Digital media company Salon Media Group is for sale, including intellectual property rights and the Salon.com website, according to a May 8 filing with the U.S. Securities and Exchange Commission. The sale price is $5 million and Salon.com LLC is named as the buyer, but it is not clear who owns or represents the buyer. A 10% deposit of $500,000 has already been made. This will be part of the $550,000 due in cash at closing, $100,000 of which will be deposited into escrow. The balance of $3.85 million is due in two installments over the next two years, half due at 12 months and the remainder at 24 months, secured by promissory note.* (see story update below)
The deal also includes an earn-out payment provision where the buyer agrees to pay Salon up to $500,000 if the net revenue of the company in 2019 exceeds the net revenue target of $4.2 million. The asset purchase agreement can be terminated at any time prior to the closing date of the sale, before or after the approval of Salon stockholders.
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As required by the SEC, the filing outlines risks associated with the agreement, including the fact that there are no guarantees that the sale will be completed and if it is not completed, Salon may have to file for bankruptcy and liquidation of assets. If the sale does not complete in time, the asset sale could be considered abandoned.
The SEC filing also notes that CEO Jordan Hoffner resigned from his position on May 3, 2019, but it was not because of any disagreements with the company on matters relating to its operations, policies and practices. Hoffner will remain one of the companys directors, at least for the time being. He joined the company in May 2016. Richard MacWilliams has been named acting CEO at a rate of $7,500 per month, and Trevor Colhoun was named acting CFO at a rate of $2,500 per month to fill a vacancy left by Betsy Hambrechts resignation.
As if this werent painful enough, Salon said it received a letter from the SEC on March 26, 2019 that notified the company that it had not complied with the SECs reporting obligations, failing to file financial disclosures for more than a year, reports The New York Post. If the company did not comply within 15 days of the letter, the SEC could subject Salon to administrative proceedings and revoke the companys registration and delist Salons stock. Salon has far surpassed the 15-day deadline, but is hoping to comply by June 7.
As of 4 p.m. yesterday, Salon Media stock was valued at $0.03 per share. Its 52-week high was $0.046. When looking for Salon.coms financials and earnings reports, we received a 404 error message, stating the page we were looking for does not exist.
STORY UPDATE: According to Ann Bridges for LaCorte News, Salon is being sold to Christopher Richmond and Drew Schoentrup. The two are co-founders of Proper Media who is involved in an ugly legal battle with fact-checking site Snopes. They are also involved with several other media-related ventures.
Since going public in 1999, the company has been on a steady losing streak, posting losses year after year. As evidenced by its stock price, the company has little value remaining with perhaps the exception of its archives. Salon desperately needs this sale to go through. If it doesnt, bankruptcy and liquidation are probably its only option.