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                       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, 2003

                                       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)

                          22 Fourth Street, 16th Floor
                             San Francisco, CA 94103
                    (Address of principal executive offices)

                                ----------------

                                 (415) 645-9200
              (Registrant's telephone number, including area code)

                                ----------------

           Securities registered pursuant to Section 12(b) of the Act:
                                      None

                                ----------------

           Securities registered pursuant to Section 12(g) of the Act:
                         Common Stock, $0.001 Par Value
                                (Title of Class)

                                ----------------

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

Indicate by check mark whether the Registrant is an accelerated filer as defined
by Rule 12b-12 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, 2003 was 14,155,276 shares.
================================================================================
<PAGE>
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FORM 10-Q
SALON MEDIA GROUP, INC.
INDEX
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                                                                           PAGE
PART I FINANCIAL INFORMATION                                              NUMBER


ITEM 1: Condensed Consolidated Financial Statements

        Condensed Consolidated Balance Sheets as of September 30,
         2003 and March 31, 2003 (unaudited).................................3

        Condensed Consolidated Statements of Operations for the
         three months and six months ended September 30, 2003 and
         2002 (unaudited)....................................................4

        Condensed Consolidated Statements of Cash Flows for the
         six months ended September 30, 2003 and 2002 (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..........30

ITEM 4: Controls and Procedures.............................................30

PART II OTHER INFORMATION

ITEM 1: Legal Proceedings...................................................30

ITEM 2. Changes in Securities and Use of Proceeds...........................30

ITEM 3. Defaults upon Senior Securities.....................................31

ITEM 4. Submission of Matters to a Vote of Security Holders.................31

ITEM 5. Other Information...................................................31

ITEM 6: Exhibits and Reports on Form 8-K....................................32

        Signatures..........................................................33

                                        2
<PAGE>

--------------------------------------------------------------------------------
PART I:  FINANCIAL INFORMATION
ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
<TABLE><CAPTION>
                             SALON MEDIA GROUP, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
                                   (UNAUDITED)
                                                                              SEPTEMBER 30,          MARCH 31,
                                                                                  2003                 2003
                                                                              ------------         ------------
<S>                                                                          <C>                  <C>
ASSETS
    Current assets:
       Cash and cash equivalents                                              $         42         $        162
       Accounts receivable, net                                                        241                  227
       Prepaid expenses and other current assets                                       558                  169
                                                                              ------------         ------------
        Total current assets                                                           841                  558

    Property and equipment, net                                                        283                  459
    Prepaid advertising rights                                                       5,240                5,480
    Goodwill, net                                                                      200                  200
    Other intangibles, net                                                             163                  348
    Other assets                                                                       137                  545
                                                                              ------------         ------------
        Total assets                                                          $      6,864         $      7,590
                                                                              ============         ============
LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
       Convertible notes payable-related parties                              $      2,464         $      1,256
       Convertible notes payable-non related parties                                   863                  458
       Bank borrowing                                                                   72                 --
       Accounts payable and accrued liabilities                                      1,452                1,366
       Deferred revenue                                                                897                  918
                                                                              ------------         ------------
        Total current liabilities                                                    5,748                3,998
    Long-term liabilities
         Warrants payable                                                              522                  354
         Other long-term liabilities                                                    84                  215
                                                                              ------------         ------------
       Total liabilities                                                             6,354                4,567
                                                                              ------------         ------------
Stockholders' equity:
    Preferred stock, $0.001 par value, 5,000,000
       shares authorized, 934 issued and outstanding
       at September 30, 2003 and March 31, 2003 (liquidation
       value of $7,472 at September 30, 2003)                                         --                   --
    Common stock, $0.001 par value, 50,000,000 shares
       authorized, 14,155,276 shares issued and outstanding
       at September 30, 2003 and March 31, 2003                                         14                   14
    Additional paid-in-capital                                                      85,288               85,283
    Accumulated deficit                                                            (84,792)             (82,274)
                                                                              ------------         ------------
       Total stockholders' equity                                                      510                3,023
                                                                              ------------         ------------
        Total liabilities and stockholders' equity                            $      6,864         $      7,590
                                                                              ============         ============
</TABLE>

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

                                        3
<PAGE>

                             SALON MEDIA GROUP, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)
<TABLE><CAPTION>

                                                            THREE MONTHS ENDED               SIX MONTHS ENDED
                                                               SEPTEMBER 30,                   SEPTEMBER 30,
                                                         -------------------------       -------------------------
                                                            2003           2002             2003           2002
                                                         ----------     ----------       ----------     ----------
<S>                                                      <C>            <C>              <C>            <C>
Net revenues                                             $    1,086     $    1,023       $    2,131     $    1,995
                                                         ----------     ----------       ----------     ----------

Operating expenses:
    Production and content                                      956          1,221            2,145          2,394
    Sales and marketing                                         467            559            1,030          1,311
    Research and development                                    149            161              298            323
    General and administrative                                  322            395              693            802
    Amortization of intangibles                                  97             93              190            227
                                                         ----------     ----------       ----------     ----------
        Total operating expenses                              1,991          2,429            4,356          5,057
                                                         ----------     ----------       ----------     ----------

Loss from operations                                           (905)        (1,406)          (2,225)        (3,062)

Other income, net                                              (252)           (25)            (324)           (32)
                                                         ----------     ----------       ----------     ----------
       Net loss                                              (1,157)        (1,431)          (2,549)        (3,094)


Preferred deemed dividend                                       (41)           (50)              31            (50)
                                                         ----------     ----------       ----------     ----------

Net loss attributable to common stockholders             $   (1,198)    $   (1,481)      $   (2,518)    $   (3,144)
                                                         ==========     ==========       ==========     ==========

Basic and diluted net loss per share attributable
       to common stockholders                            $    (0.09)    $    (0.11)      $    (0.18)    $    (0.23)

Weighted average shares used in computing
       basic and diluted net loss per share
       attributable to common stockholders                   14,090         13,997           14,044         13,880
</TABLE>


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

                                        4
<PAGE>

                             SALON MEDIA GROUP, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)
<TABLE><CAPTION>
                                                                                           SIX MONTHS ENDED
                                                                                             SEPTEMBER 30,
                                                                                      --------------------------
                                                                                         2003            2002
                                                                                      ----------      ----------
<S>                                                                                  <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                                           $   (2,549)     $   (3,094)
   Adjustments to reconcile net loss to net cash used in operating activities:
     Loss from retirement of assets, net                                                      43            --
     Stock-based compensation and warrant amortization                                       224              39
     Depreciation and amortization                                                           432             518
     Allowance for (recovery of) doubtful accounts                                            (8)              9
     Amortization of prepaid advertising rights                                              240             507
     Changes in assets and liabilities:
        Accounts receivable                                                                   (6)            (44)
        Prepaid expenses, other current assets and other assets                             (129)            147
        Accounts payable and other liabilities                                                24             (82)
        Deferred revenue                                                                     (21)            130
                                                                                      ----------      ----------
           Net cash used in operating activities                                          (1,750)         (1,870)
                                                                                      ----------      ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of property and equipment                                                         (1)           --
   Proceeds from asset sales                                                                  15            --
                                                                                      ----------      ----------
           Net cash provided by investing activities                                          14            --
                                                                                      ----------      ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from bank borrowing                                                              155            --
   Payments to bank                                                                          (83)           --
   Proceeds from issuance of notes payable                                                 1,613             696
   Principal payments under capital leases                                                   (69)           (102)
                                                                                      ----------      ----------
           Net cash provided by financing activities
                                                                                           1,616             594
                                                                                      ----------      ----------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                                   (120)         (1,276)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                             162           1,542
                                                                                      ----------      ----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                            $       42      $      266
                                                                                      ==========      ==========

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
   Issuance of stock and warrants in connection with acquisition                      $        5      $       42
   Issuance of warrants in connection with issuance of convertible
      notes payable                                                                          151               6
   Preferred deemed dividend in connection with preferred stock financing                    (31)             50
</TABLE>

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

                                        5
<PAGE>

                             SALON MEDIA GROUP, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                                   (UNAUDITED)

1. THE COMPANY

         Salon Media Group, Inc ("Salon") is an Internet media company that
produces a total network of nine primary subject-specific Websites and two
online communities. Salon was originally incorporated in July 1995 in the State
of California and reincorporated in Delaware in June 1999. Salon operates in one
business segment.

2. BASIS OF PRESENTATION

         The interim condensed consolidated financial statements are unaudited
and have been prepared on the same basis as the annual financial statements and,
in the opinion of management, reflect all adjustments, which include only normal
recurring adjustments necessary to present fairly Salon's consolidated financial
position, consolidated results of operations and consolidated cash flows for the
periods presented. The condensed consolidated balance sheet data as of March 31,
2003 is derived from and should be read in conjunction with the audited
financial statements, which are included in Salon's Annual Report on Form 10-K,
as amended, filed with the Securities and Exchange Commission. Pursuant to the
rules of the Securities and Exchange Commission, these financial statements do
not include all disclosures required by generally accepted accounting
principles. The results for the six months ended September 30, 2003 are not
necessarily indicative of the expected results for any other interim period or
for the fiscal year ending March 31, 2004.

         These condensed consolidated financial statements contemplate the
realization of assets and the satisfaction of liabilities in the normal course
of business. Salon has incurred losses and negative cash flows from operations
since inception and has an accumulated deficit at September 30, 2003 of $84,792.
These factors raise substantial doubt about Salon's ability to continue as a
going concern.

         Salon has reduced expenses, and may reduce them further, to match
anticipated revenues to reach cash flow breakeven. There can be no assurance
that a further cost cutting exercise will be successful in completely
eliminating the difference between expenditures and revenues or that such
actions would not have a harmful effect on Salon's business and results of
operations. Until cash flow breakeven is reached, Salon will have to rely on
additional investment capital or other financing activities, including notes
from investors. These financing alternatives may include the sale of the prepaid
advertising rights. There can be no assurance that Salon will be able to sell
its advertising rights at all or at a reasonable rate to Salon and Salon also
may not be able to obtain additional capital on terms, which are favorable, or
at all. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

3. CONCENTRATIONS OF CREDIT RISK

         No customer accounted for more than 10% of total revenue for the
three-month or six month periods ended September 30, 2003 and September 30,
2002. Four customers accounted for 26%, 16%, 15% and 13% of the total accounts
receivable balance as of September 30, 2003. Three customers accounted for 23%,
11% and 10% of the total accounts receivable balance as of September 30, 2002.

                                        6
<PAGE>

                             SALON MEDIA GROUP, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                                   (UNAUDITED)

4. GOODWILL AMORTIZATION AND INTANGIBLE ASSETS

         The following table sets forth information concerning Salon's goodwill
and intangible assets as of September 30, 2003:
<TABLE><CAPTION>
                                                          Gross                       Net
                                                        Carrying    Accumulated    Carrying
                                                         Amount    Amortization     Amount
                                                      -----------  ------------  -----------
<S>                                                   <C>          <C>           <C>
Trade name                                            $     1,200  $      1,080  $       120
Proprietary technology                                        355           320           35
Audio technology                                              158           150            8
                                                      -----------  ------------  -----------
Total intangible assets subject to amortization       $     1,713  $      1,550  $       163
                                                      ===========  ============  ===========

Goodwill                                              $     3,555  $      3,355  $       200
                                                      -----------  ------------  -----------
Total intangible assets not subject to amortization   $     3,555  $      3,355  $       200
                                                      ===========  ============  ===========
</TABLE>

The weighted average amortization period remaining for all intangible assets
subject to amortization is 0.5 years.

5. NET LOSS PER SHARE

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

                                                               THREE MONTHS ENDED            SIX MONTHS ENDED
                                                                  SEPTEMBER 30                 SEPTEMBER 30
                                                          ---------------------------   --------------------------
                                                              2003           2002           2003          2002
                                                          ------------   ------------   ------------  ------------
<S>                                                      <C>            <C>            <C>           <C>
Numerator:
    Net loss attributable to common stockholders          $     (1,198)  $     (1,481)  $     (2,518) $     (3,144)
                                                          ------------   ------------   ------------  ------------

Denominator
    Weighted average shares outstanding                     14,155,000     14,155,000     14,155,000    14,155,000
    Weighted average shares held in escrow                     (65,000)      (158,000)      (111,000)     (275,000)
                                                          ------------   ------------   ------------  ------------
    Weighted average shares used in computing
        basic and diluted net loss per share                14,090,000     13,997,000     14,044,000    13,880,000
                                                          ============   ============   ============  ============

Basic and diluted net loss per share attributable
    to common stockholders                                $      (0.09)  $      (0.11)  $      (0.18)  $     (0.23)
                                                          ============   ============   ============  ============

Antidilutive securities including options, warrants
 and convertible preferred stock not included in net
 loss attributable to common stockholders per share
 calculation                                                36,944,787     31,635,330     36,944,787    31,635,330
</TABLE>

                                        7
<PAGE>

                             SALON MEDIA GROUP, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                                   (UNAUDITED)

If Salon's compensation expense under its stock option plan had been determined
pursuant to Statement of Financial Accounting Standards (SFAS) No. 123,
"Accounting for Stock-Based Compensation," Salon's net loss per share would have
been as follows:
<TABLE><CAPTION>
                                                                  THREE MONTHS ENDED             SIX MONTHS ENDED
                                                                     SEPTEMBER 30                  SEPTEMBER 30
                                                             ---------------------------    ---------------------------
                                                                 2003           2002            2003           2002
                                                             ------------   ------------    ------------   ------------
<S>                                                         <C>            <C>             <C>            <C>
Net loss attributable to common stockholders:
     As reported                                             $     (1,198)  $     (1,481)   $     (2,518)  $     (3,144)
     Add back: stock-based employee compensation
         expense included in reported net loss                        --              15             --              30

     Deduct: total stock-based compensation
         expense determined under the fair value
         based method, net of related tax                             (22)          (212)           (104)          (514)

     Pro forma net loss attributable to common
                                                             ------------   ------------    ------------   ------------
         stockholders                                        $     (1,220)  $     (1,678)   $     (2,622)  $     (3,628)
                                                             ============   ============    ============   ============

Basis and diluted net loss per share attributable
  to common stockholders:
         As reported                                         $      (0.09)  $      (0.11)   $      (0.18)  $      (0.23)
         Pro forma net loss per share                        $      (0.09)  $      (0.12)   $      (0.19)  $      (0.26)
</TABLE>

6. RECENT ACCOUNTING PRONOUNCEMENTS

         In November 2002, the Emerging Issues Task Force (EITF) reached a
consensus on Issue No. 00-21 "Accounting for Revenue Arrangements With Multiple
Deliverables" which provides guidance on how to account for arrangements that
involve the delivery or performance of multiple products, services and/or rights
to use assets. The provisions of EITF No. 00-21 apply to revenue arrangements
entered into in fiscal periods beginning after June 15, 2003. The adoption of
EITF No. 00-21 did not have a significant affect on Salon's financial position
and results of operations.

         In May 2003, the Financial Accounting Standards Board (FASB) issued
SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics
of both Liabilities and Equity." This Statement establishes standards for how an
issuer classifies and measures in its statement of financial position certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances) because that financial
instrument embodies an obligation of the issuer. This Statement is

                                        8
<PAGE>

                             SALON MEDIA GROUP, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                                   (UNAUDITED)

effective for financial instruments entered into or modified after May 31, 2003
and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003, except for mandatorily redeemable financial
instruments of nonpublic entities. For nonpublic entities, mandatorily
redeemable financial instruments are subject to the provisions of this Statement
for the first period beginning after December 15, 2003. It is to be implemented
by reporting the cumulative effect of a change in an accounting principle for
financial instruments created before the issuance date of the statement and
still existing at the beginning of the interim period of adoption. The adoption
of SFAS No. 150 did not have an adverse affect on Salon's financial position or
results of operations.

7. CONVERTIBLE NOTES PAYABLE

         On April 10, 2003 Salon finalized a Note and Warrant Purchase agreement
with two investors for $200 and issued warrants to purchase 600,000 shares of
common stock at $0.046 per share. The investors included a Director of Salon, as
well as an entity that the father of Salon's President, Chief Financial Officer,
Treasurer and Secretary, has an ownership interest in. On April 29, 2003 Salon
finalized a Note and Warrant Purchase agreement with the same investors for $200
and issued warrants to purchase 600,000 shares of common stock at $0.0575 per
share. On May 28, 2003 Salon finalized a Note and Warrant Purchase agreement
with the same Director of Salon for $300 and issued warrants to purchase 900,000
shares of common stock at $0.0575 per share. On June 12, 2003 Salon finalized a
Note and Warrant Purchase agreement with the father of Salon's President, Chief
Financial Officer, Treasurer and Secretary for $100 and issued warrants to
purchase 300,000 shares of common stock at $0.0575 per share. On June 26, 2003
Salon finalized a Note and Warrant Purchase agreement with an investor for $100
and issued warrants to purchase 300,000 shares of common stock at $0.0575 per
share. On July 10, 2003 Salon finalized a Note and Warrant Purchase agreement
with three investors for $248 and issued warrants to purchase 744,015 shares of
common stock at $0.046 per share. The investors included a Director of Salon,
and an entity that Salon's President, Chief Financial Officer, Treasurer and
Secretary has an ownership interest in. On July 30, 2003 Salon finalized a Note
and Warrant Purchase agreement with a Director of Salon for $100 and issued
warrants to purchase 300,000 shares of common stock at $0.0345 per share. On
August 29, 2003 Salon finalized a Note and Warrant Purchase agreement with three
investors for $165 and issued warrants to purchase 495,000 shares of common
stock at $0.0345 per share. The investors included a Director of Salon, and
Salon's President, Chief Financial Officer, Treasurer and Secretary.

         The notes, which were amended effective September 12, 2003 and
September 22, 2003, can be converted into financing securities or Salon's common
stock and accrue interest on the unpaid principal at 6.0% per year with such
interest and principal due on December 31, 2003. The notes automatically convert
upon the closing of Salon's first sale of its preferred or common stock with
aggregate gross proceeds to Salon of at least $2,000 (including the conversion
of the outstanding principal of the notes and other converted indebtedness of
Salon). In the event that Salon issues new financing securities by December 31,
2003, the number of shares of the financing securities to be issued upon
conversion of the notes shall equal the aggregate amount of the Notes divided by
the price per share of the financing securities issued and sold. If no new
financing occurs by December 31, 2003, the notes can convert at the option of
the note holder to shares of common stock based on the average closing price of
Salon's common stock over the sixty trading days ending on September 30, 2003 or
December 31, 2003, which ever is lower, as reported on such market(s) and/or
exchanges where the common stock has traded. The conversion of the notes to
common stock may only occur at such time as Salon's stockholders approve an

                                        9
<PAGE>

                             SALON MEDIA GROUP, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                                   (UNAUDITED)

amendment to Salon's certificate of incorporation increasing the authorized
shares of common stock to a level that would permit conversion of the notes to
common stock. In the event of bankruptcy or insolvency proceedings, the notes
become immediately due and payable. Salon granted the purchasers of the notes a
security interest in substantially all of Salon's assets. The indebtedness of
the notes is subordinated to certain bank indebtedness.

         On September 12, 2003 and September 29, 2003, Salon finalized Note and
Warrant Purchase agreements with the same Director of Salon mentioned above for
a total of $200 and issued warrants to purchase 300,000 shares of common stock
at $0.0575 per share and 300,000 shares of common stock at $0.0805 per share.
The terms of these notes are identical to the terms of the amended notes
mentioned above.

         As of this filing, the holders of these notes and the notes issued
during the year ended March 31, 2003, have not elected to convert their notes
into either financing securities or Salon's common stock.

         The warrants issued in conjunction with the notes were valued at $151
using the Black-Scholes option-pricing model, applying a contractual life of
three years, a weighted average risk-free rate of 2.0% to 2.4%, an expected
dividend yield of 0%, a volatility of 120% and a deemed fair value of common
stock of $0.04 to $0.07.

         The $3,327 of convertible notes payable issued by Salon do not
stipulate a maximum number of shares issuable upon conversion. Since Salon may
potentially have insufficient shares authorized to satisfy all obligations under
convertible instruments, warrant agreements and options, the value of warrants
issued are classified as long-term liabilities, with the fair value re-measured
at each balance sheet period. The re-measurement of warrants as of September 30,
2003 resulted in a cummulative charge of $17, of which a benefit of $31 related
to warrants issued in conjunction with the prior issuances of preferred stock,
and was recorded as a preferred deemed dividend in Salon's results of
operations.

8. BANK BORROWINGS

         Salon has an Accounts Receivable Purchase Agreement with a bank. Under
the terms of the agreement, the bank can make advances of 60% or 80% of the face
value of acceptable receivables from Salon, depending on the nature of the
receivable. During the six month period ended September 30, 2003, Salon borrowed
$155 and repaid $83 under the agreement. Subsequent to September 30, 2003, Salon
borrowed an additional $27 and repaid $72.

9. SUBSEQUENT EVENTS

         On October 1, 2003 Michael O'Donnell, Salon's President and Chief
Executive Officer, resigned. As part of the resignation, Michael O'Donnell
received warrants to purchase one million shares of Salon's common stock at $.05
per share. The warrants were valued at $31 using the Black-Scholes
option-pricing model, applying a contractual life of two years, a weighted
average risk-free rate of 1.625%, an expected dividend yield of 0%, a volatility
of 120% and a deemed fair value of common stock of $0.05. David Talbot, Salon's
Chairman of the Board and Editor-in-Chief became the Chief Executive Officer and
Elizabeth Hambrecht, Salon's Chief Financial Officer, Treasurer and Secretary
became Salon's President.

                                       10
<PAGE>

                             SALON MEDIA GROUP, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                                   (UNAUDITED)

         On October 6, 2003 Salon finalized a Note and Warrant Purchase
agreement with an investors for $100 and issued warrants to purchase 300,000
shares of common stock at $0.0805 per share. The investor was an entity of which
the father of Salon's President, Chief Financial Officer, Treasurer and
Secretary, has an ownership interest in. On October 10, 2003 Salon finalized a
Note and Warrant Purchase agreement with a Director of Salon for $100 and issued
warrants to purchase 300,000 shares of common stock at $0.0575 per share. On
October 30, 2003 Salon finalized a Note and Warrant Purchase agreement with two
investors for $150 and issued warrants to purchase 450,000 shares of common
stock at $0.0575 per share. The investors included a Director of Salon, as well
as an entity that the father of Salon's President, Chief Financial Officer,
Treasurer and Secretary, has an ownership interest in. On November 12, 2003
Salon finalized a Note and Warrant Purchase agreement with a Director of Salon
for $100 and issued warrants to purchase 300,000 shares of common stock at
$0.069 per share.















                                       11
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS

         This section and other parts of this Form 10-Q contain "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, as amended (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, anticipated sale of
television advertising credits, economic conditions, on-line advertising, market
performance, subscription service plans, and revenue sources. Although Salon
Media Group, Inc. (Salon) believes its plans, intentions and expectations
reflected in such forward-looking statements are reasonable, we can give no
assurance those plans, and intentions or expectations will be achieved. Our
actual results may differ significantly from those anticipated or implied in
these forward-looking statements as a result of the factors set forth 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 Conditions
and Results of Operations" and "Factors That May Affect Our 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.

OVERVIEW

         Salon Media Group, Inc. is an Internet media company that provides
online news and information. An online pioneer, Salon offers award-winning
journalism from breaking news and in-depth analysis to provocative commentary on
politics, technology, culture and entertainment. Salon also offers an audio
streaming Website, and hosts' two online communities - Table Talk and The Well.
Salon believes that its network of Websites combines the thoughtfulness of
print, the timeliness of television and the interactivity of talk radio.

         The main entry and navigation point to Salon's nine subject specific
Websites is Salon's home page at www.salon.com. The Websites provide news,
features, interviews and regular columnists on specific topics, from politics
and arts and entertainment to parenting and health, while Salon's online
communities allow users to interact and discuss Salon content and other topics
via electronic messaging. Salon's users can access Table Talk or The Well
through www.salon.com or through Salon's content Websites.

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

         This section and other parts of this Form 10-Q should be considered in
conjunction with the audited financial statements, which are included in Salon's
Annual Report on Form 10-K, as amended, filed with the Securities and Exchange
Commission. Matters of interest therein include, but are not limited to, Salon's
disclosure of critical accounting policies.

                                       12
<PAGE>

RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2003
COMPARED TO THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2002

NET REVENUES:

         Net revenues increased 6% to $1.1 million for the three months ended
September 30, 2003 from $1.0 million for the three months ended September 30,
2002 and increased 7% to $2.1 million for the six months ended September 30,
2003 from $2.0 million for the six months ended September 30, 2002.

         Advertising revenues decreased to $0.4 million for the three months
ended September 30, 2003 from $0.5 million for the three months ended September
30, 2002 and decreased to $0.8 million for the six months ended September 30,
2003 from $1.0 million for the six months ended September 30, 2002. The drop in
advertising revenues has resulted from advertisers preference to advertise on
websites with more website visitors and corresponding more ad impressions than
Salon is able to generate. To offset this decline, Salon has introduced a new
strategy whereby it emphasizes to potential advertisers its intercept ad format
with rich media (called an "Ultramercial"), that Salon feels results in a more
favorable ad experience than traditional banner advertising. Salon also
emphasizes the fact that its focused audience demographics (such as age, annual
income and education) facilitate product branding. Salon cannot predict how
successful this strategy will be.

         Subscription revenues increased to $0.6 million for the three months
ended September 30, 2003 from $0.5 million for the three months ended September
30, 2002 and increased to $1.2 million for the six months ended September 30,
2003 from $0.9 million for the six months ended September 30, 2002. The increase
in subscription revenues is attributable to Salon Premium, as subscriptions to
The Well have remained constant. New and renewal one-year subscriptions to Salon
Premium for the three months ended September 30, 2003 were approximately 15,000,
and approximately 30,000 for the six months ended September 30, 2003, compared
to approximately 8,000 for the three months ended September 30, 2002 and 17,000
for the six months ended September 30, 2002. The increase in subscriptions is
primarily attributable to the appeal of Salon's content which compels new
individuals to subscribe, a renewal rate for one-year paid subscriptions as of
September 30, 2003 estimated to range from 65% to 70%, the introduction of an
annual subscription plan with ads in September 2002, and gift subscriptions.
During the three and six months ended September 30, 2002 two-year subscriptions
to Salon Premium were approximately 500 and 700, respectively. Salon
discontinued this two-year subscription plan in November 2002. Individuals
previously opting for two-year subscriptions are now signing up for the one-year
plans. Salon cannot estimate if its growth in subscribers will continue at the
same levels being experienced. Effective August 15, 2003 Salon raised the price
of Salon Premium annual subscriptions to $35 with no ads and $22.50 with ads.
Salon cannot predict what affect, if any, this increase will have on
subscription revenues. As of September 30, 2003, Salon has approximately 72,000
active subscribers and deferred $0.8 million of revenue, compared to 41,000
active subscribers and deferred revenue of $0.5 million as of September 30,
2002, representing an approximate increase of 75% in active subscribers from the
comparable period last year.

         Salon estimates that it will recognize approximately $2.0 million of
Salon Premium revenue for its fiscal year ending March 31, 2004 but cannot
accurately estimate advertising revenue during the period.

PRODUCTION AND CONTENT:

         Production and content expenses during the three months ended September
30, 2003 were $1.0 million versus $1.2 million during the three months ended
September 30, 2002, a decline of $0.2 million or 22%. Production and content
expenses during the six months ended September 30, 2003 were $2.1 million versus
$2.4 million during the six months ended September 30, 2002, a decline of $0.3
million or

                                       13
<PAGE>

10%. Product and content expenses have declined in all categories reflecting the
limited cash on hand to fund operations. Salon does not anticipate material
future changes in production and content expenditures.


SALES AND MARKETING:

         Sales and marketing expenses during the three months ended September
30, 2003 were $0.5 million versus $0.6 million for the three months ended
September 30, 2002, a decline of $0.1 million or 16%. The modest decline was in
all expense categories and reflected the limited cash on hand to fund operations
during the period.

         Sales and marketing expenses during the six months ended September 30,
2003 were $1.0 million versus $1.3 million for the six months ended September
30, 2002, a decline of $0.3 million or 21%. The decline is primarily
attributable to utilizing $0.3 million less prepaid advertising rights this year
compared to last year.

         Salon acquired its prepaid advertising rights during its year ended
March 31, 2000 and has been amortizing the utilization of these rights since
that time. Salon has determined that the best use of its advertising rights
would be to sell the rights in order to generate working capital. Salon has
attempted to sell a portion of these rights without success. Consequently,
excluding the amortization of the advertising rights, Salon anticipates that
sales and marketing expenses will be approximately $1.6 million for the year
ending March 31, 2004.

RESEARCH AND DEVELOPMENT:

         Research and development expenses during the three months and six
months ended September 30, 2003 were $0.2 million and $0.3 million respectively,
were comparable to amounts for the three months and six months ended September
30, 2002. Salon does not anticipate material future changes or reductions in
research and development expenditures.

GENERAL AND ADMINISTRATIVE:

         General and administrative expenses during the three months ended
September 30, 2003 were $0.3 million versus $0.4 million for the three months
ended September 30, 2002, a decline of $0.1 million or 18%. General and
administrative expenses during the six months ended September 30, 2003 were $0.7
million versus $0.8 million for the six months ended September 30, 2002, a
decline of $0.1 million or 14%. General and administrative expenses have
declined in all categories reflecting the limited cash on hand to fund
operations.

         On October 1, 2003, Salon's Chief Executive Officer and Treasurer
resigned. As a result, Salon expects to incur charges of approximately $104 for
salary related costs and $31 reflecting the value of warrants issued to acquire
one million shares of Salon's common stock at $0.05 per share for its quarter
ending December 31, 2003. Salon anticipates all other costs in the future to be
comparable to costs incurred during the period just ended.

AMORTIZATION OF INTANGIBLES:

         Amortization of intangible expenses during the three months and six
months ended September 30, 2003 were $0.1 million and $0.2 million respectively,
comparable to amounts for the three months and six months ended September 30,
2002.

                                       14
<PAGE>

OTHER INCOME, NET:

         Other income, net for the three and six months ended September 30, 2003
was $0.3 million compared to none for the three and six months ended September
30, 2002. Approximately, $0.2 million of the increase is attributable to
expensing the value of warrants issued in conjunction with the issuance of notes
payable, and $0.1 million from the accrual of interest on the notes issued and
other nominal interest related items. The majority of the warrants issued has
been to related parties, primarily John Warnock, a Director of Salon and
entities that the father of Salon's President, Chief Financial Officer,
Treasurer and Secretary, has an ownership interest in.

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS:

         As a result of the above factors, Salon recorded a net loss
attributable to common stockholders of $1.2 million, or $0.09 per share for the
three months ended September 30, 2003 compared to a net loss attributable to
common stockholders of $1.5 million, or $0.11 per share for the three months
ended September 30, 2002. In addition, Salon recorded a net loss attributable to
common stockholders of $2.5 million, or $0.18 per share for the six months ended
September 30, 2003 compared to a net loss attributable to common stockholders of
$3.1 million, or $0.23 per share for the six months ended September 30, 2002.

LIQUIDITY AND CAPITAL RESOURCES:

         As of September 30, 2003, Salon has $42,000 cash on hand.

         Net cash used in operations was $1.8 million for the six months ended
September 30, 2003, compared to $1.9 million for the six months ended September
30, 2002. The principal use of cash during the six months ended September 30,
2003 was to fund the $2.5 million net loss for the period, which was primarily
offset by $0.9 million of non-cash charges. The principal use of cash during the
six months ended September 30, 2002 was to fund the $3.1 million net loss for
the period, which was primarily offset by $1.1 million of non-cash charges

         No cash was used in investing activities for the six months ended
September 30, 2003 and September 30, 2002. Salon does not expect any significant
capital expenditures during the current fiscal year.

         Net cash from financing activities provided $1.6 million for the six
months ended September 30, 2003 compared to $0.6 million for the six months
ended September 30, 2002. For the six months ended September 30, 2003, Salon
issued $1.6 million of convertible notes payable, of which $1.4 million was to
related parties, borrowed a net $0.1 million from a bank, and made payments
under capital leases of $0.1 million. For the six months ended September 30,
2002, Salon issued $0.7 million of convertible notes payable, of which $0.3
million was to related parties, and made payments under capital leases of $0.1
million.

         Salon's independent accountants have included a paragraph in their
report for the fiscal years ended March 31, 2003 and March 31, 2002 indicating
that substantial doubt exists as to Salon's ability to continue as a going
concern because it has recurring operating losses and negative cash flows, and
an accumulated deficit. Salon has eliminated various positions, has not filled
positions opened by attrition, implemented a wage reduction of 15% effective
April 1, 2001, and has cut discretionary spending, but due to limited visibility
of advertising activity, it is unable to predict accurately if and when it will
reach cash-flow break even.

                                       15
<PAGE>

         On June 27, 2003 Salon amended its lease for office space in San
Francisco. Under the terms of the amended lease agreement, retroactive to
February 28, 2003, the termination date was moved from December 2009 to February
2005; the monthly base rent was lowered from approximately $70,000 to
approximately $21,000; Salon will only rent one floor; prior rents owed to the
landlord will be repaid by the end of the revised release term; and Salon will
forfeit a $0.4 million deposit. As of September 30, 2003 the balance of prior
rents owed aggregated to $0.2 million. On July 7, 2003, the landlord drew on a
$0.4 million letter of credit from Salon, held as a security deposit by the
landlord and collateralized by Salon with a $0.4 million certificate of deposit.
The forfeited deposit of $0.4 million was recorded as pre-payment, to be
amortized over the amended lease term. As of September 30, 2003, $0.3 million is
yet to be amortized and is included as a component of prepaid expenses and other
current assets in Salon's balance sheet.

         As of September 30, 2003, Salon had $42,000 in available cash.
Subsequent to September 30, 2003, Salon received $450,000 from the issuance of
convertible notes payable, of which $300,000 was from a Director of Salon and
$150,000 was from an entity that the father of Salon's President, Chief
Financial Officer, Secretary and Treasurer, is an investor. These funds have
been utilized to fund operations. During the current fiscal year, Salon has
substantially relied upon these two investors to offset the negative cash flows
from operating activities. There is no assurance that these two investors will
continue to invest in Salon.

         Salon has entered into discussions with third parties to finance
additional new content for Salon's Websites. There is no assurance that these
discussions will result in additional new funding.

         As of this filing, Salon has $3.8 million of convertible notes payable
which are expected to convert to equity securities by December 2003.

         Salon is attempting to secure additional funds from the issuance of
equity securities or instruments that convert into equity securities. If Salon
raises additional funds by selling equity securities, or instruments that
convert into equity securities, the percentage ownership of Salon's current
stockholders will be reduced and its stockholders will most likely experience
additional dilution. Given Salon's recent low stock price, any dilution will
likely be substantial for existing stockholders.

         Salon is attempting to sell its prepaid advertising rights to generate
additional working capital. Salon cannot accurately predict if and how much they
may be sold for. Salon believes that any sale of its prepaid advertising rights
will most likely result in a charge to operating results. Salon cannot determine
if a transaction will in fact take place, as a potential transaction will
involve Salon, NBC, which must agree to the transfer of rights to a third party,
and a third party willing to acquire the rights. Salon has negotiated with NBC
for their approval to sell these rights to a third party and has been
unsuccessful in this endeavor as of this filing

         If Salon does not secure additional funds from the issuance of equity
securities and instruments that convert into equity securities, or from the sale
of prepaid advertising rights, Salon may be unable to continue as a going
concern and cease operations. Salon cannot determine at this time whether or
not, or to what extent, it will be successful in securing additional cash
resources during its third quarter of its fiscal year ending March 31, 2004 to
meet operating requirements.

RECENT ACCOUNTING PRONOUNCEMENTS

         In November 2002, the Emerging Issues Task Force (EITF) reached a
consensus on Issue No. 00-21 "Accounting for Revenue Arrangements With Multiple
Deliverables" which provides guidance on how to account for arrangements that
involve the delivery or performance of multiple products, services

                                       16
<PAGE>

and/or rights to use assets. The provisions of EITF No. 00-21 apply to revenue
arrangements entered into in fiscal periods beginning after June 15, 2003. The
adoption of EITF No. 00-21 did not have an adverse affect on Salon's financial
position and results of operations.

         In May 2003, the Financial Accounting Standards Board (FASB) issued
Standard of Financial Accounting Standard (SFAS) No. 150, "Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and
Equity." This Statement establishes standards for how an issuer classifies and
measures in its statement of financial position certain financial instruments
with characteristics of both liabilities and equity. It requires that an issuer
classify a financial instrument that is within its scope as a liability (or an
asset in some circumstances) because that financial instrument embodies an
obligation of the issuer. This Statement is effective for financial instruments
entered into or modified after May 31, 2003 and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003, except for
mandatorily redeemable financial instruments of nonpublic entities. For
nonpublic entities, mandatorily redeemable financial instruments are subject to
the provisions of this Statement for the first period beginning after December
15, 2003. It is to be implemented by reporting the cumulative effect of a change
in an accounting principle for financial instruments created before the issuance
date of the statement and still existing at the beginning of the interim period
of adoption. The adoption of SFAS No. 150 did not have an adverse affect on
Salon's financial position or results of operations.


RISK FACTORS

FACTORS THAT MAY AFFECT SALON'S FUTURE RESULTS AND MARKET PRICE OF STOCK


SALON WILL VERY LIKELY CEASE OPERATIONS IN ITS CURRENT FORM IF IT IS UNABLE TO
RAISE ADDITIONAL CASH RESOURCES

         Salon has received $450,000 from the issuance of convertible notes
payable subsequent to September 30, 2003. These funds, in conjunction with
collections of accounts receivable and Salon Premium subscriptions, have been
used to fund operations as of this filing. Salon needs to secure additional cash
resources in order to continue as a going concern. Salon is attempting to secure
additional funds from the issuance of equity securities and instruments that
convert into equity securities and from the sale of its prepaid advertising
rights.

         If Salon does not secure additional funds from the issuance of equity
securities and instruments that convert into equity securities, or from the sale
of advertising rights, Salon may be unable to continue as a going concern and
cease operations. Salon cannot determine at this time whether, or to what
extent, it will be successful in securing additional cash resources during its
third quarter of its year ending March 31, 2004 to meet operating requirements
until it reaches cash flow breakeven.

SALON HAS RELIED ON RELATED PARTIES FOR SIGNIFICANT INVESTMENT CAPITAL

         Salon has been relying on cash from related parties to fund operations.
The related parties are primarily John Warnock, a Director of Salon, and an
entity that the father of Salon's President, Chief Financial Officer, Secretary
and Treasurer is an investor. Out of $3.3 million of cash received by Salon from
the issuance of convertible notes payable as of September 30, 2003, $2.5 million
was from related parties. All of the $450,000 cash received by Salon from the
issuance of convertible notes payable issued subsequent to September 30, 2003
was from related parties. Curtailment of cash investments by related

                                       17
<PAGE>


parties could detrimentally impact Salon's ability to continue its operations
and Salon may be unable to continue as a going concern.

SALON LACKS SIGNIFICANT REVENUES AND HAS A HISTORY OF LOSSES

         Salon has a history of significant losses and expects to incur
operating losses in the near future. For the six months ended September 30,
2003, Salon had net losses attributable to common stockholders of $2.5 million
and had an accumulated deficit of $84.8 million. If and when Salon does achieve
profitability, Salon may not be able to sustain or increase profitability on a
quarterly or annual basis in the future. If revenues grow more slowly than Salon
anticipates or operating expenses exceed expectations, financial results will
most likely be severely harmed and the ability of Salon to continue its
operations will be seriously jeopardized.

         Salon's independent accountants provided a "going-concern" audit
opinion on the consolidated financial statements for the years ended March 31,
2003, 2002 and 2001. The audit opinion reported substantial doubt about Salon's
ability to continue as a going concern, citing issues such as the history of
losses and absence of current profitability. As a result of the "going-concern"
opinion, Salon's stock price and investment prospects may be adversely affected,
thus limiting financing choices and raising concerns about the realization of
value on assets and operations.

SALON MAY OR MAY NOT BE SUCCESSFUL IN SELLING ITS PREPAID ADVERTISING RIGHTS

         As of September 30, 2003, Salon has approximately $7.7 million of
prepaid advertising rights valued at $5.2 million. The rights resulted from the
December 1999 sale of 1,125,000 of shares of Salon's common stock to Rainbow
Media Holdings, Inc., a subsidiary of Cablevision Systems Corporation. At the
time of the transaction, Rainbow Media Holdings, Inc. owned the Bravo television
network. On December 9, 2002 Cablevision Systems Corporation concluded a sale of
its Bravo network to NBC and as a result, NBC acquired an obligation to provide
Salon with approximately $5.0 million in advertising. Salon has negotiated with
NBC for their approval to sell these rights to a third party and has been
unsuccessful in this endeavor as of this filing. Salon cannot accurately predict
if it will acquire the approval from NBC to sell the rights, or how much they
may be sold to a third party. Salon believes that any sale of its prepaid
advertising rights will most likely result in a charge to operating results. Any
proceeds from the sale of these prepaid rights will be used to fund Salon's
operations.

         Approximate $3.0 million in rights are still owed by Cablevision
Systems Corporation. Salon does not know to what extent Cablevision Systems will
facilitate the transfer and sale of these rights to a third party.

SALON HAS ENTERED INTO THIRD-PARTY SUBSCRIPTION BUNDLING SERVICES

         Salon has entered into two agreements with third parties who
contemplate combining Salon's content with other content providers, with the
resulting bundled content sold to individuals for a set monthly fee. Of the
monthly fee, Salon would earn a nominal amount. As of this filing, Salon's has
not earned any revenue from these agreements and contemplates immaterial amounts
by December 31, 2003. Salon cannot estimate how much revenue it may earn under
these agreements.

                                       18
<PAGE>

SALON'S OPERATIONS REQUIRE ATTRACTIVE CONTENT, SUBSCRIBER INTEREST, AND
CONFIDENCE BY SUBSCRIBERS AND SUPPLIERS THAT THE SUBSCRIPTION OFFERING WARRANTS
THEIR LONG-TERM SUPPORT AND INVESTMENT. THE ABSENCE OF ANY OF THESE FACTORS
COULD IMPAIR THE RESULTS, REVENUE AND CASH FLOW FROM SUBSCRIPTIONS.

         Salon is under severe budgetary constraints to limit expenditures.
These constraints affect editorial staffing levels and the purchase of content
from freelance writers. These constraints affect the amount and quality of
content published on Salon's Websites and consequently, the positive experience
of Website visitors. The positive experience leads to reoccurring Website
visits, new subscriptions to Salon Premium, and corresponding high renewal rates
of Salon Premium subscribers. For the six months ended September 30, 2003
Salon's estimated renewal rate for one-year paid subscription to Salon Premium
ranges from 65% to 70%. Salon cannot predict if this rate will continue in the
future or how many new Salon Premium subscriptions it will acquire.

SALON HAS DEPENDED ON ADVERTISING SALES FOR MUCH OF ITS REVENUES, AND ITS
INABILITY TO MAINTAIN OR INCREASE ADVERTISING REVENUES WILL HARM ITS BUSINESS

         Salon has historically depended on the sale of advertising for the
majority of its revenue. The January 2003 Website change and the advertising
format introduced in May 2003 will change the mix of revenue, lowering
traditional forms of advertising, increasing new forms of advertising and
changing subscription patterns. The net effect is currently unknown.

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

     o    successfully sell and market it new content access advertisements;

     o    entice non Salon Premium Website visitors to view and advertisers to
          sell new ad units and formats;

     o    maintain a significant number of unique site visitors and
          corresponding significant reach of Internet users;

     o    maintain a significant number of sellable impressions available to
          advertisers;

     o    grow the number of Salon Premium plan subscribers willing to view
          Website advertisements

     o    successfully sell and market it network to advertisers;

     o    increase the amount of revenues it receives per advertisement;

     o    increase awareness of the Salon brand;

     o    target advertisements and electronic commerce opportunities to users
          with appropriate interests;

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

     o    attract and retain key sales personnel.

                                       19
<PAGE>

THE LENGTH OF SALON'S SALES CYCLE IS UNCERTAIN AND VARIABLE AND MAY LEAD TO
SHORTFALLS IN REVENUES AND FLUCTUATIONS IN ITS OPERATING RESULTS

         Salon's dependence on advertising subjects it to the risk of revenue
shortfalls because the sales cycles for advertising vary significantly, and
during these cycles Salon may expend substantial funds and management resources
while not obtaining advertising revenues. If sales are delayed or do not occur,
Salon's financial results for a particular period may be harmed. The time
between the date of initial contact with a potential customer and the signing of
an advertising order may range from as little as one week to up to several
months. Sales of advertising are subject to factors over which Salon has little
or no control, including:

     o    advertisers' budgets;

     o    the acceptability of "access passes" and rich media "Ultramercials" to
          advertisers;

     o    internal acceptance reviews by advertisers and their agencies;

     o    the possibility of cancellation or delay of projects by advertisers.

         OUR STOCK HAS BEEN AND WILL LIKELY CONTINUE TO BE SUBJECT TO
SUBSTANTIAL PRICE AND VOLUME FLUCTUATIONS DUE TO A NUMBER OF FACTORS, MANY OF
WHICH WILL BE BEYOND OUR CONTROL, THAT MAY PREVENT OUR STOCKHOLDERS FROM
RESELLING OUR COMMON STOCK AT A PROFIT

         The securities markets have experienced significant price and volume
fluctuations, and the market prices of the securities of Internet companies have
been especially volatile. This market volatility, as well as general economic,
market or political conditions have, and may continue to reduce the market price
of our common stock, regardless of our operating performance. In addition, our
operating results could be below the expectations of public market analysts and
investors, and in response, the market price of our common stock could decrease
significantly.

IF OUR SHARE PRICE IS VOLATILE, WE MAY BE THE TARGETS OF SECURITIES LITIGATION,
WHICH IS COSTLY AND TIME-CONSUMING TO DEFEND

         In the past, following periods of market volatility in the price of a
company's securities, security holders have instituted class action litigation.
Our share price has, in the past, experienced price volatility, and may continue
to do so in the future. Many companies have been subject 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, Salon has not been subject
to such litigation.

SALON'S PRINCIPAL STOCKHOLDERS CAN EXERCISE A CONTROLLING INFLUENCE OVER SALON'S
BUSINESS AFFAIRS AND THEY MAY MAKE BUSINESS DECISIONS WITH WHICH NON-PRINCIPAL
STOCKHOLDERS DISAGREE THAT WILL AFFECT THE VALUE OF THEIR INVESTMENT

         As of this filing, Salon has two directors, one of which is associated
with a company that has an investment in Salon, that in the aggregate, own a
significant percentage of the voting rights granted by ownership of common
stock, preferred stock and convertible debt as of September 30, 2003 and
convertible debt issued subsequent to September 30, 2003. Also, Salon's
President, Chief Financial

                                       20
<PAGE>

Officer, Secretary and Treasurer is the daughter of an investor whose beneficial
ownership of Salon is in excess of 5 percent. In addition, investors whose
beneficial ownership of Salon is in excess of 5 percent, primarily hold $3.6
million of convertible debt of as of this filing. This debt may convert to
approximately ninety million shares of common stock by December 31, 2003 based
on the average closing price of Salon's common stock for the sixty-day period
ending September 30, 2003. If Salon were to aggregate this class of ownership
with all other 5 percent and greater shareholders, this combined group of
shareholders would own a majority of the voting rights granted by ownership of
common and preferred stock as of September 30, 2003. If the principal
stockholders were to act together, these stockholders would be able to exercise
control over most matters requiring approval by other stockholders, including
the election of directors and approval of significant corporate transactions.
These actions may be taken even if principal stockholders oppose non-principal
stockholders. This concentration of ownership may also have the effect of
delaying or preventing a change in control of Salon, which could cause Salon's
stock price to decline.

SALON'S QUARTERLY OPERATING RESULTS ARE VOLATILE AND MAY ADVERSELY AFFECT ITS
COMMON STOCK PRICE

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

     o    Salon's ability to attract and retain advertisers and subscribers;

     o    Salon's ability to attract and retain a large number of users;

     o    the introduction of new Websites, services or products by Salon or by
          its competitors;

     o    the timing and uncertainty of Salon's advertising sales cycles;

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

     o    the economic and business cycle and the recovery speed;

     o    the level of Internet usage;

     o    Salon's ability to attract, integrate and retain qualified personnel;

     o    technical difficulties or system downtime affecting the Internet
          generally or the operation of Salon's Websites;

     o    the impact of national economic and diplomatic concerns on the
          advertising and news business; and,

     o    the amount and timing of operating costs.

         In order to attract and maintain Salon's user base, Salon may incur
expenditures on sales and marketing, content development, technology and
infrastructure. These types of expenditures are planned or committed in advance
and in anticipation of future revenues. If Salon's revenues in a particular
quarter are lower than it anticipates, Salon may be unable to reduce spending in
that quarter. As a result, any shortfall in revenues would likely harm its
quarterly operating results.

                                       21
<PAGE>

         Due to the factors noted above and the other risks discussed in this
section, one should not rely on quarter-to-quarter comparisons of Salon's
results of operations as an indication of future performance. It is possible
that in some future periods results of operations may be below the expectations
of public market analysts and investors. If this occurs, the price of its common
stock may decline.

THE CONTROVERSIAL CONTENT OF SALON'S WEBSITES MAY LIMIT ITS REVENUES

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

SALON'S PROMOTION OF THE SALON BRAND MUST BE SUCCESSFUL IN ORDER TO ATTRACT AND
RETAIN USERS AS WELL AS ADVERTISERS AND STRATEGIC PARTNERS

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

SALON NEEDS TO HIRE, INTEGRATE AND/OR RETAIN QUALIFIED PERSONNEL BECAUSE THESE
INDIVIDUALS ARE IMPORTANT TO ITS GROWTH

         Salon's success significantly depends on key editorial and design
personnel. In addition, because Salon's users must perceive the content of
Salon's Websites as having been created by credible and notable sources, Salon's
success also depends on the name recognition and reputation of its editorial
staff, in particular David Talbot, Salon's founder, Chief Executive Officer and
Editor-in-Chief.

         Salon's future success depends to a significant extent on the continued
services David Talbot, the loss of which would likely have a significantly
adverse effect on its business.

         Due to Salon's current operating difficulties, Salon may experience
difficulty in hiring and retaining highly skilled employees with appropriate
qualifications. Salon may be unable to retain its current key employees or
attract, integrate or retain other qualified employees in the future. If Salon
does not succeed in attracting new personnel or integrating, retaining and
motivating its current personnel, its business could be harmed.

                                       22
<PAGE>

SALON MAY EXPEND SIGNIFICANT RESOURCES TO PROTECT ITS INTELLECTUAL PROPERTY
RIGHTS OR TO DEFEND CLAIMS OF INFRINGEMENT BY THIRD PARTIES, AND IF SALON IS NOT
SUCCESSFUL IT MAY LOSE RIGHTS TO USE SIGNIFICANT MATERIAL OR BE REQUIRED TO PAY
SIGNIFICANT FEES

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

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

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

SALON'S TECHNOLOGY DEVELOPMENT EFFORTS MAY NOT BE SUCCESSFUL IN IMPROVING THE
FUNCTIONALITY OF ITS NETWORK, WHICH COULD RESULT IN REDUCED TRAFFIC ON ITS
NETWORK OR RETENTION OF SALON PREMIUM SUBSCRIBERS

         Salon has developed a proprietary online publishing system and has
developed software to manage its Salon Premium subscription service. If these
systems do not work as intended, or if Salon is unable to continue to develop
these systems to keep up with the rapid evolution of technology for content
delivery and subscription management, including advertising on the Internet, its
network of Websites or subscription management may not operate properly which
could harm Salon's business. Additionally, software product design, development
and enhancement involve creativity, expense and the use of new development tools
and learning processes. Delays in software development processes are common, as
are project failures, and either factor could harm Salon's business. Moreover,
complex software products like its online publishing and subscription management
systems frequently contain undetected errors or shortcomings, and may fail to
perform or scale as expected. Although Salon has tested and will continue to
test its systems, errors or deficiencies may be found in these systems that may
impact its business adversely.

SALON RELIES ON THIRD PARTIES FOR SEVERAL CRITICAL FUNCTIONS RELATING TO
DELIVERY OF ADVERTISING AND ITS WEBSITE PERFORMANCE, AND THE FAILURE OF THESE
THIRD PARTIES TO SUPPLY THESE SERVICES IN AN EFFICIENT MANNER COULD LIMIT ITS
GROWTH AND IMPAIR ITS BUSINESS

         Salon relies on a number of third party suppliers for various services.
While Salon believes that it could obtain these services from other qualified
suppliers on similar terms and conditions, a disruption in the supply of these
services by its current suppliers could severely harm its business.

         Salon uses third-party software to manage and measure the delivery of
advertising on its network of Websites. This type of software may fail to
perform as expected. If this software malfunctions or does

                                       23
<PAGE>

not deliver the correct advertisements to its network, Salon's advertising
revenues could be reduced, and its business could be harmed.

         Salon uses third-party software to measure traffic on its network of
Websites. This type of software does not always perform as expected. If this
software malfunctions or does not accurately measure its user traffic, Salon may
not be able to justify its advertising rates, and its advertising revenues could
be reduced.

ACCEPTANCE AND EFFECTIVENESS OF INTERNET ADVERTISING IS EVOLVING AND, TO THE
EXTENT IT DOES NOT GROW, SALON'S MARKET MAY NOT DEVELOP ADEQUATELY AND ITS
BUSINESS COULD BE HARMED

         Salon's success is highly dependent on an increase in the use of the
Internet. If the markets for Internet advertising or electronic commerce does
not continue to develop, its business may be severely harmed.

         Different pricing models are used to sell Internet advertising. It is
difficult to predict which pricing models, if any, will emerge as the industry
standard. This uncertainty makes it difficult to project its future advertising
rates and revenues. Any failure to adapt to pricing models that develop or
respond to competitive pressures could reduce its advertising revenues.
Moreover, "filter" software programs that limit or prevent advertising from
being delivered to an Internet user's computer are commonly available.
Widespread use of this software could adversely affect the commercial viability
of Internet advertising and its business.

ADVERTISING PRODUCT OFFERINGS CONTINUE TO CHANGE AND THIS CREATES ADDITIONAL
EFFORT AND UNCERTAINTY ABOUT THIS REVENUE STREAM

         Advertisers continue to be attracted by new products, promotional
vehicles and offerings delivered via the Internet. This interest in new products
requires that Salon identify advertiser interests, develop and launch new
advertising products or formats, create appropriate pricing schedules, train the
sales force in the use and sale of new products, manage the obsolescence of
earlier products, and restructure the Salon.com Website to effectively deliver,
track and report new products. New product design, development and launch
involve creativity, expense, technology modifications and learning processes.
While Salon has integrated this activity into its existing operations, the rate
of change could create an environment where Salon is unable to effectively
develop, deliver or track the delivery of products acceptable to the market.

         Advertisers are increasingly selecting shorter campaign lengths with
less lead-time until launch. These campaigns have less flexibility in delivery
requirements and limit the ability of Salon to precisely identify future
revenues.

TRACKING AND MEASUREMENT STANDARDS FOR INTERNET BASED ADVERTISING MAY NOT EVOLVE
TO THE EXTENT NECESSARY TO SUPPORT INTERNET ADVERTISING, THEREBY CREATING
UNCERTAINTY ABOUT THE VIABILITY OF SALON'S BUSINESS MODEL

         Measurement standards for Internet based advertising are evolving. In
addition, software to track Internet usage is also evolving. The development of
such software or other methodologies may not keep pace with Salon's information
needs, particularly to support Salon's internal business requirements and those
of its advertisers. The absence or insufficiency of this information could limit
Salon's ability to attract and retain advertisers.

                                       24
<PAGE>

         It is important to Salon's advertisers that Salon accurately presents
the demographics of its user base and the delivery of advertisements on its
Websites. Salon depends on third parties to provide certain of the
advertiser-requested services. If they were unable to provide these services in
the future, Salon would need to perform this function itself or obtain them from
another provider, if available. This could cause Salon to incur additional costs
or lose revenue due to a lower level of service. Companies may choose to not
advertise on Salon or may pay less for advertising if they do not perceive our
measurements or measurements made by third parties to be reliable.

IF USE OF THE INTERNET DOES NOT GROW, SALON'S BUSINESS COULD BE HARMED

         Salon's success is highly dependent upon continued growth in the use of
the Internet generally and in particular as a medium for content, advertising
and electronic commerce. If Internet usage does not grow, it may not be able to
increase revenues from advertising and this may harm Salon's business. A number
of factors may inhibit the growth of Internet usage, including the following. If
these or any other factors cause use of the Internet to slow or decline, its
results of operations could be harmed.

     o    inadequate network infrastructure;

     o    security concerns;

     o    charging for content;

     o    inconsistent quality of service; and

     o    limited availability of cost-effective, high-speed access.


INCREASING COMPETITION AMONG INTERNET CONTENT PROVIDERS COULD REDUCE ITS
ADVERTISING SALES OR MARKET SHARE, THEREBY HARMING ITS BUSINESS

         The market for Internet content is relatively new, rapidly changing and
intensely competitive. Salon expects competition for Internet content to
continue to increase, and if it cannot compete effectively, its business could
be harmed. The number of Websites competing for the attention and spending of
users and advertisers may continue to increase with the most trafficked Websites
receiving a disproportionate share of advertising dollars. Salon is not one of
the most trafficked Websites, or even one of the top ten Websites.

         Increased competition could result in advertising price reductions or
loss of market share, any of which could harm Salon's business. Competition is
likely to increase significantly as new companies enter the market and current
competitors expand their services. Many of Salon's present and potential
competitors are likely to enjoy substantial competitive advantages over Salon.
If Salon does not compete effectively or if it experiences any pricing pressures
or loss of market share resulting from increased competition, its business could
be harmed.

SALON MAY BE HELD LIABLE FOR CONTENT OR THIRD PARTY LINKS ON ITS WEBSITES OR
CONTENT DISTRIBUTED TO THIRD PARTIES

         As a publisher and distributor of content over the Internet, including
user-generated content on Salon's online communities and links to third party
Websites that may be accessible through Salon.com, Salon faces potential
liability for defamation, negligence, copyright, patent or trademark
infringement and

                                       25
<PAGE>

other claims based on the nature, content or ownership of the material that is
published on or distributed from its network of Websites. 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 its links to sexually explicit
Websites and our provision of sexually explicit advertisements when this content
is displayed. Although Salon carries general liability insurance, its insurance
may not be adequate to indemnify Salon for all liabilities imposed. Any
liability that is not covered by its insurance or is in excess of its insurance
coverage could severely harm its financial condition and business. Implementing
measures to reduce its exposure to these forms if liability may require Salon to
spend substantial resources and limit the attractiveness of Salon's service to
users.

CONCERNS ABOUT TRANSACTIONAL SECURITY MAY HINDER ELECTRONIC COMMERCE PROGRAMS BY
SUBJECTING US TO LIABILITY OR BY DISCOURAGING COMMERCIAL TRANSACTIONS OVER THE
INTERNET

         A significant barrier to sale of subscriptions and electronic commerce
is the secure transmission of confidential information over public networks. Any
breach in Salon's security could expose it to a risk of loss or litigation and
possible liability. Salon relies on encryption and authentication technology
licensed from third parties to provide secure transmission of confidential
information. As a result of advances in computer capabilities, new discoveries
in the field of cryptography or other developments, a compromise or breach of
the algorithms we use to protect customer transaction data may occur. A
compromise of its security could severely harm its business. A party who is able
to circumvent our security measures could misappropriate proprietary
information, including customer credit card information, or cause interruptions
in the operation of its network of Websites.

         Salon may be required to expend significant capital and other resources
to protect against the threat of security breaches or to alleviate problems
caused by these breaches. However, protection may not be available at a
reasonable price or at all. Concerns over the security of electronic commerce
and the privacy of users may also inhibit the growth of the Internet as a means
of conducting commercial transactions.

SALON'S INTERNALLY DEVELOPED SOFTWARE AND SOFTWARE PLATFORMS PROVIDED BY A THIRD
PARTY TO MANAGE SALON'S SUBSCRIPTION BUSINESS MIGHT FAIL RESULTING IN LOST
SUBSCRIPTION INCOME

         Salon's software to manage its subscription business was developed
internally to interface with the software provided by a third party. The third
party's software provides a gateway to authenticate credit card transactions. If
these systems were to fail or not function as intended, credit card transactions
might not be processed and Salon's revenues would therefore be harmed.

SALON'S SYSTEMS MAY FAIL DUE TO NATURAL DISASTERS, TELECOMMUNICATIONS FAILURES
AND OTHER EVENTS, ANY OF WHICH WOULD LIMIT USER TRAFFIC

         Substantially all of Salon's communications hardware and computer
hardware operations for its Websites are in facilities in San Francisco,
California. Fire, floods, earthquakes, power loss, telecommunications failures,
break-ins, supplier failure to meet commitments, and similar events could damage
these systems and cause interruptions in its services. Computer viruses,
electronic break-ins or other similar disruptive problems could cause users to
stop visiting its network of Websites and could cause advertisers to terminate
any agreements with us. In addition, Salon could lose advertising revenues
during these interruptions and user satisfaction could be negatively impacted if
the service is slow or unavailable. If any of these circumstances occurred, its
business could be harmed. Salon's insurance

                                       26
<PAGE>

policies may not adequately compensate it for any losses that may occur due to
any failures of or interruptions in our systems. Salon does not presently have a
formal disaster recovery plan.

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

HACKERS MAY ATTEMPT TO PENETRATE SALON'S SECURITY SYSTEM; ONLINE SECURITY
BREACHES COULD HARM ITS BUSINESS

         Consumer and supplier confidence in Salon's Websites depends on
maintaining relevant security features. Security breaches also could damage its
reputation and expose us to a risk of loss or litigation. Experienced
programmers or "hackers" have successfully penetrated sectors of its systems and
Salon expects that these attempts will continue to occur from time to time.
Because a hacker who is able to penetrate its network security could
misappropriate proprietary information or cause interruptions in its products
and services, Salon may have to expend significant capital and resources to
protect against or to alleviate problems caused by these hackers. Additionally,
Salon may not have a timely remedy against a hacker who is able to penetrate its
network security. Such security breaches could materially adversely affect
Salon. In addition, the transmission of computer viruses resulting from hackers
or otherwise could expose us to significant liability. Salon's insurance
policies may not be adequate to reimburse us for losses caused by security
breaches. Salon also faces risks associated with security breaches affecting
third parties with whom it has relationships.

GOVERNMENTAL REGULATION AND LEGAL UNCERTAINTIES OF THE INTERNET MAY RESTRICT
SALON'S BUSINESS OR RAISE ITS COSTS

         There are currently few laws or regulations that specifically regulate
communications or commerce on the Internet. Laws and regulations may be adopted
in the future, however, that address issues including content, copyrights,
distribution, antitrust matters, user privacy, pricing, and the characteristics
and quality of products and services. An increase in regulation or the
application of existing laws to the Internet could significantly increase
Salon's costs of operations and harm Salon's business. For example, the
Communications Decency Act of 1996 sought to prohibit the transmission of
certain types of information and content over the web. Additionally, several
telecommunications companies have petitioned the Federal Communications
Commission to regulate Internet service providers and online service providers
in a manner similar to long distance telephone carriers and to impose access
fees on these companies. Imposition of access fees could increase the cost of
transmitting data over the Internet. Moreover, it may take years to determine
the extent to which existing laws relating to issues such as property ownership,
obscenity, libel and personal privacy are applicable to the Internet or the
application of laws and regulations from jurisdictions whose laws do not
currently apply to its business.

PRIVACY CONCERNS COULD IMPAIR SALON'S BUSINESS

         Salon has a policy against using personally identifiable information
obtained from users of its Websites and services without the user's permission.
In the past, the Federal Trade Commission has investigated companies that have
used personally identifiable information without permission or in violation of a
stated privacy policy. If Salon uses this information without permission or in
violation of its policy, Salon may face potential liability for invasion of
privacy for compiling and providing information to its corporate customers and
electronic commerce merchants. In addition, legislative or

                                       27
<PAGE>

regulatory requirements may heighten these concerns if businesses must notify
Internet users that the data may be used by marketing entities to direct product
promotion and advertising to the user. Other countries and political entities,
such as the European Union, have adopted such legislation or regulatory
requirements. The United States may adopt similar legislation or regulatory
requirements. If consumer privacy concerns are not adequately addressed, our
business, financial condition and results of operations could be materially
harmed.

POSSIBLE STATE SALES AND OTHER TAXES COULD ADVERSELY AFFECT SALON'S RESULTS OF
OPERATIONS

         Salon generally does not collect sales or other taxes from individuals
who sign up for Salon subscriptions. During the year ended March 31, 2003, the
State of California audited Salon's sales tax returns and found Salon in
compliance with its filings and did not object to the fact that it did not
collect sales tax on subscriptions. However, one or more other states may seek
to impose sales tax collection obligations on out-of-state companies, including
Salon, which engage in or facilitate electronic commerce. State and local
governments have discussed and made proposals imposing taxes on the sale of
goods and services through the Internet. Such proposals, if adopted, could
substantially impair the growth of electronic commerce and could reduce Salon's
ability to derive revenue from electronic commerce. Moreover, if any state or
foreign country were to assert successfully that Salon should collect sales or
other taxes on the exchange of merchandise on its network or to tax revenue
generated from Salon subscriptions, its financial results could be harmed.

PROVISIONS IN DELAWARE LAW AND OUR CHARTER, STOCK OPTION AGREEMENTS AND OFFER
LETTERS TO EXECUTIVE OFFICERS MAY PREVENT OR DELAY A CHANGE OF CONTROL

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

     o    the board of directors approved the transaction where the stockholder
          acquired 15% or more of the corporation's assets;

     o    after the transaction where 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

     o    on or after this date, the merger or sale is approved by the board of
          directors and the holders of at least two-thirds of the outstanding
          voting stock that is not owned by the stockholder.

         A Delaware corporation may opt out of the Delaware anti-takeover laws
if its certificate of incorporation or bylaws so provide. We have not opted out
of the provisions of the anti-takeover laws. As such, these laws could prohibit
or delay mergers or other takeover or change of control of Salon and may
discourage attempts by other companies to acquire Salon.

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

                                       28
<PAGE>

     o    Salon's board is classified into three classes of directors as nearly
          equal in size as possible with staggered three year-terms; and

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

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

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

         In addition, offer letters with executive officers provide for the
payment of severance and acceleration of options upon the termination of these
executive officers following a change of control of Salon. These provisions in
offer letters could have the effect of discouraging potential takeover attempts.













                                       29
<PAGE>

ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK

         Salon does not have an exposure to market risk for changes in interest
rates.


ITEM 4. CONTROLS AND PROCEDURES

         Under the supervision and with the participation of our management,
including our chief executive officer and chief financial officer we evaluated
the effectiveness of our disclosure controls and procedures, as such term is
defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934,
as amended. Based on this evaluation, our chief executive officer and chief
financial officer concluded that our disclosure controls and procedures were
effective as of the end of the period covered by this quarterly report.


--------------------------------------------------------------------------------
PART II: OTHER INFORMATION
--------------------------------------------------------------------------------

ITEM 1. LEGAL PROCEEDINGS.

         Not Applicable

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

Recent Sales of Unregistered Securities:

         On April 10, 2003 Salon finalized a Note and Warrant Purchase agreement
with two investors for $200,000 and issued warrants to purchase 600,000 shares
of common stock at $0.046 per share. The investors included a Director of Salon,
as well as an entity of which the father of Salon's President, Chief Financial
Officer, Treasurer and Secretary, has an ownership interest in. On April 29,
2003 Salon finalized a Note and Warrant Purchase agreement with the same
investors for $200,000 and issued warrants to purchase 600,000 shares of common
stock at $0.0575 per share. On May 28, 2003 Salon finalized a Note and Warrant
Purchase agreement with the same Director of Salon for $300,000 and issued
warrants to purchase 900,000 shares of common stock at $0.0575 per share. On
June 12, 2003 Salon finalized a Note and Warrant Purchase agreement with the
father of Salon's President, Chief Financial Officer, Treasurer and Secretary
for $100,000 and issued warrants to purchase 300,000 shares of common stock at
$0.0575 per share. On June 26, 2003 Salon finalized a Note and Warrant Purchase
agreement with an investor for $100,000 and issued warrants to purchase 300,000
shares of common stock at $0.0575 per share. On July 10, 2003 Salon finalized a
Note and Warrant Purchase agreement with three investors for $248,000 and issued
warrants to purchase 744,015 shares of common stock at $0.046 per share. The
investors included a Director of Salon, and an entity of which Salon's
President, Chief Financial Officer, Treasurer and Secretary, has an ownership
interest in. On July 30, 2003 Salon finalized a Note and Warrant Purchase
agreement with a Director of Salon for $100,000 and issued warrants to purchase
300,000 shares of common stock at $0.0345 per share. On August 29, 2003 Salon
finalized a Note and Warrant Purchase agreement with three investors for
$165,000 and issued warrants to purchase 495,000 shares of common stock at
$0.0345 per share. The investors included a Director of Salon, and Salon's
President, Chief Financial Officer, Treasurer and Secretary.

                                       30
<PAGE>

         The notes, which were amended effective September 12, 2003 and
September 22, 2003, can be converted into financing securities or Salon's common
stock and accrue interest on the unpaid principal at 6.0% per year with such
interest and principal due on December 31, 2003. The notes automatically convert
upon the closing of Salon's first sale of its preferred or common stock with
aggregate gross proceeds to Salon of at least $2,000,000 (including the
conversion of the outstanding principal of the notes and other converted
indebtedness of Salon). In the event that Salon issues new financing securities
by December 31, 2003, the number of shares of the financing securities to be
issued upon conversion of the notes shall equal the aggregate amount of the
Notes divided by the price per share of the financing securities issued and
sold. If no new financing occurs by December 31, 2003, the notes can convert at
the option of the note holder to shares of common stock based on the average
closing price of Salon's common stock over the sixty trading days ending on
September 30, 2003 or December 31, 2003, which ever is lower, as reported on
such market(s) and/or exchanges where the common stock has traded. The
conversion of the notes to common stock may only occur at such time as Salon's
stockholders approve an amendment to Salon's certificate of incorporation
increasing the authorized shares of common stock to a level that would permit
conversion of the notes to common stock. In the event of bankruptcy or
insolvency proceedings, the notes become immediately due and payable. Salon
granted the purchasers of the notes a security interest in substantially all of
Salon's assets. The indebtedness of the notes is subordinated to certain bank
indebtedness.

         On September 12, 2003 and September 29, 2003, Salon finalized Note and
Warrant Purchase agreements with the same Director of Salon mentioned above for
a total of $200,000 and issued warrants to purchase 300,000 shares of common
stock at $0.0575 per share and 300,000 shares of common stock at $0.0805 per
share. The terms of these notes are identical to the terms of the amended notes
mentioned above.

         As of this filing, the holders of these notes and the notes issued
during the year ended March 31, 2003, have not elected to convert their notes
into either financing securities or Salon's common stock.

         In the event of bankruptcy or insolvency proceedings, the Note becomes
immediately due and payable. Salon granted the purchaser of the Note a security
interest in substantially all of Salon's assets. The indebtedness of the Note is
subordinated to certain bank indebtedness, as incurred.

         The issuance of the shares of notes and warrants were deemed exempt
from registration under the Securities Act as a transaction by an issuer not
involving public offering. The investors represented their intention to acquire
the securities for investment only and not with a view to or for sale in
connection with any distribution thereof and appropriate legends were affixed to
the securities issued in the transactions.

ITEM 3. DEFAULT UPON SENIOR SECURITIES.

         Not Applicable

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         Not Applicable

ITEM 5. OTHER INFORMATION.

         On October 9, 2003 Salon announced that Michael O'Donnell, Salon's
President and Chief Executive Officer had resigned. David Talbot, Salon's
Chairman of the Board and Editor-in-Chief became the Chief Executive Officer and
Elizabeth Hambrecht, Salon's Chief Financial Officer, Treasurer and Secretary
became Salon's President.

                                       31
<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(A) EXHIBITS.

4.2.41(1)  Note and Warrant Purchase Agreement dated July 10, 2003

4.2.42(1)  Convertible Promissory Note dated July 10, 2003 by Salon Media Group,
           Inc.

4.2.43(1)  Common Stock Purchase Warrant dated July 10, 2003 by Salon Media
           Group, Inc.

4.2.44(2)  Note and Warrant Purchase Agreement dated July 30, 2003

4.2.45(2)  Convertible Promissory Note dated July 30, 2003 by Salon Media Group,
           Inc.

4.2.46(2)  Common Stock Purchase Warrant dated July 30, 2003 by Salon Media
           Group, Inc.

4.2.47(3)  Note and Warrant Purchase Agreement dated September 12, 2003

4.2.48(3)  Convertible Promissory Note dated September 12, 2003 by Salon Media
           Group, Inc.

4.2.49(3)  Common Stock Purchase Warrant dated September 12, 2003 by Salon Media
           Group, Inc.

4.2.50(4)  Note and Warrant Purchase Agreement dated September 29, 2003

4.2.51(4)  Convertible Promissory Note dated September 29, 2003 by Salon Media
           Group, Inc.

4.2.52(4)  Common Stock Purchase Warrant dated September 29, 2003 by Salon Media
           Group, Inc.

31.1       Certification of David Talbot, Chairman and 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, President, Chief Financial
           Officer, Treasurer and Secretary of the Registrant pursuant to
           Section 302, as adopted pursuant to the Sarbanes-Oxley Act of 2002

32.1       Certification of David Talbot, Chairman and 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, President, Chief Financial
           Officer, Treasurer and Secretary of the Registrant pursuant to
           Section 906, as adopted pursuant to the Sarbanes-Oxley Act of 2002

(1)  Incorporated by reference to the exhibit filed with the Registrant's
     Current Report on Form 8-K filed on July 25, 2003

(2)  Incorporated by reference to the exhibit filed with the Registrant's
     Current Report on Form 8-K filed on August 7, 2003

(3)  Incorporated by reference to the exhibit filed with the Registrant's
     Current Report on Form 8-K filed on September 29, 2003

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<PAGE>

(4)  Incorporated by reference to the exhibit filed with the Registrant's
     Current Report on Form 8-K filed on October 14, 2003

(B) REPORTS ON FORM 8-K.

         On July 25, 2003 Salon filed a Current Report on Form 8-K under Item 5
announcing the sale of convertible promissory notes and warrants for which it
received $248,005 in cash.

         On August 7, 2003 Salon filed a Current Report on Form 8-K under Item 5
announcing the sale of convertible promissory notes and warrants for which it
received $100,000 in cash.

         On September 29, 2003 Salon filed a Current Report on Form 8-K under
Item 5 announcing the sale of convertible promissory notes and warrants for
which it received $100,000 in cash.

         On October 14, 2003 Salon filed a Current Report on Form 8-K under Item
5 announcing the sale of convertible promissory notes and warrants for which it
received $100,000 in cash on September 29, 2003 and $100,000 in cash on October
6, 2003.







SIGNATURES

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


                                     SALON MEDIA GROUP, INC.

Dated: 11/13/03                      /s/ David Talbot
                                     -------------------------------------------
                                     David Talbot, Chairman and Chief Executive
                                     Officer


Dated: 11/13/03                      /s/ Elizabeth Hambrecht
                                     -------------------------------------------
                                     Elizabeth  Hambrecht, President, Chief
                                     Financial Officer, Secretary and Treasurer



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