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.