- Quarterly Report (10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

Form 10-Q

_____________________

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2009

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 000-51661

_____________________

BIGSTRING CORPORATION

(Exact name of registrant as specified in its charter)

_____________________

Delaware	20-0297832
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

157 Broad Street, Suite 109, Red Bank, New Jersey 07701

(Address of principal executive offices) (Zip Code)

(732) 741-2840

(Registrant’s telephone number, including area code)

(Former name, former address and formal fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 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 ¨

Indicate by check mark whether the registrant has submitted and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

	Large accelerated filer ¨	Accelerated filer ¨
	Non-accelerated filer ¨	Smaller reporting company x
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Number of shares of Common Stock outstanding at August 13, 2009:

Common Stock, par value $0.0001 per share	59,167,666
(Class)	(Number of Shares)

BIGSTRING CORPORATION

IND E X TO FORM 10-Q

		PAGE
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	1

	Consolidated Balance Sheets (unaudited) as of June 30, 2009 and December 31, 2008	2

	Consolidated Statements of Operations (unaudited) for the Three and Six Months Ended June 30, 2009 and 2008 and the period October 8, 2003 (Date of Formation) through June 30, 2009	3

	Consolidated Statements of Stockholders’ Equity (Deficiency) (unaudited) for the Six Months Ended June 30, 2009 and 2008 and the period October 8, 2003 (Date of Formation) through June 30, 2009	4

	Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2009 and 2008 and the period October 8, 2003 (Date of Formation) through June 30, 2009	6

	Notes to Unaudited Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4.	Controls and Procedures	30


PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 3.	Defaults Upon Senior Securities	31

Item 4.	Submission of Matters to a Vote of Security Holders	31

Item 5.	Other Information	31

Item 6.	Exhibits	31

Signatures		32

Index of Exhibits		E-1

Index

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain information included in this Quarterly Report on Form 10-Q and other filings of the Registrant under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well as information communicated orally or in writing between the dates of such filings, contains or may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Such statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from expected results. Among these risks, trends and uncertainties are the availability of working capital to fund our operations, the competitive market in which we operate, the efficient and uninterrupted operation of our computer and communications systems, our ability to generate a profit and execute our business plan, the retention of key personnel, our ability to protect and defend our intellectual property, the effects of governmental regulation and other risks identified in the Registrant’s filings with the Securities and Exchange Commission from time to time.

In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of such terms or other comparable terminology. Although the Registrant believes that the expectations reflected in the forward-looking statements contained herein are reasonable, the Registrant cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither the Registrant, nor any other person, assumes responsibility for the accuracy and completeness of such statements. The Registrant is under no duty to update any of the forward-looking statements contained herein after the date of this Quarterly Report on Form 10-Q.

Index

P A RT I. FINANCIAL INFORMATION

Item 1. Financial Statement s

Certain information and footnote disclosures required under accounting principles generally accepted in the United States of America have been condensed or omitted from the following consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). It is suggested that the following consolidated financial statements be read in conjunction with the year-end consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2008 of BigString Corporation (“BigString”), as amended.

The results of operations for the three and six months ended June 30, 2009 and 2008 are not necessarily indicative of the results of the entire fiscal year or for any other period.

Index

B I GSTRING CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(A DEVELOPMENT STAGE COMPANY)

(Unaudited)

	June 30, 2009			December 31, 2008
ASSETS
Current assets:
Cash and cash equivalents	$	39,455		$	178,787
Accounts receivable - net of allowance of $35 and $660		5,377			15,115
Prepaid expenses and other current assets		4,770			17,922
Total current assets		49,602			211,824
Property and equipment - net		54,989			74,737
Other assets		140,636			155,677
TOTAL ASSETS	$	245,227		$	442,238

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Accounts payable	$	228,403		$	294,521
Accrued expenses		324,578			216,938
Unearned revenue		4,546			7,104
Accrued interest		21,150			60,000
Short-term debt		473,532			-
Total current liabilities		1,052,209			578,563
Long term liabilities:
Long-term debt		539,446			892,824
TOTAL LIABILITIES		1,591,655			1,471,387

Stockholders' deficiency:
Preferred stock, $.0001 par value - authorized 1,000,000 shares; outstanding 400,000 and 400,000 shares, respectively		40			40
Common stock, $.0001 par value - authorized 249,000,000 shares; outstanding 53,238,144 and 52,244,394 shares, respectively		5,324			5,224
Additional paid in capital		13,616,978			13,119,632
Deficit accumulated during the development stage		(14,968,770	)		(14,154,045	)
Total stockholders' deficiency		(1,346,428	)		(1,029,149	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY	$	245,227		$	442,238

See notes to unaudited consolidated financial statements.

Index

BIGSTRING CORPORATION AND SUBSIDIARY

CONS O LIDATED STATEMENTS OF OPERATIONS

(A DEVELOPMENT STAGE COMPANY)

(Unaudited)

													Period
													October 8, 2003
	For the Three Months Ended						For the Six Months Ended						(Date of Formation)
	June 30,						June 30,						Through
	2009			2008			2009			2008			June 30, 2009
Operating revenues	$	9,737		$	12,646		$	21,840		$	22,344		$	150,994
Operating expenses: (1)
Cost of revenues		18,611			18,356			44,569			39,596			546,810
Research and development		101,326			125,430			221,181			255,560			2,301,975
Sales and marketing		2,365			109,569			26,270			142,218			993,445
General and administrative		94,527			411,328			312,378			729,453			4,431,748
Amortization of intangibles		-			240,153			-			480,306			4,490,190
Impairment of assets		-			-			-			-			1,042,876
Total operating expenses		216,829			904,836			604,398			1,647,133			13,807,044
Loss from operations		(207,092	)		(892,190	)		(582,558	)		(1,624,789	)		(13,656,050	)
Other income (expense): (1)
Interest income		13			1,241			59			3,372			72,648
Interest expense		(20,775	)		(19,875	)		(40,650	)		(32,873	)		(153,735	)
Other, net		(101,047	)		(91,191	)		(192,238	)		(181,104	)		(1,439,286	)
Total other income (expenses)		(121,809	)		(109,825	)		(232,829	)		(210,605	)		(1,520,373	)
Loss before income tax benefit		(328,901	)		(1,002,015	)		(815,387	)		(1,835,394	)		(15,176,423	)
Income tax benefit		-			-			-			-			686,991
Net loss before subsidiary adjustment		(328,901	)		(1,002,015	)		(815,387	)		(1,835,394	)		(14,489,432	)
Gain on deconsolidation of subsidiary		662			-			662			-			662
Net loss	$	(328,239	)	$	(1,002,015	)	$	(814,725	)	$	(1,835,394	)	$	(14,488,770	)

Net loss per common share calculation:
Basic and diluted	$	(0.01	)	$	(0.02	)	$	(0.02	)	$	(0.04	)
Weighted average common shares outstanding:
Basic and diluted		53,083,611			51,248,225			52,753,337			51,124,910

(1) Stock-based and other non-cash compensation by function above:
Cost of revenues	$	-		$	-		$	-		$	-		$	5,653
Research and development		12,648			16,372			38,996			61,885			229,969
Sales and marketing		-			-			-			-			222,725
General and administrative		40,078			158,118			175,958			315,706			1,742,235
Other, net		-			-			-			-			269,094
Total stock-based and other non-cash compensation	$	52,726		$	174,490		$	214,954		$	377,591		$	2,469,676

See notes to unaudited consolidated financial statements.

Index

BIGSTRING CORPORATION AND SUBSIDIARY

CONSOLIDATED STA T EMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)

(A DEVELOPMENT STAGE COMPANY)

(Unaudited)

				Preferred Stock				Common Stock						Additional
				No. of				No. of						Paid-In			Subscription
	Total			Shares		Amount		Shares			Amount			Capital			Receivable			Deficit

Balance, October 8, 2003	$	-			-	$	-		-		$	-		$	-		$	-		$	-
Issuance of common stock (at $.0001 per share)		-			-		-		21,210,000			2,121			(2,121	)		-			-
Contribution of capital		45,000			-		-		-			-			45,000			-			-
Sale of common stock (at $0.25 per share)		-			-		-		40,000			4			9,996			(10,000	)		-
Net loss		(29,567	)		-		-		-			-			-			-			(29,567	)
Balance, December 31, 2003		15,433			-		-		21,250,000			2,125			52,875			(10,000	)		(29,567	)
Cash received from prior sale of common stock		10,000			-		-		-			-			-			10,000			-
Sale of common stock (at $0.25 per share)		217,500			-		-		870,000			87			217,413			-			-
Issuance of common stock for services (valued at $0.21 per share)		39,251			-		-		185,000			19			39,232			-			-
Issuance of common stock for acquisition (valued at $0.24 per share)		4,800,000			-		-		20,000,000			2,000			4,798,000			-			-
Issuance of warrants for services (valued at $0.07 per share)		3,500			-		-		-			-			3,500			-			-
Net loss		(729,536	)		-		-		-			-			-			-			(729,536	)
Balance, December 31, 2004		4,356,148			-		-		42,305,000			4,231			5,111,020			-			(759,103	)
Sale of common stock (at $0.25 per share)		230,500			-		-		922,000			92			230,408			-			-
Exercise of warrants (at $0.25 per share)		11,250			-		-		45,000			4			11,246			-			-
Issuance of common stock for services (valued at $0.25 per share)		12,500			-		-		50,000			5			12,495			-			-
Sale of common stock (at $0.16 per share)		1,511,700			-		-		9,448,125			945			1,510,755			-			-
Issuance of warrants for services (valued at $0.07 per share)		179,200			-		-		-			-			179,200			-			-
Net loss		(2,102,587	)		-		-		-			-			-			-			(2,102,587	)
Balance, December 31, 2005		4,198,711			-		-		52,770,125			5,277			7,055,124			-			(2,861,690	)
Redemption of shares from stockholders (at $0.05 per share)		(400,000	)		-		-		(8,000,000	)		(800	)		(399,200	)		-			-
Issuance of common stock for consulting services (valued at $0.82 per share)		-			-		-		1,250,000			125			(125	)		-			-
Stock-based compensation expense		314,250			-		-		-			-			314,250			-			-
Issuance of warrants for consulting services (valued at $0.08, $0.18 and $0.42 per share)		36,595			-		-		-			-			36,595			-			-
Issuance of common stock for website acquisition (valued at $0.80 per share)		600,000			-		-		750,000			75			599,925			-			-
Sale of preferred stock (at $.0001 per share)		1,860,000			400,000		40		-			-			1,859,960			-			-
Dividends from allocation of proceeds for the beneficial conversion feature of preferred stock		-			-		-		-			-			480,000			-			(480,000	)
Exercise of warrants (at $0.16, $0.20 and $0.25 per share)		18,000			-		-		165,000			17			34,233			(16,250	)		-
Net loss		(3,114,225	)		-		-		-			-			-			-			(3,114,225	)
Balance, December 31, 2006		3,513,331			400,000		40		46,935,125			4,694			9,980,762			(16,250	)		(6,455,915	)
Cash received from prior exercise of warrants		16,250			-		-		-			-			-			16,250			-
Issuance of common stock for consulting services (valued at $0.50 and $0.33 per share)		-			-		-		432,000			43			(43	)		-			-
Allocation to warrants from sale of convertible promissory notes and warrants		31,320			-		-		-			-			31,320			-			-
Beneficial conversion feature of convertible promissory notes		666,648			-		-		-			-			666,648			-			-

Index

Issuance of common stock for conversion of convertible promissory notes (at $0.18 per share)		155,000		-		-	861,111		86		154,914		-		-
Stock-based compensation expense		672,532		-		-	-		-		672,532		-		-
Issuance of warrants, net (valued at $0.10 per share)		19,094		-		-	-				19,094		-		-
Issuance of common stock for waiver and release (valued at $0.25 per share)		250,000		-		-	1,000,000		100		249,900		-		-
Exercise of warrants (at $0.10 per share)		150,000		-		-	1,500,001		150		149,850		-		-
Net loss		(3,949,184	)	-		-	-		-		-		-		(3,949,184	)
Balance, December 31, 2007		1,524,991		400,000		40	50,728,237		5,073		11,924,977		-		(10,405,099	)
Exercise of warrants (at $0.10 per share)		21,333		-		-	213,333		21		21,312		-		-
Issuance of common stock for conversion of convertible promissory notes (at $0.18 per share)		20,000		-		-	111,111		11		19,989		-		-
Allocation to warrants from sale of convertible promissory notes and warrants		76,176		-		-	-		-		76,176		-		-
Beneficial conversion feature of convertible promissory notes		188,740		-		-	-		-		188,740		-		-
Stock-based compensation expense		727,800		-		-	-		-		727,800		-		-
Issuance of common stock for accrued interest (at $0.15 per share)		43,757		-		-	291,713		29		43,728		-		-
Issuance of common stock for website acquisition (valued at $0.13 per share)		117,000		-		-	900,000		90		116,910		-		-
Net loss		(3,748,946	)	-		-	-		-		-		-		(3, 748,946	)
Balance, December 31, 2008		(1,029,149	)	400,000		40	52,244,394		5,224		13,119,632		-		(14,154,045	)
Stock-based compensation expense		214,954		-		-	-		-		214,954		-		-
Issuance of common stock for accrued interest (at $0.08 per share)		79,500		-		-	993,750		100		79,400		-		-
Allocation to warrants from sale of convertible promissory notes and warrants		34,992		-		-	-		-		34,992		-		-
Beneficial conversion feature of convertible promissory notes		168,000		-		-	-		-		168,100		-		-
Net loss		(814,725	)	-		-	-		-		-		-		(814,725	)
Balance, June 30, 2009	$	(1,346,428	)	400,000	$	40	53,238,144	$	5,324	$	13,616,978	$	-	$	(14,968,770	)

See notes to unaudited consolidated financial statements.

Index

BIGSTRING COR P ORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(A DEVELOPMENT STAGE COMPANY)

(Unaudited)

							Period
							October 8, 2003
	For the Six Months Ended						(Date of Formation)
	June 30,						Through
	2009			2008			June 30, 2009
Cash flows from operating activities:
Net loss	$	(814,725	)	$	(1,835,394	)	$	(14,488,770	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization of property and equipment, intangible and other assets		65,085			546,906			4,900,581
Gain on sale of property and equipment		3,755			(3,513	)		2,058
Impairment of assets		-			-			1,042,876
Accretion for beneficial conversion feature and discount on notes		143,146			133,668			673,854
Stock-based compensation		214,954			377,591			2,200,582
Other non-cash compensation		-			-			269,094
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable, net		9,738			947			(5,377	)
(Increase) in prepaid expenses and other assets		(20,899	)		(92,906	)		(401,444	)
(Decrease) increase in accounts payable		(66,118	)		(45,624	)		228,403
Increase (decrease) in accrued expenses and other liabilities		148,290			(18,081	)		465,920
(Decrease) increase in unearned revenue		(2,558	)		(4,111	)		4,546
Net cash used in operating activities		(319,332	)		(940,517	)		(5,107,677	)
Cash flows from investing activities:
Purchase of property and equipment		-			-			(262,290	)
Sale of property and equipment		-			50,809			50,889
Acquisitions		-			-			(13,000	)
Net cash provided by (used in) investing activities		-			50,809			(224,401	)
Cash flows from financing activities:
Proceeds from issuance of convertible notes and warrants		180,000			700,000			1,930,000
Proceeds from issuance of preferred stock, net		-			-			1,860,000
Proceeds from exercise of common stock warrants and issuance of common stock		-			65,090			2,231,533
Payments for redemption of notes		-			-			(250,000	)
Payments for redemption of common stock		-			-			(400,000	)
Net cash provided by financing activities		180,000			765,090			5,371,533
Net (decrease) increase in cash		(139,332	)		(124,618	)		39,455
Cash and cash equivalents - beginning of period		178,787			298,033			-
Cash and cash equivalents - end of period	$	39,455		$	173,415		$	39,455

Supplementary information:
Cash paid during the periods for:
Interest	$	-		$	-		$	9,328
Acquisitions	$	-		$	-		$	13,000
Details of acquisitions:
Fair value of assets acquired	$	-		$	-		$	2,790
Fair value of liabilities assumed		-			-			(5,857	)
Intangibles		-			-			5,533,067
Common stock issued to effect acquisition	$	-		$	-		$	5,517,000
Non-cash transactions during the periods for:
Conversion of promissory notes	$	-		$	20,000		$	175,000
Issuance of common stock for accrued interest	$	79,500		$	43,757		$	123,257
Common stock issued for services	$	113,889		$	170,834		$	1,275,751
Common stock options issued for services		86,028			184,209			600,301
Common stock warrants issued for services		15,037			22,548			324,530
Total stock-based compensation:		214,954			377,591			2,200,582
Issue of warrants, net		-			-			19,094
Issuance of common stock for waiver and release		-			-			250,000
Total other non-cash compensation		-			-			269,094
Total stock-based and other non-cash compensation	$	214,954		$	377,591		$	2,469,676

See notes to unaudited consolidated financial statements.

Index

BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE T H REE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 AND THE PERIOD OCTOBER 8, 2003 (DATE OF FORMATION) THROUGH JUNE 30, 2009

NOTE 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The consolidated balance sheet as of June 30, 2009, and the consolidated statements of operations, stockholders’ equity and cash flows for the periods presented herein have been prepared by BigString and are unaudited. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial position, results of operations, changes in stockholders' equity and cash flows for all periods presented have been made. The information for the consolidated balance sheet as of December 31, 2008 was derived from audited financial statements. The results of operations for the three and six months ended June 30, 2009 are not necessarily indicative of the results to be expected for the year ending December 31, 2009.

These Notes to Unaudited Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and related notes included in BigString’s 2008 Annual Report on Form 10-K filed with the SEC on March 31, 2009, as amended.

ORGANIZATION

BigString was incorporated in the State of Delaware on October 8, 2003 under the name “Recall Mail Corporation.” The company’s name was formally changed to “BigString Corporation” in July 2005. BigString was formed to develop technology that would allow the user of email services to have comprehensive control, security and privacy relating to the email generated by the user. In March 2004, the BigString email service was introduced to the market.

BigString Interactive, Inc. (“BigString Interactive”), incorporated in the State of New Jersey, was formed by BigString in early 2006 to develop technology relating to interactive web portals.

PeopleString Corporation (“PeopleString”), incorporated in the State of Delaware, was formed by BigString in early 2009 to develop technology relating to social networks. After purchases of PeopleString common stock by investors from April 2009 to June 2009, BigString owns less than 50% of PeopleString’s outstanding common stock.

Email Emissary, Inc. (“Email Emissary”), incorporated in the State of Oklahoma, was acquired by BigString in July 2004; in September 2006, all of Email Emissary’s assets, including its pending patent application, were transferred to BigString. Email Emissary was dissolved on May 17, 2007.

BigString is considered a development stage enterprise as defined in Statement of Financial Accounting Standards (“SFAS”) No. 7, “Accounting and Reporting for Development Stage Companies,” issued by the Financial Accounting Standards Board (the “FASB”). BigString has limited revenue to date, continues to raise capital and there is no assurance that ultimately BigString will achieve a profitable level of operations.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of BigString and its subsidiary, BigString Interactive, which is a wholly-owned subsidiary. All intercompany transactions and balances have been eliminated.

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, BigString evaluates its estimates. Actual results could differ from those estimates.

RECLASSIFICATIONS

Certain reclassifications have been made to prior period balances in order to conform to the current period’s presentation.

CASH EQUIVALENTS

Cash equivalents include short-term investments in United States treasury bills and commercial paper with an original maturity of three months or less when purchased. At June 30, 2009 and December 31, 2008, cash equivalents approximated $39,500 and $179,000, respectively.

Index

BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

CERTAIN RISKS AND CONCENTRATION

Financial instruments which potentially subject BigString to concentrations of credit risk consist principally of temporary cash investments. BigString places its temporary cash investments with quality financial institutions and commercial issuers of short term paper.

BigString grants credit to customers based on an evaluation of the customer’s financial condition, sometimes without requiring collateral. Exposure to losses on receivables is principally dependent on each customer’s financial condition. BigString controls its exposure to credit risk through credit approvals, credit limits and monitoring procedures and establishes allowances for anticipated losses.

REVENUE RECOGNITION

BigString derives revenue from online services, electronic commerce, advertising and data network services. BigString also derives revenue from marketing affiliations. BigString recognizes revenue in accordance with the guidance contained in the SEC Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition in Financial Statements.”

Consistent with the provisions of the FASB’s Emerging Issues Task Force (“EITF”) Issue No. 99-19, “Reporting Revenue Gross as a Principal Versus Net as an Agent,” BigString generally recognizes revenue associated with its advertising and marketing affiliation programs on a gross basis due primarily to the following factors: BigString is the primary obligor; has general inventory risk; has latitude in establishing prices; has discretion in supplier selection; performs part of the service; and determines specifications. In connection with contracts to provide email services to marketing affiliates, BigString may be obligated to make payments, which may represent a portion of revenue, to its marketing affiliates.

Consistent with EITF Issue No. 01-9, “Accounting for Considerations Given by a Vendor to a Customer (Including the Reseller of the Vendor’s Product),” BigString accounts for cash considerations given to customers, for which it does not receive a separately identifiable benefit or cannot reasonable estimate fair value, as a reduction of revenue rather than an expense. Accordingly, corresponding distributions to active users and distributions of referral fees are recorded as a reduction of gross revenue.

BigString records its allowance for doubtful accounts based upon an assessment of various factors, including historical experience, age of the accounts receivable balances, the credit quality of customers, current economic conditions and other factors that may affect customers’ ability to pay. Allowances at June 30, 2009 and December 31, 2008 were $35 and $660, respectively.

DEPRECIATION

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated primarily using the straight-line method over their estimated useful lives of these assets.

RESEARCH AND DEVELOPMENT

BigString accounts for research and development costs in accordance with accounting pronouncements, including SFAS No. 2, “Accounting for Research and Development Costs,” and SFAS No. 86, “Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed.” BigString has determined that technological feasibility for its software products is reached shortly before the products are released. Research and development costs incurred between the establishment of technological feasibility and product release have not been material and have accordingly been expensed when incurred.

EVALUATION OF LONG-LIVED ASSETS

BigString reviews property and equipment and finite-lived intangible assets for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. In accordance with the guidance provided in SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” if the carrying value of the long-lived asset exceeds the estimated future undiscounted cash flows to be generated by such asset, the asset would be adjusted to its fair value and an impairment loss would be charged to operations in the period identified.

The impairment analysis of finite-lived intangible assets conducted by BigString indicated that the intangible assets were impaired as of the assessment date. As a result, BigString recorded impairment charges of $627,584 and $415,292 for the years ending December 31, 2008 and 2007, respectfully. See Note 5 of Notes to Unaudited Consolidated Financial Statements for the detailed information regarding the valuation methods and key assumptions used in coming to this determination.

INTANGIBLES

SFAS No. 142, “Goodwill and other Intangible Assets,” specifies the financial accounting and reporting for acquired goodwill and other indefinite life intangible assets. Goodwill and other indefinite-lived intangible assets are no longer amortized, but are reviewed for impairment at least annually.

Index

BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

DEFERRED FINANCING COSTS

Debt issue costs were deferred and amortized in other income (expense) over the terms of the related debts. BigString issued notes in June 2009, August 2008, February 2008 and May 2007 and incurred issuance costs of $33,552, $18,977, $91,706 and $248,939, respectively, which are being amortized over the term of the notes. Amortization expense related to these costs is included in other, net in the unaudited consolidated statements of operations and was $49,092, $47,436 and $256,038 for the six months ended June 30, 2009 and 2008 and the period October 8, 2003 (Date of Formation) through June 30, 2009, respectively.

INCOME TAXES

BigString accounts for income taxes using an asset and liability approach under which deferred income taxes are recognized by applying enacted tax rates applicable to future years to the differences between the financial statement carrying amounts and the tax basis of reported assets and liabilities. A valuation allowance reduces the deferred tax assets to the amount estimated more likely than not to be realized.

The principal items giving rise to deferred taxes are timing differences between book and tax amortization of intangible assets and other expenditures.

EARNINGS (LOSS) PER COMMON SHARE

Basic earnings (loss) per common share is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding during the specified period and after preferred stock dividend requirements. Diluted earnings (loss) per common share is computed by dividing net earnings (loss) by the weighted average number of common shares and potential common shares outstanding during the specified period and after preferred stock dividend requirements. All potentially dilutive securities, which include convertible notes, outstanding preferred stock, warrants and options, have been excluded from the computation, as their effect is antidilutive.

STOCK-BASED COMPENSATION

Effective January 1, 2006, BigString accounts for stock-based compensation under SFAS No. 123(R), “Share-Based Payment” (“SFAS No. 123(R)”). BigString adopted SFAS No. 123(R) using the modified prospective method. Under this method, SFAS No. 123(R) applies to new awards and to awards modified, repurchased, or cancelled after the required effective date of SFAS No. 123(R). Additionally, compensation costs for the portion of the awards outstanding as of the required effective date of SFAS No. 123(R), for which the requisite service has not been rendered, are being recognized as the requisite service is rendered after the required effective date of SFAS No. 123(R). The compensation cost for the portion of awards is based on the grant-date fair value of those awards as calculated for either recognition or pro forma disclosures under SFAS No. 123, “Accounting for Stock Based Compensation.” Changes to the grant-date fair value of equity awards granted before the required effective date of SFAS No. 123(R) are precluded. The compensation cost for those earlier awards is attributed to periods beginning on or after the required effective date of SFAS No. 123(R) using the attribution method that was used under SFAS No. 123, except that the method of recognizing forfeitures only as they occur was not continued.

BigString issues shares of common stock to non-employees as stock-based compensation. BigString accounts for the services using the fair market value of the consideration issued, generally measured at the closing price of BigString’s common stock on the date of the agreement. For the three months ended June 30, 2009 and 2008, BigString recorded compensation expense of $28,473 and $85,417, respectively, in connection with the issuance of shares of common stock to non-employees. For the six months ended June 30, 2009 and 2008 and the period October 8, 2003 (Date of Formation) through June 30, 2009, BigString recorded compensation expense of $113,889, $170,834 and $1,275,751, respectively, in connection with the issuance of shares of common stock to non-employees. For the period October 8, 2003 (Date of Formation) through June 30, 2009, BigString also recorded $250,000 other non-cash compensation expense for shares of common stock issued to non-employees.

BigString issues stock purchase warrants to non-employees as stock-based compensation. The fair values of the stock purchase warrants are estimated on the date of grant using the Black-Scholes option-pricing model. For the three months ended June 30, 2009 and 2008, BigString recorded compensation expense of $3,763 and $11,274, respectively, associated with issuances of stock purchase warrants. For the six months ended June 30, 2009 and 2008 and the period October 8, 2003 (Date of Formation) through June 30, 2009, BigString recorded compensation expense of $15,037, $22,548 and $324,530, respectively, in connection with the issuance of stock purchase warrants for services. For the period October 8, 2003 (Date of Formation) through June 30, 2009, BigString also recorded $19,094 other non-cash compensation expense, net for the cancellation and issue of warrants.

BigString has one stock-based compensation plan under which incentive and nonqualified stock options or rights to purchase stock may be granted to employees, directors and other eligible participants. The fair values of the stock options are estimated on the date of grant using the Black-Scholes option-pricing model. For the three months ended June 30, 2009 and 2008, BigString recorded compensation expense of $20,490 and $77,799, respectively. For the six months ended June 30, 2009 and 2008 and the period October 8, 2003 (Date of Formation) through June 30, 2009, BigString recorded compensation expense of $86,028, $184,209 and $600,301, respectively. BigString did not grant stock options prior to 2006.

Index

BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

BUSINESS COMBINATIONS

Business combinations which have been accounted for under the purchase method of accounting include the results of operations of the acquired business from the date of acquisition. Net assets of the company acquired are recorded at their fair value at the date of acquisition.

ACCOUNTING FOR DERIVATIVES

BigString evaluates its options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” and related interpretations including EITF Issue No. 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock.”

FAIR VALUE OF FINANCIAL INSTRUMENTS

For financial instruments, including cash investments, accounts receivable, accounts payable and accrued expenses, the carry amount approximates fair value because of the short maturities of such instruments. Convertible notes are carried at estimated fair value less any unamortized discount.

BENEFICIAL CONVERSION FEATURE

When debt or equity is issued which is convertible into common stock at a discount from the common stock market price at the date the debt or equity is issued, a beneficial conversion feature for the difference between the closing price and the conversion price multiplied by the number of shares issuable upon conversion is recognized. The beneficial conversion feature is presented as a discount to the related debt or a dividend to the related equity, with an offsetting amount increasing additional paid-in capital.

EQUITY METHOD INVESTMENTS

BigString accounts for non-marketable investments using the equity method of accounting if the investment gives it the ability to exercise significant influence over, but not control of, an investee. Significant influence generally exists if there is an ownership interest representing between 20% and 50% of the voting stock of the investee. Under the equity method of accounting, investments are stated at initial cost and are adjusted for additional investments and their proportionate share of earnings or losses and distributions. BigString records its share of the investee’s earnings or losses in earnings (losses) from unconsolidated entities, net of income taxes, in its consolidated statement of operations. Equity investments of less than 20% are stated at cost. The cost is not adjusted for its proportionate share of the earnings or losses. BigString evaluates its equity investments for impairment when events or changes in circumstances indicate, in management’s judgment, that the carrying value of such investments may have experienced an other-than-temporary decline in value. When evidence of a loss in value has occurred, BigString compares fair value of the investment to its carrying value to determine whether impairment has occurred. If the estimated fair value is less than the carrying value and management considers the decline to be other than temporary, the excess of the carrying value over the estimated fair value is recognized as impairment in the consolidated financial statements.

NEW FINANCIAL ACCOUNTING STANDARDS

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS No. 162”). SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (“GAAP”) in the United States. BigString adopted SFAS No. 162 on January 1, 2009, and it did not have a material impact on BigString’s consolidated financial position, cash flows and results of operations.

In December 2007, the FASB issued SFAS No. 160 “Noncontrolling Interests in Consolidated Financial Statements - An amendment of ARB No. 51” (“SFAS 160”). SFAS 160 establishes new accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this statement requires the recognition of non-controlling interests (minority interest) as equity in the consolidated financial statements and separate from parent’s equity. The amount of net income attributable to the non-controlling interest will be included in consolidated net income on the face of the income statement. SFAS 160 clarifies that changes in a parent’s ownership in a subsidiary that does not result in deconsolidation are equity transactions if the parent retains its controlling financial interest. In addition, this statement requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. Such gain or loss will be measured using the fair value of the non-controlling equity investment of the deconsolidation date. SFAS 160 also includes expanded disclosure requirements regarding the interest of the parent and its non-controlling interest. SFAS 160 is effective for fiscal years, and interim periods other than fiscal years, beginning on or after December 15, 2008. BigString completed its implementation of SFAS No. 160 effective January 1, 2009, and it did not have a material impact on BigString’s consolidated financial position, cash flows and results of operations.

Index

BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In December 2007, the FASB issued SFAS 141(R), which replaces SFAS 141 “Business Combinations.” This statement is intended to improve the relevance, completeness and representational faithfulness of the information provided in financial reports about the assets acquired and the liabilities assumed in a business combination. This statement requires an acquiror to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions specified in the statement. Under SFAS 141(R), acquisition-related costs, including restructuring costs, must be recognized separately from the acquisition and will generally be expensed as incurred. That replaces SFAS 141’s cost-allocation process, which required the cost of an acquisition to be allocated to the individual assets acquired and liabilities assumed based on their estimated fair values. SFAS 141(R) shall be applied prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual report period beginning on or after December 15, 2008. BigString adopted SFAS No. 141(R) on January 1, 2009, and it did not have a material impact on BigString’s consolidated financial position, cash flows and results of operations.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which enhances existing guidance for measuring assets and liabilities using fair value. This standard provides a single definition of fair value, together with a framework for measuring it, and requires additional disclosure about the use of fair value to measure assets and liabilities. In February 2008, the FASB issued FASB Staff Position (“FSP”) SFAS 157-1, “Application of SFAS No. 157 to SFAS No. 13 and Its Related Interpretative Accounting Pronouncements that Address Leasing Transactions” (“FSP SFAS 157-1”) and FASB Staff Position SFAS 157-2, “Effective Date of SFAS No. 157” (“FSP SFAS 157-2”). FSP SFAS 157-1 excludes SFAS No. 13 and its related interpretive accounting pronouncements that address leasing transactions from the requirements of SFAS No. 157, with the exception of fair value measurements of assets and liabilities recorded as a result of a lease transaction but measured pursuant to other pronouncements within the scope of SFAS No. 157. FSP SFAS 157-2 delays the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). FSP SFAS 157-1 and FSP SFAS 157-2 became effective for BigString upon adoption of SFAS No. 157 on January 1, 2008. BigString completed its implementation of SFAS No. 157 effective January 1, 2009, and it did not have a material impact on BigString’s consolidated financial position, cash flows and results of operations.

NOTE 2. GOING CONCERN

For the six months ended June 30, 2009, BigString’s unaudited consolidated financial statements reflect a net loss of $814,725, net cash used in operations of $319,332, working capital deficit of $1,002,607, a stockholders’ deficit accumulated during the development stage of $14,968,770 and a cumulative net loss of $14,488,770. These matters raise doubt about the ability of BigString to continue as a going concern. BigString’s unaudited consolidated financial statements do not include any adjustments to reflect the possible effects on recoverability and classification of assets or the amounts and classification of liabilities that may result from the inability to continue as a going concern.

The ability of BigString to continue as a going concern is dependent on BigString’s ability to further implement its business plan, raise capital and generate additional revenues. BigString can give no assurances that it will generate sufficient cash flow from operations or obtain additional financing.

The time required for BigString to become profitable is highly uncertain, and BigString can give no assurances that it will achieve or sustain profitability or generate sufficient cash flow from operations to meet planned capital expenditures, planned marketing expenditures and working capital requirements. If required, the ability to obtain additional financing from other sources also depends on many factors beyond BigString’s control, including the state of the capital markets and the prospects for BigString’s business. The necessary additional financing may not be available to BigString or may be available only on terms that would result in further dilution to the current stockholders of BigString.

NOTE 3. ACQUISITIONS

On July 9, 2008, BigString completed the acquisition of the website, BuddyStumbler, pursuant to an asset purchase agreement. BigString issued 900,000 shares to the sellers. The market value of BigString’s common stock on July 9, 2008 was $0.13 per share. The purchase price of $117,000 has been allocated to intangible assets based on estimated fair value. The acquisition includes right, title and interest in domain names, customer and member lists and source code. The results of operations of the assets acquired were not material.

On December 11, 2006, BigString completed the acquisition of the website, DailyLOL, pursuant to an asset purchase agreement. The cash purchase price of $13,000 has been allocated to intangible assets based on estimated fair value. The acquisition includes right, title and interest in domain names, customer and member lists and source code. The results of operations of the assets acquired were not material.

On May 19, 2006, BigString completed the acquisition of certain assets, including two websites, from a principal of Lifeline Industries, Inc. In consideration for the assets, BigString issued 750,000 shares of BigString’s common stock.

Index

BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The market value of BigString’s common stock on May 19, 2006 was $0.80 per share. In conjunction with this acquisition, BigString acquired an intangible asset for $600,000 based on estimated fair value. The acquisition included right, title and interest in domain names, customer and member lists and source code. The results of operations of the assets acquired were not material. Lifeline Industries, Inc. previously entered an agreement on May 2, 2006, to provide business consultant services to BigString for three years.

On July 16, 2004, BigString completed the acquisition of Email Emissary. BigString purchased 100% of Email Emissary’s stock for 20,000,000 shares of BigString’s common stock. BigString acquired Email Emissary to consolidate its marketing and development operations. The purchase price of $4,800,000 was allocated to both tangible and intangible assets and liabilities based on estimated fair values. Approximately $4,803,000 of identifiable intangible assets (patent application, trademark and websites) arose from this transaction. Such intangible assets are being amortized on a straight-line basis over the estimated economic life of five years.

This acquisition was accounted for using the purchase method of accounting, and accordingly, the results of operations of Email Emissary has been included in BigString’s consolidated financial statements from July 16, 2004, the date of closing.

NOTE 4. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

	June 30, 2009		December 31, 2008
Computer equipment and internal software	$	159,313	$	177,326
Furniture and fixtures		5,721		5,848
		165,034		183,174
Less accumulated depreciation		110,045		108,437
	$	54,989	$	74,737

Depreciation expense for the three months ended June 30, 2009 and 2008 was $7,890 and $9,539. Depreciation expense for the six months ended June 30, 2009 and 2008 and the period October 8, 2003 (Date of Formation) through June 30, 2009, was $15,993, $19,164 and $154,362, respectively.

NOTE 5. GOODWILL AND OTHER INTANGIBLES

Other intangibles consist of a patent application and trademark, logos, source codes and websites. Amounts assigned to these intangibles were determined by management. Management considered a number of factors in determining the allocations, including an independent formal appraisal. Other intangibles are being amortized over five years.

Other intangible assets consist of the following:

	June 30, 2009			December 31, 2008
Patent application and trademark	$	4,803,067		$	4,803,067
Logos, websites and source codes		730,000			730,000
		5,533,067			5,533,067
Impairment		(1,042,876	)		(1,042,876	)
	$	4,490,191		$	4,490,191
Accumulated amortization		4,490,191			4,490,191
	$	-		$	-

Other intangibles are tested annually for impairment. If events indicate that impairment could exist, a recoverability test is performed comparing future net cash flows from the asset to the carrying value of the asset. If the recoverability test indicates the asset is impaired and the asset carrying amount is greater than fair market value, an impairment charge adjusts the carrying value to fair market value. Continuing losses associated with the assets indicate that impairments may exist.

In 2008, the recoverability test for the patent application and trademark assets indicated impairment. The fair market value, based on weighted, discounted cash flows and disposition values, was not material, and an impairment loss of $520,334 for the carrying amount was recognized.

In 2008, the recoverability test for the logos, websites and source codes, which primarily include the website BuddyStumbler, indicated impairment. The fair market value, based on weighted, discounted cash flows and disposition values, was not material, and an impairment loss of $107,250 for the carrying amount was recognized.

Index

BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In 2007, the recoverability test for the logos, websites and source codes, which primarily include the websites FindItAll, AmericanMoBlog and DailyLOL, indicated impairment. The fair market value, based on weighted, discounted cash flows and disposition values, was not material, and an impairment loss of $415,292 for the carrying amount was recognized.

In June 2008, BigString entered into an asset purchase agreement to sell FindItAll and AmericanMoBlog for a nominal fee and 20,000,000 shares of common stock in FindItAll, Inc. The shares and fee were received in July 2008. Fair market value was determined using the cost method of investment because BigString has determined that this is a passive investment in a non-marketable equity and BigString does not have significant influence over the company.

Estimated remaining amortization expenses for intangible assets for the next five years is zero.

NOTE 6. INVESTMENTS

Equity Investment:

At March 31, 2009, BigString owned 100% of the common shares outstanding of PeopleString and the financial results of PeopleString were included in BigString’s Consolidated Financial Statements at March 31, 2009. After purchases of PeopleString common stock by investors, BigString owned 35% of PeopleString’s outstanding common stock at June 30, 2009. For the three and six months ended June 30, 2009 and the period October 8, 2003 (Date of Formation) through June 30, 2009, BigString recorded a gain of $662 on the deconsolidation of its subsidiary PeopleString.

At June 30, 2009, BigString had an equity investment in PeopleString and accounted for this investment under the equity method. As of June 30, 2009, there were no material earnings (losses) reported by PeopleString.

Cost Method Investment:

In April, 2009, BigString sold 15,000,000 shares of common stock in FindItAll, Inc. for $40,000 in a private transaction. The remaining shares of common stock in FindItAll, Inc. continue to be held at cost in Other assets on BigString’s Consolidated Balance Sheets.

NOTE 7. OTHER INCOME (EXPENSE)

Other income (expense) consists of interest income, interest expense, and other, net.

Interest income was $13 and $1,241 for the three months ended June 30, 2009 and 2008, respectively. Interest income was $59, $3,372 and $72,648 for the six months ended June 30, 2009 and 2008, and the period October 8, 2003 (Date of Formation) through June 30, 2009, respectively.

Interest expense consists of interest on convertible debt payable on each anniversary date of the promissory notes and is included in accrued interest. Interest expense was $20,775 and $19,875 for the three months ended June 30, 2009 and 2008, respectively. Interest expense was $40,650, $32,873 and $153,735 for the six months ended June 30, 2009 and 2008, and the period October 8, 2003 (Date of Formation) through June 30, 2009, respectively.

The components of other, net consist of expenses related to the convertible debenture financing, preferred stock financing and warrant and common stock financings and are as follows:

									Period
									October 8, 2003
	For the Three Months Ended				For the Six Months Ended				(Date of Formation)
	June 30,				June 30,				Through
	2009		2008		2009		2008		June 30, 2008
Amortization of debt issue costs	$	25,245	$	23,847	$	49,092	$	47,436	$	256,038
Amortization of promissory note discount		9,846		8,388		18,234		13,167		59,841
Amortization of beneficial conversion feature		65,956		58,956		124,912		120,501		614,013
Other financing expenses		-		-		-		-		509,394
	$	101,047	$	91,191	$	192,238	$	181,104	$	1,439,286

Debt issue costs for the June 2009, August 2008, February 2008 and May 2007 financings were $33,552, $18,977, $91,706 and $248,939, respectively, and are being amortized over the term of each note, which is 24, 5, 36 and 36 months, respectively. Amortization is accelerated for the proportion of promissory notes which are converted in a period.

Other financing expenses include $250,000 of stock-based other non-cash compensation for the fair market value of common stock issued for a waiver and release related to the debt financing in 2007.

Index

BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8. INCOME TAXES

BigString adopted the provisions of the FASB Financial Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), on January 1, 2007. As a result of the implementation of FIN 48, BigString recognized no adjustment in the net liability for unrecognized income tax benefits.

BigString has participated in the State of New Jersey’s Corporation Business Tax Benefit Certificate Transfer program (the “Program”), which allows certain high technology and biotechnology companies to sell unused net operating loss (“NOL”) carryforwards to other New Jersey corporation business taxpayers. The Program requires that the purchaser pay at least 75% of the amount of the surrendered tax benefit. For the six months ended June 30, 2009 and 2008, and the period October 8, 2003 (Date of Formation) through June 30, 2009, BigString recorded a net state tax benefit of $0, $0 and $686,991, respectively, as a result of its sale of New Jersey state net operating losses and New Jersey state research and development credits. Since New Jersey law provides that net operating losses can be carried over for up to seven years, BigString may be able to transfer its unused New Jersey net operating losses in future years.

The tax effects of temporary differences that give rise to significant portions of deferred tax assets include NOL carry forwards and research and development credits. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Valuation allowances for the six months ended June 30, 2009 and 2008, and the period October 8, 2003 (Date of Formation) through June 30, 2009, have been applied to offset the deferred tax assets in recognition of the uncertainty that such tax benefits will be realized as BigString continues to incur losses.

At December 31, 2008, BigString has available NOL carry forwards of approximately $12.7 million for federal income tax reporting purposes and $5.1 million for state income tax reporting purposes which expire in various years through 2028. The differences between book income and tax income primarily relates to amortization of intangible assets and other expenditures. Pursuant to Section 382 of the Internal Revenue Code of 1986, as amended, the annual utilization of a company’s NOL and research credit carry forwards may be limited, and, as such, BigString’s NOL carry forwards available to offset future federal taxable income may be limited. Similarly, BigString may be restricted in using its research credit carry forwards to offset future federal income tax expense.

NOTE 9. DEBT

On June 23, 2009, BigString entered into a financing arrangement with several accredited financing parties. Proceeds from the financing have been used to support ongoing operations and the advancement of BigString’s technology, and fund the marketing and the development of its business.

Pursuant to the Subscription Agreement entered into by BigString with Whalehaven Capital Fund Limited, Alpha Capital Anstalt and Excalibur Special Opportunities LP (collectively, the “2009 Subscribers”), the 2009 Subscribers purchased convertible notes in the aggregate principal amount of $180,000, which notes are convertible into shares of BigString’s common stock, and warrants to purchase up to 6,000,000 shares of BigString's common stock, resulting in net proceeds of approximately $146,500 after transaction fees of approximately $33,500. BigString accounted for the convertible notes under SFAS No. 133, and related interpretations including EITF Issue No. 00-19. Approximately $35,000 of the proceeds was allocated to the warrants based on fair value, and included as additional paid in capital. Due to the beneficial conversion feature of the convertible notes, $168,000 was included as additional paid in capital based on the conversion discount.

Each convertible note has a term of two years and accrues interest at a rate of 6% annually. The holder of a convertible note shall have the right from and after the issuance thereof until such time as the convertible note is fully paid, to convert any outstanding and unpaid principal portion thereof into shares of common stock at a conversion price of $0.015 per share, as adjusted. The conversion price and number and kind of shares to be issued upon conversion of the convertible notes are subject to adjustment from time to time. The warrants have an exercise price of $0.015 per share, as adjusted. The number of shares of common stock underlying each warrant and the exercise price are subject to certain adjustments.

In connection with the June 23, 2009 financing, BigString paid Whalehaven Capital Fund Limited $6,000, Alpha Capital Anstalt $6,000 and Excalibur Special Opportunities LP $2,400 for finder’s fees.

As a result of this financing, the conversion price for the outstanding convertible notes and the exercise price underlying the warrants previously issued by BigString in February 2008 and May 2007 and the conversion price of the shares of outstanding Series A Preferred Stock were subject to adjustment under anti-dilution provisions. The 2007 Subscribers and 2008 Subscribers verbally agreed to waive anti-dilution provisions related to the number of shares of common stock underlying the warrants previously issued by BigString in February 2008 and May 2007.

On August 25, 2008, BigString closed on a financing. Providing the financing were Dwight Lane Capital, LLC, a limited liability company in which Todd M. Ross, a former director of BigString, has an interest, and Marc W. Dutton, a former director of BigString. In connection with such financing, BigString issued promissory notes in the aggregate principal amount of $250,000 and common stock purchase warrants to purchase up to an aggregate 800,000 shares of BigString's common stock. Each note had a term of five months and accrued interest at a rate of 12% annually. The warrants have an exercise price of $0.08 per share.

Index

BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

BigString incurred transaction fees of approximately $19,000. BigString accounted for the convertible feature of the notes under SFAS No. 133, and related interpretations including EITF Issue No. 00-19. Due to the conversion rights only upon an event of default, $2,080 was included as additional paid in capital based on a weighted conversion discount. The warrants did not have a conversion discount, and accordingly, no proceeds were allocated to the warrants based on fair value, nor included as additional paid in capital.

As a result of this financing, the conversion price for the outstanding convertible notes and the exercise price and number of shares of common stock underlying the warrants previously issued by BigString in February 2008 and May 2007 and the conversion price of the shares of outstanding Series A Preferred Stock were subject to adjustment under anti-dilution provisions.

In December 2008, all amounts due under the notes were paid by BigString, including accrued interest of $9,328, and, as a result, the notes were cancelled.

On February 29, 2008, BigString entered into a financing arrangement with several accredited financing parties. Proceeds from the financing have been used to support ongoing operations and the advancement of BigString’s technology, and fund the marketing and the development of its business.

Pursuant to the Subscription Agreement entered into by BigString with Whalehaven Capital Fund Limited, Alpha Capital Anstalt and Excalibur Small Cap Opportunities LP (collectively, the “2008 Subscribers”), the 2008 Subscribers purchased convertible notes in the aggregate principal amount of $700,000, which notes are convertible into shares of BigString’s common stock, and warrants to purchase up to 2,333,333 shares of BigString's common stock, resulting in net proceeds of approximately $608,000 after transaction fees of approximately $92,000. BigString accounted for the convertible notes under SFAS No. 133, and related interpretations including EITF Issue No. 00-19. Approximately $76,200 of the proceeds was allocated to the warrants based on fair value, and included as additional paid in capital. Due to the beneficial conversion feature of the convertible notes, $186,660 was included as additional paid in capital based on the conversion discount.

Each convertible note has a term of three years and accrues interest at a rate of 6% annually. The holder of a convertible note shall have the right from and after the issuance thereof until such time as the convertible note is fully paid, to convert any outstanding and unpaid principal portion thereof into shares of common stock at a conversion price of $0.15 per share, as adjusted. The conversion price and number and kind of shares to be issued upon conversion of the convertible notes are subject to adjustment from time to time. The warrants have an exercise price of $0.15 per share, as adjusted. The number of shares of common stock underlying each warrant and the exercise price are subject to certain adjustments.

In connection with the February 29, 2008 financing, BigString paid Gem Funding LLC (the “Finder”) $56,000 and issued a warrant to purchase 373,333 shares of BigString’s common stock to the Finder on February 29, 2008. The Finder's warrant is similar to and carries the same rights as the warrants issued to the 2008 Subscribers.

As a result of this financing, the conversion price for the outstanding convertible notes and the exercise price and number of shares of common stock underlying the warrants previously issued by BigString in May 2007 and the conversion price of the shares of outstanding Series A Preferred Stock were subject to adjustment under anti-dilution provisions.

On May 1, 2007, BigString entered into a financing arrangement with several accredited financing parties. Pursuant to the Subscription Agreement entered into by BigString with Whalehaven Capital Fund Limited, Alpha Capital Anstalt, Chestnut Ridge Partners LP, Iroquois Master Fund Ltd. and Penn Footwear (collectively, the “2007 Subscribers”), the 2007 Subscribers purchased convertible notes in the aggregate principal amount of $800,000, which notes are convertible into shares of BigString’s common stock, and warrants to purchase up to 1,777,779 shares of BigString's common stock, resulting in net proceeds of approximately $551,000 after transaction fees of approximately $249,000. BigString accounted for the convertible notes under SFAS No. 133, and related interpretations including EITF Issue No. 00-19. Approximately $31,300 of the proceeds was allocated to the warrants based on fair value, and included as additional paid in capital. Due to the beneficial conversion feature of the convertible notes, $666,648 was included as additional paid in capital based on the conversion discount.

Each convertible note has a term of three years and accrues interest at a rate of 6% annually. The holder of a convertible note shall have the right from and after the issuance thereof until such time as the convertible note is fully paid, to convert any outstanding and unpaid principal portion thereof into shares of BigString’s common stock at a conversion price of $0.15 per share, as adjusted. The conversion price and number and kind of shares to be issued upon conversion of the convertible notes are subject to adjustment from time to time. The warrants have an exercise price of $0.30 per share, as adjusted. The number of shares of common stock underlying each warrant and the exercise price are subject to certain adjustments.

Index

BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In connection with the May 1, 2007 financing, BigString paid the Finder $64,000 and issued a warrant to purchase 213,333 shares of BigString’s common stock to the Finder on May 1, 2007. The Finder's warrant is similar to and carries the same rights as the warrants issued to the 2007 Subscribers.

On November 30, 2007, BigString and the 2007 Subscribers entered into an Agreement, Waiver and Limited Release. As part of the Agreement, Waiver and Limited Release, the 2007 Subscribers released BigString from liquidated damages relating to the outstanding convertible notes. At the date of the Agreement, Waiver and Limited Release, BigString had accrued $24,267 in liquidated damages. BigString also granted the 2007 Subscribers 1,000,000 restricted shares of BigString’s common stock. BigString recorded $250,000 of stock-based other non-cash compensation expense related to the debt issue.

At June 30, 2009, Chestnut Ridge Partners LP had converted $125,000 of notes and Penn Footwear had converted $50,000 of notes. Information regarding the convertible notes outstanding at June 30, 2009 and December 31, 2008 is as follows:

	June 30, 2009			December 31, 2008
Convertible note, May 1, 2007	$	625,000		$	625,000
Beneficial conversion feature		(188,076	)		(231,477	)
Note Discount		(8,833	)		(10,873	)
		428,091			382,650

Convertible note, February 29, 2008	$	700,000		$	700,000
Beneficial conversion feature		(119,255	)		(134,810	)
Note Discount		(48,668	)		(55,016	)
		532,077			510,174

Convertible note, June 23, 2009	$	180,000		$	-
Beneficial conversion feature		(161,000	)		-
Note Discount		(33,534	)		-
		(14,534	)		-
	$	945,634		$	892,824

For the six months ended June 30, 2009 and 2008, and the period October 8, 2003 (Date of Formation) through June 30, 2009, $0, $20,000 and $175,000 of the convertible notes dated May 1, 2007 were converted resulting in 0, 111,111 and 972,222, respectively, shares of BigString’s common stock being issued to the holders of the convertible notes.

For the six months ended June 30, 2009 and 2008, and the period October 8, 2003 (Date of Formation) through June 30, 2009, there were no conversions of the convertible notes dated February 29, 2008 and June 23, 2009.

For the six months ended June 30, 2009 and 2008, and the period October 8, 2003 (Date of Formation) through June 30, 2009, BigString issued 993,750, 291,713 and 1,285,463 shares, respectively, of BigString’s common stock in lieu of $79,500, $43,757 and $123,257, respectively, of accrued interest. Future accrued interest payments, which may include shares of BigString’s common stock in lieu of accrued interest, on the May 1, 2007, February 29, 2008 and June 23, 2009 convertible notes are currently estimated as follows:

	Accrued
Years Ending	Interest
December 31,	Payments
2009	$	-
2010		90,300
2011		52,800
	$	143,100

NOTE 10. COMMON STOCK

On July 18, 2005, BigString amended its Certificate of Incorporation to, among other things, (1) change its name from Recall Mail Corporation to BigString Corporation, and (2) increase the number of shares BigString is authorized to issue from 50,000,000 shares to 250,000,000 shares, consisting of 249,000,000 shares of common stock, par value$0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share. The board of directors has the authority, without action by the stockholders, to designate and issue the shares of preferred stock in one or more series and to designate the rights, preference and privileges of each series, any or all of which may be greater than the rights of BigString’s common stock. Currently, there are 400,000 shares of preferred stock outstanding.

Index

BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In October 2003, the month of BigString’s formation, BigString issued 21,210,000 shares of its common stock to principals of BigString at no cost to such principals.

During 2003, BigString concluded a private placement of securities, pursuant to which it sold 40,000 shares of BigString’s common stock at a per share purchase price of $0.25. BigString received $10,000 in gross proceeds as a result of this private placement.

During 2004, BigString concluded a private placement of securities, pursuant to which it sold 870,000 shares of BigString’s common stock at a per share purchase price of $0.25. BigString received $217,500 in gross proceeds as a result of this private placement.

During 2004, BigString issued 185,000 shares of common stock valued at $0.21 per share in consideration for consulting services provided by two marketing consultants. BigString recorded consulting expense of $39,251 in connection with the issuance of these shares. Fair market value was based on most recent private placement per share purchase price and an agreed upon per share purchase price discount.

During 2004, BigString completed the acquisition of Email Emissary for 20,000,000 shares of BigString’s common stock for a purchase price of $4,800,000. Fair market value of $0.24 per share was based on the weighted average private placement per share purchase prices in 2003 and 2004.

During 2005, BigString issued 50,000 shares of common stock valued at $0.25 per share for business advisory services. Fair market value was based on the concurrent private placement per share purchase price.

For the year ended December 31, 2005, BigString concluded several private placements pursuant to which it sold 922,000 shares of its common stock at a per share purchase price of $0.25 and 9,448,125 shares of its common stock at a per share purchase price of $0.16. As a result of these private placements, BigString received $1,742,200 in gross proceeds.

On May 2, 2006, BigString issued 1,250,000 shares of common stock in consideration for business consultant services to be provided by Lifeline Industries, Inc. The market value of BigString’s common stock at May 2, 2006 was $0.82 per share.

Additionally, in May 2006, BigString redeemed 2,000,000 shares of its common stock from each of Charles A. Handshy, Jr. and David L. Daniels, former directors of BigString, and 2,000,000 shares of its common stock from each of their spouses, June E. Handshy and Deborah K. Daniels, at a purchase price of $0.05 per share.

On February 26, 2007, BigString agreed to issue 140,000 shares of common stock to CEOcast, Inc. in consideration for investor relations services. The market value of BigString’s common stock at February 26, 2007 was $0.50 per share.

Additionally, on February 26, 2007, BigString agreed to issue 192,000 shares of common stock to Howard Greene in consideration for public relations services provided by Greene Inc. Communications. The market value of BigString’s common stock at February 26, 2007 was $0.50 per share.

On May 1, 2007, BigString issued 100,000 shares of common stock to Jonathan Bomser in consideration for online marketing services provided by CAC, Inc. The market value of BigString’s common stock at May 1, 2007 was $0.33 per share.

On November 30, 2007, BigString agreed to issue 1,000,000 shares of its common stock to the 2007 Subscribers as part of the Agreement, Waiver and Limited Release. The market value of BigString’s common stock at November 30, 2007 was $0.25 per share.

During November and December 2007, BigString issued an aggregate 861,111 shares of common stock for the conversion of convertible promissory notes totaling $155,000. The conversion price was $0.18 per share.

On February 8, 2008, BigString issued 111,111 shares of its common stock for the conversion of convertible promissory notes totaling $20,000. The conversion price was $0.18 per share.

On May 1, 2008, BigString issued 291,713 shares of its common stock for accrued interest on convertible promissory notes totaling $43,757. The conversion price was $0.15 per share.

On July 9, 2008, BigString completed the acquisition of certain assets and issued 900,000 shares of its common stock. The market value of BigString’s common stock at July 9, 2008 was $0.13 per share.

Index

BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

On March 2, 2009, BigString issued 525,000 shares of its common stock for accrued interest on convertible promissory notes totaling $42,000. The conversion price was $0.08 per share.

On May 1, 2009, BigString issued 468,750 shares of its common stock for accrued interest on convertible promissory notes totaling $37,500. The conversion price was $0.08 per share.

NOTE 11. PREFERRED STOCK

On May 19, 2006, BigString issued a total of 400,000 shares of Series A Preferred Stock, par value $0.0001 per share, and warrants to purchase 1,000,000 shares of its common stock to Witches Rock Portfolio Ltd., The Tudor BVI Global Portfolio Ltd. and Tudor Proprietary Trading, L.L.C., for an aggregate purchase price of $2,000,000. The shares of Series A Preferred Stock are convertible under certain circumstances into shares of BigString’s common stock, and have certain dividend, voting, liquidation and conversion rights. The warrants are convertible into shares of BigString’s common stock at an exercise price per share of $1.25, as adjusted. BigString has registered the shares of common stock issuable upon conversion of the shares of Series A Preferred Stock and the shares of common stock underlying the warrants. In conjunction with this transaction, BigString incurred a fee of $140,000, which is included in additional paid in capital.

BigString accounted for the convertible preferred stock under SFAS No. 133, and related interpretations including EITF Issue No. 00-19. BigString performed calculations allocating the proceeds of the Series A Preferred Stock with detachable warrants to each respective security at their fair values. The value of the warrants of $400,000 was recorded as a reduction of the Series A Preferred Stock and credited to additional paid-in-capital. The recorded discount of $480,000 resulting from allocation of proceeds to the beneficial conversion feature is analogous to a dividend and is recognized as a return to the preferred stockholders at the date of issuance of the convertible preferred stock.

NOTE 12. SHARE-BASED COMPENSATION

On January 1, 2006, BigString adopted SFAS No. 123(R) requiring the recognition of compensation expense in the consolidated statements of operations related to the fair value of its employee and non-employee share-based options and warrants. SFAS No. 123(R) revises SFAS No. 123, “Accounting for Stock-Based Compensation,” and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS No. 123(R) is supplemented by SAB No. 107 and SAB No. 110 which express the SEC staff’s views regarding the interaction between SFAS No. 123(R) and certain SEC positions and regulations including the valuation of share-based payment arrangements.

Warrants:

During 2004, BigString granted warrants as payment for advisory services. The warrants provided for the purchase of 60,000 shares of BigString’s common stock at an exercise price of $0.25. Certain of these warrants were exercised in 2005, which resulted in 45,000 shares of BigString’s common stock being issued to the holders thereof. As a result of these exercises, BigString received $11,250 in gross proceeds. The remainder of these warrants was exercised in 2006, which resulted in 15,000 shares of BigString’s common stock being issued to the holder thereof. As a result of this exercise, BigString recorded a subscription receivable of $3,750. In connection with the grant of these warrants, BigString recorded an expense of $3,500 which is included in BigString’s consolidated statement of operations for the year ended December 31, 2004. The fair value of the warrants granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used: dividend yield of 0%; expected volatility of 47%; risk free rate of return of 5%; and expected life of 2 years. The weighted average fair value of these warrants was $0.07 per share.

On January 1, 2005, BigString granted warrants to two consultants as payment for advisory services. Each warrant provided for the purchase of 50,000 shares of BigString’s common stock at an exercise price of $0.25 per share. One of the warrants was exercised in 2006, which resulted in 50,000 shares of BigString’s common stock being issued to the holder thereof. As a result of this exercise, BigString recorded a subscription receivable of $12,500. In addition, the other warrant providing for the purchase of 50,000 shares of BigString’s common stock expired on January 1, 2007. In connection with the grant of these warrants, BigString recorded an expense of $7,400 which is included in BigString’s consolidated statements of operations for the year ended December 31, 2005. The fair value of the warrants granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used: dividend yield of 0%; expected volatility of 47%; risk free rate of return of 5%; and expected life of 2 years. The weighted average fair value of these warrants was $0.07 per share.

On September 23, 2005, BigString granted warrants to a consultant, as payment for advisory services. One warrant provides for the purchase of 1,246,707 shares of BigString’s common stock with a per share exercise price of $0.16, and the second warrant provides for the purchase of 1,196,838 shares of BigString’s common stock with a per share exercise price of $0.20. Each of these warrants is due to expire on September 23, 2010 and each grant is non-forfeitable. A portion of each warrant, representing 50,000 shares of common stock, was assigned to a third party. The assigned portions of the warrants were exercised in 2006, which resulted in 100,000 shares of BigString’s common stock being issued to the holder thereof. As a result of these exercises, BigString received $18,000 in gross proceeds. In connection with the grant of these warrants, BigString recorded an expense of $171,800 which is included in BigString’s consolidated statements of operations for the year ended December 31, 2005. The fair value of the warrants granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used: dividend yield of 0%; expected volatility of 47%; risk free rate of return of 5%; and expected life of 2 years. The weighted average fair value of these warrants was $0.07 per share.

Index

BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

On May 2, 2006, BigString granted warrants to purchase shares of BigString’s common stock in consideration for business consultant services to be provided by Lifeline Industries, Inc. A total of $135,300 of the deferred compensation in connection with the warrants has been expensed over a period of 36 months. For the six months ended June 30, 2009, BigString expensed $15,037, which was the remaining balance of total unrecognized compensation cost included within paid-in-capital on BigString’s consolidated balance sheet. The fair value of the warrants granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used: dividend yield of 0%; expected volatility of 47%; risk free rate of return of 5%; and expected life of 2 years. The weighted average fair value of these warrants was $0.42 and $0.18 per share.

On December 1, 2006, BigString granted warrants to two consultants, as payment for advisory services. Each warrant provides for the purchase of 50,000 shares of BigString’s common stock at an exercise price of $0.50 per share. Each of these warrants is due to expire on December 1, 2011. In connection with the grant of these warrants, BigString recorded an expense of $6,530 which is included in BigString’s consolidated statements of operations for the year ended December 31, 2006. The fair value of the warrants granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used: dividend yield of 0%; expected volatility of 47%; risk free rate of return of 4%; and expected life of 3 years. The weighted average fair value of these warrants was $0.08 per share.

As discussed in Note 9, on May 1, 2007, BigString granted warrants to purchase up to 1,991,112 shares of BigString's common stock to the 2007 Subscribers and the Finder. Each of the warrants has a term of five years from May 1, 2007 and was fully vested on the date of issuance. The warrants are exercisable at $0.30 per share of common stock, as adjusted. A total of $31,320 of the purchase price for the convertible notes and warrants was allocated to the warrants based on fair value.

In November 2007, BigString repriced warrants to purchase 1,713,334 shares of common stock previously issued to the 2007 Subscribers, which warrants were subsequently exercised by the 2007 Subscribers at the reduced exercise price. The exercise price of the repriced warrants was reduced from $0.30 per share to $0.10 per share. As a result of this repricing, the warrants with an exercise price of $0.30 per share were deemed cancelled and new warrants with an exercise price of $0.10 per share were deemed issued. In December 2007, five repriced warrants were exercised at the exercise price of $0.10 per share, which resulted in 1,500,001 shares of BigString’s common stock being issued to the holders thereof. As a result of these exercises, BigString received $150,000 in gross proceeds. In addition, one repriced warrant was exercised in January 2008 at the exercise price of $0.10 per share, which resulted in 213,333 shares of BigString’s common stock being issued to the holder thereof and $21,333 in gross proceeds to BigString. The fair value of the warrants deemed cancelled and deemed issued was estimated on the date of approval by the board of directors of BigString using the Black-Scholes option-pricing model with the following weighted average assumptions used: dividend yield of 0% and 0%; expected volatility of 69% and 69%; risk free rate of return of 4% and 3%; and expected life of 4 and 0 years for the deemed cancellation and deemed issue of warrants, respectively. The weighted average fair value of the deemed cancellation and deemed issue of warrants was $0.11 per share and $0.12 per share, respectively. BigString expensed the net fair value of $19,094 for the year ended December 31, 2007.

As discussed in Note 9, on February 29, 2008, BigString granted warrants to purchase up to 2,706,666 shares of BigString's common stock to the 2008 Subscribers and Finder. Each of the warrants has a term of five years from February 29, 2008 and was fully vested on the date of issuance. The warrants are exercisable at $0.15 per share of common stock, as adjusted. A total of $76,176 of the purchase price for the convertible notes and warrants was allocated to the warrants based on fair value. As a result of this transaction, certain warrants to purchase shares of BigString’s common stock issued to the 2007 Subscribers and the Finder were adjusted.

As discussed in Note 9, on August 25, 2008, BigString granted warrants to purchase up to 800,000 shares of BigString's common stock to Dwight Lane Capital, LLC and Marc W. Dutton. Each of the warrants has a term of ten years from August 25, 2008 and was fully vested on the date of issuance. The warrants are exercisable at $0.08 per share of common stock. The warrants did not have a conversion discount, and accordingly, no proceeds for the convertible notes and warrants was allocated to the warrants, based on fair value, nor included as additional paid in capital. As a result of this transaction, certain warrants to purchase shares of BigString’s common stock issued to the 2007 Subscribers and 2008 Subscribers and the Finder were adjusted.

As discussed in Note 9, on June 23, 2009, BigString granted warrants to purchase up to 6,000,000 shares of BigString's common stock to the 2009 Subscribers. Each of the warrants has a term of five years from June 23, 2009 and was fully vested on the date of issuance. The warrants are exercisable at $0.015 per share of common stock, as adjusted. A total of $34,992 of the purchase price for the convertible notes and warrants was allocated to the warrants based on fair value. As a result of this transaction, certain warrants to purchase shares of BigString’s common stock issued to the 2007 Subscribers and 2008 Subscribers and the Finder were adjusted.

The number of warrants outstanding as of January 1, 2009 and changes to such number during the six months ended June 30, 2009 is as follows:

Index

BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
	Shares			Price		Term		Value
Warrants outstanding at January 1, 2009		10,393,545		$	0.25		4.2	$	-
Warrants granted		11,700,000		$	0.02
Warrants exercised		-		$	-
Warrants cancelled/forfeited/expired		(5,700,000	)	$	0.08
Warrants outstanding at June 30, 2009		16,393,545		$	0.14		4.2	$	175,500
Warrants exercisable at June 30, 2009		16,393,545		$	0.14		4.2	$	175,500

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the aggregate difference between the closing stock prices of BigString’s common stock at the specified dates and the exercise prices for in-the-money warrants) that would have been received by the warrant holders if all in-the-money warrants had been exercised on the specified dates.

Warrants granted during the six months ended June 30, 2009 and 2008 were 11,700,000 and 2,706,666, respectively. For the period October 8, 2003 (Date of Formation) through June 30, 2009, warrants to purchase a total of 28,764,657 shares of BigString’s common stock were granted.

Warrants exercised during the six months ended June 30, 2009 and 2008 were 0 and 213,333, respectively. Cash received during the six months ended June 30, 2009 and 2008 from the exercise of warrants was $0 and $21,333, respectively. For the period October 8, 2003 (Date of Formation) through June 30, 2009, a total of 1,923,334 shares of BigString’s common stock were purchased upon the exercise of warrants.

During the six months ended June 30, 2009 and 2008, 5,700,000 and 0 warrants were cancelled. During the period October 8, 2003 (Date of Formation) through June 30, 2009, warrants to purchase a total of 50,000 shares of BigString’s common stock expired with an aggregate intrinsic value of $26,000 at the date of expiration. In addition, for the period October 8, 2003 (Date of Formation) through June 30, 2009, warrants to purchase a total of 10,397,778 shares of common stock were cancelled with an aggregate intrinsic value of $0 at the date of cancellation.

Equity Incentive Plan and Stock Options Issued to Consultants:

At the 2006 annual meeting of stockholders of BigString, the BigString Corporation 2006 Equity Incentive Plan (the “Equity Incentive Plan”) was adopted and approved by a majority of BigString’s stockholders. Under the Equity Incentive Plan, incentive and nonqualified stock options and rights to purchase BigString’s common stock may be granted to eligible participants. Options are generally priced to be at least 100% of the fair market value of BigString’s common stock at the date of the grant. Options are generally granted for a term of five or ten years. Options granted under the Equity Incentive Plan generally vest between one and five years.

On July 11, 2006, BigString approved the grant of a non-qualified stock option to purchase 575,100 shares of BigString’s common stock to a vendor. The non-qualified stock option has a term of five years from July 11, 2006 and an exercise price of $0.32 per share. For the year ended December 31, 2006, BigString recorded a consulting expense of $47,775 in connection with the contractual relationship between Mr. Vogel and BigString.

On July 11, 2006, BigString granted incentive stock options to purchase 2,620,000 shares of BigString’s common stock under its Equity Incentive Plan to certain of BigString’s employees. Incentive stock options to purchase 1,450,000 shares of BigString’s common stock were granted at an exercise price of $0.32 per underlying share with 25% vesting every three months for one year, and incentive stock options to purchase 1,170,000 shares of BigString’s common stock were granted at an exercise price of $0.50 per underlying share with vesting over periods of three and four years. In addition, non-qualified stock options to purchase 600,000 shares of BigString’s common stock were granted to two non-employee directors at an exercise price of $0.50 per underlying share with vesting over a period of three years.

On September 18, 2006, BigString granted an incentive stock option to purchase 1,800,000 shares of BigString’s common stock under its Equity Incentive Plan to a new BigString officer. When vested, 400,000 shares of BigString’s common stock will be eligible for purchase at the per share price equal to $0.24; 600,000 shares of BigString’s common stock will be eligible for purchase at $0.50 per share; 400,000 shares of BigString’s common stock will be eligible for purchase at $.90 per share; and 400,000 shares of BigString’s common stock will be eligible for purchase at $1.25 per share. The incentive stock option vests quarterly over a three year period, and the shares of BigString’s common stock subject to the incentive stock option will vest in order of exercise price, with the shares with the lower exercise price vesting first.

Index

BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

On November 14, 2007, BigString granted incentive stock options to purchase 1,275,000 shares of BigString’s common stock under its Equity Incentive Plan to certain of BigString’s employees. Incentive stock options were granted at an exercise price of $0.18 per underlying share with 25% vesting every three months for one year. In addition, non-qualified stock options to purchase 800,000 shares of BigString’s common stock were granted to three non-employee directors at an exercise price of $0.18 per underlying share with 25% vesting every three months for one year.

On January 14, 2008, BigString granted incentive stock options to purchase 800,000 shares of BigString’s common stock under its Equity Incentive Plan to a new BigString employee. Incentive stock options were granted at an exercise price of $0.22 per underlying share with 25% vesting every three months for one year. These options were forfeited.

On April 11, 2008, BigString granted incentive stock options to purchase 2,580,000 shares of BigString’s common stock under its Equity Incentive Plan to certain of BigString’s employees. Incentive stock options were granted at an exercise price of $0.21 per underlying share with 25% vesting every three months for one year. In addition, non-qualified stock options to purchase 1,000,000 shares of BigString’s common stock were granted to two non-employee directors at an exercise price of $0.21 per underlying share with 25% vesting every three months for one year.

On October 13, 2008, BigString granted incentive stock options to purchase 300,000 shares of BigString’s common stock under its Equity Incentive Plan to a BigString employee. Incentive stock options were granted at an exercise price of $0.10 per underlying share with 25% vesting every three months for one year.

On November 17, 2008, BigString granted non-qualified stock options to purchase 300,000 shares of BigString’s common stock to a BigString vendor under a partnering arrangement. The stock options were granted at an exercise price of $0.08 per underlying share with 25% vesting every three months for one year. These stock options were granted outside of the Equity Incentive Plan.

For the six months ended June 30, 2009 and 2008, and the period October 8, 2003 (Date of Formation) through June 30, 2009, BigString recorded stock-based option compensation expense of $86,028, $184,209 and $600,301, respectively. SFAS No. 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. Stock-based compensation expense was recorded net of estimated forfeitures.

The number of stock options outstanding as of January 1, 2009 and changes to such number during the six months ended June 30, 2009 is as follows:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
	Shares			Price		Term		Value
Options outstanding at January 1, 2009		9,950,100		$	0.33		5.5	$	-
Options granted		-		$	-
Options exercised		-		$	-
Options cancelled/forfeited/expired		(800,000	)	$	0.31
Options outstanding at June 30, 2009		9,150,100		$	0.33		5.2	$	-
Options exercisable at June 30, 2009		8,825,100		$	0.32		5.1	$	-

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the aggregate difference between the closing stock prices of BigString’s common stock at the specified dates and the exercise prices for in-the-money options) that would have been received by the option holders if all in-the-money options had been exercised on the specified dates.

Options granted during the six months ended June 30, 2009 and 2008 were 0 and 4,380,000, respectively. For the period October 8, 2003 (Date of Formation) through June 30, 2009, options to purchase a total of 12,650,100 shares of BigString’s common stock were granted.

No options were exercised, and no cash received from option exercises and purchases of shares for the six months ended June 30, 2009 and 2008, and the period October 8, 2003 (Date of Formation) through June 30, 2009. The total tax benefit attributable to options exercised in the period October 8, 2003 (Date of Formation) through June 30, 2009 was $0.

During the six months ended June 30, 2009 and 2008, and the period October 8, 2003 (Date of Formation) through June 30, 2009, options to purchase a total of 800,000, 1,000,000, and 3,500,000 shares of BigString’s common stock, respectively, were forfeited or expired with an aggregate intrinsic value of $0 at the date of expiration.

The fair value of each option award is estimated on the date of grant using the Black-Scholes valuation model, consistent with the provisions of SFAS No. 123(R), SAB No. 107 and SAB No. 110. Because option-pricing models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. BigString has limited relevant historical information to support the expected exercise behavior because BigString’s common stock has been publicly traded only since May 1, 2006.

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BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the weighted-average assumptions used to estimate the fair values of the stock options granted in the periods presented:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2009			2008			2009			2008
Risk-free interest rate		-	%		2	%		-	%		2	%
Expected volatility		-	%		97	%		-	%		98	%
Expected life (in years)		-			2			-			2
Dividend yield		-			-			-			-

The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of the grant.

BigString estimates the volatility of its common stock at the date of the grant based on historical volatility, expected volatility and publicly traded peer companies.

The expected life of stock options granted under the Equity Incentive Plan is based on management judgment, historical experience and publicly traded peer companies.

BigString has no history or expectations of paying cash dividends on its common stock.

NOTE 13. RELATED PARTY TRANSACTIONS

On April 2, 2009, PeopleString entered into an agreement with BigString to license BigString’s messaging technology and share the cost of certain common services. At June 30, 2009, BigString was a significant, non-majority stockholder of PeopleString’s common stock. The agreement renews annually and is subject to adjustment periodically. BigString accounts for this transaction as an expense reduction. For the six months ended June 30, 2009, BigString’s expenses were reduced by $15,595 under the terms of the agreement.

NOTE 14. COMMITMENTS AND CONTINGENCIES

Leases:

BigString leases its facilities which require BigString to pay certain executory costs (such as insurance and maintenance). Future minimum lease payments for operating leases are approximately as follows:

	Minimum
Years Ending	Lease
December 31,	Payments
2009	$	42,100
2010		21,100
	$	63,200

Rental expense was $11,900, $21,400 and $207,008 for the six months ended June 31, 2009 and 2008, and the period October 8, 2003 (Date of Formation) through June 31, 2009, respectively.

Computer co-location, power and Internet access expense was $23,985, $28,703 and $205,868 for the six months ended June 30, 2009 and 2008, and the period October 8, 2003 (Date of Formation) through June 30, 2009, respectively.

Consulting Agreements:

On January 27, 2004, BigString entered into an agreement with Greene Inc. Communications to provide public relations services. In consideration for services performed, BigString agreed to issue to Howard Greene 140,000 shares of common stock in April, 2005 and 192,000 shares of common stock in February, 2007. Total public relation expenses, including the services of Greene Inc. Communications, were $16,276, $127,516 and $318,074 for the six months ended June 30, 2009 and 2008, and the period October 8, 2003 (Date of Formation) through June 30, 2009, respectively.

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BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

On May 2, 2006, BigString signed a three-year business consultant services agreement with Lifeline Industries, Inc. In consideration for the services to be performed under the agreement, BigString issued to Lifeline Industries, Inc. (1) 1,250,000 shares of common stock, (2) a fully vested, five year warrant to purchase 225,000 shares of common stock at a per share purchase price of $0.48, and (3) a fully vested, five year warrant to purchase 225,000 shares of common stock at a per share purchase price of $1.00. BigString incurred corresponding consulting expenses of $128,926, $193,382 and $1,160,300 for the six months ended June 30, 2009 and 2008, and the period October 8, 2003 (Date of Formation) through June 30, 2009, respectively.

Marketing Affiliate Commitments:

In connection with contracts to provide email services to marketing affiliates, BigString may be obligated to make payments, which may represent a portion of net advertising and/or service revenues, to its marketing affiliates. As of the six months ended June 30, 2009 and 2008, and the period October 8, 2003 (Date of Formation) through June 30, 2009, these commitments were not material.

Other Commitments:

In the ordinary course of business, BigString may provide indemnifications to customers, vendors, lessors, marketing affiliates, directors, officers and other parties with respect to certain matters. It is not possible to determine the aggregate maximum potential loss under these indemnification agreements due to the limited history of prior indemnification claims and unique circumstances involved in each agreement. Historically, BigString has not incurred material costs as a result of obligation under these agreements and has not accrued any liabilities related to such agreements.

As of June 30, 2009, BigString did not have any relationships with unconsolidated entities or financial partnerships, such as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other limited purposes. BigString is not exposed to financing, liquidity, market or credit risks that could arise under such relationships.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

We have provided below information about BigString Corporation’s (“BigString”) financial condition and results of operations for the three and six months ended June 30, 2009 and 2008. This information should be read in conjunction with BigString’s unaudited consolidated financial statements for the three and six months ended June 30, 2009 and 2008, and the period October 8, 2003 (Date of Formation) through June 30, 2009, including the related notes thereto, which are included on pages 1 through 23 of this report.

Background

BigString Interactive, Inc., incorporated in the State of New Jersey, was formed by BigString in early 2006 to develop technology relating to interactive web portals.

PeopleString Corporation, incorporated in the State of Delaware, was formed by BigString in early 2009 to develop technology relating to social networks. After purchases of PeopleString common stock by investors from April 2009 to June 2009, BigString owns less than 50% of PeopleString’s outstanding common stock.

Email Emissary, Inc., incorporated in the State of Oklahoma, was acquired by BigString in July 2004. In September 2006, all of Email Emissary’s assets, including its pending patent application, were transferred to BigString. Email Emissary was dissolved on May 17, 2007.

Development Stage Company

BigString is considered a development stage enterprise as defined in SFAS No. 7, “Accounting and Reporting for Development Stage Companies,” issued by the FASB. BigString has limited revenue to date and continues to raise capital. There is no assurance that ultimately BigString will achieve a profitable level of operations.

Overview

BigString is a technology firm with a global client base, focused on providing a superior online communications experience for its users. BigString’s goal is to make Internet communication more efficient, reliable and valuable, while protecting individual privacy and proprietary information. BigString has developed innovative messaging services that allow users to easily send, recall, erase, self-destruct and secure electronic messages.

BigString’s innovations in recallable, erasable email provide a new level of privacy and security for those who wish to protect their proprietary information and manage their digital rights. BigString serves three main email markets: free and paid email accounts for individuals, professional business email solutions, and email hosting services. BigString 3.0 email provides, at no cost to its users, advanced spam filters, virus protection and large-storage, web-based email accounts with features similar to those offered by AOL ® , Yahoo ® , Hotmail ® , Google ® , Verizon ® and Comcast ® . In addition to the equivalent features provided by competitors, BigString 3.0 offers erasable, recallable and self-destructing applications, non-printable and non-forwardable emails, set time or number of views (including ‘view-once’) and masquerading to protect the sender’s privacy and security. BigString 3.0 also allows a sender to view tracking reports that indicate when emails were opened by the recipient and how many times they were viewed. Senders can add, change and/or delete attachments before or after a recipient opens the email. In addition, BigString 3.0 allows senders to direct emails to disintegrate in front of their recipient’s eyes and allows senders to create, save and send self-destructing video email.

BigString’s self-destructing, instant messaging technology enables users to send instant messages (“IM”) that self-destruct after being sent. BigStringIM, available as a web version or a free plug-in for AOL’s AIM™, prevents logging, saving or screen printing to address security and privacy gaps in the large, growing instant messaging market. BigString also offers a multi-platform IM integration which allows users to sign into BigStringIM, AIM™, Yahoo™, MSN™ and Google Talk™ concurrently.

BigString’s self-destructing, Short Message Service (“SMS”) text messaging technology enables users to send text messages and pictures that self-destruct after being sent. SMS Eraser, available for BlackBerry phones, can be downloaded for a fee at www.BigString.com or one of several third-party global BlackBerry application distributors. BigString’s entry into the mobile phone messaging market expands the availability and use of BigString’s proprietary self-destructing messaging platforms.

BigString also provides hosting, private label, and co-branded solutions. Web publishers and content sites may offer BigString’s messaging services to their existing registered member base as well as all future members that register. The web publishers and content sites are responsible for marketing. BigString receives advertising revenue associated with these marketing affiliations and may also receive premium fees when registered members upgrade service. In conjunction with contracts to provide email services to marketing affiliates, BigString may be obligated to make payments, which may represent a portion of revenue, to its marketing affiliates.

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Building on the popularity of the social networking sites such as Facebook ® , MySpace ® , Friendster ® and LinkedIn ® , BigString’s social networking applications allow users to easily send and receive messages, notifications, email and videos that self-destruct on command. These rapidly growing, adjacent markets offer BigString the opportunity to leverage its capabilities in messaging and streaming audio and video to create complementary messaging applications. BigString’s development efforts are focused to address security and privacy gaps in social networking messaging applications.

In March, 2009, BigString announced the launch of PeopleString through a subsidiary, an incentive-based social network that pays users to receive regular direct mail and perform internet activities, such as email, instant messaging, video mail, online file storage, search and shopping. In addition, members generate additional revenue by creating a personal affiliate network. The service provides entrepreneurs with business tools to earn additional revenue through PeopleString. PeopleString also provides fee-based development services. PeopleString is operated by PeopleString Corporation. BigString owns less than 50% of PeopleString’s outstanding common stock.

For BigString to increase its revenue, BigString needs to establish a large customer base. A large customer base of free email and messaging services provides BigString with more opportunities to sell its premium services, which could result in increased revenue. In addition, a large customer base may allow BigString to increase its advertising rates and attract other Internet based advertising and marketing firms to advertise and form marketing affiliations with BigString, which could result in increased advertising and product fee revenues.

BigString’s marketing efforts focus on increasing brand awareness and consumer adoption of its messaging products. Promotions included email tag lines, organic search, paid search, banners, blogs, social networks, video and other viral tactics, multimedia, print, and radio. BigString has also developed product packages which may help BigString in achieving critical mass, including hosting, private label, and co-branded solutions, email marketing services and a video alliance program.

BigString currently markets to Internet users who seek to utilize the Internet as their source for email and messaging services. Generally, BigString products and services can be readily accessed through the Internet and thus from virtually anywhere where the Internet is accessible. Email users can access BigString’s English language site, www.BigString.com, on a global basis, 24 hours a day. As of June 30, 2009, BigString email visitors accessed www.BigString.com from 227 countries/territories, compared to 216 countries/territories as of June 30, 2008, and 60 countries/territories as of December 31, 2006. The top five countries by visits to www.BigString.com are as follows: United States 55%, United Kingdom 8%, Canada 5%, Peru 3% and India 2%, followed by Mexico, Australia, Columbia, Germany and Brazil.

Certain criteria BigString reviews to measure its performance are set forth below:

the number of first time and repeat users of the services;

the number of pages of the website viewed by a user;

the number of free and/or paid accounts for each service;

the number of users of the free services who purchase one of the premium product packages;

the length of time between the activation of a free account and the conversion to a paid account;

the retention rate of customers, including the number of account closures and the number of refund requests;

the acquisition cost per user for each of the services;

the cost and effectiveness for each of the promotional efforts;

the revenue and effectiveness of advertisements served; and

the revenue, impressions, clicks and actions per user.

Critical Accounting Policies

BigString’s discussion and analysis of financial condition and results of operations are based upon BigString’s unaudited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these unaudited consolidated financial statements requires BigString to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, BigString evaluates its estimates, including those related to intangible assets, income taxes and contingencies and litigation. BigString bases its estimates on historical expenses and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

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BigString believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

Revenue Recognition. BigString derives revenue from online services, electronic commerce, advertising and data network services. BigString also derives revenue from marketing affiliations. BigString recognizes revenue in accordance with the guidance contained in SAB No. 104, “Revenue Recognition in Financial Statements.”

Consistent with the provisions of the FASB’s EITF Issue No. 99-19, “Reporting Revenue Gross As A Principal Versus Net As An Agent,” BigString generally recognizes revenue associated with its advertising and marketing affiliation programs on a gross basis due primarily to the following factors: BigString is the primary obligor; has general inventory risk; has latitude in establishing prices; has discretion in supplier selection; performs part of the service; and determines specifications. In connection with contracts to provide email services to marketing affiliates, BigString may be obligated to make payments, which may represent a portion of revenue, to its marketing affiliates.

Consistent with EITF Issue No. 01-9, “Accounting for Considerations Given by a Vendor to a Customer (Including the Reseller of the Vendor’s Product),” BigString accounts for cash considerations given to customers, for which it does not receive a separately identifiable benefit or cannot reasonably estimate fair value, as a reduction of revenue rather than an expense. Accordingly, corresponding distributions to active users and distributions of referral fees are recorded as a reduction of gross revenue.

Stock-Based Compensation. Effective January 1, 2006, BigString accounts for stock-based compensation under SFAS No. 123(R), “Share-Based Payment.” BigString adopted SFAS No. 123(R) using the modified prospective method. Under this method, SFAS No. 123(R) applies to new awards and to awards modified, repurchased, or cancelled after the required effective date of SFAS No. 123(R). Additionally, compensation costs for the portion of the awards outstanding as of the required effective date of SFAS No. 123(R), for which the requisite service has not been rendered, are being recognized as the requisite service is rendered after the required effective date of SFAS No. 123(R). The compensation cost for the portion of awards is based on the grant-date fair value of those awards as calculated for either recognition or pro forma disclosures under SFAS No. 123, “Accounting for Stock Based Compensation.” Changes to the grant-date fair value of equity awards granted before the required effective date of SFAS No. 123(R) are precluded. The compensation cost for those earlier awards is attributed to periods beginning on or after the required effective date of SFAS No. 123(R) using the attribution method that was used under SFAS No. 123, except that the method of recognizing forfeitures only as they occur was not continued.

BigString has one stock-based compensation plan under which incentive and nonqualified stock options or rights to purchase stock may be granted to employees, directors and other eligible participants. BigString issues shares of its common stock, warrants to purchase common stock and non-qualified stock options to non-employees as stock-based compensation. BigString accounts for the services using the fair market value of the consideration issued.

Research and Development. BigString accounts for research and development costs in accordance with accounting pronouncements, including SFAS No. 2 “Accounting for Research and Development Costs,” and SFAS No. 86, “Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed.” BigString has determined that technological feasibility for its software products is reached shortly before the products are released. Research and development costs incurred between the establishment of technological feasibility and product release have not been material and have accordingly been expensed when incurred.

Evaluation of Long-Lived Assets. BigString reviews property and equipment and finite-lived intangible assets for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. In accordance with the guidance provided in SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” if the carrying value of the long-lived asset exceeds the estimated future undiscounted cash flows to be generated by such asset, the asset would be adjusted to its fair value and an impairment loss would be charged to operations in the period identified. Should the impairment loss be significant, the charge to operations could have a material adverse effect on BigString’s results of operations and financial condition.

Intangibles. SFAS No. 142, “Goodwill and other Intangible Assets” specifies the financial accounting and reporting for acquired goodwill and other indefinite life intangible assets. Goodwill and other indefinite-lived intangible assets are no longer amortized, but are reviewed for impairment at least annually. The valuation of intangible assets has been determined by management after considering a number of factors.

Accounting for Derivatives. BigString evaluates its options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under SFAS No. 133 and related interpretations including EITF 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock.”

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Results of Operations

For the Three and Six Months Ended June 30, 2009 and 2008

Net Loss. For the three months ended June 30, 2009, net loss was $328,239, as compared to a net loss of $1,002,015 for the three months ended June 30, 2008. The $673,776 decrease in net loss was primarily attributable to a $688,007 decrease in operating expenses related to sales and marketing, general and administrative, and amortization.

For the six months ended June 30, 2009, net loss was $814,725, as compared to a net loss of $1,835,394 for the six months ended June 30, 2008. The $1,020,669 decrease in net loss was primarily attributable to a $1,042,735 decrease in operating expenses related to sales and marketing, general and administrative, and amortization.

Revenues. For the three months ended June 30, 2009, revenues were $9,737, a $2,909 decrease from revenues of $12,646 earned in the three months ended June 30, 2008. Of the revenues generated for the three months ended June 30, 2009, $5,689 was generated from product and service fees and $4,048 was generated from advertisers, as compared to $8,811 from product and service fees and $3,835 from advertisers for the three months ended June 30, 2008.

For the six months ended June 30, 2009, revenues were $21,840, a $504 decrease from revenues of $22,344 earned in the six months ended June 30, 2008. Of the revenues generated for the six months ended June 30, 2009, $12,883 was generated from product and service fees and $8,958 was generated from advertisers, as compared to $14,084 from product and service fees and $8,260 from advertisers for the six months ended June 30, 2008.

The 2% decrease in revenues for the six months ended June 30, 2009 over the same prior year period was primarily due to the write-off of a receivable of $12,900, partially offset by increased service fees.

Revenues associated with PeopleString are included in BigString’s Consolidated Financial Statements for the three months ended March 31, 2009, and are not included in BigString’s Consolidated Financial Statements for the three months ended June 30, 2009.

At June 30, 2009, unearned revenue from product and service fees decreased 36% to $4,546 from $7,104 at December 31, 2008.

Operating Expenses. For the three months ended June 30, 2009, operating expenses were $216,829, a $688,007 decrease from operating expenses of $904,836 incurred in the three months ended June 30, 2008. Operating expenses, excluding amortization, depreciation, impairment and share-based compensation expenses, for the three months ended June 30, 2009 were $156,213, a $324,441 decrease from the same prior year period.

Cost of revenues: Cost of revenues for the three months ended June 30, 2009 were $18,611, as compared to $18,356 for the same prior year period. The $255 increase in cost was primarily attributable to increased hosting related fees.

Research and development: Research and development expenses for the three months ended June 30, 2009 were $101,326, as compared to $125,430 for the same prior year period. The $24,104 decrease in expenses was primarily attributable to a reduction in development staffing and associated overhead costs.

Sales and marketing: Sales and marketing expenses for the three months ended June 30, 2009 were $2,365, as compared to $109,569 for the same prior year period. The $107,204 decrease in expenses was primarily attributable to decreased public relations expenses.

General and administrative: General and administrative expenses for the three months ended June 30, 2009 were $94,527, as compared to $411,328 for the same prior year period. The $316,801 decrease in expenses was primarily attributable to decreased compensation, administrative and professional expenses.

Amortization: Amortization expenses for the three months ended June 30, 2009 were $0, as compared to $240,153 for the same prior year period. The decrease in expense was attributable to the 2008 impairment of intangible assets and completion of amortization expenses.

For the six months ended June 30, 2009, operating expenses were $604,398, a $1,042,735 decrease from operating expenses of $1,647,133 incurred in the six months ended June 30, 2008. Operating expenses, excluding amortization, depreciation, impairment and share-based compensation expenses, for the six months ended June 30, 2009 were $324,359, a $398,277 decrease from the same prior year period.

Cost of revenues: Cost of revenues for the six months ended June 30, 2009 were $44,569, as compared to $39,596 for the same prior year period. The $4,973 increase in cost was primarily attributable to increased activity associated with the revenue mix.

Research and development: Research and development expenses for the six months ended June 30, 2009 were $221,181, as compared to $255,560 for the same prior year period. The $34,379 decrease in expenses was primarily attributable to a reduction in development staffing and associated overhead costs.

Index

Sales and marketing: Sales and marketing expenses for the six months ended June 30, 2009 were $26,270, as compared to $142,218 for the same prior year period. The $115,948 decrease in expenses was primarily attributable to decreased public relations expenses.

General and administrative: General and administrative expenses for the six months ended June 30, 2009 were $312,378, as compared to $729,453 for the same prior year period. The $417,075 decrease in expenses was primarily attributable to decreased compensation, administrative and professional expenses.

Amortization: Amortization expenses for the six months ended June 30, 2009 were $0, as compared to $480,306 for the same prior year period. The decrease in expense was attributable to the 2008 impairment of intangible assets and completion of amortization expenses.

Other income (expense). For the three months ended June 30, 2009, other expenses were $121,809, a $11,984 increase over other expenses of $109,825 in the three months ended June 30, 2008.

Interest income: Interest income for the three months ended June 30, 2009 was $13, as compared to $1,241 for the same prior year period. The $1,228 decrease was primarily attributable to lower rates and cash balances.

Interest expense: Interest expense for the three months ended June 30, 2009 was $20,775, as compared to $19,875 for the same prior year period. The $900 increase was primarily attributable to the interest on the June 23, 2009 promissory notes.

Other, net: Other, net expenses for the three months ended June 30, 2009 were $101,047, as compared to $91,191 for the same prior year period. The $9,856 increase was primarily attributable to the amortization of the beneficial conversion features of the June 23, 2009 promissory notes.

For the six months ended June 30, 2009, other expenses were $232,829, a $22,224 increase over other expenses of $210,605 in the six months ended June 30, 2008.

Interest income: Interest income for the six months ended June 30, 2009 was $59, as compared to $3,372 for the same prior year period. The $3,313 decrease was primarily attributable to lower rates and cash balances.

Interest expense: Interest expense for the six months ended June 30, 2009 was $40,650, as compared to $32,873 for the same prior year period. The $7,777 increase was primarily attributable to the 2009 full period interest on the February 29, 2008 promissory notes and interest on the June 23, 2009 promissory notes.

Other, net: Other, net expenses for the six months ended June 30, 2009 were $192,238, as compared to $181,104 for the same prior year period. The $11,134 increase was primarily attributable to the amortization of the promissory note discounts and amortization of the beneficial conversion features of the promissory notes.

Income Taxes. For the three and six months ended June 30, 2009 and 2008, BigString has applied valuation allowances to offset the deferred tax assets in recognition of the uncertainty that such tax benefits will be realized.

At December 31, 2008, BigString has available net operating loss carry forwards of approximately $12.7 million for federal income tax reporting purposes and $5.1 million for state income tax reporting purposes which expire in various years through 2028. The differences between book income and tax income primarily relates to amortization of intangible assets and other expenditures. Pursuant to Section 382 of the Internal Revenue Code of 1986, as amended, the annual utilization of a company’s net operating loss and research credit carry forwards may be limited, and, as such, BigString may be restricted in using its net operating loss and research credit carry forwards to offset future federal income tax expense.

Gain on deconsolidation of subsidiary. At March 31, 2009, BigString owned 100% of the common shares outstanding of PeopleString and the financial results of PeopleString were included in BigString’s Consolidated Financial Statements at March 31, 2009. After purchases of PeopleString common stock by investors, BigString owned 35% of PeopleString’s outstanding common stock at June 30, 2009. For the three and six months ended June 30, 2009 BigString recorded a gain of $662 on the deconsolidation of its subsidiary PeopleString.

Liquidity and Capital Resources

BigString’s operating and capital requirements have exceeded its cash flow from operations as BigString has been building its business. Since inception through June 30, 2009, BigString has expended $5,332,078 for operating and investing activities, which has been primarily funded by investments of $5,371,533 from BigString’s stockholders and convertible note and warrant holders. For the six months ended June 30, 2009, BigString expended $319,332 for operating and investing activities, a decrease of $570,376 from the amount expended during the six months ended June 30, 2008.

Index

BigString’s cash balance as of June 30, 2009 was $39,455, which was a decrease of $139,332 from the cash balance of $178,787 as of December 31, 2008. This decrease to the cash balance was attributable to the operating outlays primarily associated with the development of products and services and professional fees.

Management believes BigString’s current cash balance of $15,872 at August 12, 2009 is not sufficient to fund the minimum level of operations for the next twelve months.

BigString’s unaudited consolidated financial statements beginning on page 2 have been prepared assuming BigString will continue as a going concern. As more fully explained in Note 2 to BigString’s unaudited consolidated financial statements, BigString has a working capital deficit and has incurred losses since operations commenced. BigString’s continued existence is dependent upon its ability to obtain needed working capital through additional equity and/or debt financing and revenue to cover expenses as BigString continues to incur losses. These uncertainties raise substantial doubt about BigString’s ability to continue as a going concern. BigString’s unaudited consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties should BigString be unable to continue as a going concern.

BigString participated in the State of New Jersey’s Corporation Business Tax Benefit Certificate Transfer program, which allows certain high technology and biotechnology companies to sell unused NOL carryforwards to other New Jersey corporation business taxpayers. On December 16, 2008 and December 19, 2007, BigString received net proceeds of $428,137 and $258,854, respectively, in connection with its sale of unused NOLs in the Program. BigString may also be able to transfer additional unused New Jersey NOLs in future years if it is accepted to participate in the Program in 2009 and in future years.

On April 6, 2009, BigString sold a portion of its shares in FindItAll, Inc., which BigString held as an investment, for $40,000.

On June 23, 2009, BigString entered into a financing arrangement with Whalehaven Capital Fund Limited, Alpha Capital Anstalt and Excalibur Special Opportunities LP, pursuant to which the 2009 Subscribers purchased convertible notes in the aggregate principal amount of $180,000, which notes are convertible into shares of BigString’s common stock, and warrants to purchase up to 6,000,000 shares of BigString's common stock. Each convertible note has a term of two years and accrues interest at a rate of six percent annually. The holder of a convertible note shall have the right from and after the issuance thereof until such time as the convertible note is fully paid, to convert any outstanding and unpaid principal portion thereof into shares of common stock at a conversion price of $0.015 per share, as adjusted. The conversion price and number and kind of shares to be issued upon conversion of the convertible note are subject to adjustment from time to time. The warrants have an exercise price of $0.015 per share, as adjusted. The number of shares of common stock underlying each warrant and the exercise price are subject to certain adjustments.

If the revenue from our operations are not adequate to allow us to pay the principal and interest on the outstanding convertible notes, and the convertible notes are not converted into shares of common stock, we will seek additional equity financing and/or debt financing. It is also possible that we will seek to borrow money from traditional lending institutions, such as banks.

BigString has completed significant development of our email and messaging services and social networking services and have made adjustments to our cost structure, such as the elimination of expenses associated with the production of OurPrisoner and the reduction of a portion of compensation costs associated with development. We have also reduced general expenses such as rent and other discretionary expenses. As a result, our operating and investing cash expenditures were reduced by $570,376, or 64%, for the six months ended June 30, 2009, as compared to the same prior year period.

BigString expects to continue development on our messaging, email and related service offerings. We expect to continue development on our social network platform. We also expect sales, marketing and advertising expenses and cost of revenues to increase as we promote and grow our products and services. However, if our revenue and cash balance are insufficient to fund the continued growth of our business, we will seek additional funds. There can be no assurance that such funds will be available to us or that adequate funds for our operations, whether from debt or equity financings, will be available when needed or on terms satisfactory to us. Our failure to obtain adequate additional financing may require us to delay or curtail some or all of our business efforts and could cause us to seek bankruptcy protection. Any additional equity financing may involve substantial dilution to our then-existing stockholders.

As part of our cash conservation efforts, BigString’s officers began deferring a portion of their salaries in March 2009. For the six months ended June 30, 2009, accrued, payable compensation was $38,500. Other than the aforementioned deferred compensation, BigString’s officers and directors have not, as of the date of this filing, loaned any funds to BigString, and there are no formal commitments or arrangements to advance or loan funds to BigString or repay any such advances or loans.

Index

It e m 3. Quantitative and Qualitative Disclosures About Market Risk

BigString is a smaller reporting company and is therefore not required to provide this information.

Ite m 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures.

Management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on management’s evaluation, our chief executive officer and chief financial officer concluded that, as of June 30, 2009, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting.

We review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes.

There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Index

PART II. OTHER INF O RMATION

Item 1.	Legal Proceeding s

	BigString is not a party to, and none of its property is the subject of, any pending legal proceedings. To BigString’s knowledge, no governmental authority is contemplating any such proceedings.

Item 1A.	Risk Facto r s

	BigString is a smaller reporting company and is therefore not required to provide this information.

Item 2.	Unregister e d Sales of Equity Securities and Use of Proceeds

	The information required by this Item with respect to sales of unregistered securities has been previously disclosed by BigString in its Current Report on Form 8-K which was filed with the SEC on June 29, 2009.

Item 3.	Defaults Upo n Senior Securities

	None.

Item 4.	Submission of Matters to a Vote of Security Holders

	None.

Item 5.	Other Informa t ion

	None.

Item 6.	Exhibi t s

	See Index of Exhibits commencing on page E-1.

Index

SIGN A TURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BigString Corporation
	Registrant


Dated: August 14, 2009	/s/ Darin M. Myman
	Darin M. Myman
	President and Chief Executive Officer
	(Principal Executive Officer)


Dated: August 14, 2009	/s/ Robert S. DeMeulemeester
	Robert S. DeMeulemeester
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

Index

IN D EX OF EXHIBITS

Exhibit No.	Description of Exhibit

3.1.1	Certificate of Incorporation of BigString, placed into effect on October 8, 2003, incorporated by reference to Exhibit 3.1.1 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on August 29, 2005.

3.1.2	Certificate of Amendment to the Certificate of Incorporation of BigString, placed into effect on July 19, 2005, incorporated by reference to Exhibit 3.1.2 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on August 29, 2005.

3.1.3	Certificate of Designations of Series A Preferred Stock, par value $0.0001 per share, of BigString, incorporated by reference to Exhibit 3.1.3 to the Current Report on Form 8-K filed with the SEC on May 22, 2006.

3.2	Amended and Restated By-laws of BigString, incorporated by reference to Exhibit 3.2 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on August 29, 2005.

4.1	Specimen certificate representing BigString’s common stock, par value $.0001 per share, incorporated by reference to Exhibit 4.1 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on August 29, 2005.

4.2	Form of Convertible Note, dated May 1, 2007, issued to the following persons and in the following amounts: Whalehaven Capital Fund Limited ($250,000); Alpha Capital Anstalt ($250,000); and Iroquois Master Fund Ltd. ($125,000), incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed with the SEC on May 3, 2007.

4.3	Form of Convertible Note, dated February 29, 2008, issued to the following subscribers and in the following amounts: Whalehaven Capital Fund Limited ($250,000); Alpha Capital Anstalt ($250,000); and Excalibur Small Cap Opportunities LP ($200,000), incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K filed with the SEC on March 6, 2008.

4.4	Non-Negotiable Convertible Promissory Note, dated August 25, 2008, issued to Dwight Lane Capital, LLC ($175,000), incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on August 27, 2008.

4.5	Non-Negotiable Convertible Promissory Note, dated August 25, 2008, issued to Marc W. Dutton ($75,000), incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed with the SEC on August 27, 2008.

4.6	Form of Convertible Note, dated June 23, 2009, issued to the following subscribers and in the following amounts: Whalehaven Capital Fund Limited ($75,000); Alpha Capital Anstalt ($75,000); and Excalibur Special Opportunities LP ($30,000), incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on June 29, 2009.

10.1	Registration Rights Agreement, dated August 10, 2005, between BigString and AJW New Millennium Offshore, Ltd., incorporated by reference to Exhibit 10.1 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on August 29, 2005.

10.2	Registration Rights Agreement, dated August 10, 2005, between BigString and AJW Partners, LLC, incorporated by reference to Exhibit 10.2 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on August 29, 2005.

10.3	Registration Rights Agreement, dated August 10, 2005, between BigString and AJW Qualified Partners, LLC, incorporated by reference to Exhibit 10.3 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on August 29, 2005.

10.4	Registration Rights Agreement, dated June 17, 2005, between BigString and David Matthew Arledge, incorporated by reference to Exhibit 10.4 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on August 29, 2005.

10.5	Registration Rights Agreement, dated June 17, 2005, between BigString and David A. Arledge, incorporated by reference to Exhibit 10.5 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on August 29, 2005.

10.6	Registration Rights Agreement, dated July 31, 2005, between BigString and Jeffrey M. Barber and Jo Ann Barber, incorporated by reference to Exhibit 10.6 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on August 29, 2005.

E-1

Index

10.7	Registration Rights Agreement, dated June 17, 2005, between BigString and Nicholas Codispoti, incorporated by reference to Exhibit 10.7 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on August 29, 2005.

10.8	Registration Rights Agreement, dated June 17, 2005, between BigString and Nicholas Codispoti, IRA Account, incorporated by reference to Exhibit 10.8 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on August 29, 2005.

10.9	Registration Rights Agreement, dated June 17, 2005, between BigString and Nicholas Codispoti, President, Codispoti Foundation, incorporated by reference to Exhibit 10.9 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on August 29, 2005.

10.10	Registration Rights Agreement, dated June 17, 2005, between BigString and Jon M. Conahan, incorporated by reference to Exhibit 10.10 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on August 29, 2005.

10.11	Registration Rights Agreement, dated July 31, 2005, between BigString and Michael Dewhurst, incorporated by reference to Exhibit 10.11 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on August 29, 2005.

10.12	Registration Rights Agreement, dated June 17, 2005, between BigString and Theodore Fadool, Jr., incorporated by reference to Exhibit 10.12 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on August 29, 2005

10.13	Registration Rights Agreement, dated June 17, 2005, between BigString and Charles S. Guerrieri, incorporated by reference to Exhibit 10.13 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on August 29, 2005.

10.14	Registration Rights Agreement, dated August 9, 2005, between BigString and James R. Kauffman and Barbara Kauffman, incorporated by reference to Exhibit 10.14 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on August 29, 2005.

10.15	Registration Rights Agreement, dated July 31, 2005, between BigString and Joel Marcus, incorporated by reference to Exhibit 10.15 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on August 29, 2005.

10.16	Registration Rights Agreement, dated August 10, 2005, between BigString and New Millennium Capital Partners II, LLC, incorporated by reference to Exhibit 10.16 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on August 29, 2005.

10.17	Registration Rights Agreement, dated July 31, 2005, between BigString and Richard and Georgia Petrone, incorporated by reference to Exhibit 10.17 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on August 29, 2005.

10.18	Registration Rights Agreement, dated July 31, 2005, between BigString and David and Kim Prado, incorporated by reference to Exhibit 10.18 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on August 29, 2005.

10.19	Registration Rights Agreement, dated August 4, 2005, between BigString and Marc Sandusky, incorporated by reference to Exhibit 10.19 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on August 29, 2005.

10.20	Registration Rights Agreement, dated August 6, 2005, between BigString and Shefts Family LP, incorporated by reference to Exhibit 10.20 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on August 29, 2005.

10.21	Registration Rights Agreement, dated June 17, 2005, between BigString and Thomas Shields, incorporated by reference to Exhibit 10.21 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on August 29, 2005.

E-2

Index

10.22	Agreement, dated December 1, 2005, by and among BigString and the following selling stockholders: AJW New Millennium Offshore, Ltd., AJW Qualified Partners, LLC, AJW Partners, LLC, David M. Adredge, David A. Arledge, Susan Baran, Jeffrey M. Barber and JoAnn Barber, Nicholas Codispoti, Nicholas Codispoti, IRA, Codispoti Foundation, Jon M. Conahan, Dean G. Corsones, Michael Dewhurst, Marc Dutton, Theodore Fadool, Jr., Howard Greene, Harvey M. Goldfarb, Charles S. Guerrieri, Brenda L. Herd and Glenn A. Herd, Herd Family Partnership, Ronald C. Herd and Michele Herd, Steven Hoffman, James R. Kaufman and Barbara Kaufman, Jeffrey Kay and Lisa Kay, Gerald Kotkin, Paul A. Levis PSP, Joel Marcus, Barbara A. Musco and Barrie E. Bazar, Craig Myman, New Millennium Capital Partners II, LLC, Alfred Pantaleone, Sara R. Pasquarello, Richard P. Petrone and George Petrone, David Prado and Kim Prado, Lee Rosenberg, Todd M. Ross, Marc Sandusky, Adam Schaffer, H. Joseph Sgroi, Shefts Family LP, Thomas Shields, Mark Yuko, Bradley Zelenitz and Shefts Associates, Inc., incorporated by reference to Exhibit 10.24 to the Annual Report on Form 10-KSB filed with the SEC on March 31, 2006.

10.23	Business Consultant Services Agreement by and between BigString and Shefts Associates, Inc., incorporated by reference to Exhibit 10.30 to Amendment No. 1 to the Registration Statement on Form SB-2 (Registration No. 333-127923) filed with the SEC on October 21, 2005.

10.24	Lease between BigString, as Tenant, and Walter Zimmerer & Son, as Landlord, dated February 3, 2009, for the premises located at 157 Broad Street, Suite 109, Red Bank, New Jersey 07701, incorporated by reference to Exhibit 10.24 to the Annual Report on Form 10-K filed with the SEC on March 31, 2009.

10.25	Business Consultant Services Agreement, dated May 2, 2006, by and between BigString and Lifeline Industries, Inc., incorporated by reference to Exhibit 10.32 to the Current Report on Form 8-K filed with the SEC on May 4, 2006.

10.26	Securities Purchase Agreement, dated as of May 19, 2006, by and among BigString and Witches Rock Portfolio Ltd., The Tudor BVI Global Portfolio Ltd. and Tudor Proprietary Trading, L.L.C., including Schedule 1 – Schedule of Purchasers, and Exhibit C – Form of Warrant. Upon the request of the SEC, BigString agrees to furnish copies of each of the following schedules and exhibits: Schedule 2-3.2(d) – Warrants; Schedule 2-3.3 – Registration Rights; Schedule 2-3.7 – Financial Statements; Schedule 2-3.10 – Broker’s or Finder’s Fees; Schedule 2-3.11 – Litigation; Schedule 2-3.16 – Intellectual Property Claims Against the Company; Schedule 2-3.17 – Subsidiaries; Schedule 2-3.19(a) – Employee Benefit Plans; Schedule 2-3.22 – Material Changes; Exhibit A – Form of Certificate of Designations of the Series A Preferred Stock; Exhibit B – Form of Registration Rights Agreement; Exhibit D – Form of Giordano, Halleran & Ciesla, P.C. Legal Opinion, incorporated by reference to Exhibit 10.33 to the Current Report on Form 8-K filed with the SEC on May 22, 2006.

10.27	Registration Rights Agreement, dated as of May 19, 2006, by and among BigString and Witches Rock Portfolio Ltd., The Tudor BVI Global Portfolio Ltd. and Tudor Proprietary Trading, L.L.C., incorporated by reference to Exhibit 10.34 to the Current Report on Form 8-K filed with the SEC on May 22, 2006.

10.28	Asset Purchase Agreement, dated as of May 19, 2006, by and between BigString and Robb Knie. Upon the request of the SEC, BigString agrees to furnish a copy of Exhibit A – Form of Registration Rights Agreement, and Exhibit B – Investor Suitability Questionnaire, incorporated by reference to Exhibit 10.35 to the Current Report on Form 8-K filed with the SEC on May 22, 2006.

10.29	Registration Rights Agreement, dated as of May 19, 2006, by and between BigString and Robb Knie, incorporated by reference to Exhibit 10.36 to the Current Report on Form 8-K filed with the SEC on May 22, 2006.

10.30	Stock Redemption Agreement, dated May 31, 2006, by and between BigString and David L. Daniels, incorporated by reference to Exhibit 10.37 to the Registration Statement on Form SB-2 (Registration No. 333-135837) filed with the SEC on July 18, 2006.

10.31	Stock Redemption Agreement, dated May 31, 2006, by and between BigString and Deborah K. Daniels, incorporated by reference to Exhibit 10.38 to the Registration Statement on Form SB-2 (Registration No. 333-135837) filed with the SEC on July 18, 2006.

10.32	Stock Redemption Agreement, dated May 31, 2006, by and between BigString and Charles A. Handshy, Jr., incorporated by reference to Exhibit 10.39 to the Registration Statement on Form SB-2 (Registration No. 333-135837) filed with the SEC on July 18, 2006.

E-3

Index

10.33	Stock Redemption Agreement, dated May 31, 2006, by and between BigString and June E. Handshy, incorporated by reference to Exhibit 10.40 to the Registration Statement on Form SB-2 (Registration No. 333-135837) filed with the SEC on July 18, 2006.

10.34	Letter Agreement, dated September 18, 2006, between BigString and Robert DeMeulemeester, incorporated by reference to Exhibit 10.41 to the Current Report on Form 8-K filed with the SEC on September 21, 2006.

10.35	BigString Corporation 2006 Equity Incentive Plan, incorporated by reference to Exhibit 10.42 to the Annual Report on Form 10-KSB filed with the SEC on April 2, 2007.

10.35.1	Form of Incentive Option Agreement (Employees), incorporated by reference to Exhibit 10.42.1 to the Annual Report on Form 10-KSB filed with the SEC on April 2, 2007.

10.35.2	Form of Director Option Agreement (Non-employee Directors), incorporated by reference to Exhibit 10.42.2 to the Annual Report on Form 10-KSB filed with the SEC on April 2, 2007.

10.36	Subscription Agreement, dated as of April 30, 2007, by and among BigString and Whalehaven Capital Fund Limited, Alpha Capital Anstalt, Chestnut Ridge Partners LP, Iroquois Master Fund Ltd. and Penn Footwear, including Exhibit B – Form of Common Stock Purchase Warrant. Upon the request of the Securities and Exchange Commission, BigString agrees to furnish copies of each of the following schedules and exhibits: Schedule 5(a) – Subsidiaries; Schedule 5(d) – Additional Issuances/Capitalization; Schedule 5(f) – Conflicts; Schedule 5(q) – Undisclosed Liabilities; Schedule 5(v) – Transfer Agent; Schedule 8 – Finder’s Fee; Schedule 9(s) – Lockup Agreement Providers; Schedule 11.1(iv) – Additional Securities to be Included in the Registration Statement; Exhibit A – Form of Convertible Note (included as Exhibit 4.2); Exhibit C – Form of Escrow Agreement; Exhibit D – Form of Giordano, Halleran & Ciesla, P.C. Legal Opinion; Exhibit E – Proposed Public Announcement; and Exhibit F – Form of Lock-Up Agreement, incorporated by reference to Exhibit 10.43 to the Current Report on Form 8-K filed with the SEC on May 3, 2007.

10.37	Agreement, Waiver and Limited Release, dated as of November 30, 2007, by and among BigString and the Releasors, incorporated by reference to Exhibit 10.37 to the Current Report on Form 8-K filed with the SEC on December 5, 2007.

10.38	Subscription Agreement, dated as of February 29, 2008, by and among BigString and Whalehaven Capital Fund Limited, Alpha Capital Anstalt and Excalibur Small Cap Opportunities LP, including Exhibit B – Form of Common Stock Purchase Warrant. Upon the request of the Securities and Exchange Commission, BigString agrees to furnish copies of each of the following schedules and exhibits: Schedule 5(a) – Subsidiaries; Schedule 5(d) – Additional Issuances/Capitalization; Schedule 5(f) – Conflicts; Schedule 5(q) – Undisclosed Liabilities; Schedule 5(v) – Transfer Agent; Schedule 8 – Finder’s Fee; Schedule 9(s) – Lockup Agreement Providers; Exhibit A – Form of Convertible Note (included as Exhibit 4.2); Exhibit C – Form of Escrow Agreement; Exhibit D – Form of Giordano, Halleran & Ciesla, P.C. Legal Opinion; Exhibit E – Proposed Public Announcement; and Exhibit F – Form of Lock-Up Agreement, incorporated by reference to Exhibit 10.43 to the Current Report on Form 8-K filed with the SEC on March 6, 2008.

10.39	Common Stock Purchase Warrant, dated August 25, 2008, issued to Dwight Lane Capital, LLC, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on August 27, 2009.

10.40	Common Stock Purchase Warrant, dated August 25, 2008, issued to Marc W. Dutton, incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on August 27, 2009.

10.41	Subscription Agreement, dated as of June 23, 2009, by and among BigString and Whalehaven Capital Fund Limited, Alpha Capital Anstalt and Excalibur Special Opportunities LP, including Exhibit B – Form of Common Stock Purchase Warrant. Upon the request of the Securities and Exchange Commission, BigString agrees to furnish copies of each of the following schedules and exhibits: Schedule 5(a) – Subsidiaries; Schedule 5(d) – Additional Issuances/Capitalization; Schedule 5(f) – Conflicts; Schedule 5(q) – Undisclosed Liabilities; Schedule 5(v) – Transfer Agent; Schedule 8 – Finder’s Fee; Schedule 9(s) – Lockup Agreement Providers; Exhibit A – Form of Convertible Note (included as Exhibit 4.2); Exhibit C – Form of Escrow Agreement; Exhibit D – Form of Giordano, Halleran & Ciesla, P.C. Legal Opinion; Exhibit E – Proposed Public Announcement; and Exhibit F – Form of Lock-Up Agreement, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on June 29, 2009.

E-4

Index

31.1	Section 302 Certification of Chief Executive Officer.

31.2	Section 302 Certification of Chief Financial Officer.

32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.

32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.

E-5

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