable within one year from the date of advance. On December 7, ~~except~~2018, ~~share~~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, 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. ~~data)~~The warrants expire five years from the issuance date and can be exercised with cash or cancellation of the secured notes referenced above.

OnDuring ~~November~~the 14fiscal year ended March 31, ~~2016~~2019, the Company received $~~300~~500 infrom ~~the~~PubLife, ~~form~~LLC ofupon ~~Demand~~execution ~~Promissory~~of ~~Note from~~ a ~~related~~term ~~party.~~sheet ~~The~~for ~~Note bears interest at~~ the ~~rate~~sale of ~~four~~the ~~percent (4%) per annum~~Salon.com Asbusiness, awhich ~~condition~~is tothe ~~issuance~~basis offor the ~~Demand~~Asset ~~Promissory~~Purchase ~~Note,~~Agreement ~~all~~discussed ~~related-party~~below. ~~cash~~Upon ~~advances~~closing ~~from~~of ~~Mr.~~the ~~Warnock~~Asset ~~and~~Purchase ~~Mr. Hambrecht~~Agreement, ~~$5,428~~this ~~and~~ $~~2,913~~500 ~~respectively,~~is ~~were~~ to be ~~converted~~credited ~~into~~against athe ~~total~~purchase ~~of 83,410,000 shares of Common Stock at a conversion~~ price ~~of $0~~.10 ~~per~~If ~~share. Mr.~~the ~~Warnock~~Company ~~received~~fails ~~54,280,000 shares of Common Stock. Due~~ to close the ~~Company’s~~Asset ~~insufficient~~Purchase ~~authorized~~Agreement ~~shares~~or ofbreaches ~~Common~~the ~~Stock,~~term ~~Mr.~~sheet ~~Hambrecht~~with ~~further~~PubLife ~~agreed~~related to ~~receive~~the ~~2,246,017~~Asset ~~shares~~Purchase ~~of Common Stock and 268~~Agreement,~~840~~ ~~shares~~this of$500 ~~Series A Preferred Stock which~~ will ~~automatically~~ convert into ~~26,883,983~~a ~~shares~~10% ofsecured ~~Common~~promissory ~~Stock~~note ~~upon~~payable ~~the~~within ~~filing~~90-days of ~~the~~issuance, ~~Amendment~~secured ~~and~~by ~~resulting~~all ~~increase in authorized shares~~ of ~~Common~~the ~~Stock,~~Company’s ~~which~~assets ~~occurred~~and onsenior ~~August~~to 1,all ~~2017. These~~indebtedness ~~notes were converted within the terms~~ of the ~~agreements, no gain or loss was recognized upon conversion~~Company.

~~Purchase~~Note ~~Agreements~~7. Related Party Transactions

OnPromissory January 24, 2017, the Company entered into the Purchase Agreement with the Purchasers to issue and sell in the Private Placement up to 2,417,471 shares of the Company’s Series A Preferred Stock, at a purchase price of $1.24 per share. The purchase and sale of the shares of the Series A Preferred Stock were completed in three stages: (1) Initial Closing, (2) Second Closing and (3) Final Closing.Notes

~~The~~Various ~~Initial~~related ~~Closing~~parties ~~was~~have ~~completed~~provided onimmediately ~~January~~available ~~26,~~funds ~~2017. In~~to ~~the~~serve ~~Initial~~as ~~Closing,~~a webridge ~~sold~~ to the ~~Purchasers~~Company’s an2018 ~~aggregate~~and of2019 ~~805,824~~equity ~~shares~~capital ofraises ~~Series~~through Athe ~~Preferred~~issuance ~~Stock~~and ~~for~~sale aof ~~total~~interest ~~purchase~~bearing ~~price~~convertible ofpromissory $1notes ~~million.~~that ~~The~~are ~~investors~~convertible ininto ~~the~~shares ~~Initial~~of ~~Closing included~~ the Company’s ~~director~~Common ~~and~~Stock ~~then~~in ~~CEO~~accordance ~~(until~~with ~~May~~the 3,terms ~~2019), Jordan Hoffner, and certain~~ of ~~his~~these ~~family~~notes ~~members, the Company’s then CFO (until September 28, 2019), Elizabeth Hambrecht,~~ and ~~the~~their ~~Company’s~~securities ~~Director,~~purchase ~~William Hambrecht~~agreements.

The 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 Mr. Hoffner, Ryan Nathanson, the Company’s Chief Operating Officer, and Ms. Jordana Brondo, the Company’s former Chief Revenue Officer.57

~~The~~SALON ~~Final~~MEDIA ~~Closing was completed on July 20~~GROUP, ~~2017~~INC. 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.

55NOTES TO FINANCIAL STATEMENTS

~~SALON~~(amounts ~~MEDIA~~in ~~GROUP~~thousands, ~~INC.~~except share and per share data)

~~NOTES~~The TOfollowing ~~FINANCIAL~~is ~~STATEMENTS~~a summary of these related party bridge convertible promissory notes issued during the fiscal year ended March 31, 2019:

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

Note Date	Related Party Purchasers		Principal Amount			Interest Rate			Maturity Date		Purchase Agreement		Equity Capital Raise
10/26/17		Humilis Holdings Capital Fund LP (1)	$	125		$	10	%		10/26/18		10/26/17		2017
11/30/17		Eu Revocable Trust (2)	$	50			10	%		11/30/18		11/30/17		2017
11/30/17		Jordan Hoffner (3)	$	75			10	%		11/30/18		11/30/17		2017
12/12/17		Jordan Hoffner (3)	$	38			10	%		12/12/18		12/12/17		2017
12/12/17		Jordan Hoffner (3)	$	22			10	%		12/12/18		12/12/17		2017
01/09/18		Jordan Hoffner (3)	$	75			10	%		01/09/19		01/09/18		2017
02/26/18		Jordan Hoffner (3)	$	100			10	%		02/26/19		02/26/18		2018
03/29/18		Jordan Hoffner (3)	$	50			10	%		03/29/19		03/29/18		2018
04/10/18		Eu Revocable Trust (2)	$	50			10	%		04/10/19		04/10/18		2019
04/12/18		Humilis Holdings Capital Fund LP (4)	$	50			10	%		04/12/19		04/12/18		2019
04/07/18		Jordan Hoffner (3)	$	10			10	%		04/27/19		04/07/18		2019
12/07/18		Humilis Holdings Capital Fund LP (4)	$	52			10	%		06/30/19		12/07/18		2019
12/07/18		Jordan Hoffner (3)	$	67			10	%		06/30/19		12/07/18		2019
Total Convertible Related Party Promissory Notes			$	764
Less: Debt Discount			$	(53	)
Total Convertible Related Party Promissory Notes, net of discount			$	711

~~The~~(1) ~~following~~Trevor ~~summarizes~~Colhoun, ~~related~~Director, ~~party~~is ~~purchasers~~one inof the ~~Initial,~~Managing ~~Second~~Members ~~and~~of ~~Final~~Humilis ~~Closings:~~Holdings Capital Management Company which provides management services to Humilis Holdings Capital Fund LP.

Related-party Purchasers	Shares of Series A Preferred Stock		Stage of Closing	Aggregate Purchase Price
Spear Point Capital Fund LP (1)		443,203	Initial	$	550
Hambrecht 1980 Revocable Trust (2)		80,582	Initial	$	100
Eu Revocable Trust (3)		40,291	Initial	$	50
Jordan Hoffner		20,146	Initial	$	25
Pershing LLC as Custodian, Jordan Jon Hoffner IRA Rollover (4)		20,146	Initial	$	25
Larry Hoffner (5)		20,146	Initial	$	25
Pershing LLC as Custodian, Jordan Jon Hoffner IRA Rollover (4)		40,291	Second	$	50
Jordana Brondo (6)		32,233	Second	$	40
Ryan Nathanson (7)		12,087	Second	$	15
Hambrecht 1980 Revocable Trust (2)		120,873	Final	$	150
Jordan Jon Hoffner Pershing LLC (4)		80,582	Final	$	100
Eu Revocable Trust (3)		20,146	Final	$	25
Total		930,726		$	1,155

(2)	Elizabeth Hambrecht was the CFO of the Company until September 28, 2018, she is the daughter of William Hambrecht, Director, and she is the trustee of the Trust.

(13) ~~Trevor~~Jordan ~~Colhoun,~~Hoffner ~~Director,~~was isthe aCEO ~~Managing Member~~ of ~~Spear~~the ~~Point~~Company ~~Capital~~until ~~Management~~May ~~LLC~~3, ~~which~~2019, ~~provides~~he ~~management~~is ~~services~~currently toa ~~Spear Point Capital Fund LP~~Director.

(24) ~~William~~Trevor ~~Hambrecht~~Colhoun, Director, ~~father~~is one of ~~Elizabeth~~the ~~Hambrecht,~~Managing ~~former~~Members ~~CFO;~~of ~~Mr.~~Humilis ~~Hambrecht~~Holdings isCapital ~~the~~Fund ~~trustee of the Trust.~~LP

~~(3)~~Purchase ~~Elizabeth Hambrecht, former CFO (until September 28, 2018), is the trustee of the Trust.~~Agreements

~~(4)~~On ~~Jordan~~January ~~Hoffner~~24, ~~director~~2017, the Company entered into the Purchase Agreement with the Purchasers to issue and ~~former~~sell ~~CEO~~in ~~(until~~the ~~May~~Private 3Placement up to 2,417,471 ~~2019)~~shares of the Company’s Series A Preferred Stock, isat a purchase price of $1.24 per share. The purchase and sale of the ~~Custodian~~shares of the ~~account~~Series A Preferred Stock were completed in three stages: (1) Initial Closing, (2) Second Closing and (3) Final Closing.

~~(5)~~The ~~Larry~~Initial ~~Hoffner~~Closing iswas completed on January 26, 2017. In the ~~father~~Initial Closing, we sold to the Purchasers an aggregate of ~~Jordon~~805,824 ~~Hoffner~~shares of Series A Preferred Stock for a total purchase price of $1 million. The investors in the Initial Closing included the Company’s former CEO, ~~director~~Jordan Hoffner, and certain of his family members, the Company’s former ~~CEO~~CFO, Elizabeth Hambrecht, and the Company’s Director, William Hambrecht.

~~(6) Former Chief Revenue Officer.~~58

~~(7)~~SALON ~~Former~~MEDIA ~~Chief~~GROUP, ~~Operating Officer~~INC.

56NOTES TO FINANCIAL STATEMENTS

~~SALON~~(amounts ~~MEDIA~~in ~~GROUP~~thousands, ~~INC.~~except share and per share data)

~~NOTES~~The TOSecond ~~FINANCIAL~~Closing ~~STATEMENTS~~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 Mr. Hoffner, Ryan Nathanson, the Company’s former Chief Operating Officer, and Ms. Jordana Brondo, the Company’s former Chief Revenue Officer.

~~(amounts~~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 ~~thousands~~participating in the Private Placement. The investors in the Final Closing included Jordan Hoffner, ~~except~~Elizabeth ~~share~~Hambrecht and ~~per~~William ~~share data)~~Hambrecht.

~~Note~~The 6.following ~~Accrued~~summarizes ~~Expenses~~related party purchasers in the Initial, Second and Final Closings:

	March 31,
Related-party Purchasers	Shares of Series A Preferred Stock		Stage of Closing		Aggregate Purchase Price
	2018			2017
Humilis Holdings Capital Fund LP (1)		443,203	Initial		$	550
Accrued Expenses
Hambrecht 1980 Revocable Trust (2)		80,582	Initial		$	100
Salaries and wages payable		134			390
Eu Revocable Trust (3)		40,291	Initial		$	50
Accrued services		220			126
Jordan Hoffner		20,146	Initial		$	25
Fair value of vested stock options		-			931
Pershing LLC as Custodian, Jordan Jon Hoffner IRA Rollover (4)		20,146	Initial		$	25
Other accrued expenses		487			141
Larry Hoffner (5)		20,146	Initial		$	25
	$	841		$	1,588
Pershing LLC as Custodian, Jordan Jon Hoffner IRA Rollover (4)		40,291	Second		$	50
Jordana Brondo (6)		32,233	Second		$	40
Ryan Nathanson (7)		12,087	Second		$	15
Hambrecht 1980 Revocable Trust (2)		120,873	Final		$	150
Jordan Jon Hoffner Pershing LLC (4)		80,582	Final		$	100
Eu Revocable Trust (3)		20,146	Final		$	25
Total		930,726			$	1,155

~~Due~~(1) toTrevor ~~insufficient authorized shares of Common Stock as of November 14~~Colhoun, ~~2016~~Director, ~~the~~is ~~vested options as of November 14, 2016 with~~ a ~~fair~~Managing ~~value~~Member of ~~$818,~~Humilis ~~were~~Holdings ~~reclassified~~Capital ~~from~~Management ~~equity~~Company to liabilities and re-measured at fair value and presented under accrued liabilities. The balance of this option liability was $931 as of March 31, 2017, respectively. The Amendment with the Secretary of State of the State of Delaware was filed on August 1, 2017, after which ~~the~~provides ~~$1,010~~management ~~option~~services ~~liability was reclassified back~~ to ~~equity~~Humilis ~~during~~Holdings ~~the~~Capital ~~quarter~~Fund ~~ended September 30, 2017 and upon the resulting increased authorized shares of our Common Stock~~LP.

57(2) William Hambrecht, Director, father of Elizabeth Hambrecht, former CFO; Mr. Hambrecht is the trustee of the Trust.

~~SALON~~(3) ~~MEDIA~~Elizabeth ~~GROUP~~Hambrecht, ~~INC~~former CFO, is the trustee of the Trust.

~~NOTES~~(4) TOJordan ~~FINANCIAL~~Hoffner, ~~STATEMENTS~~former CEO, is the Custodian of the account.

(~~amounts~~5) inLarry ~~thousands,~~Hoffner ~~except~~is ~~share~~the ~~and~~father ~~per~~of ~~share~~Jordon ~~data)~~Hoffner, former CEO.

~~Note 7. 401~~(k6) ~~Savings~~Former ~~Plan~~Chief Revenue Officer.

~~Salon’s 401~~(k7) ~~Savings~~Former ~~Plan~~Chief ~~(the~~Operating ~~“401(k) Plan”) is a defined contribution retirement plan intended to qualify under Sections 401(a) and 401(k) of the Internal Revenue Code~~Officer. All full-time employees of Salon are eligible to participate in the 401(k) Plan pursuant to its terms. Participants may contribute from 1% to 20% of compensation, subject to statutory limitations. Employer matching contributions are discretionary based on a certain percentage of a participant’s contributions as determined by management of Salon. Salon has not made any discretionary matching contributions to the 401(k) Plan through March 31, 2018.

~~Note 8. Common Stock~~59

OnSALON ~~April~~MEDIA 1GROUP, ~~2016, 150,000,000 common shares, par value $0~~INC.~~001, were authorized, of which 76,245,442 shares were issued and outstanding.~~

OnNOTES ~~July~~FINANCIAL ~~12, 2016 and September 15, 2016, 10,000 and 18,541 shares of common stock were issued for the exercise of employee stock options.~~STATEMENTS

On(amounts ~~November 14, 2016, 17,200,000 common shares were issued~~ in ~~exchanges for 1~~thousands,~~075~~ ~~shares~~except ofshare ~~Series~~and Cper ~~Preferred~~share ~~shares. The Company recorded a non-cash preferred deemed dividend of approximately $860.~~data)

OnNote ~~November 2016, 56,526,017 common shares were issued in exchange for related party cash advances~~8. No ~~gain~~Accrued orExpenses ~~loss~~from ~~was~~Continuing ~~recorded due to the conversion occurring within the terms of the agreements.~~Operations

On August 1, 2017, the Company filed a Certificate of Amendment with the Secretary of State of the State of Delaware in order to increase the number of authorized shares of Common Stock. The number of authorized commons stock the Company shall have the authority to issue is 900,000,000; par value $0.001 per share.

	March 31,
	2019		2018
Accrued Expenses
Salaries and wages payable		113		45
Accrued services		6		220
Other accrued expenses		785		487
	$	904	$	752

OnNote ~~August~~9. ~~29,~~401(k) ~~2017,~~Savings ~~1,056,477 shares of common stock were issued for the exercise of employee stock options.~~Plan

OnSalon’s ~~March~~401(k) ~~31,~~Savings ~~2018,~~Plan ~~900,000,000~~(the ~~common~~“401(k) ~~shares,~~Plan”) ~~par~~is ~~value~~a $0defined contribution retirement plan intended to qualify under Sections 401(a) and 401(k) of the Internal Revenue Code.~~001,~~ ~~were~~All ~~authorized,~~full-time employees of ~~which~~Salon ~~151~~are eligible to participate in the 401(k) Plan pursuant to its terms. Participants may contribute from 1% to 20% of compensation,~~056,477~~ ~~shares~~subject ~~were~~to ~~issued~~statutory ~~and~~limitations. ~~outstanding~~Employer matching contributions are discretionary based on a certain percentage of a participant’s contributions as determined by management of Salon. Salon has not made any discretionary matching contributions to the 401(k) Plan through March 31, 2019.

Note 910. ~~Employee~~Common Stock ~~Option Plans~~

~~Salon~~On ~~has~~March ~~two stock option plans approved by stockholders: the Salon Media Group~~31, ~~Inc.~~2019 ~~2004 Stock Plan (the “2004 Stock Plan”) that was approved by Salon’s stockholders in November 2004~~ and ~~the~~March ~~Salon~~31, ~~Media~~2018, ~~Group~~900,000,000 ~~Inc.~~common ~~2014~~shares, ~~Stock~~par ~~Incentive~~value ~~Plan (the “2014 Stock Incentive Plan”) that was approved by Salon’s stockholders in March 2014~~$0. ~~The 2004 Stock Plan and the 2014 Stock Incentive Plan~~001, ~~each~~were ~~with an effective term of ten years following its approval by the stockholders of the Company~~authorized, ~~allow the issuance~~ of ~~incentive~~which ~~and non-statutory options to employees and non-employees of Salon. The 2004 Plan expired in November 2014~~151,056,477 ~~after~~shares ~~which no further options~~ were ~~permitted~~issued toand ~~be granted~~outstanding.

~~Under~~Note ~~the~~11. ~~2014~~Employee Stock ~~Incentive~~Option Plan, the maximum aggregate number of shares which may be issued is 10,000,000 shares, plus an annual increase to be added on the first business day of the Company’s fiscal year beginning in 2015 equal to 1% of the number of shares outstanding as of such date or a lesser number of shares determined by the administrator.Plans

58Salon has two stock option plans approved by stockholders: the Salon Media Group, Inc. 2004 Stock Plan (the “2004 Stock Plan”) that was approved by Salon’s stockholders in November 2004 and the Salon Media Group, Inc. 2014 Stock Incentive Plan (the “2014 Stock Incentive Plan”) that was approved by Salon’s stockholders in March 2014. The 2004 Stock Plan and the 2014 Stock Incentive Plan, each with an effective term of ten years following its approval by the stockholders of the Company, allow the issuance of incentive and non-statutory options to employees and non-employees of Salon. The 2004 Plan expired in November 2014, after which no further options were permitted to be granted.

~~SALON~~Under ~~MEDIA~~the ~~GROUP~~2014 Stock Incentive Plan, ~~INC~~the maximum aggregate number of shares which may be issued is 10,000,000 shares, plus an annual increase to be added on the first business day of the Company’s fiscal year beginning in 2015 equal to 1% of the number of shares outstanding as of such date or a lesser number of shares determined by the administrator.

~~NOTES~~Under ~~FINANCIAL~~the ~~STATEMENTS~~2014 Stock Incentive Plan, incentive and nonqualified stock options may be granted to officers, employees, directors and consultants of Salon. Options generally vest over periods of four years. Options generally become exercisable as to 25% of the option shares one year from the date of grant and then ratably over the following 36 months (1/48 per month). The exercise price of options is determined by the Board and is equal to the fair market value of the stock on the grant date. Generally, Salon’s options expire, if not exercised, ten years after the date of grant.

~~(amounts in thousands, except share and per share data)~~60

~~Under~~SALON ~~the~~MEDIA ~~2014 Stock Incentive Plan~~GROUP, ~~incentive and nonqualified stock options may be granted to officers, employees, directors and consultants of Salon~~INC. Options generally vest over periods of four years. Options generally become exercisable as to 25% of the option shares one year from the date of grant and then ratably over the following 36 months (1/48 per month). The exercise price of options is determined by the Board and is equal to the fair market value of the stock on the grant date. Generally, Salon’s options expire, if not exercised, ten years after the date of grant.

~~Salon~~NOTES ~~may~~FINANCIAL grant restricted stock awards to officers that typically vest over an approximate four year period. Restricted stock awards are considered outstanding at the time of grant, as the stock award holders are entitled to dividends and voting rights.STATEMENTS

~~Salon~~(amounts ~~has~~in ~~also granted options pursuant to Non-Plans. Non-Plans are equity compensation plans not approved by stockholders. On June 9~~thousands, ~~2016,~~except weshare ~~granted to our CEO an option to purchase 12,654,318 shares of Common Stock pursuant to the terms~~ and ~~conditions~~per ofshare ~~the Salon Media Group, Inc. Non Plan Stock Option agreement, with vesting in equal monthly installments over a four-year period commencing with the grant date.~~data)

OnSalon ~~September~~may 6,grant ~~2017,~~restricted westock ~~granted~~awards to ~~our~~officers ~~CEO~~that antypically ~~option~~vest toover ~~purchase~~an ~~31,260,505~~approximate ~~shares~~four-year ofperiod. ~~Common~~Restricted ~~Stock~~stock ~~pursuant~~awards toare ~~the~~considered ~~terms~~outstanding ~~and~~at ~~conditions of~~ the ~~Salon~~time ~~Media~~of ~~Group~~grant, ~~Inc.~~as ~~Non Plan Stock Option agreement, with our standard vesting of 25% of~~ the ~~option~~stock ~~shares~~award ~~one~~holders ~~year~~are ~~from~~entitled ~~the~~to ~~date~~dividends ~~of grant~~ and ~~then~~voting ~~ratably over the following 36 months (1/48 per month)~~rights.

Salon has also granted options pursuant to Non-Plans. Non-Plans are equity compensation plans not approved by stockholders. On September 6, 2017, we granted to ~~each of the four members of~~ our ~~Board~~CEO an option to ~~collectively~~ purchase 531,~~384~~260,~~615~~505 shares of Common Stock pursuant to the terms and conditions of the Salon Media Group, Inc. Non Plan Stock Option agreement, with our standard vesting of 25% of the option shares one year from ~~their~~the ~~service~~date ~~commencement~~of grant and then ratably over the following 36 months (1/48 per month).

AsOn ofSeptember ~~March 31~~6, ~~2018~~2017, ~~Salon~~we ~~has~~granted ~~approximately~~to 12each of the four members of our Board an option to collectively purchase 5,~~287~~384,~~000~~615 shares ~~authorized~~of Common Stock pursuant to bethe ~~issued~~terms ~~under~~and conditions of the ~~2014~~Salon ~~Stock~~Media ~~Incentive~~Group, Inc. Non Plan Stock Option agreement, with vesting of ~~which~~25% ~~approximately~~of ~~3,813,000~~the option shares ~~remain~~one ~~available~~year ~~for~~from ~~future~~their ~~grant~~service commencement and then ratably over the following 36 months (1/48 per month).

~~Stock~~As ~~based~~of ~~compensation~~March ~~expense~~31, ~~recognized~~2019, ~~for~~Salon ~~the~~has ~~years~~approximately ~~ended~~13,050,000 ~~March~~shares ~~31,~~authorized ~~2018~~to ~~and~~be ~~2017~~issued ~~was~~under ~~$1,262~~the ~~and~~2014 ~~$525,~~Stock ~~which~~Incentive ~~consisted~~Plan of ~~stock-based~~which ~~compensation~~approximately ~~expense~~10,530,000 ~~related~~shares toremain ~~stock~~available ~~options~~for future grant.

AsStock ofbased ~~March 31, 2018, the aggregate stock~~ compensation ~~remaining~~expense torecognized befor ~~amortized~~the toyears ~~expense~~ended ~~was~~March $431,~~427.~~ ~~Salon~~2019 ~~expects~~and ~~this~~2018 ~~stock-based~~and ~~compensation~~2017 ~~balance~~was ~~to be amortized as follows:~~ $1,~~406~~526 ~~during~~and ~~fiscal year 2019;~~ $1,~~434 during fiscal year 2020; $1~~262,~~143~~ ~~during~~which ~~fiscal~~consisted ~~year~~of ~~2021~~stock-based ~~and~~compensation ~~$444~~expense ~~during~~related ~~fiscal~~to ~~year 2022. The expected amortization reflects only outstanding~~ stock ~~option awards as of March 31, 2018~~options.

NoAs ~~amounts~~of ~~were~~March 31, ~~recorded~~2019, ~~relating~~the aggregate stock compensation remaining to ~~excess~~be ~~tax~~amortized ~~benefits~~to ~~from~~expense ~~the~~was ~~exercise~~$2,888. ofSalon expects this stock-based compensation ~~awards~~balance to be amortized as follows: $1,310 during ~~the~~fiscal year ~~ended~~2020; ~~March 31~~$1,134 ~~2018~~during ~~and~~fiscal ~~2017~~year 2021; and as$444 aduring ~~result~~fiscal ~~there~~year ~~were~~2022. noThe ~~differences~~expected inamortization ~~net~~reflects ~~cash~~only ~~used~~outstanding instock ~~operating~~option ~~and~~awards ~~financing~~as ~~activities~~of March 31, 2019.

59No amounts were recorded relating to excess tax benefits from the exercise of stock-based compensation awards during the year ended March 31, 2019, 2018 and 2017 and as a result there were no differences in net cash used in operating and financing activities.

~~SALON~~The ~~MEDIA~~fair ~~GROUP,~~value ~~INC.~~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:

NOTES FINANCIAL STATEMENTS

	Year Ended March 31,
	2019				2018
Risk-free interest rates		1.75	–	2.55%		1.75	–	2.55%
Expected lives (in years)		5.7	–	6.3		5.7	–	6.3
Expected volatility		437	–	453%		437	–	453%
Dividend yield			0.0%				0.0%

~~(amounts~~We indid ~~thousands,~~not ~~except~~grant ~~share~~any ~~and~~options ~~per~~during ~~share~~the ~~data)~~fiscal year ended March 31, 2019.

~~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:~~61

	Year Ended March 31,
	2018			2017
Risk-free interest rates	1.75	–	2.55%	1.10	–	1.15%
Expected lives (in years)	5.7	–	6.3	4.0	–	6.3
Expected volatility	437	–	453%	206	–	393%
Dividend yield		0.0%			0.0%

SALON MEDIA GROUP, INC.

WeNOTES ~~applied~~FINANCIAL the expected term of 6.3 years during the fiscal year ended March 31, 2018, 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.STATEMENTS

~~Due~~(amounts toin ~~insufficient authorized shares of Common Stock as of November 14~~thousands, ~~2016,~~except ~~the~~share ~~vested options as of November 14, 2016 a fair value of $818, were reclassified from equity to liabilities~~ and ~~re-measured~~per atshare fair value and presented under accrued liabilities. The balance of this option liability was $931 as of March 31, 2017, respectively. The Amendment was filed on August 1, 2017, after which the $1,010 option liability was reclassified back to equity during the quarter ended September 30, 2017, upon the resulting increased authorization of shares of Common Stock.data)

OnDue ~~March~~to ~~14,~~insufficient ~~2018,~~authorized ~~the~~shares ~~Board~~of ~~approved~~Common aStock ~~stock~~as ~~option~~of ~~repricing~~November ~~program~~14, ~~(the “Reprice”)~~2016, ~~authorizing~~the ~~Salon’s~~vested ~~officers~~options toas ~~reprice~~of ~~certain~~November ~~outstanding~~14, ~~stock~~2016 ~~options~~a ~~held~~fair byvalue ~~active~~of ~~employees~~$818, ~~and~~were ~~directors~~reclassified ~~that~~from ~~have~~equity ~~option~~to ~~exercise~~liabilities ~~prices~~and ~~above~~re-measured ~~the~~at ~~current~~ fair ~~market~~ value ofand ~~Salon’s~~presented ~~Common~~under ~~Stock~~accrued liabilities. ~~Salon~~The ~~believes~~balance ~~the repricing~~ of ~~such~~this ~~stock~~option ~~options~~liability ~~will~~was ~~encourage~~$931 ~~the~~as ~~continued~~of ~~service~~March of31, ~~valued~~2017, ~~employees~~respectively. ~~and~~The ~~directors,~~Amendment ~~and~~was ~~motivate~~filed ~~such~~on ~~service~~August ~~providers~~1, to2017, ~~perform~~after atwhich ~~high~~the ~~levels~~$1,010 ~~both~~option ofliability ~~which~~was ~~are~~reclassified ~~critical~~back to ~~Salon’s~~equity ~~continued~~during ~~success.~~the ~~Salon~~quarter ~~does~~ended ~~not~~September ~~expect~~30, to2017, ~~incur~~upon ~~any~~the ~~additional~~resulting ~~stock-based~~increased ~~compensation~~authorization ~~charges~~of asshares ~~a result~~ of ~~this~~Common ~~repricing~~Stock.

60On March 14, 2018, the Board approved a stock option repricing program (the “Reprice”), authorizing Salon’s officers to reprice certain outstanding stock options held by active employees and directors that have option exercise prices above the current fair market value of Salon’s Common Stock. Salon believes the repricing of such stock options will encourage the continued service of valued employees and directors, and motivate such service providers to perform at high levels, both of which are critical to Salon’s continued success. Salon does not expect to incur any additional stock-based compensation charges as a result of this repricing.

~~SALON~~The ~~MEDIA~~following ~~GROUP~~table summarizes activity under Salon’s plans for the years ended March 31, ~~INC.~~2018 and 2019:

NOTES FINANCIAL STATEMENTS

	Outstanding Stock Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding as of March 31, 2017		19,177,000		$	0.21		8.2	$	223
Granted		44,379,000		$	0.06
Exercised		(1,057,000	)	$	0.01
Expired or forfeited		(4,422,000	)	$	0.15
Outstanding as of March 31, 2018		58,077,000		$	0.06		9.1	$	284
Granted		0
Exercised		0
Expired or forfeited		(7,141,000	)	$	0.14
Outstanding as of March 31, 2019		50,936,000		$	0.06		8.1	$	0
Exercisable as of March 31, 2019		24,408,000		$	0.06		7.9	$	0
Vested and expected to vest as of March 31, 2019		70,635,000		$	0.06		8.1	$	0

~~(amounts in thousands, except share and per share data)~~62

~~The~~SALON ~~following~~MEDIA ~~table summarizes activity under Salon’s plans for the years ended March 31~~GROUP, ~~2017~~ ~~and 2018:~~INC.

	Outstanding Stock Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding as of March 31, 2016		7,242,000		$	0.15		7.3	$	124
Granted		12,955,000		$	0.24
Exercised		(29,000	)	$	0.05
Expired or forfeited		(991,000	)	$	0.18
Outstanding as of March 31, 2017		19,177,000		$	0.21		8.2	$	223
Granted		44,379,000		$	0.06
Exercised		(1,057,000	)	$	0.01
Expired or forfeited		(4,422,000	)	$	0.15
Outstanding as of March 31, 2018		58,077,000		$	0.06		9.1	$	284
Exercisable as of March 31, 2018		9,731,000		$	0.06		8.2	$	284
Vested and expected to vest as of March 31, 2018		56,533,000		$	0.06		9.1	$	284

NOTES FINANCIAL STATEMENTS

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

~~SALON~~The ~~MEDIA~~following ~~GROUP~~table summarizes information about stock options outstanding as of March 31, ~~INC.~~2019:

NOTES FINANCIAL STATEMENTS

			Options Outstanding						Options Exercisable
					Weighted
					Average		Weighted				Weighted
			Number of		Remaining		Average		Number of		Average
Range of			Shares		Contractual		Exercise		Shares		Exercise
Exercise Prices			Outstanding		Life (Years)		Price (1)		Exercisable		Price
$0.05	-	$0.06		50,726,000		8.1	$	0.06		24,198,000	$	0.06
$0.11	-	$0.16		190,000		0.5	$	0.12		190,000	$	0.12
$0.24	-	$0.24		20,000		5.6	$	0.24		20,000	$	0.24
				50,936,000		8.1	$	0.06		24,408,000	$	0.06

(~~amounts~~1) inOn ~~thousands~~March 14, ~~except~~2018, ~~share~~the Board approved a stock option Reprice, authorizing Salon’s officers to reprice 57,835,494 options using a new exercise price of $0.06. The stock option originally had a range of exercise prices from $0.08 to $0.24. We valued this reprice by comparing the original exercise price to the modified exercise price and ~~per~~the ~~share~~difference ~~data)~~between the two is immaterial and we did not incur any additional stock-based compensation charges as a result of this repricing.

The ~~following~~weighted ~~table~~average ~~summarizes~~grant ~~information~~date ~~about~~fair value per share of the stock ~~options~~option ~~outstanding~~awards asgranted in the years ended March 31, 2019 and 2018 was $0.0 and $0.13, respectively. The weighted average fair value of options vested during the years ended March 31, 2019 and 2018: was $0.15 and $0.19 per share, respectively.

			Options Outstanding						Options Exercisable
					Weighted
					Average		Weighted				Weighted
			Number of		Remaining		Average		Number of		Average
Range of			Shares		Contractual		Exercise		Shares		Exercise
Exercise Prices			Outstanding		Life (Years)		Price (1)		Exercisable		Price
$0.05	-	$0.06		57,867,000		9.1	$	0.06		9,524,000	$	0.06
$0.11	-	$0.16		190,000		1.5	$	0.12		190,000	$	0.12
$0.24	-	$0.24		20,000		6.6	$	0.24		17,000	$	0.24
				58,077,000		9.1	$	0.06		9,731,000	$	0.06

The total intrinsic value of options exercised during the years ended March 31, 2019 and 2018 were nil. A total of 1,056,477 options were exercised during the year ended March 31, 2018, respectively. No options were exercised during the year ended March 31, 2019.

~~(1)~~Note ~~On March 14, 2018, the Board approved a stock option Reprice, authorizing Salon’s officers to reprice 57,835,494 options using a new exercise price of $0~~12.~~06.~~ Stock The stock option originally had a range of exercise prices from $0.08 to $0.24. We valued this reprice by comparing the original exercise price to the modified exercise price and the difference between the two is immaterial and we did not incur any additional stock-based compensation charges as a result of this repricing.Warrants

~~The~~During ~~weighted~~the ~~average~~fiscal ~~grant~~year ~~date~~ended ~~fair~~March ~~value~~31, ~~per~~2019, ~~share of~~ the ~~stock~~Company ~~option~~issued ~~awards~~11,312,600 ~~granted~~five-year inwarrants ~~the~~with ~~years~~an ~~ended~~exercise ~~March 31,~~price ~~2018~~of ~~and 2017 was~~ $0.1301 ~~and~~in ~~$0.23,~~connection ~~respectively~~with notes payable. The ~~weighted average~~ fair value of ~~options~~the ~~vested~~warrants ~~during~~of ~~the~~$119 ~~years~~was ~~ended~~recorded ~~March~~as ~~31,~~a ~~2018~~discount ~~and~~to ~~2017~~the ~~was~~notes ~~$0.19~~payable, and ~~$0.22~~charged ~~per~~to ~~share~~additional paid-in capital during the fiscal year ended March 31, ~~respectively~~2019.

~~The total intrinsic value of options exercised during the years ended March 31, 2018 and 2017 were nil.~~ A ~~total~~summary of ~~1,056,000~~warrants ~~and 29~~issued,~~000~~ ~~options were~~ exercised ~~during~~and ~~the~~expired ~~years~~are ~~ended~~as ~~March 31, 2018 and 2017, respectively.~~ follows:

Note 10. Commitments and Contingencies

	Shares		Weighted Average Exercise Price ($)		Weighted Average Remaining Contractual Terms
Outstanding as of March 31, 2017		0	$	-		-
Granted		0	$	-		-
Expired		0	$	-		-
Outstanding as of March 31, 2018		0	$	-		-
Granted		11,312,600	$	0.01		4.69
Expired		0	$	-		-
Outstanding as of March 31, 2019		11,312,600	$	0.01		4.69
Exercisable as of March 31, 2019		11,312,600	$	0.01		4.69

On October 17, 2017, we signed a two-year office lease agreement for our 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 approximately $73 for the remaining fifteen months of the lease.63

62SALON MEDIA GROUP, INC.

~~SALON~~NOTES ~~MEDIA~~TO ~~GROUP,~~FINANCIAL ~~INC.~~STATEMENTS

~~NOTES~~(amounts TOin ~~FINANCIAL~~thousands, ~~STATEMENTS~~except share and per share data)

~~(amounts~~Note in13. ~~thousands,~~Commitments ~~except share~~ and ~~per share data)~~Contingencies

InOn ~~August~~October ~~2016~~17, 2017, we ~~informed~~signed ~~our~~a ~~landlord~~two-year ~~at our~~ office ~~space~~lease atagreement ~~132~~for ~~West 31st Street, New York, New York, of~~ our ~~intention~~San toFrancisco ~~move~~headquarters ~~out~~at of870 ~~the~~Market ~~premises~~Street, ~~and~~San weFrancisco, ~~engaged a property agent to find a sub-tenant for this space~~California. The two-year lease, for ~~this~~approximately ~~space~~1,072 square feet, commenced on ~~July~~December 1, ~~2014~~2017 and will ~~expire~~terminate on ~~September~~November 30, 2019. InOn ~~January~~April ~~2017~~9, we2019 ~~were~~the ~~asked~~Company toterminated ~~vacate~~ the ~~office~~lease ~~space~~effective atJune ~~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~~2019. OnThe ~~August~~outstanding 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~~obligation tois approximately $~~918~~15 ~~plus damages and attorney fees. Counsel~~ for ~~Salon~~the isremaining ~~currently~~three ~~evaluating~~months ~~potential~~of ~~defenses and counterclaims, based on~~ the ~~laws and fact~~lease.

~~The~~In ~~potential~~August ~~amount~~2016, ofwe ~~this~~informed ~~contingent~~our ~~liability~~landlord isat ~~indeterminate,~~our ~~since~~office itspace isat ~~unknown~~132 ~~whether~~West ~~the~~31st ~~landlord~~Street, ~~will~~New ~~lease~~York, ~~the~~New ~~premises~~York, toof aour ~~new~~intention ~~tenant,~~to inmove ~~which~~out ~~case~~of the ~~rents~~premises, ~~from~~and ~~the~~we ~~new~~engaged ~~tenant~~a ~~are~~property anagent ~~off~~to find a sub-~~set~~tenant tofor ~~this~~the ~~liability~~space. ~~While~~ ~~counsel~~The lease for ~~Salon~~the isNew ~~evaluating~~York ~~potential~~space ~~defenses~~commenced on July 1, 2014 and ~~counterclaims~~will toexpire ~~the~~on ~~Complaint~~September 30, 2019. In January 2017, we ~~are~~were ~~unable~~asked to ~~determine~~vacate the ~~foregoing~~office ~~liability~~space at 132 West 31st Street due to nonpayment of our monthly rent, ifand ~~any~~on January 30, ~~with~~2017 ~~any~~we ~~degree~~released the letter of ~~certainty,~~credit ~~due~~of $204 to the ~~uncertain~~landlord ~~nature~~in payment of ~~litigation~~the ~~matters~~past due rent. ~~The~~ ~~parties~~On ~~are~~August ~~currently~~3, ~~engaged~~2017, inwe ~~discovery~~received ~~proceedings~~a ~~and~~notice noof ~~trial~~legal ~~date~~action ~~has~~(the ~~been~~“Complaint”) ~~set.~~from ~~The~~the landlord. ~~has~~This ~~moved~~civil ~~for~~summons ~~partial~~and ~~summary~~complaint ~~judgement~~in asNew York State Court seeks to ~~liability,~~recover ~~which~~all ~~motion~~unpaid ~~has~~rents ~~not~~for ~~yet~~the ~~been~~remainder ~~opposed~~of our five-year lease, ~~argued~~equal orto ~~decided~~approximately by$918 plus damages and attorney fees. Counsel for Salon is currently evaluating potential defenses and counterclaims, based on the ~~Court~~laws and fact.

OnThe ~~November~~potential ~~18,~~amount ~~2018,~~of ~~Jordana~~this ~~Brondo,~~contingent aliability ~~former~~is ~~employee of Salon Media Group~~indeterminate, ~~brought~~since ait ~~formal~~is ~~claim~~unknown ~~against~~whether the ~~Company~~landlord ~~for~~will ~~Judicial~~lease ~~Arbitration~~the ~~and~~premises ~~Mediation~~to ~~Services~~a ~~under~~new ~~JAMS~~tenant, in ~~San~~which ~~Francisco,~~case ~~CA. Under~~the ~~her~~rents ~~claim,~~from ~~Ms.~~the ~~Brondo~~new ~~alleges~~tenant ~~wrongful~~are ~~termination~~an ~~under~~off-set ~~the~~to ~~basis~~this ofliability. While ~~gender~~counsel ~~discrimination~~for ~~pregnancy~~Salon ~~discrimination,~~is ~~wrongful~~evaluating ~~termination~~potential indefenses ~~violation~~and ofcounterclaims ~~public~~to ~~policy~~the Complaint, ~~and~~we ~~retaliation. Ms.~~are ~~Brondo~~unable ~~seeks~~to ~~general~~determine ~~damages,~~the ~~special~~foregoing ~~damages~~liability, ~~punitive~~if ~~damages~~any, ~~cost~~with ofany ~~fees~~degree ~~and~~of ~~attorney~~certainty, ~~fees~~due into the ~~amount~~uncertain nature of ~~$1,600,000~~litigation matters. The ~~Company~~parties ~~has~~are ~~denied~~currently ~~the~~engaged ~~allegations~~in discovery proceedings and isno ~~actively~~trial ~~defending~~date ~~the~~has ~~matter~~been set. In ~~addition~~The landlord has moved for partial summary judgement as to liability, ~~the~~which ~~Company~~motion has ~~insurance~~not toyet ~~cover~~been ~~any~~opposed, ~~unexpected~~argued ~~liability. The~~or ~~matter~~decided isby ~~currently~~the ~~pending~~Court.

~~Our~~On ~~current~~November ~~office~~18, ~~space~~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 ~~New~~San ~~York~~Francisco, ~~located~~CA. Under ~~at 315~~her ~~West~~claim, ~~36th Street~~Ms. Brondo alleges wrongful termination under the basis of gender discrimination pregnancy discrimination, ~~New~~wrongful ~~York~~termination in violation of public policy, ~~New~~and ~~York~~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 ~~rented~~actively ondefending athe ~~month-~~matter. In addition, the Company has insurance to~~-month~~ ~~basis~~cover ~~and~~any ~~does~~unexpected ~~not~~liability. The ~~carry~~matter ais ~~lease~~currently ~~agreement~~pending.

~~Rent~~Our ~~expense~~current ~~under~~office ~~operating~~space ~~lease~~in ~~agreements~~New ~~was~~York, ~~$555~~located ~~and~~at 315 ~~$473~~West ~~for~~36th Street, ~~the~~New ~~years~~York, ~~ended~~New ~~March~~York ~~31,~~is ~~2018~~rented on a month-to-month basis and ~~2017,~~does ~~respectively~~not carry a lease agreement.

~~Total~~Rent ~~future~~expense ~~minimum payments~~ under ~~our~~ operating lease ~~and~~agreements ~~short-term~~was ~~borrowing~~$333 inand ~~effect~~$555 asfor ofthe years ended March 31, ~~2018~~2019 ~~are~~and as2018, ~~follows:~~respectively.

	Payments Due By Period
	Total		Year 1		Year 2
Operating lease	$	73	$	58	$	15
Short-term borrowing		1,000		1,000		-
Short-term borrowing interest		439		439		-
Convertible promissory notes, net		200		200		-
Convertible promissory notes – related party		535		535		-
Total	$	2,247	$	2,232	$	15

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

~~Salon,~~NOTES asTO ~~permitted~~FINANCIAL under Delaware law and in accordance with its Bylaws, indemnifies its officers and directors for certain events or occurrences, subject to certain limits, while the officer is or was serving at Salon’s request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum amount of potential future indemnification is unlimited; however, Salon does have a Director and Officer Insurance Policy that limits Salon’s exposure and enables Salon to recover a portion of any future amounts paid. As a result of the insurance policy coverage, Salon believes the fair value of these indemnification agreements is minimal.STATEMENTS

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

~~SALON~~Total ~~MEDIA~~future ~~GROUP~~minimum payments under our operating lease and short-term borrowing in effect as of March 31, ~~INC.~~2019 are as follows:

NOTES TO FINANCIAL STATEMENTS

	Total			1 Year or less			1 - 3 Years
Operating lease	$	15		$	15		$	-
Short-term borrowing		1,000			1,000			-
Short-term borrowing interest		512			512
Convertible promissory notes, net		700			700			-
Convertible promissory notes – related party, net		764			764			-
Less: Debt discount		(53	)		(53	)
Total	$	2,938		$	2,938		$	-

~~(amounts~~Salon, as permitted under Delaware law and in ~~thousands~~accordance with its Bylaws, ~~except~~indemnifies ~~share~~its officers and ~~per~~directors ~~share~~for ~~data)~~certain events or occurrences, subject to certain limits, while the officer is or was serving at Salon’s request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum amount of potential future indemnification is unlimited; however, Salon does have a Director and Officer Insurance Policy that limits Salon’s exposure and enables Salon to recover a portion of any future amounts paid. As a result of the insurance policy coverage, Salon believes the fair value of these indemnification agreements is minimal.

Salon has entered into an employment agreement with a certain key executive under which severance payments in the aggregate amount of approximately $300 would become due and payable in the event of his termination other than for cause or as a result of a change in control.

~~Salon~~Note previously entered into an employment agreement with a former key executive under which severance payments in the aggregate amount of approximately $40 would become due and payable in the event of her termination for other than cause or as a result of a change in control14. ~~Note~~Income 11Taxes ~~of our prior year Form 10-K filed with the SEC on June 24, 2016 outlines the agreement terms.~~

~~Note~~The ~~11.~~Company follows ASC 740, Accounting for Income Taxes. During 2020, there will be a change in control of the Company. Under section 382 of the Internal Revenue Code such a change in control negates much of the tax loss carry forward and deferred income tax. Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes, and (b) net operating loss carry forwards. For federal income tax purposes, the Company uses the accrual basis of accounting, the same that is used for financial reporting purposes.

~~Salon~~The ~~has~~Company did not ~~recorded~~have a provision or benefit for federal or state income taxes for any period since inception due to incurred operating losses. As of March 31, 2018, Salon has net operating loss carryforwards of $94,800 and $27,800 for federal and state purposes, respectively, available to reduce future taxable income, ifduring ~~any.~~the ~~The~~fiscal ~~federal~~years ~~net~~ended ~~operating loss carryforwards begin to expire on~~ March 31, 2019 ifor ~~not utilized beforehand~~2018. ~~The state net operating loss carryforwards begin to expire on March 31, 2028 if not utilized beforehand.~~

As of March 31, 2018, Salon has research and development credit carryforward of $9 for California income tax purposes. The research and development credit carryforward for federal income tax purposes expired on March 31, 2012 and the California credits carry forward indefinitely.65

~~The~~SALON ~~Tax~~MEDIA Reform Act of 1986 limits the use of net operating loss and tax credit carryforwards in certain situations where changes occur in the stock ownership of a company. In the event Salon has incurred a change in ownershipGROUP, ~~utilization of the carryforwards could be significantly restricted~~INC.

~~Temporary~~NOTES ~~differences~~TO ~~and~~FINANCIAL ~~other sources of deferred tax assets that give rise to significant portions of deferred tax assets and liabilities are as follows:~~STATEMENTS

	March 31,
	2018			2017
Net operating losses	$	21,787		$	33,398
Other		598			660
Total deferred tax assets		22,385			34,058
Valuation allowance		(22,385	)		(34,058	)
Net deferred tax asset	$	-		$	-

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

64The Company’s deferred tax assets consisted of the following as of the fiscal years ended March 31, 2019 and 2018.

SALON MEDIA GROUP, INC.

	March 31,
	2019			2018
Net operating losses		23,280		$	22,385
Valuation allowance		(23,280	)		(22,385	)
Net deferred tax asset	$	-		$	-

~~NOTES~~Salon TOhas ~~FINANCIAL~~not ~~STATEMENTS~~recorded a provision or benefit for federal or state income taxes for any period since inception due to incurred operating losses. As of March 31, 2019, Salon has net operating loss carryforwards of $96,504 and $27,800 for federal and state purposes, respectively, available to reduce future taxable income, if any. The federal net operating loss carryforwards begin to expire on March 31, 2020 if not utilized beforehand. The state net operating loss carryforwards begin to expire on March 31, 2028 if not utilized beforehand.

~~(amounts~~Note in15. ~~thousands,~~Preferred ~~except share and per share data)~~Stock

~~Due~~As part of our committed efforts to raise capital, on January 24, 2017, Salon entered into the ~~uncertainty~~Purchase Agreement with various investors to issue and sell to the Purchasers in the Private Placement an aggregate principal amount of ~~realizing~~at least $1 million of the ~~benefits~~Company’s ~~attributable~~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 ~~aforementioned~~Series ~~deferred~~A ~~tax~~Preferred ~~assets~~Stock, ~~Salon~~each ~~has~~of ~~provided~~which ais ~~valuation~~convertible ~~allowance~~into ~~against~~100 shares of Common Stock, at the ~~net~~purchase ~~deferred~~price ~~tax~~of ~~assets~~$1.24 ~~The~~per ~~difference~~share. ~~between~~We ~~Salon’s~~expect ~~effective~~completion ~~income~~of ~~tax~~the ~~rate~~purchase and sale of the ~~federal~~Series ~~statutory~~A ~~rate~~Preferred isStock aswill ~~follows:~~occur in three stages.

	Years Ended March 31,
	2018			2017
Statutory tax benefit	$	(1,031	)	$	(3,254	)
State taxes, net of federal benefit		(216	)		(30	)
Permanent differences		337			1,957
Change in federal tax rate		12,582			-
Other		-			-
Total		11,672			(1,327	)
Change in valuation allowance		(11,672	)		1,327
	$	-		$	-

The 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 the Company’s former CEO, Jordan Hoffner, and certain of his family members, the Company’s former CFO, Elizabeth Hambrecht, and the Company’s Director, William Hambrecht.

The ~~Company~~Second isClosing ~~subject~~was tocompleted Uon March 23, 2017.S. ~~federal~~In ~~income~~the ~~tax~~Second asClosing, ~~well~~we assold to ~~income~~the ~~tax~~Purchasers inan ~~multiple~~aggregate ~~state~~of ~~jurisdictions.~~173,252 ~~Federal~~shares ~~income~~of ~~tax~~Series ~~returns~~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 ~~Company~~Private ~~are~~Placement. ~~subject~~The toinvestors ~~Internal~~in ~~Revenue~~the ~~Service~~Second ~~(“IRS”)~~Closing ~~examination~~included ~~for~~Jordan ~~all~~Hoffner, ~~years~~Ryan ~~given~~Nathanson, ~~losses~~the ~~reported~~Company’s onformer ~~returns~~Chief Operating Officer, and Jordana Brondo, the Company’s former Chief Revenue Officer.

AsThe ofFinal ~~March~~Closing 31was completed on July 20, ~~2018~~2017. In the Final Closing, ~~there~~we ~~were~~sold noto ~~uncertain~~the ~~tax~~Purchasers ~~positions.~~an ~~Management~~aggregate ~~does~~of ~~not~~221,601 ~~anticipate~~shares ~~any~~of ~~future~~Series ~~adjustments~~A inPreferred ~~the~~Stock ~~next~~for ~~twelve~~a ~~months~~total ~~which~~purchase ~~would~~price ~~result~~of in$275. aThe ~~material~~Final ~~change~~Closing toincluded ~~its~~only ~~tax~~investors ~~position.~~who ~~For~~had ~~the~~previously ~~years~~indicated ~~ended~~interest ~~March~~in ~~31,~~participating ~~2018~~in ~~and 2017,~~the Private Placement. The investors in the ~~Company~~Final ~~did~~Closing ~~not~~included ~~have~~Jordan ~~any~~Hoffner, ~~interest~~Elizabeth Hambrecht, and ~~penalties~~William Hambrecht.

On December 22, 2017, the Tax Cuts and Jobs Act (H.R. 1) (the “Tax Act”) was signed into law. The Tax Act contains significant changes to corporate taxation, including; (1) the reduction of the corporate income tax rate from a maximum rate of 35% to 21%, (ii) the acceleration of expensing for certain business assets, (iii) the one-time transition tax related to the transition of U.S. international tax from a worldwide tax system to a territorial tax system, (iv) the repeal of the domestic production deduction, (v) additional limitation on the deductibility of interest expense, (vi) expanded limitations on executive compensation, (vii) acceleration of tax revenue recognition, (viii) capitalization of research and development expenditures and (ix) creation of new minimum taxes such as the base erosion anti-abuse tax (“BEAT”) and Global Intangible Low Taxed Income (“GILTI”) tax.66

~~The~~SALON ~~key~~MEDIA impact of the Tax Act on our financial statements was the re-measurement of the deferred tax balances to the new corporate tax rate. While we have not yet completed our assessment of the effects of the Tax ActGROUP, ~~we are able to determine a reasonable estimate for this impact~~INC. ~~In accordance with Staff Accounting Bulletin No 118 (“SAB 118”), we are providing additional disclosures related to this provisional amount.~~

65NOTES TO FINANCIAL STATEMENTS

~~SALON~~(amounts ~~MEDIA~~in ~~GROUP~~thousands, ~~INC.~~except share and per share data)

~~NOTES~~In TOevent ~~FINANCIAL~~of ~~STATEMENTS~~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.

(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 ~~thousands~~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, ~~except~~2017, ~~share~~the Series A Preferred Stock accounts for approximately 52% of outstanding shares on an as converted basis and ~~per~~assuming an increase in authorized share ~~data)~~capital so that all shares can convert to Common Stock.

InThe ~~order~~holders toof ~~calculate~~ the ~~effects~~shares of ~~the~~Series ~~new~~A ~~corporate~~Preferred ~~tax~~Stock ~~rate~~are onentitled ~~our~~to ~~deferred~~vote ~~tax~~together ~~balances,~~with ~~ASC~~the ~~740~~holders ~~“Income~~of ~~Taxes” (“ASC 740”) required~~ the ~~re-measurement~~shares of ~~our~~Common ~~deferred~~Stock ~~tax balances~~ as ofthough ~~the~~part ~~enactment date~~ of ~~the~~that ~~Tax Act~~class, ~~based~~and onthey ~~the~~are ~~rates~~entitled ~~at which the balances were expected~~ to ~~reverse~~vote inon ~~the~~all ~~future.~~matters ~~The~~and ~~Act reduces the corporate tax rate~~ to ~~21%~~that ~~effective~~number ~~January~~of 1,votes ~~2018.~~equal ~~Consequently, we have recorded a decrease related~~ to ~~deferred~~the ~~tax~~largest ~~assets~~number of ~~$13~~whole ~~million~~shares ~~with~~of aCommon ~~corresponding~~Stock ~~net~~into ~~reduction~~which tothe ~~valuation~~shares ~~allowance~~ of ~~$13~~Series ~~million~~A ~~for~~Preferred ~~the~~Stock ~~year~~could ~~ended~~be ~~March 31, 2018~~converted.

~~The~~Neither ~~Company~~the ~~has~~shares ~~not~~of ~~yet~~Series ~~made~~A aPreferred ~~policy~~Stock ~~election~~nor ~~with~~the ~~respect~~underlying toshares ~~its treatment~~ of ~~potential~~Common ~~base~~Stock ~~erosion~~have ~~anti-abuse~~been ~~tax~~registered ~~(“BEAT”) and Global Intangible Low Taxed Income (“GILTI”). Companies can either account~~ for ~~taxes~~sale onunder ~~BEAT and GILTI as incurred or recognized deferred taxes when basis differences exist that are expected to affect~~ the ~~amount~~Securities Act of ~~the~~1933, ~~BEAT~~as amended, and ~~GILTI~~may ~~inclusion~~not ~~upon~~be ~~reversal.~~offered ~~The~~or ~~Company~~sold ~~is still~~ in the ~~process~~United ofStates ~~analyzing~~absent ~~the~~registration ~~provisions~~under ofsuch ~~the~~act ~~Act~~or ~~associated~~an ~~with~~applicable ~~BEAT~~exemption ~~and~~from ~~GILTI~~registration ~~and the expected impact of BEAT and GILTI on the Company in the future~~requirements.

The ~~provisional~~exchange ~~amount~~rate ~~related to the deferred tax balances are based on information available at this time~~ and ~~may~~common ~~change~~equivalent ~~due~~shares ~~to a variety~~ of ~~factors,~~our ~~including,~~Series ~~among~~A ~~others,~~Preferred ~~(i)~~Stock ~~anticipated~~as ~~guidance from the U.S. Department~~ of Treasury about implementing the Tax Act, (ii) potential additional guidance from the Securities and Exchange Commission or the Financial Accounting Standards Board related to the Tax Act, (iii) any impact resulting from our March 31, ~~2018~~2019 ~~financial~~are closing and reporting Commission or the Financial Accounting Standards Board related to the Tax Act, (iv) any impact resulting from our March 31, 2018 financial closing and reporting on our business and financial statements. We will continue our assessment of the impact of the Tax Act on our business and financial statements throughout the one-year measurement period as ~~provided by SAB 118.~~follows:

Note 12. Preferred Stock - Mezzanine Equity

Preferred Stock

Shares Outstanding

Per Share

Exchange Rate

Common

Equivalent Shares

Series A

1,648,830

100.000

164,883,000

Total

1,648,830

164,883,000

AsEffective ~~part~~June ~~of our committed efforts to raise capital~~28, ~~on January 24~~2019, ~~2017, Salon entered into~~ the ~~Purchase~~Company ~~Agreement~~effectuated ~~with~~a ~~various~~mandatory ~~investors~~conversion ~~to issue and sell to the Purchasers in 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~~1,~~417~~648,~~471~~830 shares of ~~the~~its Series A Preferred Stock, ~~each of which is convertible~~ into ~~100~~164,883,000 shares of our Common Stock~~, at the purchase price of $1~~.~~24 per share. We expect completion of the purchase and sale of the Series A Preferred Stock will occur in three stages.~~

The 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 the Company’s director and then CEO (until May 3, 2019), Jordan Hoffner, and certain of his family members, the Company’s then CFO (until September 28, 2018(, Elizabeth Hambrecht, and the Company’s Director, William Hambrecht.67

66SALON MEDIA GROUP, INC.

~~SALON~~NOTES ~~MEDIA~~TO ~~GROUP,~~FINANCIAL ~~INC.~~STATEMENTS

~~NOTES~~(amounts TOin ~~FINANCIAL~~thousands, ~~STATEMENTS~~except share and per share data)

~~(amounts~~Note in16. ~~thousands,~~Subsequent ~~except share and per share data)~~ Events

~~The~~First ~~Second~~Amendment ~~Closing was completed on March 23, 2017. In the Second Closing, we sold~~ to ~~the~~Asset ~~Purchasers~~Purchase 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, Ryan Nathanson, the Company’s former Chief Operating Officer, and Jordana Brondo, the Company’s former Chief Revenue Officer.Agreement

~~The~~On ~~Final~~April ~~Closing was completed on July 20~~15, ~~2017. In the Final Closing~~2019, ~~we sold to~~ the ~~Purchasers~~Company anentered ~~aggregate~~into ofa ~~221,601~~First ~~shares~~Amendment ofto ~~Series~~Asset APurchase ~~Preferred~~Agreement ~~Stock~~("First ~~for~~Amendment") awith ~~total purchase price of $275~~Buyer. The ~~Final~~primary ~~Closing~~purpose ~~included~~of ~~only~~the ~~investors~~First ~~who~~Amendment ~~had~~was ~~previously~~to ~~indicated~~amend ~~interest~~the inpayment ~~participating~~terms inunder the ~~Private~~Technology ~~Placement.~~Agreement ~~The~~and ~~investors in~~ the ~~Final~~Advertising ~~Closing~~Agreement ~~included~~as ~~Jordan~~set ~~Hoffner,~~forth ~~Elizabeth Hambrecht, and William Hambrecht.~~below:

~~Due~~(a) tofor ~~insufficient~~the ~~authorized~~month ~~shares~~ of ~~our~~March ~~Common~~2019: ~~Stock~~(i) ~~prior~~ad tofees under the ~~quarter~~Advertising ~~ended~~Agreement ~~December~~shall ~~31,~~be ~~2017,~~payable ~~these~~at ~~Series A Preferred shares were previously disclosed under mezzanine equity on our Balance Sheet~~6.5%, ~~The Amendment was filed~~ and ~~the~~(ii) ~~resulting~~tech ~~increase~~management infees ~~authorized~~payable ~~shares~~pursuant ofto ~~Common Stock occurred on August 1, 2017. After filing of~~ the ~~Amendment,~~Technology ~~these~~Agreement ~~Series~~shall Abe ~~Preferred Stock of~~ $~~6,862~~5 ~~were~~plus ~~reclassified~~costs ~~from~~per ~~mezzanine~~the ~~equity~~Technology ~~to stockholders’ deficit.~~Agreement;

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 (2b) ~~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~~month ~~to the holders~~ of ~~Series~~April A2019: ~~Preferred~~(i) ~~Stock~~ad offees ~~their~~under ~~full preferential amounts, then~~ the ~~entire~~Advertising ~~assets~~Agreement ~~and~~shall ~~funds of Salon legally available for distribution to stockholders will~~ be ~~distributed~~payable ~~among~~at ~~the holders of Series A Preferred Stock ratably in proportion to the full preferential amounts which they are entitled to receive~~6.5%, ~~Holders~~and of(ii) ~~shares~~tech ofmanagement ~~Series~~fees Apayable ~~Preferred Stock are not entitled to receive dividends,~~ pursuant to the ~~Certificate~~Technology ~~Designation~~Agreement ofshall ~~Preferences,~~be ~~Rights~~$10 ~~and~~plus ~~Limitations~~costs ofper the ~~Series~~Technology AAgreement; ~~Preferred Stock.~~and

~~After~~(c) 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~~month of ~~shares~~May of2019 ~~Common Stock~~ and ~~Series A Preferred Stock shall be entitled to receive the remaining assets of the Company available~~ for ~~distribution~~each tomonth ~~stockholders~~thereafter: ~~ratably~~(i) inad ~~proportion~~fees tounder the ~~shares~~Advertising ofAgreement ~~Common~~shall ~~Stock~~be ~~then~~payable ~~held~~at by6.5%, ~~them~~(ii) ~~and~~tech ~~the~~management ~~shares~~fees ofpayable ~~Common~~pursuant ~~Stock~~ to ~~which they have~~ the ~~right~~Technology toAgreement ~~acquire~~shall ~~upon~~be ~~conversion~~$10 ofplus ~~the~~costs ~~shares~~per ~~of Series A Preferred Stock held by them. Following~~ the ~~Final~~Technology ~~Closing~~Agreement ~~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~~ and ~~assuming~~(iii) an ~~increase~~amount inequal ~~authorized~~to ~~share~~10% ~~capital~~APR soapplied ~~that all shares can convert~~ to ~~Common~~the ~~Stock~~Deposit.

The ~~holders~~Company ofalso ~~the~~amended ~~shares~~Section of10.9 ~~Series A Preferred Stock are entitled to vote together with the holders~~ of the ~~shares~~Asset ofPurchase ~~Common~~Agreement ~~Stock as though part of that class, and they are entitled~~ to ~~vote~~include onthe ~~all~~term ~~matters~~sheet ~~and~~related to ~~that~~the ~~number~~acquisition offor ~~votes~~the ~~equal~~documents related to the ~~largest~~entire ~~number~~agreement of ~~whole shares of Common Stock into which~~ the ~~shares of Series A Preferred Stock could be converted~~parties.

67Second Amendment to Asset Purchase Agreement

~~SALON~~On ~~MEDIA~~June ~~GROUP~~30, ~~INC~~2019, we entered into a Second Amendment to Asset Purchase Agreement with Buyer under which the parties revised the Asset Purchase Agreement to provide that amounts delivered into escrow upon execution would not be used to compensate any Buyer Indemnified Parties for any losses under the Asset Purchase Agreement.

~~NOTES~~Settlement TOAgreements ~~FINANCIAL~~with ~~STATEMENTS~~Jordan Hoffner and Elizabeth Hambrecht

On July 1, 2019, we entered into a Settlement Agreement and Release with each of Jordan Hoffner, our former CEO and Elizabeth Hambrecht, our former CFO. Under the terms of each agreement, we agreed to pay Mr. Hoffner and Ms. Hambrecht, as applicable, the total sum of Thirty Thousand dollars ($30,000.00) (the “Settlement Payment”) on the earlier of (i) 2 business days after the Closing of that certain Asset Purchase Agreement and (ii) December 31, 2019 (the “Payment Date”). Each of Mr. Hoffner and Ms. Hambrecht Claimant acknowledges that, upon receipt of the Settlement Payment, they will have been paid all wages, severance, all unreimbursed business expenses, and all accrued but unused vacation pay due and owing to them further waived any additional claims for unpaid salary or wage amounts, inunreimbursed ~~thousands~~business expenses, ~~except~~and ~~share~~accrued but unused vacation pay. Each of Mr. Hoffner and ~~per~~Ms. ~~share~~Hambrecht ~~data)~~ executed a general release of all claims under their respective agreements. As of March 31, 2019, the Company has accrued $30,000 for each settlement payment to Jordan Hoffner and Elizabeth Hambrecht.

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.68

~~The~~SALON ~~exchange~~MEDIA ~~rate and common equivalent shares of our Series A Preferred Stock as of March 31~~GROUP, ~~2018 are as follows:~~INC.

Preferred Stock	Shares Outstanding		Per Share Exchange Rate		Common Equivalent Shares
Series A		1,648,830		100.000		164,883,000
Total		1,648,830				164,883,000

NOTES TO FINANCIAL STATEMENTS

~~The~~(amounts ~~Company~~in ~~intends to fully convert the Series A Preferred Stock into 164~~thousands,~~883,000~~ ~~shares~~except ofshare ~~Common~~and ~~Stock~~per ~~prior~~share ~~to June 30, 2019.~~data)

~~Preferred~~Departure ~~Deemed~~of ~~Dividend~~Directors or Principal Officers

InEffective ~~connection~~May ~~with~~3, ~~the January 24~~2019, ~~2017~~Jordan ~~private~~Hoffner ~~placement~~resigned ofas ~~shares of~~ the Company’s ~~Common~~Chief ~~Stock,~~Executive ~~the conversion price of the Series C Preferred Stock was reduced effective November 14, 2016, from $0~~Officer.15 to $0.10 per share of Series C Preferred Stock. Following this adjustment, each share of Series C Preferred Stock was convertible into the number of shares of Common Stock obtained by dividing two (2) times the Series C original issue price, $800, by the adjusted conversion price of $0.10 per share, resulting in each share of Series C Preferred Stock being convertible into approximately 17,200,000 Common Stock. The adjusted conversion price generated additional value to the convertibility feature of the Series C Preferred Stock. Accordingly, the Company recorded a non-cash preferred deemed dividend of approximately $860 for the additional value of the beneficial conversion feature in December 2016, the period of the adjustment. No preferred deemed dividend related events incurred during the year ended March 31, 2018.

~~Note~~Appointment ~~13.~~of ~~Subsequent Events~~Officers

~~Interest~~Effective ~~bearing~~May ~~convertible~~3, ~~promissory~~2019, ~~notes~~in &connection ~~senior~~with ~~secured~~Mr. ~~notes~~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. The relevant biographies for Mr. MacWilliams and Mr. Colhoun are set forth below.

OnMandatory ~~April~~Conversion ~~10, 2018 and April 12, 2018, the Company received each $50, for a total~~ of ~~$100,~~Series 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 note is payable in cash or will 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~~Preferred ~~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.

68Effective June 28, 2019, the Company effectuated a mandatory conversion of its 1,648,830 shares of Series A Preferred Stock into 164,883,300 shares of the Company’s Common Stock.

~~SALON MEDIA GROUP, INC.~~69

NOTES TO FINANCIAL STATEMENTS

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

From June 2018 through August 2018, the Company 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 the date of the 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, 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

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 our ability to obtain additional financing.

SALON MEDIA GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

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

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 following the 18 month anniversary of closing date (less any amounts paid to the Buyer for indemnification claims; (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:

(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 our Chief Executive Officer.

SALON MEDIA GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

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

Effective as of September 28, 2018, Elizabeth Hambrecht resigned as our Chief Financial Officer.

Appointment of Officers

Effective May 3, 2019, in connection with Mr. Hoffner’s resignation as Chief Executive Officer, the board appointed Richard MacWilliams as our acting Chief Executive Officer and the board also appointed Trevor Colhoun as our 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 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

None.

ITEM 9A. Controls and Procedures

Disclosure Controls and Procedures

Our management, with the participation of the Company’s executive and principal financial officers, or persons performing similar functions, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Form 10-K (March 31, ~~2018~~2019), as is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. 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 Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms and (ii) accumulated and communicated to our management, including the Company’s management, as the principal executive and financial officers, respectively, to allow timely decisions regarding required disclosures.

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

Lack of segregation of duties; and

2. Failure to implement accounting controls

	2.	Failure to implement accounting controls
	3.	Procedures related to identification and approval of related party transactions

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

Our management has concluded that the financial statements included in this Form 10-K 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 statement 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.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements

Our management assessed the effectiveness of our internal control over financial reporting as of March 31, ~~2018~~2019. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control-Integrated Framework (2013). A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Management has identified control deficiencies regarding the lack of segregation of duties and the need for a stronger internal control environment. The small size of the Company’s accounting staff may prevent adequate controls in the future, such as segregation of duties, due to the cost/benefit of such remediation.

Because of the above material weakness, management has concluded that we did not maintain effective internal control over financial reporting as of March 31, ~~2018~~2019, based on the criteria established in “Internal Control-Integrated Framework” issued by the COSO.

No Attestation Report by Independent Registered Accountant

The effectiveness of our internal control over financial reporting as of March 31, ~~2018~~2019 has not been audited by our independent registered public accounting firm by virtue of our exemption from such requirement as a smaller reporting company.

Changes in Internal Control Over Financial Reporting

During the most recent fiscal quarter, there have not been any significant changes in our internal controls over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

ITEM 9B. Other Information

None.

7371

PART III

ITEM 10. Directors, Executive Officers and Corporate Governance

Salon’s executive officers and directors as of ~~June~~July 1, 2019 are as follows:

Name	~~Age~~	Age	~~Position~~	Position
Richard MacWilliams(1) (2) (3)	67	67	~~Chairman of the Board and Acting CEO~~	Chairman of the Board and Acting CEO
Trevor Colhoun(1) (2)	41	42	~~Director and Acting CFO~~	Director and Acting CFO
Jordan Hoffner(1)(4)	49		Director
Jordan Hoffner(1)		49		Director
William Hambrecht(1)	82	83	~~Director~~	Director

(1)

Member of Audit Committee

(2)

Member of Compensation Committee

(3)

Member of Nominating Committee

Richard MacWilliams was elected to serve as Chairman of the Board on January 25, 2017. Mr. MacWilliams is co-founder and Managing Partner of Vista Capital Advisors. Previously, Mr. MacWilliams was Chairman of BoardEx and Executive Vice President of Bridge Information Systems. He joined Bridge as a result of Bridge’s acquisition of EJV Partners where he was President and CEO. Prior to joining EJV, Mr. MacWilliams served as Executive Vice President and trading manager for Drexel Burnham Government Securities and held a similar post at Donaldson Lufkin & Jenrette (4DLJ). While at DLJ, Mr. MacWilliams was also President and CEO ~~until~~of ~~May~~ACLI 3Commodity Services, ~~2019~~a worldwide commodity trading company. Mr. MacWilliams received a BA from Bucknell University, where he is a former trustee.

~~Richard~~Trevor ~~MacWilliams~~Colhoun was elected to serve as ~~Chairman~~Director ~~of the Board~~ on January 25, 2017. ~~and~~Mr. ~~was~~Colhoun ~~appointed~~is asa ~~acting~~Managing ~~Chief~~Member ~~Executive~~of ~~Officer~~Humilis onHoldings ~~May~~Capital 3,Management ~~2019~~LLC. ~~Mr.~~From ~~MacWilliams~~September is2009 ~~co-founder~~to ~~and~~December ~~Managing~~2013, ~~Partner~~Mr. ofColhoun ~~Vista~~was ~~Capital~~Manager ~~Advisors.~~of ~~Previously~~Walnut Financial Services, MrInc., ~~MacWilliams~~which ~~was~~he ~~Chairman~~founded as a subsidiary of ~~BoardEx~~Humilis ~~and~~Holdings ~~Executive~~LP. ~~Vice~~Walnut ~~President~~Financial ofis ~~Bridge~~a ~~Information~~private ~~Systems~~equity factoring fund. HeFrom ~~joined~~2007 ~~Bridge~~to present, Mr. Colhoun has acted as aManaging ~~result~~Partner of ~~Bridge’s~~Humilis ~~acquisition~~Holdings, ofLP, ~~EJV~~an ~~Partners~~investment ~~where~~fund hethat ~~was~~directed ~~President~~capital in private equity, debt, and ~~CEO~~real estate equity. Prior to ~~joining~~Humilis ~~EJV~~Holdings, Mr. ~~MacWilliams~~Colhoun served as ~~Executive~~ Vice President ~~and~~of ~~trading~~Capital ~~manager~~Markets ~~for~~at ~~Drexel~~Piper ~~Burnham~~Jaffray ~~Government~~from ~~Securities~~2002 ~~and~~to ~~held~~2007. aDuring ~~similar~~his ~~post~~tenure at ~~Donaldson~~Piper ~~Lufkin~~Jaffray, &Mr. ~~Jenrette~~Colhoun ~~(DLJ)~~was instrumental in leading over 50 public company transactions and along with his partner were the largest producers in the firm. ~~While~~Before atjoining ~~DLJ~~Piper Jaffray, Mr. ~~MacWilliams~~Colhoun was ~~also~~an ~~President~~Associate ~~and~~in ~~CEO~~Institutional ofSales ~~ACLI~~with ~~Commodity~~C.E. ~~Services~~Unterberg, Towbin, a ~~worldwide~~technology ~~commodity~~only ~~trading~~investment ~~company~~bank, from 2000 to 2002. Mr. ~~MacWilliams~~Colhoun ~~received~~served aas BAan Equity Analyst for Bear Stearns from ~~Bucknell~~1998 ~~University,~~to ~~where~~2000 hefor isthe afirm’s ~~former~~internal ~~trustee~~equity hedge fund.

~~Trevor~~Jordan ~~Colhoun~~Hoffner was ~~elected~~appointed toCEO ~~serve~~and as Director oneffective ~~January 25, 2017 and was appointed as acting Chief Financial Officer on~~ May 323, ~~2019~~2016. Mr. ~~Colhoun~~Hoffner is aan ~~Managing~~accomplished ~~Member~~media ofexecutive ~~Spear~~with ~~Point~~two ~~Capital~~decades ~~Management~~of ~~LLC.~~digital ~~From~~media, ~~September~~traditional ~~2009~~media toand ~~December~~technology ~~2013, Mr~~experience. ~~Colhoun~~Prior ~~was~~to ~~Manager~~joining ofSalon ~~Walnut~~Media ~~Financial Services~~Group, ~~Inc~~Mr., ~~which~~Hoffner heserved ~~founded~~ as aCEO ~~subsidiary~~ of ~~Humilis~~Federated ~~Holdings~~Media, ~~LP. Walnut Financial is~~ a ~~private~~Media ~~equity~~General ~~factoring~~company ~~fund.~~and ~~From~~leader ~~2007~~in tonative ~~present,~~advertising ~~Mr.~~and ~~Colhoun~~influencer ~~has~~marketing ~~acted~~for asdigital ~~Managing~~and ~~Partner~~TV. ofBased ~~Humilis~~in ~~Holdings,~~San LPFrancisco, anhe ~~investment~~has ~~fund~~held ~~that~~senior ~~directed~~level ~~capital~~strategy inand ~~private~~business ~~equity,~~development ~~debt,~~roles ~~and~~at ~~real~~Google ~~estate~~and ~~equity~~YouTube. ~~Prior~~While toat ~~Humilis Holdings~~YouTube, Mr. ~~Colhoun~~Hoffner ~~served~~accepted asthe ~~Vice~~company’s ~~President~~2008 ofPeabody ~~Capital~~Award ~~Markets~~for atpromoting ~~Piper~~a ~~Jaffray~~free ~~from~~exchange ~~2002~~of toideas ~~2007.~~expressed ~~During~~in ~~his~~video ~~tenure~~formats ataround ~~Piper~~the ~~Jaffray~~world. In addition, Mr. ~~Colhoun~~Hoffner ~~was~~is ~~instrumental~~an inentrepreneur ~~leading~~and ~~over~~angel 50investor ~~public~~having ~~company~~started ~~transactions~~multiple ~~and~~businesses ~~along~~in ~~with~~the ~~his~~media ~~partner~~and ~~were~~technology ~~the~~sector. ~~largest~~He ~~producers~~began inhis ~~the~~career ~~firm.~~as ~~Before~~an ~~joining~~NBC ~~Piper~~News ~~Jaffray,~~producer ~~Mr.~~before ~~Colhoun~~rising ~~was~~to anVP, ~~Associate~~Digital inStudios ~~Institutional~~at ~~Sales~~NBC ~~with C~~Universal.E. ~~Unterberg,~~He ~~Towbin,~~earned a ~~technology~~Bachelor ~~only~~of ~~investment~~Arts ~~bank,~~with honors from ~~2000~~Vassar toCollege ~~2002.~~and ~~Mr.~~a ~~Colhoun~~MBA ~~served~~in asfinance anfrom ~~Equity~~NYU’s ~~Analyst~~Stern ~~for~~School ~~Bear~~of ~~Stearns~~Business. ~~from~~He ~~1998~~currently tosits ~~2000~~as a council member for the ~~firm’s~~nonprofit ~~internal~~organization ~~equity~~Common ~~hedge~~Sense ~~fund~~Media.

Jordan Hoffner was appointed CEO and Director effective May 23, 2016 and resigned as our Chief Executive Officer effective May 3, 2019. Mr. Hoffner is an accomplished media executive with two decades of digital media, traditional media and technology experience. Prior to joining Salon Media Group, Mr. Hoffner served as CEO of Federated Media, a Media General company and leader in native advertising and influencer marketing for digital and TV. Based in San Francisco, he has held senior level strategy and business development roles at Google and YouTube. While at YouTube, Mr. Hoffner accepted the company’s 2008 Peabody Award for promoting a free exchange of ideas expressed in video formats around the world. In addition, Mr. Hoffner is an entrepreneur and angel investor having started multiple businesses in the media and technology sector. He began his career as an NBC News producer before rising to VP, Digital Studios at NBC Universal. He earned a Bachelor of Arts with honors from Vassar College and a MBA in finance from NYU’s Stern School of Business. He currently sits as a council member for the nonprofit organization Common Sense Media.72

William Hambrecht has served as a Director of Salon since February 2012. Mr. Hambrecht founded the San Francisco-based financial services firm WR Hambrecht + Co in 1998 and serves as its Chairman and Co-CEO. Prior to WR Hambrecht + Co, he co-founded and led Hambrecht & Quist, which specialized in investing in Silicon Valley companies. Mr. Hambrecht has served as a director for numerous private and public corporations. He previously served as a Director for Motorola Inc. (2008 – 2011) and AOL Inc. (2009 – 2011), was on the Board of Trustees for The American University of Beirut (2003 – 2011) and served on the Advisory Council to The J. David Gladstone Institute (2005 – 2010). In October 2006, Mr. Hambrecht was inducted into the American Academy of Arts and Sciences. He also was appointed to the board of the Presidio Trust by President Barack Obama in 2010. Mr. Hambrecht graduated from Princeton University in 1957.

Code of Conduct

Salon has adopted a Code of Conduct and Policy Regarding Reporting of Possible Violations (the “Code of Conduct”). The Code of Conduct can be found at Salon’s Website at www.salon.com/about/ir.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s executive officers, directors and persons who beneficially own more than 10% of the Company’s Common Stock to file initial reports of ownership and reports of changes in ownership with the Commission. Such persons are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms filed by such persons.

Based solely on Salon’s review of such forms furnished to us and written representations from certain reporting persons, we believe that all filing requirements applicable to our executive officers, directors and more than 10% stockholders were complied with, ~~during~~except ~~the~~that ~~fiscal~~Messrs. ~~year~~Colhoun ~~ended~~and ~~March~~Hoffner ~~31,~~failed to file Form 4s with respect to their receipt of warrants to purchase common stock on December 2018.

Audit Committee

The Audit Committee reviews, acts on and reports to the Board with respect to various auditing and accounting matters, including the adequacy of the Company’s financial reporting and disclosure controls and processes, the adequacy of the Company’s internal control policies, the selection of the Company’s independent registered public accounting firm, the scope of the annual audits, fees to be paid to the Company’s independent registered public accounting firm, the performance of the Company’s independent registered public accounting firm and the accounting practices of the Company. The Audit Committee operates under a charter that is available on our website at www.salon.com/about/ir.

During the fiscal year ended March 31, ~~2018~~2019, the members of our Audit Committee were Messrs. MacWilliams, Hambrecht, Colhoun and Hoffner. The Company has adopted the NYSE MKT Rules to determine the independence of the members of the Board. Pursuant to the NYSE MKT Rules, the Company has determined that Messrs. MacWilliams and Colhoun ~~were~~are independent directors were independent during the year ended March 31, ~~2018~~2019. As a result of their appointments as officers of the Company on May 3, 2019, Messrs. MacWilliams and Colhoun are no longer independent as of the date of filing of this Report.

7573

ITEM 11. Executive Compensation

Executive Compensation

The following table shows, for the fiscal year ended March 31, ~~2018~~2019, the compensation of Salon’s (i) principal executive officer; (ii) principal financial officer; and (iii) the two most highly compensated executive officers, collectively the “Named Executive Officers”:

Summary Compensation Table

												~~Non-Equity~~	Non-Equity
									~~Option~~	Option		~~Incentive Plan~~	Incentive Plan
Name and Principal Position	~~Year~~	Year	~~Salary ($)~~	Salary ($)		~~Bonus ($)~~	Bonus ($)		~~Awards ($) (1)~~	Awards ($) (1)		~~Compensation ($)~~	Compensation ($)		~~Total ($)~~	Total ($)
Jordan Hoffner (2)	~~2018~~	2019		~~223,637~~	93,613		-	-		~~889,261~~	1,398,394		-	-		~~1,112,898~~	1,492,007
Chief Executive Officer – (Until May 3, 2019)	2017			186,771			-			545,717			-			732,488
Chief Executive Officer (Until May 3, 2019)		2018			223,637			-			889,261			-			1,112,898
Elizabeth Hambrecht (3)	~~2018~~	2019		~~69,470~~	15,603		-	-		~~96,004~~	-		-	-		~~165,474~~	15,603
Chief Financial Officer – (Until September 27, 2018)	2017			100,720			-			14,546			-			115,266
Chief Financial Officer (Until September 27, 2018)		2018			69,470			-			96,004			-			165,474
Ryan Nathanson (4)	~~2018~~	2019		~~222,917~~	65,278		-	-		~~37,546~~	19,143		-	-		~~260,462~~	84,421
Chief Operating Officer – (Until July 27, 2018)	2017			37,500			-			-			-			37,500
Chief Operating Officer (Until July 27, 2018)		2018			222,917			-			37,546			-			260,462
Jordana Brondo (5)	~~2018~~	2019		~~153,626~~	-		-	-		-	-		-	-		~~153,626~~	-
Former Chief Revenue Officer – (Until August 25, 2017)	2017			63,333			-			-			-			63,333
Chief Revenue Officer (Until August 25, 2017)		2018			153,626			-			-			-			153,626
Cynthia Jeffers (6)	2018			-			-			-			-			-
Former Chief Executive Officer (Until May 23, 2016)	2017			55,240			-			20,287			-			75,527
David Daley (7)	2018			-			-			-			-			-
Former Editor-in-Chief – (Until June 15, 2016)	2017			48,103			-			8,732			-			56,834
Matthew Sussberg (8)	2018			-			-			-			-			-
Former Vice President Sales (Until July 25, 2016)	2017			86,276			25,281			739			-			112,296

(1) The amounts shown are the compensation costs recognized by Salon in fiscal years ~~2018~~2019 and ~~2017~~2018 for options awards, as determined pursuant to ASC 718 Compensation – Stock Compensation, excluding any estimates of future forfeitures. For a discussion of the assumptions used to calculate the value of the option awards, see Note 7 of the Notes to the Financial Statements.

(2)

Mr. Hoffner was appointed CEO and Director effective May 23, 2016 at a base annual salary of $300,000. Due to cash flow constraints, Mr. Hoffner agreed to temporarily reduce his salary at specific times during the year. Mr. Hoffner’s last day with the Company as Chief Executive Officer was May 3, 2019.

(3) Ms. Hambrecht was appointed CFO on November 11, 2014. Since July 2, 2013, Ms. Hambrecht had served as Interim CFO. Ms. Hambrecht ~~has~~had an annual salary of $~~100~~200,000. Due to cash flow constraints, Ms. Hambrecht agreed to temporarily reduce her salary at specific times during the year. Ms. Hambrecht’s last day with the Company as Chief Financial Officer was September 27, 2018.

76(4) Mr. Nathanson was appointed Chief Operating Officer effective February 1, 2017 at a base annual salary of $225,000. Mr. Nathanson’s last day with the Company as Chief Operating Officer was July 27, 2018.

(45) MrMs. ~~Nathanson~~Brondo was appointed Chief ~~Operating~~Revenue Officer effective ~~February~~June 120, 2017 at a base annual salary of $~~225~~190,000. Ms. ~~Nathanson~~Brondo’s last day with the Company as Chief ~~Operating~~Revenue Officer was ~~July~~August 2725, ~~2018~~2017.

(5) Ms. Brondo was appointed Chief Revenue Officer effective June 20, 2017 at a base annual salary of $190,000. Her termination date was on August 25, 2017. Ms. Brondo’s last day with the Company as Chief Revenue Officer was August 25, 2017.74

~~(6)~~Grants ~~Ms. Jeffers was appointed CEO effective May 29, 2012 at a base annual salary~~ of ~~$225,000.~~Plan-Based ~~Her~~Awards ~~position~~in ~~was~~Fiscal ~~succeeded~~Year ~~by Mr. Jordan Hoffner on May 23, 2016.~~2019

~~(7)~~No ~~Mr.~~equity ~~Daley~~awards ~~was~~were ~~appointed~~granted ~~Editor-in-Chief~~during onthe ~~August~~2019 ~~15,~~fiscal ~~2013~~year ~~with~~to ~~an annual salary of $150,000. Mr. Daley’s last day with~~ the ~~Company~~Named ~~was~~Executive ~~June 15, 2016~~Officers.

~~(8)~~Outstanding ~~Mr.~~Equity ~~Sussberg~~Awards ~~was~~at ~~appointed~~Fiscal ~~Vice~~2019 ~~President of Sales in April 2012 with a base annual salary of $215,000. Mr. Sussberg’s last day with the Company was July 25, 2016.~~Year-End

~~Grants~~The offollowing ~~Plan-Based~~table ~~Awards~~sets inforth ~~Fiscal~~the ~~Year~~outstanding ~~2018~~equity awards for each Named Executive Officer as of March 31, 2019.

The following table presents information on equity awards granted during the 2018 fiscal year.

GRANTS OF PLAN BASED AWARDS

All Other

Option Awards:

Grant Date

Number of

Exercise or

Fair Value

Estimated Future Payouts Under

Securities

Base Price

of Stock

Grant

Equity Incentive Plan Awards

Underlying

of Option

and Option

Name

Date

Threshold

Target

Maximum

Options

Awards (1)

Awards

Jordan Hoffner

09/06/2017

31,597,043

0.06

1,895,823

Elizabeth Hambrecht

09/06/2017

721,154

0.06

43,269

Ryan

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