Salon Media Group Inc., whose accountant indicated doubts about the company’s ability to continue without the threat of liquidation, is planning to focus on expanding its product reach to increase revenue.

Salon, which has offices in San Francisco, New York and Washington D.C., operates Salon.com, a website that covers breaking news, politics, culture, technology and entertainment.

Burr Pilger Mayer Inc., the company’s independent accounting firm, has indicated substantial doubt about the company’s ability to continue as a going concern since March 2010 because of the company’s history of significant losses. Burr Pilger’s latest report indicated the doubt for the fiscal year ended March 31, Salon says in an Aug. 14 filing with the U.S. Securities and Exchange Commission. 

Salon has incurred losses since inception, and expects to incur another loss for its fiscal year ending on March 31, 2014. The company had an accumulated deficit of $117,153 as of June 30, according to the SEC filing.

The company has been relying on cash infusions from John Warnock, chairman of the board, and William Hambrecht, a director and father of Salon’s interim CFO, Elizabeth Hambrecht. Warnock has contributed $1.28 million through interest free, unsecured cash advances, during Salon’s current fiscal year to fund operations, the company says in SEC filings.

Salon also has a borrowing agreement with Deutsche Bank Securities Inc. from May 2007 that allows it to borrow up to $1,000. That line of credit was fully drawn, and $227 in interest had accrued, as of June 30. Deutsche Bank may demand payment at any time, according to SEC filings.

On March 1 the company completed a recapitalization, where all of its convertibles notes, related-party advances, certain consulting fees, totaling about $15.7 million, were exchanged for 72.87 million shares of common stock, valued at $0.35 per share.

The company has taken some restructuring initiatives, focusing its strategy on the Salon.com website and laid off the staff of “The Well” – a group that focused on the company’s online discussion forum — in September.

Salon plans to focus its efforts on growing revenue by expanding its product reach, it says in SEC filings.

Salon has taken some steps to improve engagement on the website, including enabling a comments section on all pages “to increase usability, engagement and return visits.” The company also launched Android mobile and tablet applications in April.

For the three months ended June 30, the company’s revenue was $1.2 million, up 43 percent from the same period in 2012. The company pulled in $1.1 million in ad revenues for the quarter, up 57 percent from the same period of 2012. Salon attributes the growth to a growth in its traffic, which increased 38 percent to 10.3 million monthly users compared to the same time period the previous year.

Most of Salon’s revenue comes from ad sales on its website. The company also has a subscription program, but revenue from subscriptions has been decreasing since December 2004. Paid subscriptions peaked that month at 89,100, and have decreased to fewer than 8,000 as of June 30. The company plans to wind down its subscription service by the end of next March. 

For last week's edition of Turnaround Tuesday, see "Kinbasha Hopes for Loan Restructuring." 

For more struggling companies, see Mergers & Acquisitions' Distressed Company Watch List.

Due to holiday and vacation schedules, Turnaround Tuesday will not be published Sept. 3 and will resume Sept. 10.

Subscribe Now

Complete access to real-time information and analysis of news and trends in the industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.