================================================================================


                       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 JUNE 30, 2002

                                       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 [_]

The number of outstanding shares of the Registrant's Common Stock, par value
$0.001 per share, on August 1, 2002 was 14,155,276 shares.
================================================================================
<PAGE>

--------------------------------------------------------------------------------
FORM 10-Q
SALON MEDIA GROUP, INC.
INDEX
--------------------------------------------------------------------------------

                                                                           PAGE
PART I     FINANCIAL INFORMATION                                          NUMBER

ITEM 1:    Condensed Consolidated Financial Statements

           Condensed Consolidated Balance Sheets as of June 30, 2002 and
           March 31, 2002 (unaudited)........................................ 3

           Condensed Consolidated Statements of Operations for the three
           months ended June 30, 2002 and 2001 (unaudited) .................. 4

           Condensed Consolidated Statements of Cash Flows for the three
           months ended June 30, 2002 and 2001 (unaudited) .................. 5

           Notes to Condensed Consolidated Financial Statements (unaudited).. 6

ITEM 2:    Management's Discussion and Analysis of Financial Condition and
           Results of Operations............................................. 11

ITEM 3:    Quantitative and Qualitative Disclosures About Market Risk........ 28

PART II    OTHER INFORMATION

ITEM 1:    Legal Proceedings................................................. 29

ITEM 2.    Changes in Securities and Use of Proceeds......................... 29

ITEM 3.    Defaults upon Senior Securities................................... 29

ITEM 4.    Submission of Matters to a Vote of Security Holders............... 29

ITEM 5.    Other Information................................................. 29

ITEM 6:    Exhibits and Reports on Form 8-K.................................. 29

           Signatures........................................................ 30

                                       2
<PAGE>

--------------------------------------------------------------------------------
PART I:  FINANCIAL INFORMATION
ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                             SALON MEDIA GROUP, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE><CAPTION>
                                                                 JUNE 30,         MARCH 31,
                                                                   2002             2002
                                                                 --------         --------
<S>                                                              <C>              <C>
ASSETS
     Current assets:
          Cash and cash equivalents                              $    388         $  1,542
          Accounts receivable, net                                    399              326
          Prepaid expenses and other current assets                   200              212
                                                                 --------         --------
          Total current assets                                        987            2,080
     Property and equipment, net                                    1,149            1,299
     Prepaid advertising rights                                     5,909            6,266
     Intangible assets                                                827              919
     Other assets                                                     778              778
                                                                 --------         --------
          Total assets                                           $  9,650         $ 11,342
                                                                 ========         ========
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
          Accounts payable and accrued liabilities               $  1,613         $  1,773
          Deferred revenue                                            652              563
                                                                 --------         --------
          Total current liabilities                                 2,265            2,336
     Long-term liabilities                                            214              229
                                                                 --------         --------
          Total liabilities                                         2,479            2,565
                                                                 --------         --------
Stockholders' equity:
      Preferred stock, $0.001 par value, 5,000,000 shares
          authorized, 934 issued and outstanding at
          June 30, 2002 and March 31, 2002 (liquidation
          value of $7,472 at June 30, 2002)                          --               --
     Common stock, $0.001 par value, 50,000,000 shares
          authorized, 14,155,276 and 14,155,276 shares
          issued and outstanding at June 30, 2002
          and March 31, 2002                                           14               14
     Additional paid-in-capital                                    85,458           85,416
     Unearned compensation                                            (42)             (57)
     Accumulated deficit                                          (78,259)         (76,596)
                                                                 --------         --------
          Total stockholders' equity                                7,171            8,777
                                                                 --------         --------
          Total liabilities and stockholders' equity             $  9,650         $ 11,342
                                                                 ========         ========

 The accompanying notes are an integral part of these condensed consolidated financial statements
</TABLE>
                                       3
<PAGE>

                             SALON MEDIA GROUP, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)

<TABLE><CAPTION>
                                                          THREE MONTHS ENDED
                                                                JUNE 30,
                                                       -------------------------
                                                         2002             2001
                                                       --------         --------
<S>                                                    <C>              <C>
Net revenues                                           $    972         $    973
                                                       --------         --------

Operating expenses:
      Production and content                              1,173            1,527
      Sales and marketing                                   752              800
      Research and development                              162              218
      General and administrative                            407              464
      Amortization of intangibles                           134              113
      Write-down of long-lived assets                      --                782
                                                       --------         --------
            Total operating expenses                      2,628            3,904
                                                       --------         --------

Loss from operations                                     (1,656)          (2,931)
Other income (expense), net                                  (7)              11
                                                       --------         --------
Net loss                                               $ (1,663)        $ (2,920)
                                                       ========         ========

Basic and diluted net loss per share                   $  (0.12)        $  (0.22)

Weighted average shares used in computing basic
      and diluted net loss per share                     13,761           13,434










The accompanying notes are an integral part of these condensed consolidated financial statements
</TABLE>
                                       4
<PAGE>

                             SALON MEDIA GROUP, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE><CAPTION>
                                                                                        THREE MONTHS ENDED
                                                                                             JUNE 30,
                                                                                      -----------------------
                                                                                       2002            2001
                                                                                      -------         -------
<S>                                                                                   <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                                           $(1,663)        $(2,920)
   Adjustments to reconcile net loss to net cash used in operating activities:
       Write-down of long-lived assets                                                   --               782
       Stock-based compensation and warrant amortization                                   15              63
       Depreciation and amortization                                                      284             309
       Allowance for doubtful accounts                                                     12              30
       Amortization of prepaid advertising rights                                         357             202
       Changes in assets and liabilities:
           Accounts receivable                                                            (85)             17
           Prepaid expenses, other current assets and other assets                         12             113
           Accounts payable and other liabilities                                        (124)           (333)
           Deferred revenue                                                                89             124
                                                                                      -------         -------
               Net cash used in operating activities                                   (1,103)         (1,613)
                                                                                      -------         -------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of property and equipment                                                    --                (6)
                                                                                      -------         -------
               Net cash used in investing activities                                     --                (6)
                                                                                      -------         -------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from issuance of common stock, net                                           --                 6
   Principal payments under capital leases                                                (51)            (72)
                                                                                                      -------
                                                                                      -------         -------
               Net cash used in financing activities                                      (51)            (66)
                                                                                      -------         -------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                              (1,154)         (1,685)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                        1,542           3,047
                                                                                      -------         -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                            $   388         $ 1,362
                                                                                      =======         =======

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
   Issuance of stock and warrants in connection with acquisition                      $    42         $   108

 The accompanying notes are an integral part of these condensed consolidated financial statements
</TABLE>
                                       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 ten primary subject-specific, demographically
targeted websites, including an audio streaming website and two online
communities designed to attract Internet advertisers. 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 period presented. The condensed consolidated balance sheet data as
of March 31, 2002 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 three months ended June 30, 2002 are
not necessarily indicative of the expected results for any other interim period
or the fiscal year ending March 31, 2003.

       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 flow from operations
since inception and has an accumulated deficit at June 30, 2002 of $78,259.
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. However, until cash-flow
breakeven is reached, Salon will continue to use its current cash on hand of
$388, as well as the gross proceeds of $714 from notes issued subsequent to June
30, 2002, and the reduction of restricted cash of $140 from a renegotiated lease
deposit which also occurred subsequent to June 30, 2002.

       If Salon is unable to generate sufficient cash flows from operations,
Salon may seek additional sources of capital. There can be no assurance that
Salon will be able to obtain such financing, if necessary, on terms which are
favorable or at all.

       In the event that Salon is unable to increase revenues or financing is
unavailable, management may explore further reductions of expenses to levels
that could be financed by revenues generated. 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. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

                                       6
<PAGE>

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

       No customer accounted for more than 10% of total revenue for the
three-month period ended June 30, 2002. One customer, who acquired Salon's
website publishing software, accounted for 16% of total revenues for the three
months ended June 30, 2001. One customer accounted for 12% of the total accounts
receivable balance as of June 30, 2002. Two customers accounted for 14% and 13%
of the total accounts receivable balance as of June 30, 2001.

4.     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
                                                                                          JUNE 30,
                                                                              ---------------------------------
                                                                                  2002                 2001
                                                                              ------------         ------------
<S>                                                                           <C>                  <C>
Numerator:
   Net loss                                                                   $     (1,663)        $     (2,920)
                                                                              ============         ============

Denominator:
   Weighted average shares outstanding                                          14,155,000           14,139,000
   Weighted average shares held in escrow                                         (394,000)            (705,000)
                                                                              ------------         ------------
   Weighted average shares used in computing
       basic and diluted net loss per share                                     13,761,000           13,434,000
                                                                              ============         ============

    Basic and diluted net loss per share                                      $      (0.12)        $      (0.22)
                                                                              ============         ============
   Antidilutive securities including options, warrants and convertible
       preferred stock not included in loss per share calculation               31,359,385            5,143,525
</TABLE>

5.     GOODWILL AMORTIZATION AND INTANGIBLE ASSETS

       In accordance with Financial Accounting Standards Board (FASB) Statement
of Financial Accounting Standard No. 142, "Goodwill and Other Intangible Assets"
(SFAS No. 142), goodwill amortization was discontinued as of March 31, 2002,
thereby eliminating annual goodwill amortization of approximately $100 based on
anticipated amortization for fiscal year 2003 that would have been incurred
under the prior accounting standard. The carrying value of goodwill at June 30,
2002 was $200 and has been found not to be impaired. Salon reassessed the
expected useful lives of existing intangible assets and found that no change to
the useful lives of the assets was required.

                                       7
<PAGE>


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

       The following table reflects consolidated results adjusted as though the
adoption of SFAS No. 142 occurred as of the beginning of the three-month period
ended June 30, 2001:

                                                         Three Months Ended
                                                              June 30,
                                                     --------------------------
                                                        2002             2001
                                                     ---------        ---------
Reported net loss                                    $   1,663        $   2,920
Goodwill amortization                                     --                 28
                                                     ---------        ---------
Adjusted net loss                                    $   1,663        $   2,892
                                                     =========        =========

Basic and diluted net loss per share                 $    0.12        $    0.22
Goodwill amortization                                     --               --
                                                     ---------        ---------
Adjusted basic and diluted net loss per share        $    0.12        $    0.22
                                                     =========        =========

       The following table sets forth information concerning Salon's intangible
assets as of June 30, 2002:

<TABLE><CAPTION>
                                                            Gross                             Net
                                                           Carrying      Accumulated       Carrying
                                                            Amount       Amortization       Amount
                                                           --------        --------        --------
<S>                                                        <C>             <C>             <C>
Trade name                                                 $  1,200        $    780        $    420
Proprietary technology                                          355             231             124
Audio technology                                                158              75              83
                                                           --------        --------        --------
Total intangible assets subject to amortization            $  1,713        $  1,086        $    627
                                                           ========        ========        ========

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 1.75 years.

6.     RECENT ACCOUNTING PRONOUNCEMENTS

       In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS
No. 142, "Goodwill and Other Intangible Assets" (SFAS No. 142). This standard
eliminates the amortization of goodwill, and requires goodwill to be reviewed at
least annually for impairment, the useful lives of previously recognized
intangible assets to be reassessed and the remaining amortization periods to be
adjusted accordingly. Salon implemented this standard effective April 1, 2002.
The effect of such

                                       8
<PAGE>

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

implementation was to reduce goodwill amortization expense by $100 annually. No
material changes to the carrying value of goodwill or intangible assets resulted
by the adoption of SFAS No. 142.

       In October 2001, the FASB issued SFAS No. 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets" (SFAS No. 144). SFAS No. 144
supersedes "Accounting for the Impairment of Long- Lived Assets and for
Long-Lived Assets to Be Disposed Of" (SFAS No.121), however it retains the
fundamental provisions of SFAS No. 121 for (1) the recognition and measurement
of the impairment of long-lived assets to be held and used and (2) the
measurement of long-lived assets to be disposed of by sale. SFAS No. 144
develops a single accounting model for long-lived assets to be disposed of by
sale, whether previously held and used or newly acquired assets and consequently
amends Accounting Principles Board Opinion No. 30, "Reporting Results of
Operations -Reporting the Effects of Disposal of a Division of a Business."
Additionally, SFAS No. 144 expands the scope of discontinued operations to
include all components of an entity with operations that (1) can be
distinguished from the rest of the entity and (2) will be eliminated from the
ongoing operations of the entity in a disposal transaction. SFAS No. 144 is
effective for fiscal years beginning after December 15, 2001, and interim
periods within those fiscal years. The adoption of this standard did not have an
effect on Salon's financial statements.

       In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" (SFAS No. 146). SFAS No. 146
nullifies the guidance of the Emerging Issues Task Force (EITF) in EITF Issue
No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)". Under EITF Issue No. 94-3, an entity recognized a liability for
an exit cost on the date that the entity committed itself to an exit plan. In
SFAS 146, the Board acknowledges that an entity's commitment to a plan does not,
by itself, create a present obligation to other parties that meets the
definition of a liability and requires that a liability for a cost that is
associated with an exit or disposal activity be recognized when the liability is
incurred. It also establishes that fair value is the objective for the initial
measurement of the liability. SFAS No. 146 will be effective for exit or
disposal activities that are initiated after December 31, 2002. Salon does not
expect an impact on its financial position and results of operating from the
adoption of SFAS No. 146.

7.     SUBSEQUENT EVENTS

       On July 24, 2002, Salon entered into a Note and Warrant Purchase
Agreement with various investors for estimated net proceeds of $685. Under the
agreement, Salon issued Convertible Promissory Notes (Notes) for a gross amount
of $714 and issued warrants to purchase approximately 357,000 shares of common
stock at $0.21 per share. The notes accrue interest on the unpaid principal at
6.0% per year, with such interest and principal due the earlier of (i) the date
of the next meeting of Salon's stockholders at which a proposal seeking the
approval of the sale of the Notes and the sale of shares of Salon's Series B
Preferred Stock is voted upon and is not approved by Salon's stockholders, or
(ii) September 30, 2003.

       The Notes can be converted into financing securities or Salon's common
stock, as the case may be, the earlier of (i) the sale of the Notes and Warrants
and the sale of shares of Salon's Series B Preferred Stock have been duly
approved by Salon's stockholders in accordance with applicable Nasdaq
Marketplace Rules, or (ii) such time as Salon's equity securities are no longer
subject to Nasdaq Marketplace Rules. Salon is currently the subject of a Nasdaq
listing qualifications proceeding and the hearing panel has provided Salon until
August 13, 2002 to meet the bid price-listing standard. After

                                       9
<PAGE>

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

August 13, 2002, Salon might be delisted and no longer subject to Nasdaq rules.
The Notes automatically convert upon the closing of the 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 September 30, 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 September 30, 2003,
the Notes convert 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
as reported on such market(s) and/or exchanges where the common stock has
traded.

       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 future bank indebtedness, if incurred.

       In July 2002 Salon reduced its restricted cash, included as a component
of other assets, by $140 from a renegotiated lease deposit.
























                                       10
<PAGE>



--------------------------------------------------------------------------------
PART I:       FINANCIAL INFORMATION
ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATIONS
--------------------------------------------------------------------------------

       This section and other parts of this Form 10-Q contain "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") that involve risks and uncertainties, including, but not limited to,
statements regarding our strategy, plans, objectives, expectations, intentions,
financial performance, cash-flow breakeven timing, financing, economic
conditions, 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 is an Internet media company providing online news and information
for the sophisticated reader. 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 ten 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 ten content websites. Salon offers two websites, News and Politics, in
which substantially all content is only offered to Salon Premium subscribers,
with an abridged form available to all users.

       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,

                                       11
<PAGE>

filed with the Securities and Exchange Commission. Matters of interest therein
include, but are not limited to, Salon's disclosure of critical accounting
policies.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2002 COMPARED TO THE
THREE MONTHS ENDED JUNE 30, 2001

NET REVENUES:

       Net revenues were constant at $1.0 million for both three-month periods
ended June 30, 2002 and June 30, 2001. Advertising revenues declined to $0.5
million for the three months ended June 30, 2002 from $0.6 million the prior
year while subscription revenue increased from $0.2 million to $0.4 million in
the same period. During the three months ended June 30, 2001, Salon had $0.2
million of software sales and none for the three months ended June 30, 2002 as
Salon no longer actively markets its software to manage content on websites. The
decrease in advertising revenue was attributable to a continuing contraction in
spending for most forms of advertising by companies in the United States. In
addition, most Internet advertisers are choosing to place advertisements in the
largest websites, websites that attract a larger unique visitor base than Salon,
or websites that also feature cross-platform advertising mediums, such as
newspapers. The subscription revenue increase was attributable to only
recognizing revenue for approximately two months of Salon Premium subscribers
for two months usage during the three-month period ended June 30, 2001, while
the three month period ended June 30, 2002 includes revenue recognition to
reflect the usage by members of one and two year subscriptions who signed up for
the service since the inception of the program in late April, 2001. As of June
30, 2002, Salon has approximately 38,000 active Salon Premium subscribers, and
has had approximately 47,700 individuals sign up for one month, one year and two
year Salon Premium subscriptions. As of June 30, 2002, Salon has deferred $0.6
million of Salon Premium revenue to be recognized over the remaining
subscription periods and has experienced a renewal rate of approximately 66
percent. Salon cannot predict what its renewal rate will be in the future. Salon
estimates that it will recognize approximately $1.0 to $1.4 million of Salon
Premium revenue for its fiscal year ending March 31, 2003 but cannot estimate
advertising revenue during the period.

PRODUCTION AND CONTENT:

       Production and content expenses during the three months ended June 30,
2002 were $1.2 million versus $1.5 million for the three months ended June 30,
2001, a decline of $0.3 million or 23%. The decrease in production and content
costs is primarily attributable to an approximate $0.2 million decrease in
salaries and benefits from the elimination of eighteen staff positions between
periods and $0.1 million from switching to a new Internet service provider.
Salon does not anticipate material future reductions in production and content
expenditures.

SALES AND MARKETING:

       Sales and marketing expenses during the three months ended June 30, 2002
were $0.8 million, the same as during the three months ended June 30, 2001. The
amortization of prepaid advertising for the three months ended June 30, 2002 was
$0.4 million compared to $0.2 million for the three months ended June 30, 2001
due to an increased utilization of this asset. The increase of $0.2 million was
mitigated by an elimination of seven positions between periods that yielded
savings of $0.1 million and other cost reduction measures of $0.1 million. Salon
does not anticipate material future reductions in sales and marketing
expenditures and expects future amortization of prepaid advertising to be
approximately $200 per quarter.

                                       12
<PAGE>

RESEARCH AND DEVELOPMENT:

       Research and development expenses during the three months ended June 30,
2002 were $0.2 million, the same as during the three months ended June 30, 2001.
Salon does not anticipate material future reductions in research and development
expenditures.

GENERAL AND ADMINISTRATIVE:

       General and administrative expenses during the three months ended June
30, 2002 were $0.4 million versus $0.5 million for the three months ended June
30, 2001, a decline of $0.1 million or 12%. The decrease is primarily
attributable to a general contraction of expenditures. Salon does not anticipate
material future reductions in general and administrative expenditures.

AMORTIZATION OF INTANGIBLES:

       Amortization of intangible expenses during the three months ended June
30, 2002 were $0.1 million, the same as during the three months ended June 30,
2001.

WRITE-DOWN OF LONG-LIVED ASSETS:

       During the fiscal year ended March 31, 2001, Salon capitalized $0.7
million of expenditures to enhance Salon's proprietary software as Salon
contemplated marketing the software. During the quarter ended June 30, 2001,
Salon discontinued all development and dedicated internal marketing efforts to
focus on its core content, production and maintenance. Accordingly, Salon
determined that this asset was impaired and recorded an impairment charge of
$0.7 million.

       In May 2000, Salon acquired MP3Lit.com in a transaction that included
contingently issueable common stock. As a consequence, Salon issued 317,000
shares of common stock valued at $0.1 million in May 2001 resulting in
additional purchase consideration classified as goodwill. As determined during
the fiscal year ended March 31, 2001, all the goodwill associated with the
acquisition was impaired, and as a result the additional goodwill resulting from
this additional stock award was written off during the three month period ended
June 30, 2001. Additional contingent shares of 412,100 were issued in May 2002
and the additional goodwill resulting from this additional stock award was
written off during the three month period ended June 30, 2002. An additional
158,500 contingent shares are to be issued in May 2003. Salon cannot predict at
this time the financial impact of issuing these additional contingent shares.

NET LOSS:

       As a result of the above factors, Salon recorded a net loss of $1.7
million, or $0.12 per share for the three months ended June 30, 2001 compared to
a net loss of $2.9 million, or $0.22 per share for the three months ended June
30, 2001.

LIQUIDITY AND CAPITAL RESOURCES:

       As of June 30, 2002, Salon had approximately $0.4 million in available
cash remaining from the issuance of preferred stock in August and September 2001
and March 2002. Salon also had $0.6 million of restricted cash held primarily as
deposits for various lease arrangements.

                                       13
<PAGE>

       Net cash used in operations was $1.1 million for the three months ended
June 30, 2002, compared to $1.6 million for the three months ended June 30,
2001. The principal use of cash during the three months ended June 30, 2002 was
to fund the $1.7 million net loss for the period and a $0.1 million decrease in
liabilities, offset partly by non-cash charges of $0.7 million. The principal
use of cash during the three months ended June 30, 2001 was to fund the $2.9
million net loss for the period and a $0.3 million decrease in liabilities,
offset partly by non-cash charges of $1.4 million.

       No cash was used in investing activities for the three months ended June
30, 2002, compared to an immaterial amount for the three months ended June 30,
2001. Salon does not expect any significant capital expenditures during the
current fiscal year.

       Net cash from financing activities was immaterial for the three months
ended June 30, 2002 and the three months ended June 30, 2001.

       As of June 30, 2002, Salon's available cash resources were sufficient to
meet working capital needs for approximately one month. Subsequent to June 30,
2002, Salon received gross proceeds of $0.7 million from the issuance of
convertible promissory notes and warrants, and reduced its restricted cash, a
component of other assets, by $140 from a renegotiated lease deposit with a
landlord. Salon believes with this cash that it will be able to fund working
capital needs at least through September 2002 with the assistance of revenues
generated during the period. Copies of the relevant documents relating to the
issuance of the notes and warrants were filed as exhibits to Salon's Form 8-K
filed with the Securities and Exchange Commission on July 29, 2002. For complete
information, reference is made to the exhibits attached to the Form 8-K.

       Salon's auditors have included a paragraph in their report for the fiscal
years ending March 31, 2002 and 2001 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, not filled positions opened by attrition,
implemented a wage reduction of 15% effective April 1, 2001, and has cut
discretionary spending to minimal amounts, but due to economic uncertainty, and
limited visibility of advertising activity, it is unable to accurately predict
if and when it will reach cash-flow break even.

       Salon needs to raise additional funds and is currently in the process of
exploring financing options. If it is unable to complete the financial
transactions it is pursuing or if it is unable to fund its liquidity needs, then
it may not be able to continue as a going concern. Liquidity continues to be a
constraint on business operations, including Salon's ability to react to
competitive pressures or to take advantage of unanticipated opportunities. 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 very substantial for existing stockholders.

RECENT ACCOUNTING PRONOUNCEMENTS

       In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS
No. 142, "Goodwill and Other Intangible Assets" (SFAS No. 142). This standard
eliminates the amortization of goodwill, and requires goodwill to be reviewed at
least annually for impairment, the useful lives of previously recognized
intangible assets to be reassessed and the remaining amortization periods to be
adjusted accordingly. Salon implemented this standard effective April 1, 2002.
The effect of such implementation was to reduce goodwill amortization expense by
$0.1 million annually. No material changes to the carrying value of goodwill or
intangible assets resulted by the adoption of SFAS No. 142.

                                       14
<PAGE>

       In October 2001, the FASB issued SFAS No. 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets" (SFAS No. 144). SFAS No. 144
supersedes "Accounting for the Impairment of Long- Lived Assets and for
Long-Lived Assets to Be Disposed Of" (SFAS No.121), however it retains the
fundamental provisions of SFAS No. 121 for (1) the recognition and measurement
of the impairment of long-lived assets to be held and used and (2) the
measurement of long-lived assets to be disposed of by sale. SFAS No. 144
develops a single accounting model for long-lived assets to be disposed of by
sale, whether previously held and used or newly acquired assets and consequently
amends Accounting Principles Board Opinion No. 30, "Reporting Results of
Operations -Reporting the Effects of Disposal of a Division of a Business."
Additionally, SFAS No. 144 expands the scope of discontinued operations to
include all components of an entity with operations that (1) can be
distinguished from the rest of the entity and (2) will be eliminated from the
ongoing operations of the entity in a disposal transaction. SFAS No. 144 is
effective for fiscal years beginning after December 15, 2001, and interim
periods within those fiscal years. The adoption of this standard did not have an
effect on Salon's financial statements.

       In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" (SFAS No. 146). SFAS No. 146
nullifies the guidance of the Emerging Issues Task Force (EITF) in EITF Issue
No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)". Under EITF Issue No. 94-3, an entity recognized a liability for
an exit cost on the date that the entity committed itself to an exit plan. In
SFAS 146, the Board acknowledges that an entity's commitment to a plan does not,
by itself, create a present obligation to other parties that meets the
definition of a liability and requires that a liability for a cost that is
associated with an exit or disposal activity be recognized when the liability is
incurred. It also establishes that fair value is the objective for the initial
measurement of the liability. SFAS No. 146 will be effective for exit or
disposal activities that are initiated after December 31, 2002. Salon does not
expect an impact on its financial position and results of operating from the
adoption of SFAS No. 146.

RISK FACTORS

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

SALON LACKS SIGNIFICANT REVENUES, HAS A HISTORY OF LOSSES, AND AS A RESULT, MAY
NOT BE ABLE TO CONTINUE AS A GOING CONCERN

       Salon has a history of significant losses and expects to incur operating
losses in the near future. For the three months ended June 30, 2002, Salon had
net losses attributable to common stockholders of $1.7 million and had an
accumulated deficit of $78.3 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 outside auditors provided a "going-concern" audit
opinion on the consolidated financial statements for the years ended March 31,
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.

                                       15
<PAGE>

SALON REQUIRES ADDITIONAL FUNDING THAT MAY NOT BE AVAILABLE ON FAVORABLE TERMS,
IF AT ALL

       During August and September 2001 and March 2002 Salon raised
approximately $3.7 million in a private placement of Series A and B preferred
stock. Salon raised an additional gross amount of $714,000 in July 2002 in
connection with its sale of convertible promissory notes. Even though Salon has
eliminated various positions, not filled positions opened by attrition,
implemented a wage reduction of 15% effective April 1, 2001 and has cut
discretionary spending to minimum amounts, due to a weak U.S. economy in
general, and a weak advertising market in particular, it is unable to predict if
and when it will reach cash-flow break even. Salon therefore needs to raise
additional funds by approximately October 2002. If Salon raises additional funds
by selling equity securities, or instruments that convert into equity
securities, the percentage ownership of Salon's 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 very substantial for
existing shareholders. Salon cannot be sure that additional financing will be
available on terms favorable to Salon, or at all. If adequate funds are not
available on acceptable terms, if at all, Salon may be unable to continue as a
going concern and its ability to react to competitive pressures and take
advantage of unanticipated opportunities will be substantially limited. In
addition, Salon's business could be significantly adversely affected.

       The "going-concern" opinion from Salon's auditors limits Salon's ability
to access certain types of financing, and the circumstances which prompted this
opinion, may limit or prevent Salon from obtaining suitable financing, if at
all.

SALON'S STOCK LISTING HAS CHANGED AND MAY CHANGE AGAIN

       Shares of Salon's common stock were listed on the Nasdaq National Market
until September 25, 2001, at which time they were moved to the Nasdaq SmallCap
Market due to Salon's inability to meet the continued listing requirements of
the Nasdaq National Market. Listing retention on the Nasdaq SmallCap Market
requires continuing compliance with Nasdaq listing standards. One of the
conditions of continued listing is that Salon's common stock achieve and
maintain a closing bid price of at least $1.00 per share for at least ten
consecutive trading days. After panel review, Nasdaq agreed to continue the date
by which Salon must demonstrate that its stock has traded above $1.00 until
August 13, 2002. Salon has not met the minimum bid requirements during that time
period. Additionally, Salon believes it is not in compliance with the market
value of public float requirement and Salon could also fail to meet other
listing requirements. Salon has requested that Nasdaq grant an additional
180-day grace period for Salon to comply with the listing requirements. Salon
cannot predict whether Nasdaq will grant Salon's request. If Nasdaq denies the
request, Salon faces the risk of possible delisting proceedings due to Salon's
inability to meet the minimum bid requirements and other listing requirements.

       If the market price for Salon's common stock remains below $1.00 per
share, its common stock may be deemed to be penny stock. If its common stock
were considered penny stock, it would be subject to rules that impose additional
sales practices on broker-dealers who sell its securities. For example, broker
dealers must make a special suitability determination for the purchaser, receive
the purchaser's written consent to the transaction prior to sale, and make
special disclosures regarding sales commissions, current stock price quotations,
recent price information and information on the limited market in penny stock.
Because of these additional obligations, some brokers may not effect
transactions in penny stocks, which could adversely affect the liquidity of
Salon's common stock.

       If the market price for Salon's common stock stays above $1.00 but the
value of Salon's common stock not held by its directors, executive officers and
affiliates does not stay above $1,000,000 for a sustained period of time, Salon
may not qualify for continued listing on the Nasdaq SmallCap Market. Listing on
the Nasdaq SmallCap Market would enable Salon to return to the Nasdaq National
Market if

                                       16
<PAGE>

and when it achieved compliance with the other Nasdaq National Market continuing
listing requirements. If Salon's shares are not eligible for listing on the
Nasdaq SmallCap Market, then they would not be eligible for listing again on any
Nasdaq market absent compliance with the Nasdaq initial listing requirements,
which are significantly more stringent than the continued listing requirements.

       If Salon's common stock is delisted from Nasdaq SmallCap Market, it will
likely be traded on the over-the-counter bulletin board (OTCBB). If Salon's
common stock is traded on the OTCBB, its value may be negatively impacted
because stocks which trade over-the-counter tend to be less liquid and trade
with larger variations between the bid and ask price.

SALON'S COMMON STOCK PRICE MAY FLUCTUATE SIGNIFICANTLY REGARDLESS OF ITS ACTUAL
OPERATING PERFORMANCE

       The trading price of Salon's common stock may be highly volatile. Salon's
stock price may be subject to wide fluctuations in response to a variety of
factors, including:

     o   the presence of a bid price under $1.00;

     o   actual or anticipated variations in quarterly operating results and
         announcements of technological innovations;

     o   new products or services offered by Salon or its competitors;

     o   changes in financial estimates by securities analysts;

     o   conditions or trends in the Internet services industry and the online
         content segment in particular;

     o   Salon's announcement of significant acquisitions, strategic
         partnerships, joint ventures or capital commitments;

     o   additions or departures of key personnel;

     o   sales of common stock; and

     o   other events that may be beyond Salon's control.

       In addition, the Nasdaq SmallCap Market has recently experienced extreme
price and volume fluctuations. These broad market and industry factors may
materially adversely affect the market price of Salon's common stock, regardless
of Salon's actual operating performance. In the past, following periods of
volatility in the market price of an individual company's securities, securities
class action litigation often has been instituted against that company. This
type of litigation, if instituted, could result in substantial costs and a
diversion of management's attention and resources.

REVENUE GENERATED FROM SUBSCRIBERS TO SALON PREMIUM MAY NOT BE SUFFICIENT TO
OFFSET POTENTIAL LOWER ADVERTISING REVENUE

       With the weakened demand for advertising, Salon has begun to depend more
on cash generated from Salon Premium, a paid subscription service implemented in
April 2001. Salon estimates that as of June 30, 2002, approximately thirty to
thirty-five percent of its content is available to Salon Premium subscribers
only. The implementation of Salon Premium may therefore adversely restrict and
reduce the number of impressions available to sell to advertisers. Salon
believes recent content restrictions and

                                       17
<PAGE>

reduction in sellable impressions have reduced theoretical advertising capacity
but have not created practical shortages, and Salon has the means to create
useful space as demand increases.

SALON HAS AN ACTIVE SUBSCRIPTION PROGRAM BUT THE REVENUE RESULTS ARE NOT CERTAIN

       Salon has had a subscription business since it acquired The Well, an
online forum, in March 1999. The Well has now been in operation for over ten
years. In July 2001, Salon's previously free Table Talk online forum, which it
developed internally, was transitioned to a subscription service. In April 2001,
Salon launched Salon Premium, which provides Salon readers with certain benefits
in exchange for a subscription for a year or more. In October 2001, Salon
continued its efforts to expand its subscriber base, in part, by making
unabridged News and Politics stories only available to Salon Premium members. In
December 2001, Salon began offering one-month subscriptions to Salon Premium.
Salon Premium members for the most part, however, choose to view Salon's content
without any advertisements. While traditional media properties commonly operate
with advertising within subscriber-purchased pages, Salon has not implemented
this model. Dividing some of our websites between abridged content accompanied
by advertising and unabridged content accompanied by subscription revenue may
not achieve acceptable circulation or revenue goals.

       Successful subscription 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 began offering one and two year subscriptions to Salon Premium in
April 2001. As of June 30, 2002 Salon has experienced a renewal rate of
approximately sixty-six percent for one-year subscription to Salon Premium.
Salon cannot predict if this rate will continue in the future. In addition,
Salon will not know what renewal rate it can expect for individuals who have
signed up for two-year subscriptions to Salon Premium until the quarter ending
June 30, 2003.

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

       Our 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 our control, and any of which could severely harm our 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;

                                       18
<PAGE>

     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.

       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.

SALON DEPENDS ON ADVERTISING SALES FOR MUCH OF ITS REVENUES, AND ITS INABILITY
TO INCREASE ADVERTISING REVENUES WILL HARM ITS BUSINESS

       Revenues depend substantially on sales of advertising. In order to
increase revenues, Salon needs to attract additional significant advertisers on
an ongoing basis. Salon may not be able to attract or retain a sufficient number
of advertisers in the future, and if Salon cannot, its business would likely be
severely harmed. If Salon does not sell a sufficient number of advertisements or
does not engage a sufficient number of advertisers during a particular period,
its business could be severely harmed.

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

     o   successfully sell and market its network to advertisers;

     o   increase its user base;

     o   increase the amount of revenues it receives per advertisement;

     o   have a sufficient number of impressions available to advertisers;

     o   increase awareness of the Salon brand;

     o   successfully sell new ad units and formats;

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

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

     o   retain sales personnel; and

                                       19
<PAGE>

     o   convince advertisers that Salon will continue as a going concern.

THE LENGTH OF SALON'S SALES CYCLES 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 nine months.
Sales of advertising are subject to factors over which Salon has little or no
control, including:

     o   advertisers' budgets;

     o   internal acceptance reviews by advertisers and their agencies;

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

SALON HAS VARIOUS OFFICE LEASE AGREEMENTS AND ASSOCIATED LEASEHOLD IMPROVEMENTS,
DEPOSITS AND RESTRICTED CASH THAT MAY BE ADVERSELY IMPACTED IF LEASE TERMS WERE
SHORTENED FOR ANY REASON

       As of June 30, 2002 Salon had leasehold improvements recorded at cost at
$1.0 million with a net book value of $0.7 million, as well as $0.8 million of
office lease deposits and restricted cash. The leasehold improvements are being
depreciated over the term of its respective lease. If Salon were to shorten the
lease term of various lease agreements for any reason, or terminate lease
agreements, these assets could be adversely affected.

SALON MUST DETERMINE WHETHER TO ESTABLISH OR MAINTAIN DISTRIBUTION RELATIONSHIPS
TO ATTRACT MORE USERS AND SUBSCRIBERS TO ITS NETWORK

       In past periods Salon depended on distribution relationships with
high-traffic websites to increase its user base. There has been intense
competition for relationships with these websites, and Salon may not be able to
enter into such relationships on favorable terms or at all. Even if Salon enters
into distribution relationships with these websites, its websites may not
attract significant numbers of users, and its websites may not attract
additional users from these relationships. Moreover, Salon has paid, and may in
the future be asked to pay, significant fees to establish these relationships.
Salon also has commenced relationships designed to promote and sell
subscriptions to Salon Premium. These relationships are new and Salon is unable
to predict they will prove effective and economic.

SALON MUST CONTINUALLY DEVELOP COMPELLING CONTENT TO ATTRACT INTERNET USERS

       Salon's success depends upon its ability to attract and retain a large
number of users by delivering original and compelling Internet content and
services. If Salon is unable to develop content and services that allow it to
attract, retain and expand a loyal user base possessing high-value demographic
characteristics, Salon will be unable to generate advertising or subscription
revenues, and its revenues and operating results will be severely harmed. The
content and services Salon provides on its websites may not appeal to a
sufficient number of Internet users to generate advertising or subscription
revenues. Salon's ability to develop compelling content depends on several
factors, including:

     o   the quality and number of writers and artists who create content for
         Salon;

                                       20
<PAGE>

     o   the quality of Salon's editorial staff;

     o   the technical expertise of Salon's production staff; and

     o   working capital constraints of Salon.

       Consumer tastes and preferences change rapidly and Salon may not be able
to anticipate, monitor, and successfully respond to these changes to attract and
retain a sufficient number of users for Salon's network of websites. Internet
users can freely navigate and instantly switch among a large number of websites,
many of which offer content and services that compete with Salon. In addition,
many websites offer very specific, highly targeted content that could have
greater appeal than Salon's network to particular subsets of its target user
base.

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

       Many of our websites contain, and will continue to contain, content that
is politically and culturally controversial. As a result of this content,
current and potential advertisers and Salon Premium subscribers 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.

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 its users must perceive the content of its
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 and Editor-in-Chief.

       Salon's future success depends to a significant extent on the continued
services of key personnel, particularly, David Talbot, and Michael O'Donnell,
Chief Executive Officer. Salon currently has no employment agreement with Mr.
Talbot and it does not maintain "key person" life insurance for any of its
personnel. The loss of the services of Mr. Talbot, Mr. O'Donnell, or other key
employees would likely have a significantly adverse effect on its business.

       Due to recurring operating losses, our current financial position and
potential Nasdaq SmallCap delisting, 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.

                                       21
<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
our 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 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

       Salon has developed a proprietary online publishing system. If this
system does not work as intended, or if Salon is unable to continue to develop
this system to keep up with the rapid evolution of technology for content
delivery including advertising on the Internet, its network of websites may not
operate properly which could harm its 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 its
business. Moreover, complex software products like its online publishing system
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
publishing system, errors or deficiencies may be found in the system 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,
including web hosting, advertising delivery, and Internet traffic measurement.
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

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<PAGE>

not deliver the correct advertisements to its network, its 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.

       For certain clients, Salon uses third-party services to deliver
advertising features and/or measure advertising delivery. This type of service
is outside its direct control, and if the service arrangement under performs,
its advertising delivery may perform below expectations and its advertising
revenues could be adversely affected.

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.

       Currently, demand and market acceptance for Internet advertising is
uncertain and may not increase as necessary for our business to grow or succeed.
Many advertisers have little or no experience using the Internet for advertising
purposes. The adoption of Internet advertising, particularly by companies that
have historically relied on traditional media, requires the acceptance of a new
way of conducting business, exchanging information and advertising products and
services. Potential advertisers may believe Internet advertising to be
undesirable or less effective for promoting their products and services relative
to traditional advertising media. If the Internet advertising market fails to
develop or develops more slowly than Salon expects, its business could be
harmed. Within the industry, its advertising audience may be low and inhibit its
ability to sell advertising.

       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 the company 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.

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<PAGE>

       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 ADVERTISING MAY NOT EVOLVE TO THE EXTENT
NECESSARY TO SUPPORT INTERNET ADVERTISING, THEREBY CREATING UNCERTAINTY ABOUT
THE VIABILITY OF SALON'S BUSINESS MODEL

       There are currently no standards for the measurement of the effectiveness
of advertising on the Internet, and the industry may need to develop standard
measurements in order to sustain advertising volume or attract new advertisers.
Standardized measurements may not develop and if they do not, Salon's business
could be harmed. In addition, currently available software programs that track
Internet usage and other tracking methodologies are rapidly evolving. The
development of such software or other methodologies may not keep pace with its
information needs, particularly to support its internal business requirements
and those of its advertisers and sponsors. The absence or insufficiency of this
information could limit its ability to attract and retain advertisers and
sponsors.

       It is important to its advertisers that Salon accurately measures the
demographics of its user base and the delivery of advertisements on its
websites. Salon depends on third parties to provide certain of these measurement
services. If they were unable to provide these services in the future, Salon
would need to perform them themselves or obtain them from another provider, if
available. This could cause them to incur additional costs or cause
interruptions in its business while they are replacing these services. 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 our 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

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<PAGE>

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

SALON MAY BE HELD LIABLE FOR CONTENT 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, Salon faces potential
liability for defamation, negligence, copyright, patent or trademark
infringement and other claims based on the nature, content or ownership of the
material that is published on or distributed from its network of websites. These
types of claims have been brought, sometimes successfully, against online
services, websites and print publications in the past. Although Salon carries
general liability insurance, its insurance may not be adequate to indemnify us
for all liability that may be 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.

SALON MAY BE LIABLE FOR ITS LINKS TO THIRD-PARTY WEBSITES

       Salon could be exposed to liability with respect to the selection of
third-party websites that may be accessible through Salon.com. These claims
might include, among others, that by linking to websites operated by third
parties, Salon may be liable for copyright or trademark infringement or other
unauthorized actions by these third-party websites. 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. Salon's business could be seriously harmed due
to the cost of investigating and defending these claims; even to the extent
these claims do not result in liability. Implementing measures to reduce its
exposure to this liability may require us to spend substantial resources and
limit the attractiveness of our 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

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<PAGE>

privacy of users may also inhibit the growth of the Internet as a means of
conducting commercial transactions.

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 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 its
costs of operations and harm its 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

                                       26
<PAGE>

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 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. However, one or more states may seek to
impose sales tax collection obligations on out-of-state companies, including
Salon, which engage in or facilitate electronic commerce. A number of proposals
have been made at the state and local level that would impose additional 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 our ability to derive revenue from electronic commerce. Moreover, if any
state or foreign country were to successfully assert 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

                                       27
<PAGE>

       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:

       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.

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.


--------------------------------------------------------------------------------
PART I:  FINANCIAL INFORMATION
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
--------------------------------------------------------------------------------

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



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<PAGE>

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

ITEM 1.  LEGAL PROCEEDINGS.

         Not Applicable

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

         Not Applicable

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.

         Not applicable

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

(A)      EXHIBITS.


4.2.10*        Note and Warrant Purchase Agreement dated as of July 24, 2002

4.2.11*        Form of Convertible Promissory Note dated July 24, 2002

4.2.12*        Form of Common Stock Purchase Warrant dated July 24, 2002

99.6           Certification of Michael O'Donnell, Chief Executive Officer and
               President of the Registrant pursuant to 18 U.S.C.ss. 1350, as
               adopted pursuant to the Sarbanes-Oxley Act of 2002

99.7           Certification of Robert O'Callahan, Chief Financial Officer of
               the Registrant pursuant to 18 U.S.C.ss. 1350, as adopted pursuant
               to the Sarbanes-Oxley Act of 2002

* Incorporated by reference to the exhibit filed with the Registrant's Current
Report on Form 8-K filed on July 29, 2002

(B)      REPORTS ON FORM 8-K.

         None



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<PAGE>

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:   8/7/02                        /s/ Michael O'Donnell
                                     -------------------------------------------
                                     Michael O'Donnell, Chief Executive Officer
                                     and President


Dated:  8/7/02                         /s/ Robert O'Callahan
                                     -------------------------------------------
                                     Robert O'Callahan, Chief Financial Officer




















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