Salon Media Group (SLNM) Risk Analysis

As of July 1, 2019, our directors and officers beneficially owned approximately 200 million shares of Common Stock, including 24 million shares of Common Stock upon exercise of presently exercisable options,11 million shares of Common Stock upon exercise of presently exercisable warrants and 27 million shares of common stock upon conversion of convertible notes.  The approximate 200 million shares of Common Stock represent beneficial ownership of approximately 52% of our Common Stock.  As our shares of Common Stock are normally thinly traded, if our principal stockholders were to sell their shares of Common Stock, the price per share of our shares of Common Stock could be adversely affected.

Our liquidation, dissolution and winding up process will be subject to uncertainties. The amount and timing of any liquidating distribution to our stockholders will depend on the following factors, among others: - whether any potential claimants against us and currently unknown to us could present claims relating to our pre-dissolution operations that we may ultimately have to satisfy;- the costs we may have to incur to defend new claims and claims existing as of the date of this proxy statement, including possible claims against us relating to our dissolution and possible tax audits;- the payment of expenses incurred in connection with the Asset Sale and transaction expenses;- the amounts that we will need to pay for general administrative and overhead costs and expenses as an operating company before our dissolution and the amounts that we will need to pay in connection with our post-dissolution survival period;- the expenses that we may incur to terminate the leases for our offices;- the costs attendant on us as a publicly held reporting company under SEC regulations, including legal and auditing fees, especially if we are unable to obtain relief from requirements to continue preparing and filing our annual, quarterly and current reports; and - how much of our funds we will be required to reserve to provide for contingent liabilities, and how long it may take to finally determine whether and how much of those liabilities may have to be paid.

Members of our board of directors and our executive officers may have interests in the Asset Sale that are different from, or are in addition to, the interests of our stockholders generally. Our board of directors was aware of these interests and considered them, among other matters, in approving the Asset Purchase Agreement.

We may file a notice terminating our reporting obligations under the Exchange Act following completion of the Asset Sale. Once effective, we may no longer be required to file any annual, quarterly or other current reports with the SEC. If we are no longer required to file reports with the SEC, stockholders will have very little public information available about us and our operations which will further affect the trading and liquidity of our Common Stock.

As of July 1, 2019, we have $845,000 in convertible notes issued as part of a bridge note financing. These notes will convert at a discount into shares of Common Stock upon a qualified financing by the Company of at least $1 million. The conversion price will equal to 70% of the price per share paid in the qualified financing if such financing occurs within four months from the date of the Securities Purchase Agreement, or 70% less 2% per each month after the fourth month anniversary; provided however that the Conversion Price will never be less than the greater of (A) sixty percent (60%) of the purchase price paid in the qualified financing and (B) the price per share paid by investors in the most recently consummated offering of the Company's Common Stock, or $0.0124 per share, the conversion price in the Series A Mandatorily Convertible Preferred Private Placement, if the financing occurs more than four months after the date of the Securities Purchase Agreement. The issuance and sale of our Common Stock to these bridge note holders for any conversions may have a dilutive impact on our shareholders. As of July 1, 2019, we have $118,899 in convertible notes from related parties. These notes bear a 10% interest rate and are payable on June 30, 2019. In addition, we issued warrants to the secured note holders to purchase 11,312,600 shares of our common stock at an exercise price of $0.01 per share. The warrants expire five years from the issuance date and can be exercised with cash or cancellation of the secured notes referenced above. In addition, if we fail to close the Asset Purchase Agreement or breach the term sheet related to such Asset Purchase Agreement, the $500,000 advanced by PubLife, LLC will convert into a senior secured convertible promissory note, which note would bear interest and be due 90 days from issue and at the election of the PubLife, the outstanding principal amount and all accrued unpaid interest on the note would be convertible into fully paid and non-assessable shares of the our Common Stock at a price per share equal to $0.03.

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

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

Our Common Stock is traded on the OTC Markets (QB Marketplace Tier) under the symbol "SLNM." During the 30-days prior to filing of this Report, the average daily trading volume of our common stock was approximately 5,974 shares. There has been limited trading activity in our stock recently, and when it has traded, the price has fluctuated widely. We consider our Common Stock to be "thinly traded" and any last reported sale prices may not be a true market-based valuation of the Common Stock. A consistently active trading market for our stock may not develop at any time in the future. Stockholders may experience difficulty selling their shares if they choose to do so because of the illiquid market and limited public float for our stock.

As long as the price of our Common Stock remains below $5.00 per share or we have net tangible assets of $2,000,000 or less, our shares of Common Stock are likely to be subject to certain "penny stock" rules promulgated by the SEC. Those rules impose certain sales practice requirements on brokers who sell penny stock to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000). For transactions covered by the penny stock rules, the broker must make a special suitability determination for the purchaser and receive the purchaser's written consent to the transaction prior to the sale. Furthermore, the penny stock rules generally require, among other things, that brokers engaged in secondary trading of penny stocks provide customers with written disclosure documents, monthly statements of the market value of penny stocks, disclosure of the bid and asked prices and disclosure of the compensation to the brokerage firm and disclosure of the sales person working for the brokerage firm. These rules and regulations make it more difficult for brokers to sell our shares of our Common Stock and limit the liquidity of our securities.

Our Certificate of Incorporation authorizes the Board to issue up to 900,000,000 shares of common stock and up to 5,000,000 shares of Preferred Stock.  The power of the Board to issue shares of Common Stock, Preferred Stock or warrants or options to purchase shares of common stock or Preferred Stock is generally not subject to stockholder approval.  Accordingly, any additional issuance of our Common Stock, or Preferred Stock that may be convertible into Common Stock, may have the effect of diluting your investment.

Our Certificate of Incorporation permits us to issue, without approval from our shareholders, a total of 5,000,000 shares of Preferred Stock.  Our Board can determine the rights, preferences, privileges and restrictions granted to, or imposed upon, the shares of Preferred Stock and to fix the number of shares constituting any series and the designation of such series.  It is possible that our Board, in determining the rights, preferences and privileges to be granted when the Preferred Stock is issued, may include provisions that have the effect of delaying, deferring or preventing a change in control, discouraging bids for our Common Stock at a premium over the market price, or that adversely affect the market price of and the voting and other rights of the holders of our Common Stock.