10-Q

 SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2013

or

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

For the transition period from             to           

Commission file number 0-26395

SALON MEDIA GROUP, INC.

(Exact name of Registrant as specified in its charter)

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

870 Market Street, Suite 528

San Francisco, CA 94102

(Address of principal executive offices)

(415) 645-9200

(Registrant's telephone number, including area code)

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

None

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

Common Stock, $0.001 Par Value

(Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

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

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

Large accelerated filer ☐   Accelerated filer ☐   Non-accelerated filer ☐   Smaller reporting company ☑

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

The number of outstanding shares of the Registrant's Common Stock, par value $0.001 per share, on November 1, 2013 was 76,245,442 shares.

FORM 10-Q

SALON MEDIA GROUP, INC.

INDEX

		Page Number
PART I	FINANCIAL INFORMATION
ITEM 1:	Condensed Consolidated Financial Statements
	CondensedConsolidated Balance Sheets as of September 30, 2013 (unaudited) and March31, 2013	3
	Condensed Consolidated Statements of Operations for the three months and six months ended September 30, 2013 and 2012 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the six months ended September 30, 2013 and 2012 (unaudited)	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6
ITEM 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
ITEM 3:	Quantitative and Qualitative Disclosures About Market Risk	23
ITEM 4:	Controls and Procedures	23
PART II	OTHER INFORMATION
ITEM 1:	Legal Proceedings	24
ITEM 1A:	Risk Factors	24
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
ITEM 3.	Defaults upon Senior Securities	31
ITEM 4.	Mine Safety and Disclosures	31
ITEM 5.	Other Information	31
ITEM 6:	Exhibits	31
	Signatures	33

2

PART I: FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SALON MEDIA GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and par value amounts)

	September 30, 2013			March 31, 2013 (1)
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	17		$	96
Accounts receivable, net of allowance of $60 and $62		1,392			720
Prepaid expenses and other current assets		200			318
Total current assets		1,609			1,134
Property and equipment, net		57			58
Other assets, principally deposits		97			107
Total assets	$	1,763		$	1,299
Liabilities and Stockholders' Deficit
Current liabilities:
Short-term borrowings	$	1,000		$	1,000
Related party advances		1,641			9,171
Accounts payable and accrued liabilities		1,158			1,128
Deferred revenues		-			15
Total current liabilities		3,799			11,314
Deferred rent		2			12
Total liabilities		3,801			11,326
Commitments and contingencies (See Note 6)
Stockholders’ deficit:
Preferred Stock, $0.001 par value, 5,000,000 shares authorized, 1,075 shares issued and outstanding at September 30, 2013 and 8,141 shares issued and outstanding at March 31, 2013 (liquidation value of $9,699 at September 30, 2013)		-			-
Common stock, $0.001 par value, 150,000,000 shares authorized, 76,245,442 shares issued and outstanding at September 30, 2013 and 30,000,000 shares authorized, 29,573,265 shares issued and outstanding at March 31, 2013		76			30
Additional paid-in capital		115,520			106,408
Accumulated deficit		(117,634	)		(116,465	)
Total stockholders' deficit		(2,038	)		(10,027	)
Total liabilities and stockholders' deficit	$	1,763		$	1,299

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

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

3

SALON MEDIA GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

			Three Months Ended September 30,						Six Months Ended September 30,
			2013			2012			2013			2012
Revenue, net			$	1,563		$	853		$	2,760		$	1,689
Operating expenses:
	Production and content			856			747			1,666			1,681
	Sales and marketing			489			369			904			802
	Technology			378			349			758			627
	General and administrative			311			221			582			658
	Separation expenses			-			-			-			218
		Total operating expenses		2,034			1,686			3,910			3,986
Loss from operations				(471	)		(833	)		(1,150	)		(2,297	)
Interest income (expense)				(10	)		(69	)		(19	)		(128	)
Loss from continuing operations				(481	)		(902	)		(1,169	)		(2,425	)
Income from discontinued operations				-			242			-			233
Net loss			$	(481	)	$	(660	)	$	(1,169	)	$	(2,192	)
Basic and diluted net loss per share
Loss from continuing operations			$	(0.01	)	$	(0.27	)	$	(0.02	)	$	(0.74	)
Income from discontinued operations				-			0.07			-			0.07
Net loss			$	(0.01	)	$	(0.20	)	$	(0.02	)	$	(0.67	)
Weighted average shares used in computing basic and diluted net loss per share				76,231			3,283			71,613			3,283

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

4

SALON MEDIA GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

					Six Months Ended September 30,
					2013			2012
Cash flows from operating activities:
	Net loss
		Loss from continuing operations			$	(1,169	)	$	(2,425	)
		Add income from discontinued operations				-			233
				Total net loss		(1,169	)		(2,192	)
	Adjustments to reconcile net loss to net cash used in operating activities:
		Loss on disposal of property and equipment, net				9			11
		Depreciation				19			32
		Bad debt expense and change in allowance for doubtful accounts				9			-
		Stock-based compensation				49			138
		Changes in assets and liabilities:
			Accounts receivable			(681	)		34
			Prepaid expenses and other assets			128			28
			Accounts payable, accrued liabilities and deferred rent			138			(552	)
			Deferred revenues			(15	)		(85	)
				Net cash used in operating activities		(1,513	)		(2,586	)
Cash flows from investing activities:
	Purchase of property and equipment					(27	)		(22	)
	Purchase of intangible assets					-			(5	)
				Net cash used in investing activities		(27	)		(27	)
Cash flows from financing activities:
	Proceeds from related party advances					1,461			2,550
				Net cash provided by financing activities		1,461			2,550
Net cash provided by operating activities from discontinued operations						-			200
Net (decrease) increase in cash and cash equivalents						(79	)		137
Cash and cash equivalents at beginning of period						96			130
Cash and cash equivalents at end of period					$	17		$	267
Supplemental schedule of non-cash financing activity:
	Conversion of unsecured advances into common shares				$	8,991		$	-
	Conversion of accounts payable into common shares				$	118		$	-

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

5

SALON MEDIA GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(unaudited)

1. The Company and Significant Accounting Policies

The Company

Salon Media Group, Inc. (“Salon” or the “Company”) is an internet news and social networking company that produces Salon.com, a content Website, and related online communities. Salon was originally incorporated in July 1995 in California and reincorporated in Delaware in June 1999. Salon operates in one business segment.

Basis of Presentation

These interim condensed consolidated financial statements are unaudited and have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly Salon's condensed consolidated financial position, results of operations and cash flows for the periods presented. These condensed consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements for the fiscal year ended March 31, 2013, which are included in Salon’s Annual Report on Form 10-K for the fiscal year ended March 31, 2013 filed with the Securities and Exchange Commission on June 26, 2013. Pursuant to the rules of the Securities and Exchange Commission, these financial statements do not include all disclosures required by generally accepted accounting principles. The results for the six month period ended September 30, 2013 are not necessarily indicative of the expected results for any other interim period or for the fiscal year ending March 31, 2014.

These condensed consolidated 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 September 30, 2013 of $117,634. In addition, Salon expects to incur a net loss from operations for its year ending March 31, 2014.

The Company’s operating forecast for the remainder of the fiscal year ending March 31, 2014 anticipates continued but reduced operating losses. Salon estimates it will require approximately $1,200 in additional funding to meet its operating needs for the balance of its fiscal year. If planned revenues are less than expected, or if planned expenses are more than expected, the cash shortfall may be higher, which will result in a commensurate increase in required financing. During the current and previous fiscal years, Salon has relied on funding from related parties. In this fiscal year through November 14, 2013, the related parties have provided $2,011 in cash advances. Salon remains dependent upon its two largest stockholders for continued financial support while it seeks external financing from potential investors in the form of additional indebtedness or through the sale of equity securities in a private placement. The Company is working with its advisors in its efforts to obtain such funding, and explore strategic alternatives. However, Salon does not currently have an agreement in place to provide any financing, and there is no certainty that Salon will be able to enter into definitive agreements for additional financings or other strategic alternatives on commercially reasonable terms, if at all.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on deposit with banks and investments that are readily convertible into cash and have original maturities of three months or less.

6

SALON MEDIA GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(unaudited)

Concentration of Credit Risk

Financial instruments that potentially subject Salon to concentration 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 expectation of future losses.

One customer accounted for approximately 11% of total revenue for the three months ended September 30, 2013, and one customer accounted for approximately 13% of total revenue for the three months ended September 30, 2012. One customer accounted for approximately 13% of total revenue for the six months ended September 30, 2013. No customer accounted for more than 10% of total revenue for the six months ended September 30, 2012. No customer accounted for more than 10% of total accounts receivable and one customer accounted for approximately 11% of total accounts receivable as of September 30, 2013 and 2012.

Stock-Based Compensation

The Company accounts for stock-based compensation using the fair value method of accounting. The estimated fair value of the stock options granted is amortized on a straight-line basis over the vesting period of the stock.

A total of 3,018,347 stock options were granted during the quarter ended September 30.   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:

	Six months ended September 30,
	2013			2012
Risk-free interest rates		1.00	%		0.40	%
Expected term (in years)		4			4
Expected volatility		461	%		459	%
Dividend yield		0	%		0	%

The expected term of the options of four years represents the estimated period of time until exercise and is based on historical experience of similar awards, including the contractual terms, vesting schedules and expectations of future employee behavior. 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, or four years. Salon has not paid dividends in the past.

As of September 30, 2013, the aggregate stock compensation remaining to be amortized to expense was $311. Salon expects this stock compensation balance to be amortized as follows: $75 during the remainder of fiscal 2014; $145 during fiscal 2015; $77 during fiscal 2016 and $14 during fiscal 2017. The expected amortization reflects outstanding stock option awards as of September 30, 2013 expected to vest.

7

SALON MEDIA GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(unaudited)

The weighted average grant date fair value of the options granted under the Company’s stock plan as calculated using Black-Scholes option pricing model was $0.13 and $0.01 per share for the three months ended September 30, 2013 and September 30, 2012, respectively.  The weighted average grant date fair value of the options granted under the Company’s stock plan as calculated using the Black-Scholes option-pricing model was $0.13 and $0.01 per share for the six months ended September 30, 2013 and September 30, 2012, respectively.

Recapitalization

Salon has made significant progress in simplifying its capital structure and increasing its liquidity in an effort to make the Company a more compelling investment to current and new investors. With this goal in mind, at a meeting of the Board of Directors (“Board”) on February 1, 2013, the Board approved a private offering of Common Stock to the holders of its related party advances, convertible notes, certain accrued consulting fees and Preferred Stock in exchange for such related party advances, convertible notes, accrued consulting fees and Preferred Stock, at an exchange price of $0.35 per share of Common Stock (the “Recapitalization”). The primary purpose of this voluntary Recapitalization was to simplify the Company’s capital structure through the exchange of indebtedness and Preferred Stock, thereby increasing the Company’s potential to enter into capital transactions with new investors.  In addition, the Board believed that the Recapitalization offered holders a potentially more liquid asset in the form of the Company’s Common Stock and could also result in increased overall liquidity in the market for the Company’s Common Stock.

All of the holders of related party advances, accrued consulting fees and convertible notes and the holders of all outstanding Preferred Stock, other than the holders of 1,075 shares of Series C Preferred Stock, agreed to participate in the Recapitalization which resulted in an aggregate 72.9 million shares of Common Stock being issued, as described below.

Outstanding convertible notes plus interest at February 28, 2013 were approximately $3,504, all of which was exchanged for an aggregate of 10,012,372 shares of Common Stock.  Outstanding related party advances at February 28, 2013, including accrued consulting fees of $158, were approximately $12,146, all of which was exchanged for an aggregate of 34,704,102 shares of Common Stock. All the outstanding 9,404 shares of Preferred Stock (other than 1,075 shares of Series C) at February 28, 2013 were exchanged for an aggregate of 28,158,852 shares of Common Stock. These shares were issued as described in the following two paragraphs.

On March 1, 2013, 25% of related party advances and accrued consulting fees of approximately $12,146 as of February 28, 2013 were exchanged for an aggregate of 8,676,034 shares of common stock and all convertible notes plus interest of $3,504 and Preferred Stock holdings of non-affiliates other than 1,075 shares of Series C of Preferred Stock were exchanged for an aggregate of 17,614,655 shares of Common Stock. This issuance of shares represented substantially all of the available authorized Common Stock.

Due to an insufficient number of Common Stock authorized as of February 28, 2013 to complete the issuances under the Recapitalization, a special meeting of the stockholders of the Company was held on April 18, 2013, at which Company Stockholders voted to increase the authorized Common Stock of the Company from 30 million to 150 million shares. Following this vote and the filing of a Certificate of Amendment to the Company's Restated Certificate of Incorporation with the Delaware Secretary of State to effect the increase in the number of authorized shares of common stock from 30 million to 150 million shares, the remaining 75% of the balance of related party advances and accrued consulting fees as of February 28, 2013 was exchanged for an aggregate of 26,028,108 shares of Common Stock and all the 7,066 shares of Preferred Stock held by affiliates as of February 28, 2013 was exchanged for an aggregate of 20,556,569 shares of Common Stock.

8

SALON MEDIA GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(unaudited)

Reclassifications

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

2. Goodwill

Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination accounted for under the purchase method. Goodwill is not amortized but is tested for impairment annually during the Company’s fourth quarter, or when events and circumstance occur indicating that the asset might be impaired.  In connection with the sale of “The Well” in September 2012, the goodwill balance was written off in determining the gain from discontinued operations. As such, Salon has no goodwill as of September 30, 2013.

3. Borrowing Agreements

Short-term Borrowings

In May 2007, Salon finalized a borrowing agreement with Deutsche Bank Securities, Inc. that allows Salon to borrow up to $1,000 at a rate of prime less 0.25%. Salon’s obligations under this agreement are guaranteed in their entirety by Salon’s Chairman. The line of credit has been fully drawn as of September 30, 2013. Deutsche Bank Securities may demand repayment of amounts borrowed at any time. Additionally, the Chairman may also choose to terminate his guarantee, which would trigger a demand for repayment. As of September 30, 2013, accrued interest on short-term borrowings totaled $236.

As of September 30, 2013 and 2012, the weighted-average interest rate on the Company’s short-term borrowings was 3.7% and 3.0%, respectively.

Related Party Advances

During the six months ended September 30, 2013 and 2012, Salon has received unsecured, interest-free cash advances totaling $1,461 and $2,550, respectively, to fund operations from its Chairman.These advances are payable on demand, and are exchangeable into securities on the same terms as those to be issued in the next financing raised by the Company from non-related parties.

All such cash advances from the Chairman and other related party investors cumulative through February 28, 2013, totaling approximately $12,000, were converted on March 1, 2013 into shares of Common Stock in the Recapitalization.

Convertible Notes Payable

Outstanding convertible notes plus interest at February 28, 2013 was approximately $3,500, all of which was exchanged for an aggregate of approximately 10.0 million shares of Common Stock. Approximately 20% of the convertible notes were held by a non-affiliate of the Company.

9

SALON MEDIA GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(unaudited)

As of September 30, 2013, Salon has no outstanding convertible notes and does not anticipate entering into similar debt instruments during its fiscal year ending March 31, 2014.

4. Stock Option Plans

Salon has certain equity incentive plans as described in Note 8, “Employee Stock Option Plan,” of the notes to consolidated financial statements in Salon’s Annual Report on Form 10-K for the fiscal year ended March 31, 2013.

The following table summarizes activity under Salon’s plans for the three months ended September 30, 2013:

	Outstanding Stock Options			Weighted- Average Exercise Price		Aggregate Intrinsic Value
Balance as of March 31, 2013		4,201,000		$	0.18
Options granted under all plans		3,018,000		$	0.13
Exercised		(88,000	)	$	0.01
Expired and forfeited		(432,000	)	$	0.14
Outstanding at September 30, 2013		6,699,000		$	0.16	$	157,000
Exercisable at September 30, 2013		2,972,000		$	0.23	$	63,000
Vested and expected to vest		4,626,000		$	0.16	$	101,000

A total of 3,018,000 option shares were awarded during the six months ended September 30, 2013. A total of 1,457,000 option shares were awarded during the six months ended September 30, 2012. The weighted-average fair value of options vested during each of the six month periods ended September 30, 2013 and 2012 was $0.06 per share and $0.36 per share, respectively. Approximately 88,000 options were exercised during the six months ended September 30, 2013.

Salon recognized stock-based compensation expense of $49 and $138 during the six months ended September 30, 2013 and 2012, respectively.

10

SALON MEDIA GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(unaudited)

5. Net Loss Per Share

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

	Three Months Ended September 30						Six Months Ended September 30
	2013			2012			2013			2012
Numerator:
Loss from continuing operations attributable to common stockholders	$	(481	)	$	(902	)	$	(1,169	)	$	(2,425	)
Income from discontinued operations		-			242			-			233
Net loss attributable to common stockholders	$	(481	)	$	(660	)	$	(1,169	)	$	(2,192	)
Denominator:
Weighted average shares used in computing basic and diluted net loss per share attributable to common stockholders		76,231,000			3,283,000			71,613,000			3,283,000
Basic and diluted net loss per share
Loss from continuing operations	$	(0.01	)	$	(0.27	)	$	(0.02	)	$	(0.74	)
Profit from discontinued operations		-			0.07			-			0.07
Net loss	$	(0.01	)	$	(0.20	)	$	(0.02	)	$	(0.67	)
Antidilutive securities including options, warrants and convertible notes and preferred stock not included in net loss per share calculation		7,796,000			17,905,000			7,796,000			17,905,000

6. Commitments and Contingencies

On October 17, 2012, Salon signed a new office lease agreement to relocate its San Francisco headquarters to 870 Market Street, Suite 528, San Francisco, California. The three-year lease for approximately 2,405 square feet in space, commenced on December 1, 2012 and will terminate on November 30, 2015.

On October 3, 2012, the Company signed a sublease agreement with a third-party to occupy its existing office space located at 101 Spear Street, Suite 203, San Francisco, California, covering approximately 8,623 square feet. The sublease commenced on December 1, 2012 and will terminate on February 28, 2014. The sublease is co-terminus with existing obligations.

11

SALON MEDIA GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(unaudited)

The following summarizes Salon’s office lease commitments and short-term borrowings as of September 30, 2013:

	Payments Due By Period
	Total		1 Year or Less		1 - 3 Years		3 - 5 Years
Corporate office	$	189	$	86	$	103	$	-
San Francisco, net of sublease		40		40		-		-
New York		95		95		-		-
Los Angeles		11		11		-		-
Total operating leases		335		232		103		-
Short-term borrowing		1,000		1,000		-		-
Interest on short-term borrowing		236		236		-		-
Related party advances		1,641		1,641		-		-
Total	$	3,212	$	3,109	$	103	$	-

7. Preferred Stock

The conversion rate and common equivalent shares of Salon’s Preferred Stock as of September 30, 2013 are as follows:

			Per share
Preferred Stock	Shares Outstanding		Purchase Price		Conversion Rate		Common Equivalent Shares
Series C		1,075	$	800		0.785		1,096,676
Total		1,075						1,096,676

The Series C Preferred Stock conversion rate is subject to a downward adjustment anti-dilution provision under certain circumstances related to subsequent Salon securities issuances. The Company determined that the accounting for such conversion features does not require bifurcation under “Accounting for Derivative Instruments and Hedging Activities” (Accounting Standards Codification (ASC) 815) and, accordingly, the requirements of ASC 815 are not applicable.

In event of a liquidation, the holders of the Series C 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, $1,600 per share, plus an amount equal to all declared but unpaid dividends, based on an annual rate of 8%. If the assets and funds available for distribution are insufficient to permit the payment to the holders of Series C 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 C Preferred Stock ratably in proportion to the full preferential amounts which they are entitled to receive. As of September 30, 2013, no dividend has been declared to the holders of Preferred Stock.

12

SALON MEDIA GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(unaudited)

If, after initial preferential liquidation payments to the holders of Series C Preferred Stock, any assets remain available for distribution, such assets are to be distributed ratably among the holders of Common Stock and Preferred Stock, based on the shares of Common Stock then held by them and issuable upon conversion of the shares of Preferred Stock then held by them, until aggregate distributions per share reach $2,400 for the holders of Series C Preferred Stock. Salon has currently outstanding 1,075 shares of Series C Preferred Stock.

If, after payment has been made to the holders of Common Stock and holders of Preferred Stock mentioned above, any assets remain available for distribution, such assets are to be distributed ratably among the holders of Common Stock and the holders of Series C Preferred Stock, based on the number of shares of Common Stock then held by them and issuable upon conversion of the Series C Preferred Stock then held by them. Based on available information, Salon estimates that the holders of Series C Preferred Stock account for approximately 6% of stockholders on an as converted basis.

The holders of Preferred Stock are entitled to vote together with the holders of Salon’s Common Stock as though part of that class, and are entitled to vote on all matters and to that number of votes equal to the largest number of whole shares of Common Stock into which the shares of Preferred Stock could be converted. Preferred Stockholders as a group own approximately 6% of the outstanding shares of Common Stock and Common Stock issuable upon conversion of the shares of Preferred Stock, all with voting rights.

The aggregate liquidation preferences of all Preferred Stockholders as of September 30, 2013 were $1,720 excluding the effect of undeclared dividends, and $9,699 including the effect of undeclared dividends. Salon has never declared a dividend and does not expect to declare a dividend in the future.

Neither the Series C 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.

8. Discontinued Operations

The Well's declining subscriber base and aging technology led to a decision to restructure the service.  As a result, in May 2012, The Well’s staff was laid off and current subscriptions were honored and renewed through September 20, 2012, the date of the sale of the Well. All future cash inflows were thus eliminated. During the six months ended September 30, 2013, The Well has ceased to be part of the Company’s continuing operations and its financial results are reported under discontinued operations.

	Three Months Ended September 30				Six Months Ended September 30
	2013		2012		2013		2012
Net revenues	$	-	$	42	$	-	$	120
Operating expenses		-		-		-		87
Gain on Sale		-		200		-		200
Income (loss) from discontinued operations, net of tax	$	-	$	242	$	-	$	233

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SALON MEDIA GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(unaudited)

On September 20, 2012, Salon completed an Asset Sale Agreement by and between the Company and The Well Group, Inc., a California corporation, as reported on the Company’s Form 8-K filed on September 25, 2012. Pursuant to this Asset Sale Agreement, the Company sold to The Well Group, Inc., for a purchase price of $400, those assets of the Company related to “The Well,” an online discussion forum, including, without limitation (i) the domain name “well.com” and all associated URLs, (ii) certain contracts and agreements with certain third parties, including member agreements and (iii) other property and materials as are required to operate the business as a going concern.

9. Subsequent Events

From October 1, 2013 through November 14, 2013, the Company received unsecured interest-free cash advances totaling $550 from its Chairman.

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

This section and other parts of this Form 10-Q contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”) including, but not limited to, statements regarding our strategy, plans, objectives, expectations, forecasts, intentions, financial performance, cash-flow breakeven timing, financing, economic conditions, on-line advertising, market performance, subscription service plans, and revenue sources. In this report, the words “anticipates,” “believes,” “expects,” “estimates,” “forecast,” “projection,” “future,” and similar expressions identify forward-looking statements. Although Salon Media Group, Inc. (“Salon” or the “Company”) believes its plans, intentions and expectations reflected in such forward-looking statements are reasonable, Salon gives no assurance those plans, intentions or expectations will be achieved. Our actual results may differ significantly from those anticipated or implied in these forward-looking statements as a result of the factors set forth in this “Management's Discussion and Analysis of Financial Conditions and Results of Operations” and in Risk Factors. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Except as required by law, Salon assumes no obligation to update any forward-looking statements as circumstances change.

This Management’s Discussion and Analysis of Finanical Condition and Results of Operations and other parts of this Form 10-Q should be considered in conjunction with the audited consolidated financial statements, which are included in Salon’s Annual Report on Form 10-K for the fiscal year ended March 31,2013 (the “Fiscal 2013 Annual Report”) filed with the Securities and Exchange Commission. Matters of interest therein include, but are not limited to, Salon’s disclosure of critical accounting policies.

Overview

Salon is an online news and social networking company and an Internet publishing pioneer. Salon’s award-winning journalism combines original investigative stories and provocative personal essays along with quick-take commentary and staff-written Weblogs about politics, technology, culture and entertainment. Committed to interactivity, the Website also hosts an online community, Open Salon, a social network for bloggers. In editorial product Salon balances 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.

Salon believes that its original, award-winning content allows Salon to attract and retain users who are more affluent, better educated and more likely to make online purchases than typical Internet users. Salon believes its user profile makes its Website a valuable media property for advertisers and retailers who are allocating marketing resources to target consumers online.

Salon has a history of significant losses and expects to incur a loss from operations, based on generally accepted accounting principles, for its fiscal year ending March 31, 2014 and potentially for future years. Burr Pilger Mayer, Inc., Salon’s independent registered public accounting firm for the years ended March 31, 2013, 2012, 2011 and 2010, included a “going-concern” audit opinion on the consolidated financial statements for those years. The audit opinions report substantial doubt about Salon’s 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, Salon’s 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.

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Strategic Review.

We continue to focus our efforts on growing revenue by expanding our product and reach. Our expansion is underpinned by a focus on editorial excellence, investigative reporting, and breaking news; innovative, custom-built advertising solutions that align with what Salon users are looking for; and, site enhancements to improve the user experience across desktop, tablet and mobile.

Highlights from Second Quarter Fiscal Year 2014

● Net revenues rose 83% to $1.6 million in the second quarter of fiscal year 2014 versus $0.9 million in the same period in the prior year, and grew 31% compared to $1.2 million in the first quarter of fiscal year 2013. The increase in revenue was a result of growth in advertising revenues, in particular from an improvement in advertising sold by Salon’s internal advertising sales team.

● Salon’s total advertising revenue in the second quarter of fiscal year 2014 was $1.4 million, an increase of 75% compared to $0.8 million in the second quarter of fiscal year 2013, and a 27% increase over $1.1 million in the first quarter of fiscal year 2014. Direct ad sales in the second quarter of fiscal year 2014 improved substantially over the first quarter of fiscal year 2014, growing 82%. Salon aims to continue to improve its advertising offering to attract new advertisers and attract new sales categories. We believe the launch of new advertising units and custom-built ad integrations, such as a sponsored video display unit, slideshows, social media feeds, and sponsored content for our advertisers, has been integral to the increase in advertising revenues. Also, the launch of a new content vertical focused on sustainability and environmental issues has increased advertiser-friendly content on the Website.

● Unique visitors for the second quarter of fiscal year 2014 increased 8% compared to the second quarter of fiscal year 2013, and were consistent with the first quarter of fiscal year 2014, according to data compiled by Google Analytics. Unique visitors as measured by Comscore increased 2.5% compared to the second quarter of fiscal year 2013, but declined 13% compared to the first quarter of fiscal year 2014. The difference between the two sources is that Comscore uses a panel method for counting unique visitors rather than the tagging technology used by Google.

● Unique visitors in the second quarter of fiscal 2013 included traffic to an affiliated website that has since been shut down. Excluding the traffic from the affiliated website, unique visitors to the Salon.com website in the second quarter of fiscal year 2014 increased 67% compared to the second quarter of fiscal year 2013, pointing to consistent growth in readership at the core brand.

● Our traffic has experienced a significant shift to mobile readers. In the second quarter of fiscal year 2014, we had over 19 million visits on mobile devices, including tablets, which was an increase of 20% over the first quarter of fiscal year 2014, and a 78% increase over the same period the prior year. Excluding tablets, Salon had 13.6 million visits, which was an increase of 27% over the first quarter of fiscal year 2014, and a 90% increase over the second quarter of fiscal year 2013. As mobile browser is now 40% of Salon’s traffic, all advertising products are developed for mobile as well as for desktop and laptop.

● Social media referral traffic grew 9% in the second quarter of fiscal year 2014 versus the first quarter of fiscal year 2014, and 88% compared to the same period in the prior year. Facebook continues to be the largest social media referral, and continued to grow at a robust rate of 83% versus the same period in fiscal year 2013, and 9% compared to the first quarter of fiscal year 2014. We also saw rapid growth in referrals from Twitter, with an increase of 152% compared to the second quarter of fiscal 2013 and 19% compared to the first quarter of fiscal 2014.

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● Salon has placed a greater focus on improving quality of comments on stories and related discussion on social media to make Salon a platform for discussion and debate. A new comments system was launched in June 2013, and a community manager and moderation team has been added in recent months to drive better informed discussions within the community. This has resulted in an 85% increase in comments in July-August, compared to May-June. We believe that increases in comments will help drive greater traffic leading to higher ad revenue.

● Since January 2013, Salon has launched new editorial content verticals in Business, Technology and Sustainability. In just nine months, readership in these three content verticals has grown strongly and these sections have been instrumental in attracting an increase in advertisers on our Website.

● We have also continued to put significant efforts into our site development through our technology team. In the past quarter, we have implemented a new navigation design, and upgraded the appearance of the site while maximizing our advertising potential. We have completed a Search Engine Optimization audit, and implemented changes that have resulted in an improved performance of our search engine traffic. We have added optimized re-circulation units on the site to offer more relevant content to the reader. We have also continued to upgrade our security mechanisms, diversified server hosting distribution across data centers on multiple continents, and upgraded our database configuration resulting in improved site security, stability, performance, speed and uptime.

Sources of Revenue

The most significant portion of Salon’s revenues is derived from the sale of promotional space on its Website. The sale of promotional space is generally less than ninety days in duration. Advertising units sold include “rich media” streaming advertisements, as well as traditional banner and pop-up advertisements.

Salon also derives a small portion of its net revenues from its Salon Premium subscription program. This source of revenue has been decreasing since Salon’s quarter ended December 31, 2004, when paid subscriptions peaked at approximately 89,100 and have since decreased to fewer than 8,000 as of September 30, 2013. As a result of the continued decline in subscribers, as of June 2012, new subscriptions and renewals were no longer accepted, in anticipation of winding down the Company’s subscription service in July 2014.

In June 2012, Salon refocused its strategy on its core Salon.com website, and made the decision to restructure and eliminate certain non-core initiatives.  As a result, Salon laid-off The Well staff associated with its online discussion forum. On September 20, 2012, Salon entered into and completed The Well Asset Sale.

Salon also generates nominal revenue from the licensing of content that previously appeared in Salon’s Website, from traffic referrals for third party Websites, for hosting links to a third party’s personals/dating Websites, and from operating its emerging e-commerce activities.

Expenses

Production and content expenses consist primarily of salaries and related expenses for Salon’s editorial, artistic, and production staff, online communities’ staff, payments to freelance writers and artists, bandwidth costs associated with serving pages and hosting our online communities on our Website, credit card transaction costs andadserving costs.

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Sales and marketing expenses consist primarily of salaries, commissions and related personnel costs, travel, and other costs associated with Salon’s sales force, business development efforts and its subscription service. It also includes advertising, promotions and other marketing expenses.

Technology expenses consist primarily of salaries, related personnel costs and outside consultants associated with the development, testing and enhancement of the Salon.com Website and content management system, as well as supporting marketing and sales efforts.

General and administrative expenses consist primarily of salaries and related personnel costs, accounting and legal fees, 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 Salon’s outstanding debt.

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

Critical Accounting Policies

The preparation of financial statements in conformity with generally accepted accounting principles 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 consolidated financial statements of its Fiscal 2013 Annual Report. Salon believes accounting policies and estimates related to revenue recognition and stock-based compensation are the most critical to Salon’s financial statements. Future results may differ from current estimates if different assumptions are used or different conditions were to prevail.

Revenue Recognition

Salon recognizes revenues once persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is reasonably assured. Revenues are recognized ratably in the period over which Salon’s obligations are fulfilled. Payments received before Salon’s obligations are fulfilled are classified as “Deferred revenues” in Salon’s consolidated balance sheet.

Advertising revenues, derived from the sale of promotional space on its Website, comprised 93% and 89% of Salon’s revenues, respectively, for the six month periods ended September 30, 2013 and 2012. The duration of the advertisements is generally short-term, usually less than ninety days. Revenues derived from such arrangements are recognized during the period the advertising space is provided. Salon’s obligations typically include a guaranteed minimum number of impressions. To the extent minimum guaranteed amounts are not achieved, Salon defers recognition of the corresponding revenue until the remaining guaranteed amounts are provided, if mutually agreeable to an advertiser. If these “make good” impressions are not agreeable to an advertiser, no further revenue is recognized.

Salon previously offered Salon Core, formerly known as Salon Premium, a pay-for-online content service, which provided unrestricted access to Salon’s content with or without banners, pop-ups or site pass advertisements, and often included free magazine subscriptions and other giveaways, as well as the ability to easily download content in text or PDF format, a convenience that enables readers to view Salon’s content when not connected to the Internet. Core offerings were broadened in October 2011, in an attempt to increase subscribers. The subscription duration for Salon Core was generally one year. As a result of the continued decline in subscribers, as of June 2012, new subscriptions and renewals were no longer accepted, in anticipation of winding down the Company’s subscription service in fiscal 2014.

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Salon previously offered The Well as a monthly subscription service for access to online discussion forums until September 2012. Revenue was recognized ratably over the subscription period. The Well's declining subscriber base and aging technology led to a decision in June 2012 to restructure the service. As a result, The Well staff were laid off and current subscriptions were honored but not renewed upon expiration. On September 20, 2012, Salon entered into and consummated The Well Asset Sale.

Accounting for 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 vesting term of four years.

Salon recognized stock-based compensation expense of $49,000 and $138,000 during the six months ended September 30, 2013 and 2012, respectively. As of September 30, 2013, Salon had an aggregate of $311,000 of stock compensation remaining to be amortized to expense over the remaining requisite service period of the underlying awards. Salon currently expects this stock compensation balance to be amortized as follows: $75,000 during the remainder of fiscal 2014; $145,000 during fiscal 2015; $77,000 during fiscal 2016 and $14,000 during fiscal 2017. The expected amortization reflects only outstanding stock option awards as of September 30, 2013 expected to vest. Salon expects to continue issuing stock-based awards to its employees in future periods.

The full impact of stock-based compensation in the future is dependent upon, among other things, the timing of when Salon hires 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 Salon 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 Salon’s stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, Salon’s expected stock price volatility over the term of the awards.

Results of Operations for the Three and Six Months Ended September 30, 2013 Compared to the Three and Six Months Ended September 30, 2012

Net revenue

Net revenue increased 83% to $1.6 million for the three months ended September 30, 2013 from $0.9 million for the three months ended September 30, 2012. Net revenue increased 63% to $2.8 million for the six months ended September 30, 2013 from $1.7 million for the six months ended September 30, 2012.

Advertising revenues increased 75% to $1.4 million for the three months ended September 30, 2013 from $0.8 million for the three months ended September 30, 2012. The increase in the current quarter stemmed primarily from a dramatic increase in ad sales sold directly by Salon’s ad sales team (“direct advertising”), which increased 125% to $0.9 million for the three months ended September 30, 2013 from $0.4 million for the three months ended September 30, 2012. Direct advertising sales captured approximately 64% and 50% of total advertising revenue for the three months ended September 30, 2013 and 2012, respectively. Advertising sold through by third party ad networks such as Google (“Remnant ad sales”) captured approximately 36% of total advertising revenue, consistent with the same three month period a year ago.

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Advertising revenues increased 73% to $2.6 million for the six months ended September 30, 2013 from $1.5 million for the six months ended September 30, 2012. The increase in the current quarter stemmed primarily from a substantial increase in remnant ad sales, which increased 120% to $1.1 million for the six months ended September 30, 2013 from $0.5 million for the six months ended September 30, 2012. Remnant ad sales captured approximately 42% of total advertising revenue, a 9% increase from the same six month period a year ago.

The number of average monthly unique Website visitors for the three months ended September 30, 2013 increased approximately 11% to 10.3 million from 9.3 million for the same period last year. The number of average monthly unique Website visitors for the six months ended September 30, 2013 increased approximately 23% to 10.3 million from 8.4 million for the same period last year. These increases are largely attributable to the Company’s efforts to expand and enrich its original editorial content. Salon’s ability to increase the number of monthly unique Website visitors is a significant factor in Salon’s strategy to attract additional advertisers on the Website. Increasing the number of unique Website visitors is critical to Salon, as they facilitate the generation of ad impressions sold to advertisers.

Salon Core subscription revenues were immaterial for the three months ended September 30, 2013 and decreased approximately 80% to $0.02 million for the six months ended September 30, 2013 from $0.1 million for the same period last year. The decreases were directly attributed to a continued decline in subscribers as the Company no longer accepted new subscriptions and renewals as of June 2012, in anticipation of winding down the Company’s subscription service in July 2014.

Revenues from all other sources grew from immaterial for each of the three and six month periods ended September 30, 2012 to $0.1 million and $0.2 million respectively for the same periods ended September 30, 2013. The increases were attributed to increases in content recirculation revenue.

Production and content

Production and content expenses increased 15% to $0.9 million for the three months ended September 30, 2013 from $0.7 million for the three months ended September 30, 2012. The $0.1 million increase primarily resulted from costs of new ad serving services and site enhancements partially offset by savings associated with the discontinuation of Salon Studio and The Well. Production and content expenses remained relatively flat at $1.7 million for the six months ended September 30, 2013 from a year ago.

Sales and marketing

Sales and marketing expenses increased 33% to $0.5 million for the three months ended September 30, 2013 from $0.4 million for the three months ended September 30, 2012. The $0.1 million increase was mainly attributable to earned commissions from increased sales. Sales and marketing expenses were $0.9 million for the six months ended September 30, 2013, compared to $0.8 million for the six months ended September 30, 2012.  The $0.1 million or 13% increase was primarily attributable to earned commissions from increased sales.

Technology

Technology expenses remained relatively flat at $0.4 million for the three months ended September 30, 2013 from a year ago. Technology expenses increased 21% from a year ago to $0.8 million for the six months ended September 30, 2013, compared to $0.6 million for the six months ended September 30, 2012.  The $0.1 million increase was attributable to increased headcount from a year ago.

General and administrative

General and administrative expenses increased 41% to $0.3 million for the three months ended September 30, 2013 from $0.2 million a year ago. The $0.1 million increase primarily resulted from higher stock compensation costs and consultant fees, partially offset by savings from headquarter lease costs. General and administrative expenses for the six months ended September 30, 2013 were approximately $0.6 million and remained relatively flat from a year ago.

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Separation expenses

Salon did not incur any separation expenses for the three and six months ended September 30, 2013 and for the three months ended September 30, 2012. Separation expenses were $0.2 million for the six months ended September 30, 2012, which consisted of one-time charges of approximately $0.2 million related primarily to the resignation of Salon’s former Chief Executive Officer and former Chief Financial Officer, including $0.07 million in non-cash stock-based compensation from the accelerated vesting of options.

Interest expense

Interest expense for the three months ended September 30, 2013 decreased 86% to $0.01 million, compared to $0.07 million for the three months ended September 30, 2012. Interest expense for the six months ended September 30, 2013 decreased 85% to $0.02 million, compared to $0.13 million for the six months ended September 30, 2012. These decreases were primarily attributable to less interest on convertible notes that were converted into shares of Common Stock in the Company’s Recapitalization.

Liquidity and capital resources

Net cash used in operations was approximately $1.5 million for the six months ended September 30, 2013. The principal uses of cash during the six months ended September 30, 2013 were to fund the $1.2 million net loss for the period and $0.7 million increase in accounts receivable, partially offset by various working capital and immaterial non-cash items. The accounts receivable, net as of September 30, 2013 of $1.4 million, representing primarily advertising sales during the period, are expected to be collected within the next four months.

Net cash used in investing activities was immaterial during each of the six month periods ended September 30, 2013 and 2012.

Net cash provided by financing activities was $1.5 million for the six months ended September 30, 2013 and $2.6 million for the six months ended September 30, 2012. Net cash for both periods primarily reflects cash advances from related parties.

The Company’s operating forecast for the remainder of the fiscal year ending March 31, 2014 anticipates continued but reduced operating losses. Salon estimates it will require approximately $1.2 millionin additional funding to meet its operating needs for the balance of its fiscal year. If planned revenues are less than expected, or if planned expenses are more than expected, the cash shortfall may be higher, which will result in a commensurate increase in required financing. During the current and previous fiscal years, Salon has relied on funding from related parties. In this fiscal year through November 14, 2013, the related parties have provided $2,011 in cash advances. Salon remains dependent upon its two largest stockholders for continued financial support while it seeks external financing from potential investors in the form of additional indebtedness or through the sale of equity securities in a private placement. The Company is working with its advisors in its efforts to obtain such funding, and explore strategic alternatives. However, Salon does not currently have an agreement in place to provide any financing, and there is no certainty that Salon will be able to enter into definitive agreements for additional financings or other strategic alternatives on commercially reasonable terms, if at all.

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Off-Balance-Sheet Arrangements

Salon has no off-balance-sheet arrangements.

Contractual Obligations

The following summarizes Salon’s contractual obligations as of September 30, 2013:

	Payments Due By Period
	Total		1 Year or Less		1 - 3 Years		3 - 5 Years		More than 5 Years
Operating leases	$	335	$	232	$	103	$	-	$	-
Short-term borrowing		1,000		1,000		-		-		-
Interest on short-term borrowing		236		236		-		-		-
Related party advances		1,641		1,641		-		-		-
Total	$	3,212	$	3,109	$	103	$	-	$	-

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Salon maintains all of its cash in immediately available cash deposits at its bank. These funds are not subject to market risk and no interest is paid on such funds. In May 2007, Salon entered into a credit agreement with Deutsche Bank Securities, Inc. that allows Salon to borrow up to $1.0 million at a rate of prime less 0.25% which subjects Salon to interest rate risk. Salon feels that the risk of a rate change is not material as Salon contemplates having a maximum of only $1.0 million of variable rate debt outstanding during its fiscal year ending March 31, 2014. As of September 30, 2013, Salon has $1.0 million plus accrued interest outstanding under this agreement, payable on demand. As Salon conducts all of its business in the United States, Salon is not subject to foreign exchange risk.

Item 4. Controls and Procedures

Evaluation of Our Disclosure Controls and Internal Controls

Our management, with the participation of our Chief Executive Officer and Interim Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this quarterly Form 10-Q report (September 30, 2013), as is defined in Rule 13a-15(e) promulgated under the Exchange Act. Our disclosure controls and procedures are intended to ensure that the information we are required to disclose in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Interim Chief Financial Officer, as the principal executive and financial officers, respectively, to allow timely decisions regarding required disclosures.

Based on that evaluation, our Chief Executive Officer and Interim Chief Financial Officer concluded that, as of the end of the period covered by this quarterly Form 10-Q report, our disclosure controls and procedures were effective.

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

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

Changes in Internal Controls Over Financial Reporting

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

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PART II: OTHER INFORMATION

Item 1. Legal Proceedings.

Not applicable.

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 Common Stock could decline. The Risk Factors set forth below have not materially changed from those included in our Fiscal 2013 Annual Report.

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

Salon has a history of significant losses and expects to incur a loss from operations, based on generally accepted accounting principles, for its fiscal year ending March 31, 2014 and potentially in future years. Even if Salon attains profitability, it may not be able to sustain or increase profitability on a quarterly or annual basis. If revenues grow slower than Salon anticipates or operating expenses exceed expectations, financial results will most likely be severely harmed and the ability of Salon to continue its operations will be seriously jeopardized.

Burr Pilger Mayer, Inc., Salon’s independent registered public accounting firm for the years ended March 31, 2013, 2012, 2011 and 2010, included a “going-concern” audit opinion on the consolidated financial statements for those years. The audit opinions report substantial doubt about Salon’s 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, Salon’s 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.

Salon’s projected cash flows may not meet expectations

Salon relies on cash projections to run its business and changes such projections as new information is made available or events occur. The most significant component of Salon’s 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, Salon’s ability to continue as a going concern may be adversely affected.

If Salon forecasts or experiences periods of limited, or diminishing cash resources, Salon may need to sell additional securities or borrow additional funds. There is no guarantee that Salon will be able to issue additional securities in future periods or borrow additional funds on commercially reasonable terms to meet its cash needs. Salon’s ability to continue as a going concern will be adversely affected if it is unable to raise additional cash from sources it has relied upon in the past or new sources.

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Salon has relied on related parties for significant investment capital

Salon has been relying on cash infusions from related parties to fund operations. The related parties are primarily John Warnock, Chairman of the Board of Salon, and William Hambrecht. William Hambrecht is a Director and the father of Salon’s former CEO and current Interim Chief Financial Officer, Elizabeth Hambrecht. During the current fiscal year, through November 14, 2013, the Company’s Chairman has contributed approximately $2.0 million in cash advances to fund Salon’s operations.

Curtailment of cash investments and borrowing guarantees by related parties could detrimentally impact Salon’s cash availability and its ability to fund its operations.

Salon’s principal stockholders exercise a controlling influence over Salon’s business affairs and may make business decisions with which non-principal stockholders disagree and may affect the value of their investment

Approximately 58% of Salon’s voting securities is controlled, directly or indirectly by our Chairman, John Warnock, and approximately 22% is controlled directly or indirectly by William Hambrecht, a Director and the father of our interim Chief Financial Officer. The Company remains dependent upon Mr. Warnock and Mr. Hambrecht for continued financial support while it seeks external financing from potential investors in the form of additional indebtedness or through the sale of equity securities in a private placement. While all outstanding unsecured interest-free cash advances from Mr. Warnock and Mr. Hambrecht at February 28, 2013 were exchanged for Common Stock in the Company’s Recapitalization (described elsewhere in this Form 10Q), Mr. Warnock has continued to make unsecured interest-free cash advances to the Company for operating expenses, which advances are payable on demand, and are exchangeable into securities on the same terms as those to be issued in the next financing raised by the Company from non-related parties.

Future sales of significant number of shares of Salon’s Common Stock by principal stockholders could cause its stock price to decline

As Salon’s Common Stock is normally thinly traded, if Salon’s principal stockholders were to sell their shares of Common Stock, the per share price of Salon’s Common Stock may be adversely affected. Our directors and officers own approximately 64 million shares of Salon Common Stock.

Salon’s 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 will be beyond its control and may prevent its stockholders from reselling its Common Stock at a profit

The securities markets have experienced significant price and volume fluctuations. This market volatility, as well as general economic, market or political conditions, have and may continue to reduce the market price of its Common Stock, regardless of its operating performance. In addition, Salon’s stock is thinly traded and operating results could be below the expectations of public market analysts and investors, and in response, the market price of its Common Stock could decrease significantly.

Salon’s Preferred Stockholders are entitled to potentially significant liquidation preferences of Salon’s assets over Common Stockholders in the event of a liquidation event

Salon’s Series C Preferred Stockholders have liquidation preferences over Common Stockholders of the first approximately $10 million in potential sales proceeds as of September 30, 2013, which includes the effect of undeclared dividends, if granted, of about $8 million. If a liquidation event were to occur, and Preferred Stock dividends were declared, the holders of Preferred Stock would be entitled to the first $10 million of cash distributions. If a liquidation event were to occur in excess of $10 million and if Preferred Stock dividends were to be declared, the holders of Preferred Stock would be entitled to receive a relatively larger distribution than the holders of Common Stock would be entitled to receive.

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Salon has depended on advertising sales for much of its revenues, and its inability to maintain or increase advertising revenues could harm its business

Maintaining or increasing Salon’s advertising revenues depends upon many factors, including whether it will be able to:

● attract additional audience and Website visitors and increase brand awareness;

● maintain a significant number of unique Website visitors and corresponding significant reach of Internet users;

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

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

● sell and market its network to advertisers;

● increase the dollar amount of the advertising orders it receives;

● improve the technology for serving advertising on its Website;

● handle temporary high volume traffic spikes to its Website;

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

● attract and retain key sales personnel.

Hackers may attempt to penetrate Salon’s security system; online security breaches could harm its business

Consumer and supplier confidence in Salon’s Website depends on maintaining relevant security features. Security breaches also could damage its reputation and expose it to a risk of loss or litigation. Experienced programmers or “hackers” have penetrated sectors of our systems and Salon expects that these attempts will continue to occur from time to time. To our knowledge, there has been no outward harm to Salon as a result of hacking attempts. Because a hacker who is able to penetrate network security could misappropriate proprietary information or cause interruptions in our products and services, Salon may have to expend significant capital and resources to protect against or to alleviate problems caused by these hackers. Additionally, Salon may not have a timely remedy against a hacker who is able to penetrate its network security. Such security breaches could materially affect Salon. In addition, the transmission of computer viruses resulting from hackers or otherwise could expose it to significant liability. Salon’s insurance policies may not be adequate to reimburse us for losses caused by security breaches. Salon also faces risks associated with security breaches affecting third parties with whom it has relationships.

With a volatile share price, Salon may be the target of securities litigation, which is costly and time-consuming to defend

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

26

Salon’s quarterly operating results are volatile and may adversely affect its Common Stock price

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

● Salon’s ability to attract and retain advertisers and subscribers;

● Salon’s 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 Salon or by its competitors;

● the timing and uncertainty of Salon’s advertising sales cycles;

● the mix of advertisements sold by Salon or its competitors;

● economic and business cycles;

● Salon’s ability to attract, integrate and retain qualified personnel;

● technical difficulties or system downtime affecting the Internet generally or the operation of Salon’s 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 Form 10-Q, one should not rely on quarter-to-quarter comparisons of Salon’s 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 its Common Stock may decline.

The controversial content of Salon’s Website may limit its revenues

Salon’s Website contains, and will continue to contain, content that is politically and culturally controversial. As a result of this content, current and potential advertisers, or third parties who contemplate aggregating content, may refuse to do business with Salon. Salon’s outspoken stance on political issues has and may continue to result in negative reactions from some users, commentators and other media outlets. From time to time, certain advocacy groups have successfully targeted Salon’s advertisers in an attempt to persuade such advertisers to cease doing business with Salon. These efforts may be a material impediment to Salon’s ability to grow and maintain advertising revenue.

Salon must promote the Salon brand to attract and retain users as well as advertisers and strategic partners

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

27

Salon must hire, integrate and/or retain qualified personnel to support its business plans

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

Our success depends on our key personnel, including our executive officers, and the loss of key personnel, including our Chief Executive Officer, 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.

Salon may expend significant resources to protect its intellectual property rights or to defend claims of infringement by third parties, and if Salon is not successful it may lose rights to use significant material or be required to pay significant fees

Salon’s success and ability to compete are significantly dependent on its proprietary content. Salon relies exclusively on copyright law to protect its content. While Salon actively takes steps to protect its proprietary rights, these steps may not be adequate to prevent the infringement or misappropriation of its content, which could severely harm its business. Salon also licenses content from various freelance providers and other third-party content providers. While Salon attempts to ensure that such content may be freely licensed to it, other parties may assert claims of infringement against it relating to such content.

Salon may need to obtain licenses from others to refine, develop, market and deliver new services. Salon 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, Salon acquired the Internet address www.salon.com. Because www.salon.com is the address of the main home page to its Website and incorporates Salon’s name, it is a vital part of its intellectual property assets. Salon does not have a registered trademark on the address, and therefore it may be difficult for it to prevent a third party from infringing on its intellectual property rights to the address. If Salon fails to adequately protect its rights to the Website address, or if a third party infringes its rights to the address, or otherwise dilutes the value of www.salon.com, its business could be harmed.

Salon’s technology development efforts may not be successful in improving the functionality of its network, which could result in reduced traffic on its Website or reduced advertising revenues

Salon is constantly upgrading its technology to manage its Website and during the last year redesigned its Website homepage and vertical sections. In addition, it is creating technology for new products that Salon expects to launch during this fiscal year. If these systems do not work as intended, or if Salon is unable to continue to develop these systems to keep up with the rapid evolution of technology for content delivery, its Website may not operate properly, which could harm Salon’s 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 Salon’s business. Moreover, complex software products such as its online publishing frequently contain undetected errors or shortcomings, and may fail to perform or scale as expected. Although Salon has tested and will continue to test its systems, errors or deficiencies may be found in these systems that may adversely impact its business.

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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 model 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.

Salon may be held liable for content or third party links on its Website or content distributed to third parties

As a publisher and distributor of content over the Internet, including user-generated content, links to third party Websites that may be accessible through Salon.com, or content that includes links or references to a third party’s Website, Salon.com faces 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 its 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 Salon carries general liability and media insurance, its insurance may not be adequate to indemnify Salon for all liabilities imposed. Any liability that is not covered by its insurance or is in excess of its insurance coverage could severely harm its financial condition and business. Implementing measures to reduce its exposure to these forms of liability may require Salon to spend substantial resources and limit the attractiveness of Salon’s service to users.

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

Salon’s Website “” and content management system run on cloud computing hosted by Amazon Web Services, which are in a facility in Herndon, Virginia. Any disruption of Amazon’s cloud computing platform could result in a service outage. Salon’s Open Salon Website “open.salon.com” and content management system is located in a facility in Sacramento, California that has been extensively retrofitted to withstand a major earthquake.  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 its services.  Computer viruses, electronic break-ins or other similar disruptive problems could cause users to stop visiting Salon’s Website and could cause advertisers to terminate any agreements with Salon. In addition, Salon 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, Salon’s business could be harmed. Salon’s insurance policies may not adequately compensate it for losses that may occur due to any failures of or interruptions in its systems. Salon does not presently have a formal disaster recovery plan.

29

Salon’s Website must accommodate a high volume of traffic and deliver frequently updated information. It is possible that Salon will experience systems failures in the future and that such failures could harm its business. In addition, its users depend on Internet service providers, online service providers and other Website operators for access to its 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 its systems. Any of these system failures could harm Salon’s business.

Privacy concerns could impair Salon’s business

Salon has a policy against using personally identifiable information obtained from users of its 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 Salon uses personal information without permission or in violation of its policy, Salon may face potential liability for invasion of privacy for compiling and providing information to its 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. If consumer privacy concerns are not adequately addressed, its business, financial condition and results of operations could be materially harmed.

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

Salon is subject to the Delaware anti-takeover laws regulating corporate takeovers. These anti-takeover laws prevent Delaware corporations 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 of Directors 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 this date, the merger or sale is approved by the Board of Directors 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. Salon has not opted out of the provisions of the anti-takeover laws. As such, these laws could prohibit or delay mergers or other takeover or change of control of Salon and may discourage attempts by other companies to acquire Salon.

Salon’s certificate of incorporation and bylaws include a number of provisions that may deter or impede hostile takeovers or changes of control or management. These provisions include:

● Salon’s Board is classified into three classes of directors as nearly equal in size as possible with staggered three year-terms; and

30

● special meetings of the stockholders may be called only by the Chairman of the Board, the Chief Executive Officer or the Board of Directors.

These provisions may have the effect of delaying or preventing a change of control.

Salon’s certificate of incorporation and bylaws provide that it will indemnify officers and directors against losses that they may incur in investigations and legal proceedings resulting from their services to Salon, which may include services in connection with takeover defense measures. These provisions may have the effect of preventing changes in Salon’s management.

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

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

Not applicable.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

Item 6. Exhibits

(a) Exhibits.

31.1 Certification of Cynthia Jeffers, Chief Executive Officer of the Registrant pursuant to Section 302, as adopted pursuant to the Sarbanes-Oxley Act of 2002

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

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

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

101.INS** XBRL Instance

101.SCH** XBRL Taxonomy Extension Schema

101.CAL** XBRL Taxonomy Extension Calculation

101.DEF** XBRL Taxonomy Extension Definition

101.LAB** XBRL Taxonomy Extension Labels

101.PRE** XBRL Taxonomy Extension Presentation

31

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

32

Signatures

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

	SALON MEDIA GROUP, INC.
Dated: November 14, 2013		/s/ Cynthia Jeffers
		Cynthia Jeffers Chief Executive Officer

Dated: November 14, 2013	/s/ Elizabeth Hambrecht
	Elizabeth Hambrecht Interim Chief Financial Officer

33

EX-31

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Cynthia Jeffers, certify that:

1. I have reviewed this quarterly Form 10-Q of Salon Media Group, Inc.:

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end ofthe period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

November 14, 2013	/s/ Cynthia Jeffers
	Cynthia Jeffers
	Chief Executive Officer

EX-31

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Elizabeth Hambrecht, certify that:

1. I have reviewed this quarterly Form 10-Q of Salon Media Group, Inc.:

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

November 14, 2013	/s/ Elizabeth Hambrecht
	Elizabeth Hambrecht
	Interim Chief Financial Officer

EX-32

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Salon Media Group, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Cynthia Jeffers, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)     The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2)     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

  

November 14, 2013	/s/ Cynthia Jeffers
	Cynthia Jeffers
	Chief Executive Officer

EX-32

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Salon Media Group, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Elizabeth Hambrecht, Interim Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)     The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2)     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 14, 2013	/s/ Elizabeth Hambrecht
	Elizabeth Hambrecht
	Interim Chief Financial Officer

XML

Note 4 - Stock Option Plans (Tables)

6 Months Ended

Sep. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	Outstanding Stock Options			Weighted- Average Exercise Price		Aggregate Intrinsic Value
Balance as of March 31, 2013		4,201,000		$	0.18
Options granted under all plans		3,018,000		$	0.13
Exercised		(88,000	)	$	0.01
Expired and forfeited		(432,000	)	$	0.14
Outstanding at September 30, 2013		6,699,000		$	0.16	$	157,000
Exercisable at September 30, 2013		2,972,000		$	0.23	$	63,000
Vested and expected to vest		4,626,000		$	0.16	$	101,000

XML

Condensed Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Revenue, net	$ 1,563	$ 853	$ 2,760	$ 1,689
Operating expenses:
Production and content	856	747	1,666	1,681
Sales and marketing	489	369	904	802
Technology	378	349	758	627
General and administrative	311	221	582	658
Separation expenses				218
Total operating expenses	2,034	1,686	3,910	3,986
Loss from operations	(471)	(833)	(1,150)	(2,297)
Interest income (expense)	(10)	(69)	(19)	(128)
Loss from continuing operations	(481)	(902)	(1,169)	(2,425)
Income from discontinued operations	0	242	0	233
Net loss	$ (481)	$ (660)	$ (1,169)	$ (2,192)
Basic and diluted net loss per share
Loss from continuing operations (in Dollars per share)	$ (0.01)	$ (0.27)	$ (0.02)	$ (0.74)
Income from discontinued operations (in Dollars per share)	$ 0	$ 0.07		$ 0.07
Net loss (in Dollars per share)	$ (0.01)	$ (0.20)	$ (0.02)	$ (0.67)
Weighted average shares used in computing basic and diluted net loss per share (in Shares)	76,231,000	3,283,000	71,613,000	3,283,000

XML

Note 5 - Net Loss Per Share

6 Months Ended

Sep. 30, 2013

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

5. Net Loss Per Share

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

	Three Months Ended September 30						Six Months Ended September 30
	2013			2012			2013			2012
Numerator:
Loss from continuing operations attributable to common stockholders	$	(481	)	$	(902	)	$	(1,169	)	$	(2,425	)
Income from discontinued operations		-			242			-			233
Net loss attributable to common stockholders	$	(481	)	$	(660	)	$	(1,169	)	$	(2,192	)
Denominator:
Weighted average shares used in computing basic and diluted net loss per share attributable to common stockholders		76,231,000			3,283,000			71,613,000			3,283,000
Basic and diluted net loss per share
Loss from continuing operations	$	(0.01	)	$	(0.27	)	$	(0.02	)	$	(0.74	)
Profit from discontinued operations		-			0.07			-			0.07
Net loss	$	(0.01	)	$	(0.20	)	$	(0.02	)	$	(0.67	)
Antidilutive securities including options, warrants and convertible notes and preferred stock not included in net loss per share calculation		7,796,000			17,905,000			7,796,000			17,905,000

XML

Note 2 - Goodwill (Details) (USD $)	Sep. 30, 2013
Disclosure Text Block Supplement [Abstract]
Goodwill	$ 0

XML

Note 5 - Net Loss Per Share (Tables)

6 Months Ended

Sep. 30, 2013

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended September 30						Six Months Ended September 30
	2013			2012			2013			2012
Numerator:
Loss from continuing operations attributable to common stockholders	$	(481	)	$	(902	)	$	(1,169	)	$	(2,425	)
Income from discontinued operations		-			242			-			233
Net loss attributable to common stockholders	$	(481	)	$	(660	)	$	(1,169	)	$	(2,192	)
Denominator:
Weighted average shares used in computing basic and diluted net loss per share attributable to common stockholders		76,231,000			3,283,000			71,613,000			3,283,000
Basic and diluted net loss per share
Loss from continuing operations	$	(0.01	)	$	(0.27	)	$	(0.02	)	$	(0.74	)
Profit from discontinued operations		-			0.07			-			0.07
Net loss	$	(0.01	)	$	(0.20	)	$	(0.02	)	$	(0.67	)
Antidilutive securities including options, warrants and convertible notes and preferred stock not included in net loss per share calculation		7,796,000			17,905,000			7,796,000			17,905,000

XML

Note 4 - Stock Option Plans (Details) - Stock Option Plan Activity (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended	6 Months Ended
	Sep. 30, 2013	Sep. 30, 2013	Sep. 30, 2012
Stock Option Plan Activity [Abstract]
Balance as of March 31, 2013		4,201,000
Balance as of March 31, 2013 (in Dollars per share)		$ 0.18
Options granted under all plans	3,018,347	3,018,000	1,457,000
Options granted under all plans (in Dollars per share)		$ 0.13
Exercised		(88,000)
Exercised (in Dollars per share)		$ 0.01
Expired and forfeited		(432,000)
Expired and forfeited (in Dollars per share)		$ 0.14
Outstanding at September 30, 2013	6,699,000	6,699,000
Outstanding at September 30, 2013 (in Dollars per share)	$ 0.16	$ 0.16
Outstanding at September 30, 2013 (in Dollars)	$ 157,000	$ 157,000
Exercisable at September 30, 2013	2,972,000	2,972,000
Exercisable at September 30, 2013 (in Dollars per share)	$ 0.23	$ 0.23
Exercisable at September 30, 2013 (in Dollars)	63,000	63,000
Vested and expected to vest	4,626,000	4,626,000
Vested and expected to vest (in Dollars per share)	$ 0.16	$ 0.16
Vested and expected to vest (in Dollars)	$ 101,000	$ 101,000

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Note 4 - Stock Option Plans (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended	6 Months Ended
	Sep. 30, 2013	Sep. 30, 2013	Sep. 30, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	3,018,347	3,018,000	1,457,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Weighted Average Grant Date Fair Value (in Dollars per share)		$ 0.06	$ 0.36
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period		88,000
Share-based Compensation (in Dollars)		$ 49	$ 138

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Note 8 - Discontinued Operations (Details) - Discontinued Operations (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Discontinued Operations [Abstract]
Net revenues	$ 0	$ 42	$ 0	$ 120
Operating expenses	0		0	87
Gain on Sale	0	200	0	200
Income (loss) from discontinued operations, net of tax	$ 0	$ 242	$ 0	$ 233

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Note 7 - Preferred Stock (Details) (USD $) In Thousands, except Share data, unless otherwise specified	6 Months Ended
	Sep. 30, 2013	Mar. 31, 2013
Note 7 - Preferred Stock (Details) [Line Items]
Preferred Stock, Dividends Per Share, Declared (in Dollars per share)	$ 0
Preferred Stock, Shares Outstanding (in Shares)	1,075	8,141	[1]
Percentage Of Common Stock Owned By Preferred Stock Holders	6.00%
Preferred Stock, Liquidation Preference, Value (in Dollars)	$ 9,699
Series C Preferred Stock [Member]
Note 7 - Preferred Stock (Details) [Line Items]
Preferred Stock, Liquidation Preference Per Share (in Dollars per share)	$ 1,600
Preferred Stock, Dividend Rate, Percentage	8.00%
Preferred Stock, Shares Outstanding (in Shares)	1,075
Percentage Of Preferred Stock Owners In Pool	6.00%
Series C Preferred Stock [Member] | Maximum [Member]
Note 7 - Preferred Stock (Details) [Line Items]
Preferred Stock, Liquidation Preference Per Share (in Dollars per share)	$ 2,400
Excluding Undeclared Dividends [Member]
Note 7 - Preferred Stock (Details) [Line Items]
Preferred Stock, Liquidation Preference, Value (in Dollars)	$ 1,720

[1] Derived from the Company's audited consolidated financial statements. The accompanying notes are an integral part of these condensed consolidated financial statements.

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Note 3 - Borrowing Agreements (Details) (USD $)	6 Months Ended		0 Months Ended					6 Months Ended				11 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Apr. 19, 2013 Recapitalization [Member] Related Party Advances [Member]	Mar. 02, 2013 Recapitalization [Member] Related Party Advances [Member]	Feb. 28, 2013 Recapitalization [Member] Related Party Advances [Member]	Mar. 02, 2013 Recapitalization [Member] Convertible Notes [Member]	Feb. 28, 2013 Recapitalization [Member] Convertible Notes [Member]	Sep. 30, 2013 Chairman [Member]	Sep. 30, 2012 Chairman [Member]	Sep. 30, 2013 Short-term Borrowings [Member]	Sep. 30, 2012 Short-term Borrowings [Member]	Feb. 28, 2013 Convertible Notes Payable, April 4, 2009 [Member]
Note 3 - Borrowing Agreements (Details) [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 1,000,000
Line of Credit Facility, Interest Rate Description	prime less 0.25%
Interest Payable	236,000									236,000
Debt, Weighted Average Interest Rate										3.70%	3.00%
Proceeds from (Repayments of) Related Party Debt	1,461,000	2,550,000						1,461,000	2,550
Debt Instrument, Convertible, Terms of Conversion Feature												such cash advances from the Chairman and other related party investors cumulative through February 28, 2013, totaling approximately $12,000, were converted on March 1, 2013 into shares of Common Stock in the Recapitalization.
Debt Conversion, Original Debt, Amount				12,146,000	12,146,000	3,504,000	3,504,000
Debt Conversion, Converted Instrument, Shares Issued (in Shares)			26,028,108	8,676,034	34,704,102		10,012,372
Convertible Notes Payable	$ 0

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Note 1 - The Company and Significant Accounting Policies

6 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block]

1. The Company and Significant Accounting Policies

The Company

Salon Media Group, Inc. (“Salon” or the “Company”) is an internet news and social networking company that produces Salon.com, a content Website, and related online communities. Salon was originally incorporated in July 1995 in California and reincorporated in Delaware in June 1999. Salon operates in one business segment.

Basis of Presentation

These interim condensed consolidated financial statements are unaudited and have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly Salon's condensed consolidated financial position, results of operations and cash flows for the periods presented. These condensed consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements for the fiscal year ended March 31, 2013, which are included in Salon’s Annual Report on Form 10-K for the fiscal year ended March 31, 2013 filed with the Securities and Exchange Commission on June 26, 2013. Pursuant to the rules of the Securities and Exchange Commission, these financial statements do not include all disclosures required by generally accepted accounting principles. The results for the six month period ended September 30, 2013 are not necessarily indicative of the expected results for any other interim period or for the fiscal year ending March 31, 2014.

These condensed consolidated 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 September 30, 2013 of $117,634. In addition, Salon expects to incur a net loss from operations for its year ending March 31, 2014.

The Company’s operating forecast for the remainder of the fiscal year ending March 31, 2014 anticipates continued but reduced operating losses. Salon estimates it will require approximately $1,200 in additional funding to meet its operating needs for the balance of its fiscal year. If planned revenues are less than expected, or if planned expenses are more than expected, the cash shortfall may be higher, which will result in a commensurate increase in required financing. During the current and previous fiscal years, Salon has relied on funding from related parties. In this fiscal year through November 14, 2013, the related parties have provided $2,011 in cash advances. Salon remains dependent upon its two largest stockholders for continued financial support while it seeks external financing from potential investors in the form of additional indebtedness or through the sale of equity securities in a private placement. The Company is working with its advisors in its efforts to obtain such funding, and explore strategic alternatives. However, Salon does not currently have an agreement in place to provide any financing, and there is no certainty that Salon will be able to enter into definitive agreements for additional financings or other strategic alternatives on commercially reasonable terms, if at all.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on deposit with banks and investments that are readily convertible into cash and have original maturities of three months or less.

Concentration of Credit Risk

Financial instruments that potentially subject Salon to concentration 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 expectation of future losses.

One customer accounted for approximately 11% of total revenue for the three months ended September 30, 2013, and one customer accounted for approximately 13% of total revenue for the three months ended September 30, 2012. One customer accounted for approximately 13% of total revenue for the six months ended September 30, 2013. No customer accounted for more than 10% of total revenue for the six months ended September 30, 2012. No customer accounted for more than 10% of total accounts receivable and one customer accounted for approximately 11% of total accounts receivable as of September 30, 2013 and 2012.

Stock-Based Compensation

The Company accounts for stock-based compensation using the fair value method of accounting. The estimated fair value of the stock options granted is amortized on a straight-line basis over the vesting period of the stock.

A total of 3,018,347 stock options were granted during the quarter ended September 30.   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:

	Six months ended September 30,
	2013			2012
Risk-free interest rates		1.00	%		0.40	%
Expected term (in years)		4			4
Expected volatility		461	%		459	%
Dividend yield		0	%		0	%

The expected term of the options of four years represents the estimated period of time until exercise and is based on historical experience of similar awards, including the contractual terms, vesting schedules and expectations of future employee behavior. 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, or four years. Salon has not paid dividends in the past.

As of September 30, 2013, the aggregate stock compensation remaining to be amortized to expense was $311. Salon expects this stock compensation balance to be amortized as follows: $75 during the remainder of fiscal 2014; $145 during fiscal 2015; $77 during fiscal 2016 and $14 during fiscal 2017. The expected amortization reflects outstanding stock option awards as of September 30, 2013 expected to vest.

The weighted average grant date fair value of the options granted under the Company’s stock plan as calculated using Black-Scholes option pricing model was $0.13 and $0.01 per share for the three months ended September 30, 2013 and September 30, 2012, respectively.  The weighted average grant date fair value of the options granted under the Company’s stock plan as calculated using the Black-Scholes option-pricing model was $0.13 and $0.01 per share for the six months ended September 30, 2013 and September 30, 2012, respectively.

Recapitalization

Salon has made significant progress in simplifying its capital structure and increasing its liquidity in an effort to make the Company a more compelling investment to current and new investors. With this goal in mind, at a meeting of the Board of Directors (“Board”) on February 1, 2013, the Board approved a private offering of Common Stock to the holders of its related party advances, convertible notes, certain accrued consulting fees and Preferred Stock in exchange for such related party advances, convertible notes, accrued consulting fees and Preferred Stock, at an exchange price of $0.35 per share of Common Stock (the “Recapitalization”). The primary purpose of this voluntary Recapitalization was to simplify the Company’s capital structure through the exchange of indebtedness and Preferred Stock, thereby increasing the Company’s potential to enter into capital transactions with new investors.  In addition, the Board believed that the Recapitalization offered holders a potentially more liquid asset in the form of the Company’s Common Stock and could also result in increased overall liquidity in the market for the Company’s Common Stock.

All of the holders of related party advances, accrued consulting fees and convertible notes and the holders of all outstanding Preferred Stock, other than the holders of 1,075 shares of Series C Preferred Stock, agreed to participate in the Recapitalization which resulted in an aggregate 72.9 million shares of Common Stock being issued, as described below.

Outstanding convertible notes plus interest at February 28, 2013 were approximately $3,504, all of which was exchanged for an aggregate of 10,012,372 shares of Common Stock.  Outstanding related party advances at February 28, 2013, including accrued consulting fees of $158, were approximately $12,146, all of which was exchanged for an aggregate of 34,704,102 shares of Common Stock. All the outstanding 9,404 shares of Preferred Stock (other than 1,075 shares of Series C) at February 28, 2013 were exchanged for an aggregate of 28,158,852 shares of Common Stock. These shares were issued as described in the following two paragraphs.

On March 1, 2013, 25% of related party advances and accrued consulting fees of approximately $12,146 as of February 28, 2013 were exchanged for an aggregate of 8,676,034 shares of common stock and all convertible notes plus interest of $3,504 and Preferred Stock holdings of non-affiliates other than 1,075 shares of Series C of Preferred Stock were exchanged for an aggregate of 17,614,655 shares of Common Stock. This issuance of shares represented substantially all of the available authorized Common Stock.

Due to an insufficient number of Common Stock authorized as of February 28, 2013 to complete the issuances under the Recapitalization, a special meeting of the stockholders of the Company was held on April 18, 2013, at which Company Stockholders voted to increase the authorized Common Stock of the Company from 30 million to 150 million shares. Following this vote and the filing of a Certificate of Amendment to the Company's Restated Certificate of Incorporation with the Delaware Secretary of State to effect the increase in the number of authorized shares of common stock from 30 million to 150 million shares, the remaining 75% of the balance of related party advances and accrued consulting fees as of February 28, 2013 was exchanged for an aggregate of 26,028,108 shares of Common Stock and all the 7,066 shares of Preferred Stock held by affiliates as of February 28, 2013 was exchanged for an aggregate of 20,556,569 shares of Common Stock.

Reclassifications

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

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Note 3 - Borrowing Agreements

6 Months Ended

Sep. 30, 2013

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

3. Borrowing Agreements

Short-term Borrowings

In May 2007, Salon finalized a borrowing agreement with Deutsche Bank Securities, Inc. that allows Salon to borrow up to $1,000 at a rate of prime less 0.25%. Salon’s obligations under this agreement are guaranteed in their entirety by Salon’s Chairman. The line of credit has been fully drawn as of September 30, 2013. Deutsche Bank Securities may demand repayment of amounts borrowed at any time. Additionally, the Chairman may also choose to terminate his guarantee, which would trigger a demand for repayment. As of September 30, 2013, accrued interest on short-term borrowings totaled $236.

As of September 30, 2013 and 2012, the weighted-average interest rate on the Company’s short-term borrowings was 3.7% and 3.0%, respectively.

Related Party Advances

During the six months ended September 30, 2013 and 2012, Salon has received unsecured, interest-free cash advances totaling $1,461 and $2,550, respectively, to fund operations from its Chairman. These advances are payable on demand, and are exchangeable into securities on the same terms as those to be issued in the next financing raised by the Company from non-related parties.

All such cash advances from the Chairman and other related party investors cumulative through February 28, 2013, totaling approximately $12,000, were converted on March 1, 2013 into shares of Common Stock in the Recapitalization.

Convertible Notes Payable

Outstanding convertible notes plus interest at February 28, 2013 was approximately $3,500, all of which was exchanged for an aggregate of approximately 10.0 million shares of Common Stock. Approximately 20% of the convertible notes were held by a non-affiliate of the Company.

As of September 30, 2013, Salon has no outstanding convertible notes and does not anticipate entering into similar debt instruments during its fiscal year ending March 31, 2014.

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Note 6 - Commitments and Contingencies

6 Months Ended

Sep. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

6. Commitments and Contingencies

On October 17, 2012, Salon signed a new office lease agreement to relocate its San Francisco headquarters to 870 Market Street, Suite 528, San Francisco, California. The three-year lease for approximately 2,405 square feet in space, commenced on December 1, 2012 and will terminate on November 30, 2015.

On October 3, 2012, the Company signed a sublease agreement with a third-party to occupy its existing office space located at 101 Spear Street, Suite 203, San Francisco, California, covering approximately 8,623 square feet. The sublease commenced on December 1, 2012 and will terminate on February 28, 2014. The sublease is co-terminus with existing obligations.

The following summarizes Salon’s office lease commitments and short-term borrowings as of September 30, 2013:

	Payments Due By Period
	Total		1 Year or Less		1 - 3 Years		3 - 5 Years
Corporate office	$	189	$	86	$	103	$	-
San Francisco, net of sublease		40		40		-		-
New York		95		95		-		-
Los Angeles		11		11		-		-
Total operating leases		335		232		103		-
Short-term borrowing		1,000		1,000		-		-
Interest on short-term borrowing		236		236		-		-
Related party advances		1,641		1,641		-		-
Total	$	3,212	$	3,109	$	103	$	-

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Note 4 - Stock Option Plans

6 Months Ended

Sep. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

4. Stock Option Plans

Salon has certain equity incentive plans as described in Note 8, “Employee Stock Option Plan,” of the notes to consolidated financial statements in Salon’s Annual Report on Form 10-K for the fiscal year ended March 31, 2013.

The following table summarizes activity under Salon’s plans for the three months ended September 30, 2013:

	Outstanding Stock Options			Weighted- Average Exercise Price		Aggregate Intrinsic Value
Balance as of March 31, 2013		4,201,000		$	0.18
Options granted under all plans		3,018,000		$	0.13
Exercised		(88,000	)	$	0.01
Expired and forfeited		(432,000	)	$	0.14
Outstanding at September 30, 2013		6,699,000		$	0.16	$	157,000
Exercisable at September 30, 2013		2,972,000		$	0.23	$	63,000
Vested and expected to vest		4,626,000		$	0.16	$	101,000

A total of 3,018,000 option shares were awarded during the six months ended September 30, 2013. A total of 1,457,000 option shares were awarded during the six months ended September 30, 2012. The weighted-average fair value of options vested during each of the six month periods ended September 30, 2013 and 2012 was $0.06 per share and $0.36 per share, respectively. Approximately 88,000 options were exercised during the six months ended September 30, 2013.

Salon recognized stock-based compensation expense of $49 and $138 during the six months ended September 30, 2013 and 2012, respectively.

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Note 5 - Net Loss Per Share (Details) - Net Loss Per Share (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Numerator:
Loss from continuing operations attributable to common stockholders (in Dollars)	$ (481)	$ (902)	$ (1,169)	$ (2,425)
Income from discontinued operations (in Dollars)	0	242	0	233
Net loss attributable to common stockholders (in Dollars)	$ (481)	$ (660)	$ (1,169)	$ (2,192)
Denominator:
Weighted average shares used in computing basic and diluted net loss per share attributable to common stockholders (in Shares)	76,231,000	3,283,000	71,613,000	3,283,000
Basic and diluted net loss per share
Loss from continuing operations	$ (0.01)	$ (0.27)	$ (0.02)	$ (0.74)
Profit from discontinued operations	$ 0	$ 0.07		$ 0.07
Net loss	$ (0.01)	$ (0.20)	$ (0.02)	$ (0.67)
Antidilutive securities including options, warrants and convertible notes and preferred stock not included in net loss per share calculation (in Shares)	7,796,000	17,905,000	7,796,000	17,905,000

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Note 7 - Preferred Stock (Details) - Preferred stock (USD $)	Sep. 30, 2013	Mar. 31, 2013
Note 7 - Preferred Stock (Details) - Preferred stock [Line Items]
Shares Outstanding	1,075	8,141	[1]
Common Equivalent Shares	1,096,676
Series C Preferred Stock [Member]
Note 7 - Preferred Stock (Details) - Preferred stock [Line Items]
Shares Outstanding	1,075
Purchase Price Per share (in Dollars per share)	$ 800
Conversion Rate Per share (in Dollars per share)	$ 0.785
Common Equivalent Shares	1,096,676

[1] Derived from the Company's audited consolidated financial statements. The accompanying notes are an integral part of these condensed consolidated financial statements.

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Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2013	Mar. 31, 2013
Accounts receivable, allowance (in Dollars)	$ 60	$ 62	[1]
Preferred stock, par value (in Dollars per share)	$ 0.001	$ 0.001	[1]
Preferred stock, shares authorized (in Shares)	5,000,000	5,000,000	[1]
Preferred stock, shares issued (in Shares)	1,075	8,141	[1]
Preferred stock, shares outstanding (in Shares)	1,075	8,141	[1]
Preferred stock, liquidation value (in Dollars)	$ 9,699
Common stock, par value (in Dollars per share)	$ 0.001	$ 0.001	[1]
Common stock, shares authorized (in Shares)	150,000,000	30,000,000	[1]
Common stock, shares issued (in Shares)	76,245,442	29,573,265	[1]
Common stock, shares outstanding (in Shares)	76,245,442	29,573,265	[1]

[1] Derived from the Company's audited consolidated financial statements. The accompanying notes are an integral part of these condensed consolidated financial statements.

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Note 9 - Subsequent Events

6 Months Ended

Sep. 30, 2013

Subsequent Events [Abstract]

Subsequent Events [Text Block]

9. Subsequent Events

From October 1, 2013 through November 14, 2013, the Company received unsecured interest-free cash advances totaling $550 from its Chairman.

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)	6 Months Ended
	Sep. 30, 2013		Sep. 30, 2012
Net loss
Loss from continuing operations	$ (1,169,000)		$ (2,425,000)
Add income from discontinued operations	0		233,000
Total net loss	(1,169,000)		(2,192,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on disposal of property and equipment, net	9,000		11,000
Depreciation	19,000		32,000
Bad debt expense and change in allowance for doubtful accounts	9,000
Stock-based compensation	49,000		138,000
Changes in assets and liabilities:
Accounts receivable	(681,000)		34,000
Prepaid expenses and other assets	128,000		28,000
Accounts payable, accrued liabilities and deferred rent	138,000		(552,000)
Deferred revenues	(15,000)		(85,000)
Net cash used in operating activities	(1,513,000)		(2,586,000)
Cash flows from investing activities:
Purchase of property and equipment	(27,000)		(22,000)
Purchase of intangible assets			(5,000)
Net cash used in investing activities	(27,000)		(27,000)
Cash flows from financing activities:
Proceeds from related party advances	1,461,000		2,550,000
Net cash provided by financing activities	1,461,000		2,550,000
Net cash provided by operating activities from discontinued operations			200,000
Net (decrease) increase in cash and cash equivalents	(79,000)		137,000
Cash and cash equivalents at beginning of period	96,000	[1]	130,000
Cash and cash equivalents at end of period	17,000		267,000
Unsecured Advances [Member]
Supplemental schedule of non-cash financing activity:
Conversion of debt into common shares	8,991,000
Accounts Payable [Member]
Supplemental schedule of non-cash financing activity:
Conversion of debt into common shares	$ 118,000

[1] Derived from the Company's audited consolidated financial statements. The accompanying notes are an integral part of these condensed consolidated financial statements.

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Condensed Consolidated Balance Sheets (Current Period Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Mar. 31, 2013
Assets
Cash and cash equivalents	$ 17	$ 96	[1]
Accounts receivable, net of allowance of $60 and $62	1,392	720	[1]
Prepaid expenses and other current assets	200	318	[1]
Total current assets	1,609	1,134	[1]
Property and equipment, net	57	58	[1]
Other assets, principally deposits	97	107	[1]
Total assets	1,763	1,299	[1]
Liabilities and Stockholders' Deficit
Short-term borrowings	1,000	1,000	[1]
Related party advances	1,641	9,171	[1]
Accounts payable and accrued liabilities	1,158	1,128	[1]
Deferred revenues		15	[1]
Total current liabilities	3,799	11,314	[1]
Deferred rent	2	12	[1]
Total liabilities	3,801	11,326	[1]
Commitments and contingencies (See Note 6)			[1]
Stockholders’ deficit:
Preferred Stock, $0.001 par value, 5,000,000 shares authorized, 1,075 shares issued and outstanding at September 30, 2013 and 8,141 shares issued and outstanding at March 31, 2013 (liquidation value of $9,699 at September 30, 2013)			[1]
Common stock, $0.001 par value, 150,000,000 shares authorized, 76,245,442 shares issued and outstanding at September 30, 2013 and 30,000,000 shares authorized, 29,573,265 shares issued and outstanding at March 31, 2013	76	30	[1]
Additional paid-in capital	115,520	106,408	[1]
Accumulated deficit	(117,634)	(116,465)	[1]
Total stockholders' deficit	(2,038)	(10,027)	[1]
Total liabilities and stockholders' deficit	$ 1,763	$ 1,299	[1]

[1] Derived from the Company's audited consolidated financial statements. The accompanying notes are an integral part of these condensed consolidated financial statements.

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Note 6 - Commitments and Contingencies (Details)	Oct. 17, 2012 sqft	Oct. 03, 2012 sqft
Commitments and Contingencies Disclosure [Abstract]
Area of Real Estate Property	2,405	8,623

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Note 1 - The Company and Significant Accounting Policies (Details) - Assumptions Used in the Determination of Fair Value of Share-Based Payment Awards	6 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Assumptions Used in the Determination of Fair Value of Share-Based Payment Awards [Abstract]
Risk-free interest rates	1.00%	0.40%
Expected term (in years)	4 years	4 years
Expected volatility	461.00%	459.00%
Dividend yield	0.00%	0.00%

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Note 9 - Subsequent Events (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Nov. 14, 2013 Subsequent Event [Member] Chairman [Member]
Note 9 - Subsequent Events (Details) [Line Items]
Due to Related Parties	$ 1,641	$ 550

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Note 8 - Discontinued Operations

6 Months Ended

Sep. 30, 2013

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

8. Discontinued Operations

The Well's declining subscriber base and aging technology led to a decision to restructure the service.  As a result, in May 2012, The Well’s staff was laid off and current subscriptions were honored and renewed through September 20, 2012, the date of the sale of the Well. All future cash inflows were thus eliminated. During the six months ended September 30, 2013, The Well has ceased to be part of the Company’s continuing operations and its financial results are reported under discontinued operations.

	Three Months Ended September 30				Six Months Ended September 30
	2013		2012		2013		2012
Net revenues	$	-	$	42	$	-	$	120
Operating expenses		-		-		-		87
Gain on Sale		-		200		-		200
Income (loss) from discontinued operations, net of tax	$	-	$	242	$	-	$	233

On September 20, 2012, Salon completed an Asset Sale Agreement by and between the Company and The Well Group, Inc., a California corporation, as reported on the Company’s Form 8-K filed on September 25, 2012. Pursuant to this Asset Sale Agreement, the Company sold to The Well Group, Inc., for a purchase price of $400, those assets of the Company related to “The Well,” an online discussion forum, including, without limitation (i) the domain name “well.com” and all associated URLs, (ii) certain contracts and agreements with certain third parties, including member agreements and (iii) other property and materials as are required to operate the business as a going concern.

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Note 6 - Commitments and Contingencies (Details) - Office Lease Commitments and Future Payments for Short-term Borrowings (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Mar. 31, 2013
Note 6 - Commitments and Contingencies (Details) - Office Lease Commitments and Future Payments for Short-term Borrowings [Line Items]
Operating leases, total	$ 335
Operating leases, payment due 1 year or less	232
Operating leases, payment due 1 - 3 years	103
Operating leases, payment due 3 - 5 years	0
Short-term borrowing	1,000	1,000	[1]
Interest on short-term borrowing	236
Interest on short-term borrowing	236
Related party advances	1,641
Related party advances	1,641	9,171	[1]
Total	3,212
Total	3,109
Total	103
Total	0
Corporate Office [Member]
Note 6 - Commitments and Contingencies (Details) - Office Lease Commitments and Future Payments for Short-term Borrowings [Line Items]
Operating leases, total	189
Operating leases, payment due 1 year or less	86
Operating leases, payment due 1 - 3 years	103
Operating leases, payment due 3 - 5 years	0
San Francisco, Net of Sublease [Member]
Note 6 - Commitments and Contingencies (Details) - Office Lease Commitments and Future Payments for Short-term Borrowings [Line Items]
Operating leases, total	40
Operating leases, payment due 1 year or less	40
Operating leases, payment due 1 - 3 years	0
Operating leases, payment due 3 - 5 years	0
New York [Member]
Note 6 - Commitments and Contingencies (Details) - Office Lease Commitments and Future Payments for Short-term Borrowings [Line Items]
Operating leases, total	95
Operating leases, payment due 1 year or less	95
Operating leases, payment due 3 - 5 years	0
Los Angeles [Member]
Note 6 - Commitments and Contingencies (Details) - Office Lease Commitments and Future Payments for Short-term Borrowings [Line Items]
Operating leases, total	11
Operating leases, payment due 1 year or less	11
Operating leases, payment due 1 - 3 years	0
Operating leases, payment due 3 - 5 years	$ 0

[1] Derived from the Company's audited consolidated financial statements. The accompanying notes are an integral part of these condensed consolidated financial statements.

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Note 1 - The Company and Significant Accounting Policies (Tables)

6 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	Six months ended September 30,
	2013			2012
Risk-free interest rates		1.00	%		0.40	%
Expected term (in years)		4			4
Expected volatility		461	%		459	%
Dividend yield		0	%		0	%

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Note 7 - Preferred Stock

6 Months Ended

Sep. 30, 2013

Disclosure Text Block Supplement [Abstract]

Preferred Stock [Text Block]

7. Preferred Stock

The conversion rate and common equivalent shares of Salon’s Preferred Stock as of September 30, 2013 are as follows:

			Per share
Preferred Stock	Shares Outstanding		Purchase Price		Conversion Rate		Common Equivalent Shares
Series C		1,075	$	800		0.785		1,096,676
Total		1,075						1,096,676

The Series C Preferred Stock conversion rate is subject to a downward adjustment anti-dilution provision under certain circumstances related to subsequent Salon securities issuances. The Company determined that the accounting for such conversion features does not require bifurcation under “Accounting for Derivative Instruments and Hedging Activities” (Accounting Standards Codification (ASC) 815) and, accordingly, the requirements of ASC 815 are not applicable.

In event of a liquidation, the holders of the Series C 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, $1,600 per share, plus an amount equal to all declared but unpaid dividends, based on an annual rate of 8%. If the assets and funds available for distribution are insufficient to permit the payment to the holders of Series C 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 C Preferred Stock ratably in proportion to the full preferential amounts which they are entitled to receive. As of September 30, 2013, no dividend has been declared to the holders of Preferred Stock.

If, after initial preferential liquidation payments to the holders of Series C Preferred Stock, any assets remain available for distribution, such assets are to be distributed ratably among the holders of Common Stock and Preferred Stock, based on the shares of Common Stock then held by them and issuable upon conversion of the shares of Preferred Stock then held by them, until aggregate distributions per share reach $2,400 for the holders of Series C Preferred Stock. Salon has currently outstanding 1,075 shares of Series C Preferred Stock.

If, after payment has been made to the holders of Common Stock and holders of Preferred Stock mentioned above, any assets remain available for distribution, such assets are to be distributed ratably among the holders of Common Stock and the holders of Series C Preferred Stock, based on the number of shares of Common Stock then held by them and issuable upon conversion of the Series C Preferred Stock then held by them. Based on available information, Salon estimates that the holders of Series C Preferred Stock account for approximately 6% of stockholders on an as converted basis.

The holders of Preferred Stock are entitled to vote together with the holders of Salon’s Common Stock as though part of that class, and are entitled to vote on all matters and to that number of votes equal to the largest number of whole shares of Common Stock into which the shares of Preferred Stock could be converted. Preferred Stockholders as a group own approximately 6% of the outstanding shares of Common Stock and Common Stock issuable upon conversion of the shares of Preferred Stock, all with voting rights.

The aggregate liquidation preferences of all Preferred Stockholders as of September 30, 2013 were $1,720 excluding the effect of undeclared dividends, and $9,699 including the effect of undeclared dividends. Salon has never declared a dividend and does not expect to declare a dividend in the future.

Neither the Series C 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.

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Note 2 - Goodwill

6 Months Ended

Sep. 30, 2013

Disclosure Text Block Supplement [Abstract]

Goodwill Disclosure [Text Block]

2. Goodwill

Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination accounted for under the purchase method. Goodwill is not amortized but is tested for impairment annually during the Company’s fourth quarter, or when events and circumstance occur indicating that the asset might be impaired.  In connection with the sale of “The Well” in September 2012, the goodwill balance was written off in determining the gain from discontinued operations. As such, Salon has no goodwill as of September 30, 2013.

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Note 8 - Discontinued Operations (Details) (USD $) In Thousands, unless otherwise specified	Sep. 20, 2012
Discontinued Operations and Disposal Groups [Abstract]
Business Divestiture, Selling Price	$ 400

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Note 6 - Commitments and Contingencies (Tables)

6 Months Ended

Sep. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Contractual Obligation, Fiscal Year Maturity Schedule [Table Text Block]

	Payments Due By Period
	Total		1 Year or Less		1 - 3 Years		3 - 5 Years
Corporate office	$	189	$	86	$	103	$	-
San Francisco, net of sublease		40		40		-		-
New York		95		95		-		-
Los Angeles		11		11		-		-
Total operating leases		335		232		103		-
Short-term borrowing		1,000		1,000		-		-
Interest on short-term borrowing		236		236		-		-
Related party advances		1,641		1,641		-		-
Total	$	3,212	$	3,109	$	103	$	-

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Accounting Policies, by Policy (Policies)

6 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

Trade and Other Accounts Receivable, Policy [Policy Text Block]

The Company and Significant Accounting Policies

Research, Development, and Computer Software, Policy [Policy Text Block]

Salon Media Group, Inc. (“Salon” or the “Company”) is an internet news and social networking company that produces Salon.com, a content Website, and related online communities

Segment Reporting, Policy [Policy Text Block]

Salon operates in one business segment.

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

These interim condensed consolidated financial statements are unaudited and have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly Salon's condensed consolidated financial position, results of operations and cash flows for the periods presented. These condensed consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements for the fiscal year ended March 31, 2013, which are included in Salon’s Annual Report on Form 10-K for the fiscal year ended March 31, 2013 filed with the Securities and Exchange Commission on June 26, 2013. Pursuant to the rules of the Securities and Exchange Commission, these financial statements do not include all disclosures required by generally accepted accounting principles. The results for the six month period ended September 30, 2013 are not necessarily indicative of the expected results for any other interim period or for the fiscal year ending March 31, 2014.

These condensed consolidated 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 September 30, 2013 of $117,634. In addition, Salon expects to incur a net loss from operations for its year ending March 31, 2014.

The Company’s operating forecast for the remainder of the fiscal year ending March 31, 2014 anticipates continued but reduced operating losses. Salon estimates it will require approximately $1,200 in additional funding to meet its operating needs for the balance of its fiscal year. If planned revenues are less than expected, or if planned expenses are more than expected, the cash shortfall may be higher, which will result in a commensurate increase in required financing. During the current and previous fiscal years, Salon has relied on funding from related parties. In this fiscal year through November 14, 2013, the related parties have provided $2,011 in cash advances. Salon remains dependent upon its two largest stockholders for continued financial support while it seeks external financing from potential investors in the form of additional indebtedness or through the sale of equity securities in a private placement. The Company is working with its advisors in its efforts to obtain such funding, and explore strategic alternatives. However, Salon does not currently have an agreement in place to provide any financing, and there is no certainty that Salon will be able to enter into definitive agreements for additional financings or other strategic alternatives on commercially reasonable terms, if at all.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on deposit with banks and investments that are readily convertible into cash and have original maturities of three months or less.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentration of Credit Risk

Financial instruments that potentially subject Salon to concentration 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 expectation of future losses.

One customer accounted for approximately 11% of total revenue for the three months ended September 30, 2013, and one customer accounted for approximately 13% of total revenue for the three months ended September 30, 2012. One customer accounted for approximately 13% of total revenue for the six months ended September 30, 2013. No customer accounted for more than 10% of total revenue for the six months ended September 30, 2012. No customer accounted for more than 10% of total accounts receivable and one customer accounted for approximately 11% of total accounts receivable as of September 30, 2013 and 2012.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-Based Compensation

The Company accounts for stock-based compensation using the fair value method of accounting. The estimated fair value of the stock options granted is amortized on a straight-line basis over the vesting period of the stock.

A total of 3,018,347 stock options were granted during the quarter ended September 30.   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:

	Six months ended September 30,
	2013			2012
Risk-free interest rates		1.00	%		0.40	%
Expected term (in years)		4			4
Expected volatility		461	%		459	%
Dividend yield		0	%		0	%

The expected term of the options of four years represents the estimated period of time until exercise and is based on historical experience of similar awards, including the contractual terms, vesting schedules and expectations of future employee behavior. 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, or four years. Salon has not paid dividends in the past.

As of September 30, 2013, the aggregate stock compensation remaining to be amortized to expense was $311. Salon expects this stock compensation balance to be amortized as follows: $75 during the remainder of fiscal 2014; $145 during fiscal 2015; $77 during fiscal 2016 and $14 during fiscal 2017. The expected amortization reflects outstanding stock option awards as of September 30, 2013 expected to vest.

The weighted average grant date fair value of the options granted under the Company’s stock plan as calculated using Black-Scholes option pricing model was $0.13 and $0.01 per share for the three months ended September 30, 2013 and September 30, 2012, respectively.  The weighted average grant date fair value of the options granted under the Company’s stock plan as calculated using the Black-Scholes option-pricing model was $0.13 and $0.01 per share for the six months ended September 30, 2013 and September 30, 2012, respectively.

Stockholders' Equity, Policy [Policy Text Block]

Salon has made significant progress in simplifying its capital structure and increasing its liquidity in an effort to make the Company a more compelling investment to current and new investors. With this goal in mind, at a meeting of the Board of Directors (“Board”) on February 1, 2013, the Board approved a private offering of Common Stock to the holders of its related party advances, convertible notes, certain accrued consulting fees and Preferred Stock in exchange for such related party advances, convertible notes, accrued consulting fees and Preferred Stock, at an exchange price of $0.35 per share of Common Stock (the “Recapitalization”). The primary purpose of this voluntary Recapitalization was to simplify the Company’s capital structure through the exchange of indebtedness and Preferred Stock, thereby increasing the Company’s potential to enter into capital transactions with new investors.  In addition, the Board believed that the Recapitalization offered holders a potentially more liquid asset in the form of the Company’s Common Stock and could also result in increased overall liquidity in the market for the Company’s Common Stock.

All of the holders of related party advances, accrued consulting fees and convertible notes and the holders of all outstanding Preferred Stock, other than the holders of 1,075 shares of Series C Preferred Stock, agreed to participate in the Recapitalization which resulted in an aggregate 72.9 million shares of Common Stock being issued, as described below.

Outstanding convertible notes plus interest at February 28, 2013 were approximately $3,504, all of which was exchanged for an aggregate of 10,012,372 shares of Common Stock.  Outstanding related party advances at February 28, 2013, including accrued consulting fees of $158, were approximately $12,146, all of which was exchanged for an aggregate of 34,704,102 shares of Common Stock. All the outstanding 9,404 shares of Preferred Stock (other than 1,075 shares of Series C) at February 28, 2013 were exchanged for an aggregate of 28,158,852 shares of Common Stock. These shares were issued as described in the following two paragraphs.

On March 1, 2013, 25% of related party advances and accrued consulting fees of approximately $12,146 as of February 28, 2013 were exchanged for an aggregate of 8,676,034 shares of common stock and all convertible notes plus interest of $3,504 and Preferred Stock holdings of non-affiliates other than 1,075 shares of Series C of Preferred Stock were exchanged for an aggregate of 17,614,655 shares of Common Stock. This issuance of shares represented substantially all of the available authorized Common Stock.

Due to an insufficient number of Common Stock authorized as of February 28, 2013 to complete the issuances under the Recapitalization, a special meeting of the stockholders of the Company was held on April 18, 2013, at which Company Stockholders voted to increase the authorized Common Stock of the Company from 30 million to 150 million shares. Following this vote and the filing of a Certificate of Amendment to the Company's Restated Certificate of Incorporation with the Delaware Secretary of State to effect the increase in the number of authorized shares of common stock from 30 million to 150 million shares, the remaining 75% of the balance of related party advances and accrued consulting fees as of February 28, 2013 was exchanged for an aggregate of 26,028,108 shares of Common Stock and all the 7,066 shares of Preferred Stock held by affiliates as of February 28, 2013 was exchanged for an aggregate of 20,556,569 shares of Common Stock.

Reclassification, Policy [Policy Text Block]

Reclassifications

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

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Note 1 - The Company and Significant Accounting Policies (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended						7 Months Ended	0 Months Ended									8 Months Ended				3 Months Ended		6 Months Ended		3 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Apr. 19, 2013	Apr. 17, 2013	Mar. 31, 2013		Nov. 14, 2013 Subsequent Event [Member]	Mar. 02, 2013 Recapitalization [Member] Preferred Stock Other Than 1,075 Shares of Series C [Member] Convertible Notes [Member]	Apr. 19, 2013 Recapitalization [Member] Preferred Stock Other Than 1,075 Shares of Series C [Member]	Feb. 28, 2013 Recapitalization [Member] Preferred Stock Other Than 1,075 Shares of Series C [Member]	Mar. 02, 2013 Recapitalization [Member] Convertible Notes [Member]	Feb. 28, 2013 Recapitalization [Member] Convertible Notes [Member]	Feb. 28, 2013 Recapitalization [Member] Related Party Advances, Accrued Consulting Fees [Member]	Apr. 19, 2013 Recapitalization [Member] Related Party Advances [Member]	Mar. 02, 2013 Recapitalization [Member] Related Party Advances [Member]	Feb. 28, 2013 Recapitalization [Member] Related Party Advances [Member]	Sep. 30, 2013 Recapitalization [Member]	Feb. 01, 2013 Recapitalization [Member]	Sep. 30, 2013 Not Participate in the Recapitalization [Member] Series C Preferred Stock [Member]	Sep. 30, 2013 Series C Preferred Stock [Member]	Sep. 30, 2013 Sales Revenue, Net [Member]	Sep. 30, 2012 Sales Revenue, Net [Member]	Sep. 30, 2013 Sales Revenue, Net [Member]	Sep. 30, 2012 Sales Revenue, Net [Member]	Sep. 30, 2013 Accounts Receivable [Member]	Sep. 30, 2012 Accounts Receivable [Member]
Note 1 - The Company and Significant Accounting Policies (Details) [Line Items]
Number of Operating Segments			1
Retained Earnings (Accumulated Deficit) (in Dollars)	$ (117,634)		$ (117,634)				$ (116,465)	[1]
Additional Funding Required For Operating Needs (in Dollars)			1,200
Proceeds from Related Party Debt (in Dollars)									2,011
Concentration Risk, Number			1																				1	1		0	0	1
Concentration Risk, Percentage																							11.00%	13.00%	13.00%	10.00%	10.00%	11.00%
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	3,018,347		3,018,000	1,457,000
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term			4 years	4 years
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized (in Dollars)	311		311
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, To Be Recognized This Fiscal Year (in Dollars)	75		75
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, To Be Recognized In Year 2 (in Dollars)	145		145
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, To Be Recognized In Year 3 (in Dollars)	77		77
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, To Be Recognized In Year 4 (in Dollars)	14		14
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (in Dollars per share)	$ 0.13	$ 0.01	$ 0.13	$ 0.01
Debt Instrument, Convertible, Conversion Price (in Dollars per share)																				$ 0.35
Preferred Stock, Shares Outstanding (in Shares)	1,075		1,075				8,141	[1]													1,075	1,075
Conversion of Stock, Shares Issued										17,614,655	20,556,569	28,158,852							72,900,000
Debt Conversion, Original Debt, Amount (in Dollars)													$ 3,504	$ 3,504	$ 158		$ 12,146	$ 12,146
Debt Conversion, Converted Instrument, Shares Issued (in Shares)														10,012,372		26,028,108	8,676,034	34,704,102
Conversion of Stock, Shares Converted											7,066	9,404
Common Stock, Shares Authorized	150,000,000		150,000,000		150,000,000	30,000,000	30,000,000	[1]

[1] Derived from the Company's audited consolidated financial statements. The accompanying notes are an integral part of these condensed consolidated financial statements.

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Note 7 - Preferred Stock (Tables)

6 Months Ended

Sep. 30, 2013

Disclosure Text Block Supplement [Abstract]

Schedule Of Preferred Stock [Table Text Block]

			Per share
Preferred Stock	Shares Outstanding		Purchase Price		Conversion Rate		Common Equivalent Shares
Series C		1,075	$	800		0.785		1,096,676
Total		1,075						1,096,676

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Document And Entity Information	6 Months Ended
	Sep. 30, 2013	Nov. 01, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	SALON MEDIA GROUP INC
Document Type	10-Q
Current Fiscal Year End Date	--03-31
Entity Common Stock, Shares Outstanding		76,245,442
Amendment Flag	false
Entity Central Index Key	0001084332
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Sep. 30, 2013
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2

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Note 8 - Discontinued Operations (Tables)

6 Months Ended

Sep. 30, 2013

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures [Table Text Block]

	Three Months Ended September 30				Six Months Ended September 30
	2013		2012		2013		2012
Net revenues	$	-	$	42	$	-	$	120
Operating expenses		-		-		-		87
Gain on Sale		-		200		-		200
Income (loss) from discontinued operations, net of tax	$	-	$	242	$	-	$	233