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, 2014

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) 275-3911

(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, 2014 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, 2014 (unaudited) and March31, 2014	3
	Condensed Consolidated Statements of Operations for the three months and six months ended September 30, 2014 and 2013 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the six months ended September 30, 2014 and 2013 (unaudited)	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6
ITEM 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
ITEM 3:	Quantitative and Qualitative Disclosures About Market Risk	20
ITEM 4:	Controls and Procedures	20
PART II	OTHER INFORMATION
ITEM 1:	Legal Proceedings	21
ITEM 1A:	Risk Factors	21
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
ITEM 3.	Defaults upon Senior Securities	27
ITEM 4.	Mine Safety and Disclosures	28
ITEM 5.	Other Information	28
ITEM 6:	Exhibits	28
	Signatures	29

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,			March 31,
	2014			2014 (1)
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	175		$	119
Accounts receivable, net of allowance of $60		987			1,475
Prepaid expenses and other current assets		189			289
Total current assets		1,351			1,883
Property and equipment, net		59			54
Other assets, principally deposits		301			96
Total assets	$	1,711		$	2,033
Liabilities and Stockholders' Deficit
Current liabilities:
Short-term borrowings	$	1,000		$	1,000
Related party advances		4,276			2,791
Accounts payable and accrued liabilities		1,304			1,210
Deferred revenues		9			-
Total current liabilities		6,589			5,001
Deferred rent		83			2
Total liabilities		6,672			5,003
Commitments and contingencies (See Note 5)Stockholders’ deficit:
Preferred Stock, $0.001 par value, 5,000,000 shares authorized, 1,075 shares issued and outstanding as of September 30, 2014 and March 31, 2014 (liquidation value of $2,460 as of September 30, 2014 and $2,426 as of March 31, 2014)		-			-
Common stock, $0.001 par value, 150,000,000 shares authorized, 76,245,442 shares issued and outstanding as of September 30, 2014 and March 31, 2014		76			76
Additional paid-in capital		115,696			115,605
Accumulated deficit		(120,733	)		(118,651	)
Total stockholders' deficit		(4,961	)		(2,970	)
Total liabilities and stockholders' deficit	$	1,711		$	2,033

(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						Six Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Revenue, net	$	1,024		$	1,563		$	2,267		$	2,760
Operating expenses:
Production and content		977			856			1,915			1,666
Sales and marketing		459			489			865			904
Technology		267			378			665			758
General and administrative		508			311			885			582
Total operating expenses		2,211			2,034			4,330			3,910
Loss from operations		(1,187	)		(471	)		(2,063	)		(1,150	)
Interest income (expense)		(9	)		(10	)		(19	)		(19	)
Net loss	$	(1,196	)	$	(481	)	$	(2,082	)	$	(1,169	)
Basic and diluted net loss per share	$	(0.02	)	$	(0.01	)	$	(0.03	)	$	(0.02	)
Weighted average shares used in computing basic and diluted net loss per share		76,245			76,231			76,245			71,613

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,
	2014			2013
Cash flows from operating activities:
Net loss	$	(2,082	)	$	(1,169	)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on disposal of property and equipment, net		-			9
Depreciation		17			19
Bad debt expense and change in allowance for doubtful accounts		-			9
Stock-based compensation		91			49
Changes in assets and liabilities:
Accounts receivable		488			(681	)
Prepaid expenses and other assets		(105	)		128
Accounts payable, accrued liabilities and deferred rent		175			138
Deferred revenues		9			(15	)
Net cash used in operating activities		(1,407	)		(1,513	)
Cash flows from investing activities:
Purchase of property and equipment		(22	)		(27	)
Net cash used in investing activities		(22	)		(27	)
Cash flows from financing activities:
Proceeds from related party advances		1,485			1,461
Net cash provided by financing activities		1,485			1,461
Net increase (decrease) in cash and cash equivalents		56			(79	)
Cash and cash equivalents at beginning of period		119			96
Cash and cash equivalents at end of period	$	175		$	17
Supplemental schedule of non-cash financing activity:
Conversion of unsecured advances and payables into common shares	$	-		$	9,109

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”, the “Company” or “We”) 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, 2014, which are included in Salon’s Annual Report on Form 10-K for the fiscal year ended March 31, 2014 filed with the Securities and Exchange Commission on June 27, 2014. 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 three and six month periods ended September 30, 2014 are not necessarily indicative of the expected results for any other interim period or for the fiscal year ending March 31, 2015.

These condensed consolidated financial statements contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. We have incurred losses and negative cash flows from operations since inception and had an accumulated deficit as of September 30, 2014 of $120,733. In addition, we expect to incur a net loss from operations for the fiscal year ending March 31, 2015. Burr Pilger Mayer, Inc., Salon’s independent registered public accounting firm for the years ended March 31, 2014, 2013, and 2012, included a “going-concern” audit opinion on the consolidated financial statements for those years. The audit opinions report substantial doubt about our ability to continue as a going concern, citing issues such as the history of losses and absence of current profitability. As a result of the “going-concern” opinions, our stock price and investment prospects have been and will continue to be adversely affected, thus limiting financing choices and raising concerns about the realization of value on assets and operations.

Our operating forecast for the remainder of the fiscal year ending March 31, 2015 anticipates continued operating losses. We estimate we will require approximately $800 - $1,400 in additional funding to meet our operating needs for the balance of our fiscal year. If planned revenues continue to be less than expected, or if planned expenses are more than expected, the cash shortfall may be higher, which will result in a commensurate increase in required financing. During the current and previous fiscal years, we have relied on funding from related parties. Through November 14, 2014, our chairman has provided $4,826 in outstanding cash advances that have not yet been exchanged into our Common Stock. We remain dependent upon our two largest stockholders for continued financial support while we seek external financing from potential investors in the form of additional indebtedness or through the sale of equity securities in a private placement. We are working with our advisors in our efforts to obtain such funding, and explore strategic alternatives. In September 2014, we began the solicitation of potential investors in accordance with Rule 506(c) of Regulation D under the Securities Act of 1033, as amended. However, we do not currently have any agreements in place to provide any financing, and there is no certainty that we 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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SALON MEDIA GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(unaudited)

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.  We perform ongoing credit evaluations of our customers, but do not require collateral.  We provide an allowance for credit losses that we periodically adjust to reflect our management’s expectation of future losses.

Two customers accounted for approximately 12% and 19% of total revenue for the three months ended September 30, 2014. One customer accounted for approximately 11% of total revenue for the three months ended September 30, 2013. One customer accounted for approximately 16% of total revenue for the six months ended September 30, 2014. One customer accounted for approximately 13% of total revenue for the six months ended September 30, 2013. One customer accounted for approximately 15% of total accounts receivable as of September 30, 2014 and no customer accounted for more than 10% of total accounts receivable as of September 30, 2013.

Stock-Based Compensation

We account 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.

We granted options to acquire a total of 4,655 shares during the quarter ended September 30, 2014. 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,
	2014		2013
Risk-free interest rates		1.25%		1.00%
Expected term (in years)		4		4
Expected volatility		425%		461%
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. We have not paid dividends in the past.

As of September 30, 2014, the aggregate stock compensation remaining to be amortized to expense was $196. Salon expects this stock compensation balance to be amortized as follows: $80 during the remainder of fiscal 2015; $91 during fiscal 2016; $21 during fiscal 2017 and $4 during fiscal 2018. The expected amortization reflects outstanding stock option awards as of September 30, 2014 expected to vest.

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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 or total assets, have been made to the previously issued condensed consolidated financial statements to conform to the current period presentation.

2. Borrowing Agreements

Short-term Borrowings

In May 2007, we finalized a borrowing agreement with Deutsche Bank Securities, Inc. that allows us to borrow up to $1,000 at a rate of prime less 0.25%. Our obligations under this agreement are guaranteed in their entirety by our Chairman. The line of credit has been fully drawn as of September 30, 2014. Deutsche Bank Securities may demand repayment of amounts borrowed at any time. Additionally, our Chairman may also choose to terminate his guarantee, which would trigger a demand for repayment. As of September 30, 2014, accrued interest on short-term borrowings totaled approximately $274.

As of September 30, 2014 and 2013, the weighted-average interest rate on the Company’s short-term borrowings was 3.6% and 3.7%, respectively.

Related Party Advances

During the six months ended September 30, 2014 and 2013, we received unsecured, interest-free cash advances totaling $1,485 and $1,461, respectively, to fund operations from our 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.

3. Stock Option Plans

We have two equity incentive plans, the Salon Media Group, Inc. 2004 Stock Plan and the Salon Media Group, Inc. 2014 Stock Incentive Plan, as described in Note 7, “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, 2014.

The following table summarizes activity under the Salon Media Group, Inc. 2004 Stock Plan for the six months ended September 30, 2014:

				Weighted-
	Outstanding			Average		Aggregate
	Stock			Exercise		Intrinsic
	Options			Price		Value
Balance as of March 31, 2014		6,008,000		$	0.13
Options granted under all plans		35,000		$	0.24
Exercised		-			-
Expired and forfeited		(38,000	)	$	0.14
Outstanding as of September 30, 2014		6,005,000		$	0.13	$	1,563,000
Vested as of September 30, 2014		3,984,000		$	0.14	$	1,007,000
Vested and expected to vest as of September 30, 2014		5,325,000		$	0.13	$	1,365,000

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SALON MEDIA GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(unaudited)

Options totaling 35,000 shares were awarded during the six months ended September 30, 2014. Options totaling 3,018,000 shares were awarded during the six months ended September 30, 2013. The weighted-average fair value of options granted during each of the six month periods ended September 30, 2014 and 2013 was $0.24 per share and $0.13 per share, respectively. The weighted-average fair value of options vested during each of the six month periods ended September 30, 2014 and 2013 was $0.10 per share and $0.06 per share, respectively. There were no option exercises during the six months ended September 30, 2014.

Our Board of Directors also approved a resolution on June 12, 2014 to amend the Salon Media Group, Inc. 2014 Stock Incentive Plan (the 2014 Plan) to comply with certain California Code of Regulations and Internal Revenue Service regulations. As of September 30, 2014, no stock options have been awarded under the 2014 Plan.

We recognized stock-based compensation expense of $91 and $49 during the six months ended September 30, 2014 and 2013, respectively.

4. 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						Six Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Numerator:
Net loss attributable to common stockholders	$	(1,196	)	$	(481	)	$	(2,082	)	$	(1,169	)
Denominator:
Weighted average shares used in computing basic and diluted net loss per share attributable to common stockholders		76,245,000			76,231,000			76,245,000			71,613,000
Basic and diluted net loss per share attributable to common stockholders	$	(0.02	)	$	(0.01	)	$	(0.03	)	$	(0.02	)
Antidilutive securities including options, warrants and convertible notes and preferred stock not included in net loss per share calculation		7,101,000			7,796,000			7,101,000			7,796,000

9

SALON MEDIA GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(unaudited)

5. Commitments and Contingencies

On October 17, 2012, we signed a new office lease agreement to relocate our 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 April 16, 2014, we entered into an office lease for our new corporate offices at 132 West 31^st Street, New York, New York consisting of 6,523 square feet in rentable space. The lease commenced on July 1, 2014 and will expire on September 30, 2019. Upon execution of the lease, a deposit in the form of a letter of credit of $204 was required. The term of the lease is five years with an effective base monthly rent expense of approximately $26, and a 2014 base year to be utilized in allocating future excess direct expenses. The rent expense associated with the office lease is straight-lined over the term of the agreement.  As a result, deferred rent increased to $83 as of September 30, 2014 from $2 as of June 30, 2014.

The following summarizes our office lease commitments and short-term borrowings as of September 30, 2014:

	Payments Due By Period
			1 Year						More Than 5
	Total		or Less		1 - 3 Years		3 - 5 Years		Years
Operating leases	$	1,716	$	397	$	652	$	667	$	-
Short-term borrowing		1,000		1,000		-		-		-
Interest on short-term borrowing		274		274		-		-		-
Related party advances		4,276		4,276		-		-		-
Total	$	7,266	$	5,947	$	652	$	667	$	-

6. Preferred Stock

The conversion rate and common equivalent shares of our Preferred Stock as of September 30, 2014 are as follows:

			Per share				Common
	Shares		Purchase		Conversion		Equivalent
Preferred Stock	Outstanding		Price		Rate		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.

10

SALON MEDIA GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(unaudited)

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, 2014, 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 Series C Preferred Stock would account for approximately 1% of outstanding shares 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, 2014 were $1,720 excluding the effect of undeclared dividends, and $2,460 including the effect of undeclared dividends. We have never declared a dividend and do 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.

7. Subsequent Events

From October 1, 2014 through November 14, 2014, we received unsecured interest-free cash advances totaling $550 from our Chairman.

On November 7, 2014, our board of directors approved option grants to all employees, officers and directors, which, if fully exercised, would equal a total of 2.3 million shares of common stock.  The exercise price of the option grants was $0.24 per share, the closing bid/ask, on the date of grant.

On November 11, 2014, our Board appointed Elizabeth Hambrecht as Chief Financial Officer.  Since July 2013, Ms. Hambrecht has served as Interim Chief Financial Officer.   Ms. Hambrecht has an annual salary of $100,000.  On November 7, 2014, she was granted options to acquire 910,000 shares of common stock that vest in two tranches:  options for 330,000 shares that vest ratably over 12 months, and options for 580,000 shares that vest 25% one year from the date of grant and then ratably over the following 36 months (1/48 per month).  Both tranches have an exercise price of $0.24.

11

SALON MEDIA GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(unaudited)

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

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

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

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this Form 10-Q should be considered in conjunction with the audited consolidated financial statements, which are included in Salon’s Annual Report on Form 10-K for the fiscal year ended March 31, 2014 (the “Fiscal 2014 Annual Report”) filed with the Securities and Exchange Commission. Matters of interest therein include, but are not limited to, our disclosure of critical accounting policies.

Overview

Salon is an online news website committed to fearless journalism and to making the conversation smarter.  Our award-winning journalism combines original investigative stories and provocative personal essays along with quick-take commentary and staff-written articles about politics, culture, entertainment, sustainability, innovation, technology, and business.

We focus on excellence in our core editorial product so we can attract a high demographic audience and deliver value to our advertising clients. Our readership consists of a global community that is demanding and engaged. According to ComScore and Nielsen’s Online @Plan media profiling, our readers are on average 36 years old, highly affluent with an average income of $96,000, and well educated (85% college educated). They are considered influencers in public policy, culture, art, technology and fashion. We believe our user profile makes our Website a valuable media property for advertisers and retailers who are allocating marketing resources to target consumers online.

12

We have a history of significant losses and expect to incur a loss from operations, based on generally accepted accounting principles, for our fiscal year ending March 31, 2015 and potentially for future years. Burr Pilger Mayer, Inc., Salon’s independent registered public accounting firm for the years ended March 31, 2014, 2013, and 2012, included a “going-concern” audit opinion on the consolidated financial statements for those years. The audit opinions report substantial doubt about our ability to continue as a going concern, citing issues such as the history of losses and absence of current profitability. As a result of the “going-concern” opinions, our stock price and investment prospects have been and will continue to be adversely affected, thus limiting financing choices and raising concerns about the realization of value on assets and operations.

In May 2012, we adopted a strategy that has led to the most significant period of user growth in our history. Since that time, unique visitors have grown to our all-time high of 18.9 million as measured by Google Analytics. Our strategy focuses on growing our user base, which in turn increases our attractiveness to advertisers, leading to growth in revenue. Our strategy is predicated on the following core principals: (1) create high quality content that meets our users’ interests; (2) make strategic hires to bring in new editorial talent and online news business expertise; and (3) innovate to bring great products to our users. Our focus on these core principals provides opportunity for future growth.

Highlights from Quarter ended September 30, 2014

● Net revenues fell 34% to $1.0 million in the quarter ended September 30, 2014 versus $1.6 million in the same period in the prior year, and fell 18% to $2.3 million for the six months ended September 30, 2014 versus $2.8 million in the same period the prior year. The drop in revenue was a result of the competitive advertising landscape for smaller Internet media companies, and difficulty monetizing our rapidly growing mobile traffic. The period was also impacted by several unexpected events: the cancellation of a large brand campaign across all media sites that resulted in $0.2 million in lost revenue in the September quarter, the delay of several advocacy-related campaigns from September into October in order to better align with the mid-term election, and a short-term decline in third-party ad sales during the quarter due to internal restructuring of our third-party ad sales.

● Net losses were $1.2 million during the quarter ended September 30, 2014, and $2.1 million for the six months period ended September 30, 2014, an increase from $0.5 million and $0.9 million, respectively, during the same periods last year. The larger losses resulted from the decrease in revenues while operating expense increased approximately 10% for each period compared to the prior year. The increase in operating expense was primarily due to adding analytics capabilities, both in terms of software services and an employee, to analyze our traffic, higher rental expenses in our new offices in New York, and higher stock compensation charges.

● Unique visitors to the Salon.com Website during the September 2014 quarter averaged 16.5 million per month according to GoogleAnalytics, which is our best quarter on record, an increase of 61% compared to the quarter ended September 30, 2013, and increased 11% compared to the quarter ended June 30, 2014. Unique visitors as measured by ComScore increased 79% compared to the September 2013 quarter, and 9% compared to the June 2014 quarter. The difference between the two sources is that ComScore uses a panel-centric method for counting unique visitors in the U.S. market rather than the tagging technology used by Google to measure global readers.

● Since quarter-end, in October 2014, we experienced our highest ever number of readers, with 18.9 million unique visitors coming to our Website and 57.7 million page views during the month, according to Google Analytics.

● We have entered into new partnerships to extend our brand to new readers. In the September quarter, we entered into editorial partnerships with Whisper, an social network that allows people to make anonymous public confessions, with Tango, a popular direct messaging and mobile video platform with over 250 million users, and with The Washington Post.

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● In September 2014, we partnered with Happy Ending to host a live, ticketed event featuring readings by authors Zadie Smith, Leslie Jamison and Matthew Thomas and a musical performance by Emily Wells. During the readings, artist Edwina White created collages, which were projected onto the stage next to the authors. We will be hosting another Happy Ending live event in December with a reading by Lena Dunham.

● A continued focus on our mobile platforms and social media reach led to gains in these areas. Our shift to mobile readers continues, growing to 57% of unique visitors in September 2014, compared to 39% in September 2013. During the September 2014 quarter, overall traffic from the mobile platforms increased 132% compared to the September 2013 quarter, mostly due to the top articles going viral over the Facebook mobile and tablet platforms.

● Social media traffic grew 18% in the quarter ended September 30, 2014 compared to the June 2014 quarter, and 142% compared to the September quarter in 2013. Facebook continues to be the largest social media referrer, with Facebook referrals increasing 30% in the September 2014 quarter versus the June 2014 quarter, and 296% compared to the September 2013 quarter. Twitter also grew strongly in the September 2014 quarter, increasing 13% compared to the quarter ended June 30, 2014.

● Salon provides brands with a dynamic platform for sharing an array of video assets through our native advertising products. Native advertising was 21% of all of our direct sales during the six months ended September 2014. Video products are in high demand with our advertisers, and in the past six months about 50% of all our direct advertising included video assets. Our video advertisers have included companies such as Siemens, AT&T, Amazon, Adobe, Cadillac, Infiniti, Lexus, Cole Haan, Warner Brothers, MSNBC, HBO, Showtime, FX, IFC, AMC, and National Geographic.

● In our ongoing efforts to grow our suite of advertising products, we continue to build upon our video advertising products. In the last two years we have launched mobile-friendly video products that are integrated in our homepage story feed, a homepage spotlight and a video unit within the article.

Sources of Revenue

Most of our net revenues are derived from advertising from the sale of promotional space on our Website. The sale of promotional space is generally less than ninety days in duration. Advertising units sold include “rich media”, a term commonly used to describe interactive multi-media and streaming advertisements, as well as traditional banner and pop-up advertisements.

We previously derived a portion of our net revenues from our Salon Premium subscription program. This source of revenue declined from its peak in the quarter ended December 31, 2004, when paid subscriptions peaked at approximately 89,100. As of June 2012, the costs associated with maintaining the subscription program were higher than the revenues generated, so new subscriptions and renewals were no longer accepted, and the wind down of our subscription service was completed in September 2014.

We also generate revenue from the licensing of content that previously appeared in our Website, and from traffic referrals to third party Websites.

Expenses

Production and content expenses consist primarily of salaries and related expenses for our editorial and production staff, payments to freelance writers and artists, bandwidth costs associated with serving pages andadserving costs.

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

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

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

Interest expense includes accrued interest on our outstanding debt.

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

Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires us to utilize accounting policies and make estimates and assumptions that affect our reported amounts. Our significant accounting policies are described in Note 2 to the consolidated financial statements in our Fiscal 2014 Annual Report. We believe accounting policies and estimates related to revenue recognition and stock-based compensation are the most critical to our financial statements. Future results may differ from current estimates if different assumptions are used or different conditions were to prevail.

Revenue Recognition

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

Advertising revenues, derived from the sale of promotional space on our Website, comprised 91% and 93% of our revenues, respectively, for the six months ended September 30, 2014 and 2013. 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. Our obligations typically include a guaranteed minimum number of impressions. To the extent minimum guaranteed amounts are not achieved, we defer 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.

We previously offered a pay-for-online content service called Salon Premium, which provided unrestricted access to our Website with no advertisements, as well as other giveaways and benefits. As a result of the continued decline in subscribers, as of June 2012, new subscriptions and renewals were no longer accepted and the wind down of our subscription service was completed in September 2014.

Accounting for Stock-Based Compensation

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

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We recognized stock-based compensation expense of $91,000 and $49,000 during the six months ended September 30, 2014 and 2013, respectively. As of September 30, 2014, we had an aggregate of $196,000 of stock compensation remaining to be amortized to expense over the remaining requisite service period of the underlying awards. We currently expect this stock compensation balance to be amortized as follows: $80,000 during the remainder of fiscal 2015; $91,000 during fiscal 2016; $21,000 during fiscal 2017 and $4,000 during fiscal 2018. The expected amortization reflects only outstanding stock option awards as of September 30, 2014 expected to vest. We expect to continue issuing stock-based awards to our employees in future periods.

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

Results of Operations for the Three and Six Months Ended September 30, 2014 Compared to the Three and Six Months Ended September 30, 2013

Net revenue

Net revenue decreased 34% to $1.0 million for the three months ended September 30, 2014 from $1.6 million for the three months ended September 30, 2013. Net revenue decreased 18% to $2.3 million for the six months ended September 30, 2014 from $2.8 million for the six months ended September 30, 2013.

The drop in revenue was a result of the competitive advertising landscape for smaller Internet media companies, and the difficulty monetizing our rapidly growing mobile traffic. The period was also impacted by several unexpected events: the cancellation of a large automobile brand campaign across all media sites that resulted in $0.2 million in lost revenue in the September quarter, the delay of several advocacy-related campaigns from September into October in order to better align with the mid-term election, and a short-term decline in third-party ad sales during the quarter due to internal restructuring of our third-party ad sales.

Advertising revenues decreased 36% to $0.9 million for the three months ended September 30, 2014 from $1.4 million for the three months ended September 30, 2013. Direct ad sales captured approximately 45% and network ad sales captured approximately 55% of total advertising revenue for the three months ended September 30, 2014.

Advertising revenues decreased 19% to $2.1 million for the six months ended September 30, 2014 from $2.6 million for the six months ended September 30, 2013. Direct ad sales captured approximately 45% and network ad sales captured approximately 55% of total advertising revenue for the six months ended September 30, 2014.

Salon Premium subscription revenues were immaterial for the three and six months ended September 30, 2014 as we completed the wind down our subscription service in September 2014.

Revenues from all other sources remained flat and immaterial for each of the three and six months ended September 30, 2014.

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Expenses

Production and content

Production and content expenses increased 14% to approximately $1.0 million for the three months ended September 30, 2014 from approximately $0.9 million for the three months ended September 30, 2013. Production and content expenses increased 15% to approximately $1.9 million for the six months ended September 30, 2014 from approximately $1.7 million for the six months ended September 30, 2013. The $0.1 million and $0.2 million respective increase primarily resulted from the costs of subscription to optimization software and freelance writer contributions.

Sales and marketing

Sales and marketing expenses remained relatively flat at approximately $0.5 million and $0.9 million for the respective three and six months ended September 30, 2014.

Technology

Technology expenses remained relatively flat from a year ago at approximately $0.3 million and $0.7 million for the respective three and six months ended September 30, 2014.

General and administrative

General and administrative expenses increased 63% to approximately $0.5 million for the three months ended September 30, 2014 from approximately $0.3 million for the three months ended September 30, 2013. The $0.2 million increase primarily resulted from higher stock compensation costs and legal fees and increased monthly rents for our relocated New York office. General and administrative expenses increased 52% to approximately $0.9 million for the six months ended September 30, 2014 from approximately $0.6 million for the six months ended September 30, 2013. The $0.3 million increase primarily resulted from higher stock compensation costs and legal fees and increased monthly rents for our relocated New York office.

Interest expense

Interest expense for the three and six months ended September 30, 2014 and 2013 remained flat and immaterial at $0.01 million and $0.02 million, respectively.

Liquidity and capital resources

Net cash used in operations was approximately $1.4 million for the six months ended September 30, 2014. The principal uses of cash during the six months ended September 30, 2014 were to fund the $2.1 million net loss for the period, partially offset by $0.5 million decrease in net accounts receivable and various working capital and immaterial non-cash items. The accounts receivable, net as of September 30, 2014 of approximately $1.0 million, represent primarily advertising sales during the period, and are expected to be collected within the next four months. Net cash used in investing activities was immaterial during each of the six months ended September 30, 2014 and 2013.

Net cash provided by financing activities was $1.5 million for each the six months ended September 30, 2014 and 2013, reflecting cash advances from related parties.

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Our operating forecast for the remainder of the fiscal year ending March 31, 2015 anticipates continued operating losses. We estimate we will require approximately $0.8 - $1.4 million in additional funding to meet our operating needs for the balance of our fiscal year. This is an increase from our prior estimate in our June quarter because of the unanticipated decreases in revenue described above under "Results of Operations". 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, we have relied on funding from related parties. In this fiscal year through November 14, 2014, our chairman has provided $2.0 million in cash advances. We remain dependent upon our two largest stockholders for continued financial support while we seek external financing from potential investors in the form of additional indebtedness or through the sale of equity securities in a private placement. We are working with our advisors in our efforts to obtain such funding, and explore strategic alternatives. However, we do not currently have an agreement in place to provide any financing, and there is no certainty that we will be able to enter into definitive agreements for additional financings or other strategic alternatives on commercially reasonable terms, if at all.

Off-Balance-Sheet Arrangements

We have no off-balance-sheet arrangements.

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Contractual Obligations

The following summarizes our contractual obligations as of September 30, 2014:

	Payments Due By Period
			1 Year or						More than 5
	Total		Less		1 - 3 Years		3 - 5 Years		Years
Operating leases	$	1,716	$	397	$	652	$	667	$	-
Short-term borrowing		1,000		1,000		-		-		-
Interest on short-term borrowing		274		274		-		-		-
Related party advances		4,276		4,276		-		-		-
Total	$	7,266	$	5,947	$	652	$	667	$	-

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

We maintain all of our cash in immediately available cash deposits at its bank. These funds are not subject to market risk and no interest is paid on such funds. In May 2007, we entered into a credit agreement with Deutsche Bank Securities, Inc. that allows us to borrow up to $1.0 million at a rate of prime less 0.25% which subjects us to interest rate risk. We feel that the risk of a rate change is not material as we contemplate having a maximum of only $1.0 million of variable rate debt outstanding during our fiscal year ending March 31, 2015. As of September 30, 2014, we had $1.0 million plus accrued interest outstanding under this agreement, payable on demand. As we conduct all of our business in the United States, we are 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 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, 2014), 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 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 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

Item1. Legal Proceedings.

Not applicable.

Item1A. 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 2014 Annual Report.

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

We have a history of significant losses and expect to incur a loss from operations, based on generally accepted accounting principles, for our fiscal year ending March 31, 2015 and to be determined in future years. Even if we attain profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. If revenues grow more slowly than we anticipate, or continue to decline as we saw in the quarter ended September 30, 2014, or operating expenses exceed expectations, financial results will most likely be severely harmed and our ability to continue operations will be seriously jeopardized.

Burr Pilger Mayer, Inc., Salon’s independent registered public accounting firm for the fiscal years ended March 31, 2012 through 2014 included a “going-concern” audit opinion on the consolidated financial statements for each of those years. The audit opinions report substantial doubt about our ability to continue as a going concern, citing issues such as the history of losses and absence of current profitability. As a result of the “going-concern” opinions, our stock price and investment prospects have been and will continue to be adversely affected, thus limiting financing choices and raising concerns about the realization of value on assets and operations. 

Salon’s projected cash flows may not meet expectations

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

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

We have relied on related parties for significant investment capital

We have relied on cash infusions from related parties to fund operations for many years. The related parties are primarily John Warnock, Chairman of the Board of Salon, and, to a lesser extent in recent years, William Hambrecht. William Hambrecht is a Director and the father of our former CEO and current Chief Financial Officer, Elizabeth Hambrecht. During the current fiscal year, through November 14, 2014, Mr. Warnock has contributed approximately $2,035,000 in cash advances to fund our operations.

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

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

Approximately 58% of our voting securities are 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 Chief Financial Officer. We remain dependent upon Mr. Warnock and Mr. Hambrecht for continued financial support while we seek 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 in Note 4 to the consolidated financial statements included in the 2014 Annual Report), Mr. Warnock has continued to make unsecured, interest-free, cash advances to cover our operating expenses. These advances are payable on demand, and are exchangeable into securities on the same terms as those to be issued in our next financing from non-related parties.

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

Our directors and officers own approximately 65 million shares, or 85% in the aggregate, of our Common Stock. As our Common Stock is normally thinly traded, if our principal stockholders were to sell their shares of Common Stock, the per share price of our Common Stock could be adversely affected. 

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

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

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

Holders of our Series C Preferred Stock (“Preferred Stock”) have liquidation preferences over holders of Common Stock of the first approximately $2.5 million in potential sales proceeds as of September 30, 2014, which includes the effect of undeclared dividends, if granted, of about $0.7 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 $2.5 million of cash distributions. If a liquidation event were to occur in excess of $2.5 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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We must promote the Salon brand to attract and retain users, advertisers and strategic partners

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

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

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

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

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

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

● increase the dollar amount of our advertising orders;

● improve our Website’s technology for serving advertising;

● handle temporary high volume traffic spikes to our Website;

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

● attract and retain key sales personnel.

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

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

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

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

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

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

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

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

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

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

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

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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 models in a manner that slows the widespread acceptance of their technologies. In order for our services to be successful, there must be a large base of users of the technologies to deliver our content, advertising, and services. We have limited or no control over the availability or acceptance of those technologies, and any change in licensing terms, costs, availability, or user acceptance of these technologies could adversely affect our business.

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

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

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

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

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

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Privacy concerns could impair our business

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

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

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

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

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

● Our ability to attract and retain advertisers;

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

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

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

● Our ability to maximize our mobile presence;

● The timing and uncertainty of our advertising sales cycles;

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

● Economic and business cycles;

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

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

● The amount and timing of operating costs.

26

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

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

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

● the board 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 such 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. We have not opted out of the provisions of the anti-takeover laws. As such, these laws could prohibit or delay mergers or other takeovers or changes of control of Salon and may discourage attempts by other companies to acquire us.

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

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

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

Not applicable.

Item 3. Defaults Upon Senior Securities.

Not applicable.

27

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

On November 11, 2014, our Board appointed Elizabeth Hambrecht as Chief Financial Officer. Since July 2013, Ms. Hambrecht has served as Interim Chief Financial Officer. Ms. Hambrecht has an annual salary of $100,000. On November 7, 2014, she was granted options to acquire 910,000 shares of common stock that vest in two tranches: options for 330,000 shares that vest ratably over 12 months, and options for 580,000 shares that vest 25% one year from the date of grant and then ratably over the following 36 months (1/48 per month). Both tranches have an exercise price of $0.24.

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

101.INS** XBRL Instance

101.SCH** XBRL Taxonomy Extension Schema

101.CAL** XBRL Taxonomy Extension Calculation

101.DEF** XBRL Taxonomy Extension Definition

101.LAB** XBRL Taxonomy Extension Labels

101.PRE** XBRL Taxonomy Extension Presentation

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

28

 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, 2014	/s/ Cynthia Jeffers
	Cynthia Jeffers
	Chief Executive Officer
Dated: November 14, 2014	/s/ Elizabeth Hambrecht
	Elizabeth Hambrecht
	Chief Financial Officer

29

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 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.

	/s/ Cynthia Jeffers
November 14, 2014	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.

	/s/ Elizabeth Hambrecht
November 14, 2014	Elizabeth Hambrecht
	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, 2014, 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.

	/s/ Cynthia Jeffers
November 14, 2014	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, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Elizabeth Hambrecht, 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.

	/s/ Elizabeth Hambrecht
November 14, 2014	Elizabeth Hambrecht
	Chief Financial Officer

XML

Note 5 - Commitments and Contingencies (Details) (USD $) In Thousands, unless otherwise specified					1 Months Ended	0 Months Ended	6 Months Ended
	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014		Oct. 17, 2012 San Francisco Headquarters [Member] sqft	Apr. 16, 2014 Corporate Office in New York [Member] sqft	Sep. 30, 2014 Corporate Office in New York [Member]
Note 5 - Commitments and Contingencies (Details) [Line Items]
Lessee Leasing Arrangements, Operating Leases, Term of Contract					3 years	5 years
Area of Real Estate Property (in Square Feet)					2,405	6,523
Escrow Deposit						$ 204
Operating Leases, Rent Expense per Month							26
Deferred Rent Credit, Noncurrent	$ 83	$ 2	$ 2	[1]

[1] Derived from the Company's audited consolidated financial statements.

XML

Note 4 - Net Loss Per Share

6 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

4. 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						Six Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Numerator:
Net loss attributable to common stockholders	$	(1,196	)	$	(481	)	$	(2,082	)	$	(1,169	)
Denominator:
Weighted average shares used in computing basic and diluted net loss per share attributable to common stockholders		76,245,000			76,231,000			76,245,000			71,613,000
Basic and diluted net loss per share attributable to common stockholders	$	(0.02	)	$	(0.01	)	$	(0.03	)	$	(0.02	)
Antidilutive securities including options, warrants and convertible notes and preferred stock not included in net loss per share calculation		7,101,000			7,796,000			7,101,000			7,796,000

XML

Note 7 - Subsequent Events (Details) (USD $)	3 Months Ended	1 Months Ended	20 Months Ended	6 Months Ended		0 Months Ended						0 Months Ended
	Sep. 30, 2014	Nov. 14, 2014 Board of Directors Chairman [Member] Subsequent Event [Member]	Nov. 14, 2014 Board of Directors Chairman [Member] Subsequent Event [Member]	Sep. 30, 2014 Board of Directors Chairman [Member]	Sep. 30, 2013 Board of Directors Chairman [Member]	Nov. 07, 2014 Subsequent Event [Member] One Year from Date of Grant [Member] Share-based Compensation Award, Tranche Two [Member] Chief Financial Officer [Member]	Nov. 07, 2014 Subsequent Event [Member] After One Year from Date of Grant [Member] Share-based Compensation Award, Tranche Two [Member] Chief Financial Officer [Member]	Nov. 07, 2014 Subsequent Event [Member] Share-based Compensation Award, Tranche One [Member] Chief Financial Officer [Member]	Nov. 07, 2014 Subsequent Event [Member] Share-based Compensation Award, Tranche Two [Member] Chief Financial Officer [Member]	Nov. 07, 2014 Subsequent Event [Member] Chief Financial Officer [Member]	Nov. 11, 2014 Subsequent Event [Member] Chief Financial Officer [Member]	Nov. 07, 2014 Subsequent Event [Member]
Note 7 - Subsequent Events (Details) [Line Items]
Proceeds from Related Party Debt (in Dollars)		$ 550,000	$ 4,826,000	$ 1,485,000	$ 1,461,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	4,655							330,000	580,000	910,000		2,300,000
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in Dollars per share)										$ 0.24		$ 0.24
Officer Annual Salary (in Dollars)											$ 100,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period							36 months	12 months
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage						25.00%

XML

Note 6 - Preferred Stock (Details) - Preferred Stock (USD $)	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014
Note 6 - Preferred Stock (Details) - Preferred Stock [Line Items]
Shares Outstanding	1,075	1,075	1,075	[1]
Common Equivalent Shares		1,096,676
Series C Preferred Stock [Member]
Note 6 - Preferred Stock (Details) - Preferred Stock [Line Items]
Shares Outstanding	1,075	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.

XML

Note 3 - Stock Option Plans

6 Months Ended

Sep. 30, 2014

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

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

3. Stock Option Plans

We have two equity incentive plans, the Salon Media Group, Inc. 2004 Stock Plan and the Salon Media Group, Inc. 2014 Stock Incentive Plan, as described in Note 7, “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, 2014.

The following table summarizes activity under the Salon Media Group, Inc. 2004 Stock Plan for the six months ended September 30, 2014:

				Weighted-
	Outstanding			Average		Aggregate
	Stock			Exercise		Intrinsic
	Options			Price		Value
Balance as of March 31, 2014		6,008,000		$	0.13
Options granted under all plans		35,000		$	0.24
Exercised		-			-
Expired and forfeited		(38,000	)	$	0.14
Outstanding as of September 30, 2014		6,005,000		$	0.13	$	1,563,000
Vested as of September 30, 2014		3,984,000		$	0.14	$	1,007,000
Vested and expected to vest as of September 30, 2014		5,325,000		$	0.13	$	1,365,000

Options totaling 35,000 shares were awarded during the six months ended September 30, 2014. Options totaling 3,018,000 shares were awarded during the six months ended September 30, 2013. The weighted-average fair value of options granted during each of the six month periods ended September 30, 2014 and 2013 was $0.24 per share and $0.13 per share, respectively. The weighted-average fair value of options vested during each of the six month periods ended September 30, 2014 and 2013 was $0.10 per share and $0.06 per share, respectively. There were no option exercises during the six months ended September 30, 2014.

Our Board of Directors also approved a resolution on June 12, 2014 to amend the Salon Media Group, Inc. 2014 Stock Incentive Plan (the 2014 Plan) to comply with certain California Code of Regulations and Internal Revenue Service regulations. As of September 30, 2014, no stock options have been awarded under the 2014 Plan.

We recognized stock-based compensation expense of $91 and $49 during the six months ended September 30, 2014 and 2013, respectively.

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Mar. 31, 2014
Current assets:
Cash and cash equivalents	$ 175	$ 119	[1]
Accounts receivable, net of allowance of $60	987	1,475	[1]
Prepaid expenses and other current assets	189	289	[1]
Total current assets	1,351	1,883	[1]
Property and equipment, net	59	54	[1]
Other assets, principally deposits	301	96	[1]
Total assets	1,711	2,033	[1]
Current liabilities:
Short-term borrowings	1,000	1,000	[1]
Related party advances	4,276	2,791	[1]
Accounts payable and accrued liabilities	1,304	1,210	[1]
Deferred revenues	9
Total current liabilities	6,589	5,001	[1]
Deferred rent	83	2	[1]
Total liabilities	6,672	5,003	[1]
Commitments and contingencies (See Note 5)Stockholders’ deficit:
Preferred Stock, $0.001 par value, 5,000,000 shares authorized, 1,075 shares issued and outstanding as of September 30, 2014 and March 31, 2014 (liquidation value of $2,460 as of September 30, 2014 and $2,426 as of March 31, 2014)			[1]
Common stock, $0.001 par value, 150,000,000 shares authorized, 76,245,442 shares issued and outstanding as of September 30, 2014 and March 31, 2014	76	76	[1]
Additional paid-in capital	115,696	115,605	[1]
Accumulated deficit	(120,733)	(118,651)	[1]
Total stockholders' deficit	(4,961)	(2,970)	[1]
Total liabilities and stockholders' deficit	$ 1,711	$ 2,033	[1]

[1] Derived from the Company's audited consolidated financial statements.

XML

Note 1 - The Company and Significant Accounting Policies

6 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

1. The Company and Significant Accounting Policies

The Company

Salon Media Group, Inc. (“Salon”, the “Company” or “We”) 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, 2014, which are included in Salon’s Annual Report on Form 10-K for the fiscal year ended March 31, 2014 filed with the Securities and Exchange Commission on June 27, 2014. 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 three and six month periods ended September 30, 2014 are not necessarily indicative of the expected results for any other interim period or for the fiscal year ending March 31, 2015.

These condensed consolidated financial statements contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. We have incurred losses and negative cash flows from operations since inception and had an accumulated deficit as of September 30, 2014 of $120,733. In addition, we expect to incur a net loss from operations for the fiscal year ending March 31, 2015. Burr Pilger Mayer, Inc., Salon’s independent registered public accounting firm for the years ended March 31, 2014, 2013, and 2012, included a “going-concern” audit opinion on the consolidated financial statements for those years. The audit opinions report substantial doubt about our ability to continue as a going concern, citing issues such as the history of losses and absence of current profitability. As a result of the “going-concern” opinions, our stock price and investment prospects have been and will continue to be adversely affected, thus limiting financing choices and raising concerns about the realization of value on assets and operations.

Our operating forecast for the remainder of the fiscal year ending March 31, 2015 anticipates continued operating losses. We estimate we will require approximately $800 - $1,400 in additional funding to meet our operating needs for the balance of our fiscal year. If planned revenues continue to be less than expected, or if planned expenses are more than expected, the cash shortfall may be higher, which will result in a commensurate increase in required financing. During the current and previous fiscal years, we have relied on funding from related parties. Through November 14, 2014, our chairman has provided $4,826 in outstanding cash advances that have not yet been exchanged into our Common Stock. We remain dependent upon our two largest stockholders for continued financial support while we seek external financing from potential investors in the form of additional indebtedness or through the sale of equity securities in a private placement. We are working with our advisors in our efforts to obtain such funding, and explore strategic alternatives. In September 2014, we began the solicitation of potential investors in accordance with Rule 506(c) of Regulation D under the Securities Act of 1033, as amended. However, we do not currently have any agreements in place to provide any financing, and there is no certainty that we 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.  We perform ongoing credit evaluations of our customers, but do not require collateral.  We provide an allowance for credit losses that we periodically adjust to reflect our management’s expectation of future losses.

Two customers accounted for approximately 12% and 19% of total revenue for the three months ended September 30, 2014. One customer accounted for approximately 11% of total revenue for the three months ended September 30, 2013. One customer accounted for approximately 16% of total revenue for the six months ended September 30, 2014. One customer accounted for approximately 13% of total revenue for the six months ended September 30, 2013. One customer accounted for approximately 15% of total accounts receivable as of September 30, 2014 and no customer accounted for more than 10% of total accounts receivable as of September 30, 2013.

Stock-Based Compensation

We account 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.

We granted options to acquire a total of 4,655 shares during the quarter ended September 30, 2014. 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,
	2014		2013
Risk-free interest rates		1.25%		1.00%
Expected term (in years)		4		4
Expected volatility		425%		461%
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. We have not paid dividends in the past.

As of September 30, 2014, the aggregate stock compensation remaining to be amortized to expense was $196. Salon expects this stock compensation balance to be amortized as follows: $80 during the remainder of fiscal 2015; $91 during fiscal 2016; $21 during fiscal 2017 and $4 during fiscal 2018. The expected amortization reflects outstanding stock option awards as of September 30, 2014 expected to vest.

Reclassifications

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

XML

Note 3 - Stock Option Plans (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended	6 Months Ended
	Sep. 30, 2014	Sep. 30, 2014	Sep. 30, 2013
Note 3 - Stock Option Plans (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	4,655
Allocated Share-based Compensation Expense		$ 91	$ 49
2004 Plan [Member]
Note 3 - Stock Option Plans (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross		35,000	3,018,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value		$ 0.24	$ 0.13
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Weighted Average Grant Date Fair Value		$ 0.10	$ 0.06
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period			0
2014 Plan [Member]
Note 3 - Stock Option Plans (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross		0

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Note 4 - 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, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Numerator:
Net loss attributable to common stockholders (in Dollars)	$ (1,196)	$ (481)	$ (2,082)	$ (1,169)
Denominator:
Weighted average shares used in computing basic and diluted net loss per share attributable to common stockholders	76,245,000	76,231,000	76,245,000	71,613,000
Basic and diluted net loss per share attributable to common stockholders (in Dollars per share)	$ (0.02)	$ (0.01)	$ (0.03)	$ (0.02)
Antidilutive securities including options, warrants and convertible notes and preferred stock not included in net loss per share calculation	7,101,000	7,796,000	7,101,000	7,796,000

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Note 2 - Borrowing Agreements

6 Months Ended

Sep. 30, 2014

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

2. Borrowing Agreements

Short-term Borrowings

In May 2007, we finalized a borrowing agreement with Deutsche Bank Securities, Inc. that allows us to borrow up to $1,000 at a rate of prime less 0.25%. Our obligations under this agreement are guaranteed in their entirety by our Chairman. The line of credit has been fully drawn as of September 30, 2014. Deutsche Bank Securities may demand repayment of amounts borrowed at any time. Additionally, our Chairman may also choose to terminate his guarantee, which would trigger a demand for repayment. As of September 30, 2014, accrued interest on short-term borrowings totaled approximately $274.

As of September 30, 2014 and 2013, the weighted-average interest rate on the Company’s short-term borrowings was 3.6% and 3.7%, respectively.

Related Party Advances

During the six months ended September 30, 2014 and 2013, we received unsecured, interest-free cash advances totaling $1,485 and $1,461, respectively, to fund operations from our 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.

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Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2014	Mar. 31, 2014
Accounts receivable, allowance (in Dollars)	$ 60	$ 60	[1]
Preferred stock, par value (in Dollars per share)	$ 0.001	$ 0.001	[1]
Preferred stock, shares authorized	5,000,000	5,000,000	[1]
Preferred stock, shares issued	1,075	1,075	[1]
Preferred stock, shares outstanding	1,075	1,075	[1]
Preferred stock, liquidation value (in Dollars)	$ 2,460	$ 2,426	[1]
Common stock, par value (in Dollars per share)	$ 0.001	$ 0.001	[1]
Common stock, shares authorized	150,000,000	150,000,000	[1]
Common stock, shares issued	76,245,442	76,245,442	[1]
Common stock, shares outstanding	76,245,442	76,245,442	[1]

[1] Derived from the Company's audited consolidated financial statements.

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Note 5 - Commitments and Contingencies (Tables)

6 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

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

	Payments Due By Period
			1 Year						More Than 5
	Total		or Less		1 - 3 Years		3 - 5 Years		Years
Operating leases	$	1,716	$	397	$	652	$	667	$	-
Short-term borrowing		1,000		1,000		-		-		-
Interest on short-term borrowing		274		274		-		-		-
Related party advances		4,276		4,276		-		-		-
Total	$	7,266	$	5,947	$	652	$	667	$	-

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Document And Entity Information	6 Months Ended
	Sep. 30, 2014	Nov. 01, 2014
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, 2014
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2

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Note 6 - Preferred Stock (Tables)

6 Months Ended

Sep. 30, 2014

Disclosure Text Block Supplement [Abstract]

Schedule Of Preferred Stock [Table Text Block]

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

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Condensed Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Revenue, net	$ 1,024	$ 1,563	$ 2,267	$ 2,760
Operating expenses:
Production and content	977	856	1,915	1,666
Sales and marketing	459	489	865	904
Technology	267	378	665	758
General and administrative	508	311	885	582
Total operating expenses	2,211	2,034	4,330	3,910
Loss from operations	(1,187)	(471)	(2,063)	(1,150)
Interest income (expense)	(9)	(10)	(19)	(19)
Net loss	$ (1,196)	$ (481)	$ (2,082)	$ (1,169)
Basic and diluted net loss per share (in Dollars per share)	$ (0.02)	$ (0.01)	$ (0.03)	$ (0.02)
Weighted average shares used in computing basic and diluted net loss per share (in Shares)	76,245,000	76,231,000	76,245,000	71,613,000

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Note 7 - Subsequent Events

6 Months Ended

Sep. 30, 2014

Subsequent Events [Abstract]

Subsequent Events [Text Block]

7. Subsequent Events

From October 1, 2014 through November 14, 2014, we received unsecured interest-free cash advances totaling $550 from our Chairman.

On November 7, 2014, our board of directors approved option grants to all employees, officers and directors, which, if fully exercised, would equal a total of 2.3 million shares of common stock.  The exercise price of the option grants was $0.24 per share, the closing bid/ask, on the date of grant.

On November 11, 2014, our Board appointed Elizabeth Hambrecht as Chief Financial Officer.  Since July 2013, Ms. Hambrecht has served as Interim Chief Financial Officer.   Ms. Hambrecht has an annual salary of $100,000.  On November 7, 2014, she was granted options to acquire 910,000 shares of common stock that vest in two tranches:  options for 330,000 shares that vest ratably over 12 months, and options for 580,000 shares that vest 25% one year from the date of grant and then ratably over the following 36 months (1/48 per month).  Both tranches have an exercise price of $0.24.

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Note 6 - Preferred Stock

6 Months Ended

Sep. 30, 2014

Disclosure Text Block Supplement [Abstract]

Preferred Stock [Text Block]

6. Preferred Stock

The conversion rate and common equivalent shares of our Preferred Stock as of September 30, 2014 are as follows:

			Per share				Common
	Shares		Purchase		Conversion		Equivalent
Preferred Stock	Outstanding		Price		Rate		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, 2014, 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 Series C Preferred Stock would account for approximately 1% of outstanding shares 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, 2014 were $1,720 excluding the effect of undeclared dividends, and $2,460 including the effect of undeclared dividends. We have never declared a dividend and do 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 3 - 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, 2014	Sep. 30, 2014 2004 Plan [Member]	Sep. 30, 2013 2004 Plan [Member]	Mar. 31, 2014 2004 Plan [Member]
Note 3 - Stock Option Plans (Details) - Stock Option Plan Activity [Line Items]
Outstanding Stock Options		6,005,000		6,008,000
Weighted Average Exercise Price		$ 0.13		$ 0.13
Aggregate Intrinsic Value		$ 1,563,000
Vested as of September 30, 2014		3,984,000
Vested as of September 30, 2014		$ 0.14
Vested as of September 30, 2014		1,007,000
Vested and expected to vest as of September 30, 2014		5,325,000
Vested and expected to vest as of September 30, 2014		$ 0.13
Vested and expected to vest as of September 30, 2014		$ 1,365,000
Options granted under all plans	4,655	35,000	3,018,000
Options granted under all plans		$ 0.24
Expired and forfeited		(38,000)
Expired and forfeited		$ 0.14

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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			1 Months Ended	20 Months Ended	6 Months Ended		3 Months Ended		0 Months Ended	3 Months Ended		6 Months Ended
	Sep. 30, 2014	Sep. 30, 2014	Mar. 31, 2014		Nov. 14, 2014 Board of Directors Chairman [Member] Subsequent Event [Member]	Nov. 14, 2014 Board of Directors Chairman [Member] Subsequent Event [Member]	Sep. 30, 2014 Board of Directors Chairman [Member]	Sep. 30, 2013 Board of Directors Chairman [Member]	Sep. 30, 2014 Customer A [Member] Sales Revenue, Net [Member] Customer Concentration Risk [Member]	Sep. 30, 2014 Customer B [Member] Sales Revenue, Net [Member] Customer Concentration Risk [Member]	Nov. 07, 2014 Subsequent Event [Member]	Sep. 30, 2014 Sales Revenue, Net [Member] Customer Concentration Risk [Member]	Sep. 30, 2013 Sales Revenue, Net [Member] Customer Concentration Risk [Member]	Sep. 30, 2014 Sales Revenue, Net [Member] Customer Concentration Risk [Member]	Sep. 30, 2013 Sales Revenue, Net [Member] Customer Concentration Risk [Member]	Sep. 30, 2014 Accounts Receivable [Member] Customer Concentration Risk [Member]	Sep. 30, 2013 Accounts Receivable [Member] Customer Concentration Risk [Member]	Sep. 30, 2014 Minimum [Member]	Sep. 30, 2014 Maximum [Member]
Note 1 - The Company and Significant Accounting Policies (Details) [Line Items]
Number of Operating Segments		1
Retained Earnings (Accumulated Deficit) (in Dollars)	$ (120,733)	$ (120,733)	$ (118,651)	[1]
Additional Funding Required For Operating Needs (in Dollars)																		800	1,400
Proceeds from Related Party Debt (in Dollars)					550	4,826	1,485	1,461
Concentration Risk Number												2	1	1	1	1	0
Concentration Risk, Percentage									12.00%	19.00%			11.00%	16.00%	13.00%	15.00%
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in Shares)	4,655										2,300,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized (in Dollars)	196	196
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, To Be Recognized This Fiscal Year (in Dollars)	80	80
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, To Be Recognized In Year 2 (in Dollars)	91	91
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, To Be Recognized In Year 3 (in Dollars)	21	21
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, To Be Recognized In Year 4 (in Dollars)	$ 4	$ 4

[1] Derived from the Company's audited consolidated financial statements.

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Note 3 - Stock Option Plans (Tables)

6 Months Ended

Sep. 30, 2014

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

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

				Weighted-
	Outstanding			Average		Aggregate
	Stock			Exercise		Intrinsic
	Options			Price		Value
Balance as of March 31, 2014		6,008,000		$	0.13
Options granted under all plans		35,000		$	0.24
Exercised		-			-
Expired and forfeited		(38,000	)	$	0.14
Outstanding as of September 30, 2014		6,005,000		$	0.13	$	1,563,000
Vested as of September 30, 2014		3,984,000		$	0.14	$	1,007,000
Vested and expected to vest as of September 30, 2014		5,325,000		$	0.13	$	1,365,000

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Accounting Policies, by Policy (Policies)

6 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

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, 2014, which are included in Salon’s Annual Report on Form 10-K for the fiscal year ended March 31, 2014 filed with the Securities and Exchange Commission on June 27, 2014. 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 three and six month periods ended September 30, 2014 are not necessarily indicative of the expected results for any other interim period or for the fiscal year ending March 31, 2015.

These condensed consolidated financial statements contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. We have incurred losses and negative cash flows from operations since inception and had an accumulated deficit as of September 30, 2014 of $120,733. In addition, we expect to incur a net loss from operations for the fiscal year ending March 31, 2015. Burr Pilger Mayer, Inc., Salon’s independent registered public accounting firm for the years ended March 31, 2014, 2013, and 2012, included a “going-concern” audit opinion on the consolidated financial statements for those years. The audit opinions report substantial doubt about our ability to continue as a going concern, citing issues such as the history of losses and absence of current profitability. As a result of the “going-concern” opinions, our stock price and investment prospects have been and will continue to be adversely affected, thus limiting financing choices and raising concerns about the realization of value on assets and operations.

Our operating forecast for the remainder of the fiscal year ending March 31, 2015 anticipates continued operating losses. We estimate we will require approximately $800 - $1,400 in additional funding to meet our operating needs for the balance of our fiscal year. If planned revenues continue to be less than expected, or if planned expenses are more than expected, the cash shortfall may be higher, which will result in a commensurate increase in required financing. During the current and previous fiscal years, we have relied on funding from related parties. Through November 14, 2014, our chairman has provided $4,826 in outstanding cash advances that have not yet been exchanged into our Common Stock. We remain dependent upon our two largest stockholders for continued financial support while we seek external financing from potential investors in the form of additional indebtedness or through the sale of equity securities in a private placement. We are working with our advisors in our efforts to obtain such funding, and explore strategic alternatives. In September 2014, we began the solicitation of potential investors in accordance with Rule 506(c) of Regulation D under the Securities Act of 1033, as amended. However, we do not currently have any agreements in place to provide any financing, and there is no certainty that we 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.  We perform ongoing credit evaluations of our customers, but do not require collateral.  We provide an allowance for credit losses that we periodically adjust to reflect our management’s expectation of future losses.

Two customers accounted for approximately 12% and 19% of total revenue for the three months ended September 30, 2014. One customer accounted for approximately 11% of total revenue for the three months ended September 30, 2013. One customer accounted for approximately 16% of total revenue for the six months ended September 30, 2014. One customer accounted for approximately 13% of total revenue for the six months ended September 30, 2013. One customer accounted for approximately 15% of total accounts receivable as of September 30, 2014 and no customer accounted for more than 10% of total accounts receivable as of September 30, 2013.

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

Stock-Based Compensation

We account 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.

We granted options to acquire a total of 4,655 shares during the quarter ended September 30, 2014. 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,
	2014		2013
Risk-free interest rates		1.25%		1.00%
Expected term (in years)		4		4
Expected volatility		425%		461%
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. We have not paid dividends in the past.

As of September 30, 2014, the aggregate stock compensation remaining to be amortized to expense was $196. Salon expects this stock compensation balance to be amortized as follows: $80 during the remainder of fiscal 2015; $91 during fiscal 2016; $21 during fiscal 2017 and $4 during fiscal 2018. The expected amortization reflects outstanding stock option awards as of September 30, 2014 expected to vest.

Reclassification, Policy [Policy Text Block]

Reclassifications

Certain reclassifications, not affecting previously reported net income or loss or total assets, 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 (Tables)

6 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

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

	Six months ended September 30,
	2014		2013
Risk-free interest rates		1.25%		1.00%
Expected term (in years)		4		4
Expected volatility		425%		461%
Dividend yield		0%		0%

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Note 4 - Net Loss Per Share (Tables)

6 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

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

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Numerator:
Net loss attributable to common stockholders	$	(1,196	)	$	(481	)	$	(2,082	)	$	(1,169	)
Denominator:
Weighted average shares used in computing basic and diluted net loss per share attributable to common stockholders		76,245,000			76,231,000			76,245,000			71,613,000
Basic and diluted net loss per share attributable to common stockholders	$	(0.02	)	$	(0.01	)	$	(0.03	)	$	(0.02	)
Antidilutive securities including options, warrants and convertible notes and preferred stock not included in net loss per share calculation		7,101,000			7,796,000			7,101,000			7,796,000

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Note 2 - Borrowing Agreements (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Note 2 - Borrowing Agreements (Details) [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 1,000
Interest Payable	274
Board of Directors Chairman [Member]
Note 2 - Borrowing Agreements (Details) [Line Items]
Proceeds from Related Party Debt	1,485	1,461
Short-Term Borrowings [Member]
Note 2 - Borrowing Agreements (Details) [Line Items]
Interest Payable	$ 274
Debt, Weighted Average Interest Rate	3.60%	3.70%
Prime Rate [Member]
Note 2 - Borrowing Agreements (Details) [Line Items]
Debt Instrument, Basis Spread on Variable Rate	0.25%

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Note 5 - Commitments and Contingencies (Details) - Office Lease Commitments and Short-term Borrowings (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Mar. 31, 2014
Office Lease Commitments and Short-term Borrowings [Abstract]
Operating leases	$ 1,716
Operating leases	397
Operating leases	652
Operating leases	667
Short-term borrowing	1,000	1,000	[1]
Interest on short-term borrowing	274
Interest on short-term borrowing	274
Related party advances	4,276
Related party advances	4,276	2,791	[1]
Total	7,266
Total	5,947
Total	652
Total	$ 667

[1] Derived from the Company's audited consolidated financial statements.

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Sep. 30, 2014		Sep. 30, 2013
Cash flows from operating activities:
Net loss	$ (2,082)		$ (1,169)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on disposal of property and equipment, net			9
Depreciation	17		19
Bad debt expense and change in allowance for doubtful accounts			9
Stock-based compensation	91		49
Changes in assets and liabilities:
Accounts receivable	488		(681)
Prepaid expenses and other assets	(105)		128
Accounts payable, accrued liabilities and deferred rent	175		138
Deferred revenues	9		(15)
Net cash used in operating activities	(1,407)		(1,513)
Cash flows from investing activities:
Purchase of property and equipment	(22)		(27)
Net cash used in investing activities	(22)		(27)
Cash flows from financing activities:
Proceeds from related party advances	1,485		1,461
Net cash provided by financing activities	1,485		1,461
Net increase (decrease) in cash and cash equivalents	56		(79)
Cash and cash equivalents at beginning of period	119	[1]	96
Cash and cash equivalents at end of period	175		17
Supplemental schedule of non-cash financing activity:
Conversion of unsecured advances and payables into common shares			$ 9,109

[1] Derived from the Company's audited consolidated financial statements.

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Note 5 - Commitments and Contingencies

6 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

5. Commitments and Contingencies

On October 17, 2012, we signed a new office lease agreement to relocate our 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 April 16, 2014, we entered into an office lease for our new corporate offices at 132 West 31^st Street, New York, New York consisting of 6,523 square feet in rentable space. The lease commenced on July 1, 2014 and will expire on September 30, 2019. Upon execution of the lease, a deposit in the form of a letter of credit of $204 was required. The term of the lease is five years with an effective base monthly rent expense of approximately $26, and a 2014 base year to be utilized in allocating future excess direct expenses. The rent expense associated with the office lease is straight-lined over the term of the agreement.  As a result, deferred rent increased to $83 as of September 30, 2014 from $2 as of June 30, 2014.

The following summarizes our office lease commitments and short-term borrowings as of September 30, 2014:

	Payments Due By Period
			1 Year						More Than 5
	Total		or Less		1 - 3 Years		3 - 5 Years		Years
Operating leases	$	1,716	$	397	$	652	$	667	$	-
Short-term borrowing		1,000		1,000		-		-		-
Interest on short-term borrowing		274		274		-		-		-
Related party advances		4,276		4,276		-		-		-
Total	$	7,266	$	5,947	$	652	$	667	$	-

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Note 6 - Preferred Stock (Details) (USD $) In Thousands, except Share data, unless otherwise specified	6 Months Ended
	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014
Note 6 - Preferred Stock (Details) [Line Items]
Dividends, Preferred Stock	$ 0
Preferred Stock, Liquidation Preference, Value	2,460		2,426	[1]
Preferred Stock, Shares Outstanding (in Shares)	1,075	1,075	1,075	[1]
Percentage Of Common Stock Owned By Preferred Stock Holders	6.00%
Series C Preferred Stock [Member] | Maximum [Member]
Note 6 - Preferred Stock (Details) [Line Items]
Preferred Stock, Liquidation Preference, Value	2,400
Series C Preferred Stock [Member]
Note 6 - 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	1,075
Percentage Of Preferred Stock Owners In Pool	1.00%
Excluding Undeclared Dividends [Member]
Note 6 - Preferred Stock (Details) [Line Items]
Preferred Stock, Liquidation Preference, Value	$ 1,720

[1] Derived from the Company's audited consolidated financial statements.

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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, 2014	Sep. 30, 2013
Assumptions Used in the Determination of Fair Value of Share-Based Payment Awards [Abstract]
Risk-free interest rates	1.25%	1.00%
Expected term (in years)	4 years	4 years
Expected volatility	425.00%	461.00%
Dividend yield	0.00%	0.00%