SOURCE: Salon Media Group, Inc.

November 13, 2006 06:00 ET

Salon Reports Second Quarter Fiscal Year 2007 Results

Records Quarterly Net Loss of $0.5 Million Compared to Net Loss of $0.2 Million in Prior Year Period; Advertising Revenues Increase 49% to $1.3 Million Compared to Prior Year Period

SAN FRANCISCO, CA -- (MARKET WIRE) -- November 13, 2006 -- Salon Media Group, Inc. (OTCBB: SALN), an Internet media company, announced today a net loss of $0.5 million for its second quarter ended September 30, 2006, compared to a net loss of $0.2 million for its second quarter the year before.

Total revenues for the quarter ended September 30, 2006 were $1.9 million, compared to $1.7 million a year ago. Advertising revenues increased to $1.3 million, compared to $0.9 million a year ago, a 49% increase. Salon Premium revenues declined $0.1 million to $0.4 million compared to $0.5 million a year ago due to a drop in memberships.

On a non-GAAP pro forma basis, which excludes non-cash and non-recurring items, Salon recorded a $0.2 million net loss for the current quarter compared to an essential break-even a year ago.

"We are encouraged by the 49% increase in our advertising revenues in the September quarter, and also a 43% increase in quarter over quarter unique Website visitors to 3.1 million," stated Elizabeth Hambrecht, Salon's CEO and President. "The increase in unique visitors helps Salon grow its advertising revenues." She added, "We continue to work on making it easier for visitors to use our Website, which we believe will allow us to serve more pages and therefore more advertisements. We feel that this will result in a further decline in Salon Premium memberships, but will be more than offset by an increase in advertising revenues."

A reconciliation of net loss attributable to common stockholders calculated in accordance with generally accepted accounting principles in the United States of America (GAAP) and pro forma net loss attributable to common stockholders is provided immediately following the consolidated statements of operations. These pro forma measures are not in accordance with, or an alternative for, GAAP and may be different from pro forma measures used by other companies. Salon believes that the presentation of pro forma results provides useful information to management and investors regarding underlying trends in its consolidated financial condition and results of operations. Readers of Salon's consolidated financial statements are advised to review and carefully consider the financial information prepared in accordance with GAAP contained in this press release and Salon's periodic filings with the Securities and Exchange Commission.

Future Periods Guidance:

Salon does not believe that the six months ended September 30, 2006 GAAP and non-GAAP financial results should be considered predictive of future quarter or year results.

For its quarter ending December 31, 2006, Salon forecasts advertising revenues of $1.9 - $2.0 million and total revenues of $2.5 - $2.6 million. If Salon attains total revenues of $2.6 million, it forecasts that it will most likely report a GAAP net profit attributable to common stockholders of approximately $0.1 million. Salon currently has approximately $1.9 million of advertising commitments for its quarter ending December 31, 2006. Revenues during this time period have historically been the highest for Salon. Salon cannot accurately predict total revenues after December 31, 2006 owing to the relatively short time frame in which advertising orders are secured and when they run on our Website and the lack of significant long-term advertising orders.

About Salon Media Group, Inc.:

Founded in 1995, Salon is an Internet publishing company. Salon's award-winning journalism combines original investigative stories and provocative personal essays along with quick-take commentary and staff-written Weblogs about politics, technology, culture and entertainment. Committed to interactivity, the Website also hosts two online communities, Table Talk and The Well. Features in Salon's Website include the daily music download column Audiofile, Videodog video clips, the Daou Report, an opinionated guide to the blogosphere, and the ability to automatically submit Letters to the Editor.

"Safe Harbor" Statement under the U.S. Private Securities Litigation Reform Act of 1995: This press release contains certain "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are naturally subject to uncertainty and changes in circumstances. Actual results may vary materially from the expectations contained herein. The forward-looking statements contained herein include statements about future financial and operating results of Salon. Factors that could cause actual results to differ materially from those described herein include: the economic environment of the media industry; the difficulty in securing on-line advertising and subscriptions; uncertain revenue sources and the general economic environment. More detailed information about these factors is set forth in the reports filed by Salon with the Securities and Exchange Commission. Salon is under no obligation to and expressly disclaims any such obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise. We do not believe that our reported results should be considered predictive of future period or full year results.


Note: Salon is a trademark and a registered trademark of Salon Media Group, Inc. All other company and product names mentioned are trademarks of their respective owners.

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

                                    Three Months Ended   Six Months Ended
                                       September 30        September 30
                                    ------------------   ----------------
                                        2006      2005      2006      2005
                                    --------  --------  --------  --------

Net revenues                        $  1,884  $  1,654  $  3,429  $  3,284
                                    --------  --------  --------  --------

Operating expenses:
   Production and content              1,290     1,040     2,558     2,093
   Sales and marketing                   402       348       736       665
   Information technology support        252       189       432       373
   General and administrative            289       238       580       449
                                    --------  --------  --------  --------
     Total operating expenses          2,233     1,815     4,306     3,580
                                    --------  --------  --------  --------

Loss from operations                    (349)     (161)     (877)     (296)
Other income (expense), net                -         1         3        20
                                    --------  --------  --------  --------
Net loss                                (349)     (160)     (874)     (276)
Preferred deemed dividend               (186)        -      (186)        -
                                    --------  --------  --------  --------
Net loss attributable to common
 stockholders                       $   (535) $   (160) $ (1,060) $   (276)
                                    ========  ========  ========  ========

Basic and diluted net loss per
 share attributable to common
 stockholders                       $  (0.02) $  (0.01) $  (0.04) $  (0.02)

Weighted average shares used in
 computing basic and diluted net
 loss per share attributable to
 common stockholders                  34,383    15,428    29,601    15,280



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

                    Three Months Ended             Six Months Ended
                     September 30, 2006           September 30, 2006
                ----------------------------  ----------------------------
                As   (1)              Pro     As   (1)              Pro
                Reported    Adj.      Forma   Reported    Adj.      Forma
                --------  --------  --------  --------  --------  --------
Net revenues    $  1,884  $      -  $  1,884  $  3,429  $      -  $  3,429
                --------  --------  --------  --------  --------  --------

Operating
 expenses:
  Production
   and content     1,290       (34)    1,256     2,558       (67)    2,491
  Sales and
   marketing         402       (81)      321       736      (144)      592
  Information
   technology
   support           252        (4)      248       432       (10)      422
  General and
   administrative    289       (37)      252       580       (48)      532
                --------  --------  --------  --------  --------  --------
    Total
     operating
     expenses      2,233      (156)    2,077     4,306      (269)    4,037
                --------  --------  --------  --------  --------  --------

Loss from
 operations         (349)      156      (193)     (877)      269      (608)
Other income
 (expense), net        -         -         -         3         -         3
                --------  --------  --------  --------  --------  --------
Net loss            (349)      156      (193)     (874)      269      (605)
Preferred
 deemed
 dividend           (186)      186         -      (186)      186         -
                --------  --------  --------  --------  --------  --------
Net loss
 attributable
 to common
 stockholders   $   (535) $    342  $   (193) $ (1,060) $    455  $   (605)
                ========  ========  ========  ========  ========  ========
Basic and
 diluted net
 loss per share
 attributable
 to common
 stockholders   $  (0.02)           $  (0.01) $  (0.04)           $  (0.02)


(1) In accordance with accounting principles generally accepted in the
    United States



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

                    Three Months Ended             Six Months Ended
                     September 30, 2005           September 30, 2005
                ----------------------------  ----------------------------
                  As   (1)              Pro     As   (1)             Pro
                  Reported    Adj.      Forma   Reported    Adj.    Forma
                  --------  --------  --------  --------  -------  -------


Net revenues      $  1,654  $      -  $  1,654  $  3,284  $     -  $ 3,284
                  --------  --------  --------  --------  -------  -------


Operating
 expenses:
  Production and
   content           1,040       (30)    1,010     2,093      (90)   2,003
  Sales and
   marketing           348       (59)      289       665     (106)     559
  Information
   technology
   support             189       (35)      154       373      (38)     335
  General and
   administrative      238        (3)      235       449       (6)     443
                  --------  --------  --------  --------  -------  -------
      Total
       operating
       expenses      1,815      (127)    1,688     3,580     (240)   3,340
                  --------  --------  --------  --------  -------  -------

Loss from
 operations           (161)      127       (34)     (296)     240      (56)
Other income
 (expense), net          1         -         1        20        -       20
                  --------  --------  --------  --------  -------  -------
Net loss              (160)      127       (33)     (276)     240      (36)
Preferred deemed
 dividend                -         -         -         -        -        -
                  --------  --------  --------  --------  -------  -------
Net loss
 attributable to
 common
 stockholders     $   (160) $    127  $    (33) $   (276) $   240  $   (36)
                  ========  ========  ========  ========  =======  =======
Basic and diluted
 net loss per
 share attributable
 to common
 stockholders     $  (0.01)           $   0.00  $  (0.02)          $  0.00


(1) In accordance with accounting principles generally accepted in the
    United States



                          SALON MEDIA GROUP, INC.
              PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
                              (in thousands)
                                (Unaudited)

                                    Three Months Ended   Six Months Ended
                                       September 30       September 30
                                    ------------------   ----------------
                                        2006      2005       2006      2005
                                    --------  --------   --------  --------

Net loss attributable to common
 stockholders                       $   (535) $   (160) $ (1,060) $   (276)

Less:
  Utilization prepaid advertising
   rights                                 61        54       106        98
  Depreciation and amortization
   charges                                22        59        42        80
  Stock compensation charges              73        14       121        62
  Preferred deemed dividend charges      186         -       186         -
                                    --------  --------  --------  --------
Pro forma net loss attributable to
 common stockholders                $   (193) $    (33) $   (605) $    (36)
                                    ========  ========  ========  ========



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

                                                   
                                                 September 30,   March 31,
                                                      2006         2006
                                                  (Unaudited)
                                                  -----------  -----------
Assets
   Current assets:
        Cash and cash equivalents                 $       539  $       441
        Accounts receivable, net                        1,126          502
        Prepaid expenses, and other current
         assets                                           114          184
                                                  -----------  -----------
          Total current assets                          1,779        1,127
   Property and equipment, net                            142          155
   Prepaid advertising rights                           3,612        3,718
   Goodwill                                               200          200
   Other assets                                           107          104
                                                  -----------  -----------
          Total assets                            $     5,840  $     5,304
                                                  ===========  ===========
Liabilities and stockholders' equity
   Current liabilities:
        Accounts payable and accrued liabilities  $       722  $       747
        Deferred revenue                                  688          820
                                                  -----------  -----------
          Total current liabilities                     1,410        1,567
   Other long-term liabilities                            103          120
                                                  -----------  -----------
          Total liabilities                             1,513        1,687
                                                  -----------  -----------

Stockholders’ equity:
   Common stock                                            38           19
   Preferred stock                                          -            -
   Additional paid-in-capital                          96,312       94,601
   Unearned compensation                                    -          (40)
   Accumulated deficit                                (92,023)     (90,963)
                                                  -----------  -----------
        Total stockholders' equity                      4,327        3,617
                                                  -----------  -----------
          Total liabilities and stockholders'
           equity                                 $     5,840  $     5,304
                                                  ===========  ===========

Contact Information

  • Investor Contact:
    Conrad Lowry
    Chief Financial Officer
    (415) 645-9317
    Email Contact