Salon.com’s Auditors Doubt Its Continued Viability: Salon Media Group (Nasdaq: SALNC), operator of Salon.com, has just filed it annual report for 2001. An interesting read, especially portions on its paid content efforts. However, the scary portion: its auditors doubt if it can survive as a going concern, citing cash flow problems. Here’s the portion in full: “As of March 31, 2002, Salon’s available cash resources were sufficient to meet working capital needs for approximately three to four months depending on revenues generated during the period. Salon’s auditors have included a paragraph in their report indicating that substantial doubt exists as to its 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 a weak U.S. economy in general, 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 other liquidity needs, then it may be unable 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.”