<DOCUMENT>
<TYPE>424B3
<SEQUENCE>1
<FILENAME>form424b3-87947_bsgc.txt
<DESCRIPTION>424B3
<TEXT>
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-143793
BigString Corporation
PROSPECTUS SUPPLEMENT
Number 1
to
Prospectus dated November 13, 2007
of
BIGSTRING CORPORATION
18,524,866 Shares of Common Stock
---------------------------------------------------
This prospectus supplement supplements the prospectus dated November 13, 2007,
relating to the offer and sale by certain persons who are or may become
stockholders of BigString Corporation of up to 18,524,866 shares of BigString's
common stock. We are not selling any of the shares in this offering and
therefore will not receive any proceeds from the offering.
This prospectus supplement is part of, and should be read in conjunction with,
the prospectus dated November 13, 2007. This prospectus supplement is qualified
by reference to the prospectus, except to the extent the information in this
prospectus supplement updates and supersedes the information contained in the
prospectus. The primary purpose of this prospectus supplement is to (i) notify
stockholders that beginning November 20, 2007 and continuing through January 15,
2008, the exercise price of the warrants held by Whalehaven Capital Fund
Limited, Alpha Capital Anstalt, Chestnut Ridge Partners LP, Iroquois Master Fund
Ltd. and Penn Footwear has been reduced from $0.30 per share to $0.10 per share,
in order to encourage such holders to exercise the warrants, thereby providing
BigString Corporation with an additional source of income to continue funding
its operations; (ii) update certain financial information of BigString
Corporation to September 30, 2007; (iii) notify stockholders that BigString
Corporation has launched a new application that enables Facebook users to send
messages and pictures which can be programmed to self-destruct at a specific
time; and (iv) notify stockholders that BigString Corporation has introduced a
"private label" partnership program that allows social networking and certain
other websites to offer BigString Corporation's email system to their respective
user bases.
This prospectus supplement includes the attached (i) Quarterly Report on Form
10-QSB for the three months ended September 30, 2007, with exhibits, which was
filed with the Securities and Exchange Commission on November 14, 2007, (ii)
Current Report on Form 8-K, with exhibit, which was filed with the Securities
and Exchange Commission on November 15, 2007; and (iii) Current Report on Form
8-K, with exhibit, which was filed with the Securities and Exchange Commission
on November 19, 2007.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities being offered through
the prospectus dated November 13, 2007, or determined if this prospectus
supplement is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus supplement is November 20, 2007
<page>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 2007
[_] TRANSITION REPORT UNDER 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 small business issuer as specified in its charter)
Delaware 20-0297832
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3 Harding Road, Suite E, Red Bank, New Jersey 07701
---------------------------------------------------
(Address of principal executive offices)
(732) 741-2840
------------------------
(Issuer's telephone number, including area code)
--------------------------------------------------------------------------------
(Former name, former address and formal fiscal year,
if changed since last report)
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes [_] No [X]
As of November 14, 2007, there were 47,367,125 shares of the Issuer's Common
Stock, par value $0.0001 per share, outstanding.
Transitional Small Business Disclosure Format (check one):
Yes [_] No [X]
<page>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information included in this Quarterly Report on Form 10-QSB 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 (the "SEC") from time to time, including our registration statement
on Form SB-2 (Registration No. 333-143793), filed with the SEC on June 15, 2007,
and the subsequent amendments and supplements thereto.
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-QSB.
<page>
BIGSTRING CORPORATION
INDEX TO FORM 10-QSB
--------------------
PART I. FINANCIAL INFORMATION PAGE
------- --------------------- ----
Item 1. Financial Statements .................................................1
Consolidated Balance Sheets as of September 30, 2007 (unaudited)
and December 31, 2006 ................................................2
Consolidated Statements of Operations (unaudited)
for the three and nine months ended September 30, 2007 and 2006
and the period October 8, 2003 (Date of Formation) through
September 30, 2007 ...................................................3
Consolidated Statements of Stockholders' Equity (unaudited)
for the nine months ended September 30, 2007 and the period
October 8, 2003 (Date of Formation) through September 30, 2007 .......4
Consolidated Statements of Cash Flows (unaudited)
for the nine months ended September 30, 2007 and 2006
and the period October 8, 2003 (Date of Formation) through
September 30, 2007 ...................................................6
Notes to Unaudited Consolidated Financial Statements .................7
Item 2. Management's Discussion and Analysis
or Plan of Operation ................................................23
Item 3. Controls and Procedures .............................................31
PART II. OTHER INFORMATION
-------- -----------------
Item 1. Legal Proceedings ...................................................32
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds .........32
Item 3. Defaults Upon Senior Securities .....................................32
Item 4. Submission of Matters to a Vote of Security Holders .................32
Item 5. Other Information ...................................................32
Item 6. Exhibits ............................................................32
Signatures ...................................................................33
Index of Exhibits ...........................................................E-1
<page>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
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-KSB for
the year ended December 31, 2006 of BigString Corporation ("BigString").
The results of operations for the three and nine months ended September 30,
2007 and 2006 are not necessarily indicative of the results of the entire fiscal
year or for any other period.
1
<page>
BIGSTRING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(A DEVELOPMENT STAGE COMPANY)
<TABLE>
<CAPTION>
September 30, 2007 December 31, 2006
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 167,824 $ 517,074
Accounts receivable - net of allowance of $100 and $0 1,954 1,736
Prepaid expenses and other current assets 2,199 4,625
------------ ------------
Total current assets 171,977 523,435
Property and equipment - net 175,723 214,612
Intangible assets - net 2,167,042 2,979,451
Other assets 202,907 8,872
------------ ------------
TOTAL ASSETS $ 2,717,649 $ 3,726,370
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 264,981 $ 83,179
Accrued expenses 41,761 125,179
Unearned revenue 11,907 4,681
------------ ------------
Total current liabilities 318,649 213,039
Long-term liabilities:
Long-term debt 218,972 --
------------ ------------
TOTAL LIABILITIES 537,621 213,039
Stockholders' equity:
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 47,367,125 and 46,935,125 shares, respectively 4,737 4,694
Additional paid in capital 11,228,229 9,980,762
Subscription receivable -- (16,250)
Deficit accumulated during the development stage (9,052,978) (6,455,915)
------------ ------------
Total stockholders' equity 2,180,028 3,513,331
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,717,649 $ 3,726,370
============ ============
</TABLE>
See notes to unaudited consolidated financial statements.
2
<page>
BIGSTRING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(A DEVELOPMENT STAGE COMPANY)
(Unaudited)
<TABLE>
<CAPTION>
Period
October 8, 2003
(Date of
Formation)
Three Months Ended Nine Months Ended Through
September 30, September 30, September 30,
2007 2006 2007 2006 2007
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $ 10,863 $ 3,843 $ 30,050 $ 9,902 $ 56,845
Costs and expenses(1):
Cost of revenues 21,874 74,729 90,994 148,704 384,075
Research and development 116,871 160,930 374,258 423,733 1,483,039
Sales and marketing 148,962 89,701 352,701 128,583 703,087
General and administrative 288,709 389,064 893,066 794,871 2,760,826
Amortization of intangibles 270,803 270,000 812,409 760,000 3,249,025
------------ ------------ ------------ ------------ ------------
Total costs and expenses 847,219 984,424 2,523,428 2,255,891 8,580,052
------------ ------------ ------------ ------------ ------------
Loss from operations (836,356) (980,581) (2,493,378) (2,245,989) (8,523,207)
Interest expense/income (66,379) 14,446 (103,685) 29,299 (49,771)
------------ ------------ ------------ ------------ ------------
Net loss $ (902,735) $ (966,135) $ (2,597,063) $ (2,216,690) $ (8,572,978)
============ ============ ============ ============ ============
Loss per common share - basic
and diluted $ (0.02) $ (0.02) $ (0.05) $ (0.05)
============ ============ ============ ============
Weighted average common shares
outstanding - basic and diluted 47,367,125 46,770,125 47,255,066 50,232,579
============ ============ ============ ============
(1)Stock-based compensation by
function included above
Cost of revenues $ -- $ 2,660 $ 903 $ 2,660 $ 29,541
Research and development 10,905 4,032 32,737 4,032 79,586
Sales and marketing 17,627 11,722 134,786 11,722 174,950
General and administrative 126,898 129,047 381,116 161,277 850,761
------------ ------------ ------------ ------------ ------------
Total stock-based compensation expense $ 155,430 $ 147,461 $ 549,542 $ 179,691 $ 1,134,838
============ ============ ============ ============ ============
</TABLE>
See notes to unaudited consolidated financial statements.
3
<page>
BIGSTRING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(A DEVELOPMENT STAGE COMPANY)
(Unaudited)
<TABLE>
<CAPTION>
Preferred Stock Common Stock
-------------- ---------------------- Additional
No. of No. of Paid-In Subscription Retained
Total Shares Amount Shares Amount Capital Receivable Earnings
----- ------ ------ ------ ------ ------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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)
----------- ---- ---- ----------- ----------- ----------- ----------- -----------
Sale of common stock
(at $0.25 per share) 227,500 -- -- 870,000 87 217,413 10,000 --
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 -- --
</TABLE>
4
<page>
BIGSTRING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(A DEVELOPMENT STAGE COMPANY)
(Continued)
<TABLE>
<CAPTION>
Preferred Stock Common Stock
-------------------- -------------------- Additional
No. of No. of Paid-In Subscription Retained
Total Shares Amount Shares Amount Capital Receivable Earnings
----------- --------- --------- ---------- --------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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 resulting from the
allocation of proceeds for
the beneficial conversion
feature of the 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)
-----------------------------------------------------------------------------------------------------------------------------------
Exercise of warrants (at $0.16,
$0.20 and $0.25 per share) 16,250 -- -- -- -- -- 16,250 --
Issuance of common stock
for consulting services
(valued at $0.33 and $0.50
per share) -- -- -- 432,000 43 (43) -- --
Stock-based compensation
expense 549,542 -- -- -- -- 549,542 -- --
Allocation to warrants from
sale of convertible
notes and warrants 31,320 -- -- -- -- 31,320 -- --
Beneficial conversion feature
of convertible notes 666,648 -- -- -- -- 666,648 -- --
Net loss (2,597,063) -- -- -- -- -- -- (2,597,063)
-----------------------------------------------------------------------------------------------------------------------------------
Balance, September 30, 2007 $ 2,180,028 400,000 $ 40 47,367,125 $ 4,737 $ 11,228,229 $ -- $(9,052,978)
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to unaudited consolidated financial statements.
5
<page>
BIGSTRING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(A DEVELOPMENT STAGE COMPANY)
(Unaudited)
<TABLE>
<CAPTION>
Period
October 8, 2003
Nine Months Ended (Date of Formation)
September 30, Through
2007 2006 September 30, 2007
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(2,597,063) $(2,216,690) $(8,572,978)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation of property and equipment 38,889 24,270 86,566
Amortization of intangibles 812,409 760,000 3,249,025
Amortization of other assets 123,833 -- 123,833
Stock-based compensation 549,542 179,691 1,134,838
Changes in operating assets and liabilities:
(Increase) in accounts receivable, net (218) (875) (1,954)
Decrease (increase) in prepaid expenses and other assets 5,458 16,889 (8,039)
Increase (decrease) in accounts payable 181,802 (2,908) 264,981
(Decrease) increase in accrued expenses and other liabilities (63,418) 16,774 58,695
Increase (decrease) in unearned revenue 7,226 (2,033) 11,907
----------- ----------- -----------
Net cash used in operating activities (941,540) (1,224,882) (3,653,126)
----------- ----------- -----------
Cash flows from investment activities:
Purchase of property and equipment -- (177,745) (262,290)
Acquisitions -- -- (13,000)
----------- ----------- -----------
Net cash used in investing activities -- (177,745) (275,290)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from issuance of convertible notes and warrants, net 576,040 -- 576,040
Proceeds from issuance of preferred stock, net -- 1,860,000 1,860,000
Proceeds from exercise of common stock warrants and
issuance of common stock 16,250 -- 2,060,200
Payments for redemption of common stock -- (400,000) (400,000)
----------- ----------- -----------
Net cash provided by financing activities 592,290 1,460,000 4,096,240
----------- ----------- -----------
Net (decrease) increase in cash (349,250) 57,373 167,824
Cash - beginning of period 517,074 820,857 --
----------- ----------- -----------
Cash - end of period $ 167,824 $ 878,230 $ 167,824
=========== =========== ===========
Supplementary information:
Details of acquisitions:
Fair value of assets acquired $ -- $ -- $ 2,790
Fair value of liabilities assumed -- -- (5,857)
Intangibles -- 600,000 5,416,067
----------- ----------- -----------
Common stock issued to effect acquisition $ -- $ 600,000 $ 5,400,000
=========== =========== ===========
Cash paid to effect acquisition $ -- $ -- $ 13,000
=========== =========== ===========
Stock-based compensation:
Common stock issued for services $ 455,249 $ 142,360 $ 734,777
Common stock options issued for services 60,471 18,541 146,944
Common stock warrants issued for services 33,822 18,790 253,117
----------- ----------- -----------
$ 549,542 $ 179,691 $ 1,134,838
=========== =========== ===========
</TABLE>
See notes to unaudited consolidated financial statements.
6
<page>
BIGSTRING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 AND THE
PERIOD OCTOBER 8, 2003 (DATE OF FORMATION) THROUGH SEPTEMBER 30, 2007
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
---------------------
The consolidated balance sheet as of September 30, 2007, 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, 2006 was derived from audited financial statements. The results
of operations for the three and nine months ended September 30, 2007 are not
necessarily indicative of the results to be expected for the year ending
December 31, 2007.
These Notes to Unaudited Consolidated Financial Statements should be read in
conjunction with the consolidated financial statements and related notes
included in our Annual Report on Form 10-KSB for the year ended December 31,
2006 which was filed with the SEC on April 2, 2007.
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. BigString Interactive is currently
BigString's only operating subsidiary.
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
subsidiaries, all of which are wholly-owned subsidiaries. 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
7
<page>
BIGSTRING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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 September 30, 2007 and December 31, 2006, cash equivalents
approximated $163,000 and $510,000, respectively.
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 established financial institutions.
Online service revenues consist primarily of prepaid electronic commerce and
subscription fees billed and paid in advance.
Accounts receivable are typically unsecured and are primarily derived from
revenues earned from customers in the United States, Canada, Europe and Asia.
Advertising revenues generated through two advertising services firms accounted
for 16% and 14% of our revenues for the nine months ended September 30, 2007.
One advertising services firm accounted for 22% of our revenues for the nine
months ended September 30, 2006.
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."
BigString recognizes online service revenue over the period that services are
provided. Other revenues, which consist principally of electronic commerce and
advertising revenues, as well as data network service revenues, are recognized
as the services are performed. BigString recognizes these revenues as such
because the services have been provided, the fees are fixed or determinable, and
collectibility is reasonably assured. Unearned revenue consists primarily of
prepaid electronic commerce and annual prepaid subscription fees billed in
advance.
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.
8
<page>
BIGSTRING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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 as 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. Reserves
at September 30, 2007 and December, 31 2006 were $100 and $0, 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.
STOCK-BASED COMPENSATION
------------------------
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. 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 modified prospective 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. For the nine months ended September 30, 2007 and 2006,
BigString recorded compensation expense of $455,249 and $142,360, respectively,
in connection with the issuance of these shares. For the period October 8, 2003
(Date of Formation) through September 30, 2007, BigString recorded compensation
expense of $734,777 in connection with the issuance of these shares.
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 nine
months ended September 30, 2007 and 2006, BigString recorded compensation
expenses of $33,822 and $18,790, respectively, associated with issuances of
stock purchase warrants. For the period October 8, 2003 (Date of Formation)
through September 30, 2007, BigString recorded compensation expense of $253,117
in connection with the issuance of stock purchase warrants for services.
BigString also issues stock options to purchase common stock to employees,
directors and vendors as stock-based compensation. The fair values of the stock
options are estimated on the date of grant
9
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BIGSTRING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
using the Black-Scholes option-pricing model. For the nine months ended
September 30, 2007 and 2006, BigString recorded compensation expense of $60,471
and $18,541, respectively. For the period October 8, 2003 (Date of Formation)
through September 30, 2007, BigString recorded compensation expense of $146,944.
BigString did not grant stock options prior to 2006.
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.
The principal items giving rise to deferred taxes are timing differences between
book and tax amortization of intangible assets and other expenditures.
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.
All research and development for the nine months ended September 30, 2007 and
2006 was performed internally for the benefit of BigString. BigString does not
perform such activities for others.
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.
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 outstanding
preferred stock, warrants and options, have been excluded from the computation,
as their effect is antidilutive.
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.
10
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BIGSTRING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
INTANGIBLES
-----------
In September 2001, the FASB issued SFAS No. 142, "Goodwill and other Intangible
Assets." SFAS No. 142 specifies the financial accounting and reporting for
acquired goodwill and other intangible assets. Goodwill and other
indefinite-lived intangible assets are no longer amortized, but are reviewed for
impairment at least annually.
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 payable and
accrued expenses, the carry amount approximates fair value because of the short
maturities of such instruments.
NEW FINANCIAL ACCOUNTING STANDARDS
----------------------------------
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities," which permits entities to choose to
measure many financial instruments and certain other items at fair value that
are not currently required to be measured at fair value. SFAS No. 159 will be
effective for BigString on January 1, 2008. BigString is currently evaluating
the impact of adopting SFAS No. 159 on its 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 new statement 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. SFAS No. 157 also
emphasizes that fair value is a market-based measurement, not an entity-specific
measurement, and sets out a fair value hierarchy with the highest priority being
quoted prices in active markets. Under SFAS No. 157, fair value measurements are
disclosed by level within that hierarchy. While SFAS No. 157 does not add any
new fair value measurements, it does change current practice. SFAS No. 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. BigString does
not believe that the adoption of SFAS No. 157 will have a material impact on its
consolidated financial position, cash flows or results of operations.
2. GOING CONCERN
For the nine months ended September 30, 2007, BigString's consolidated financial
statements reflect a net loss of $2,597,063, net cash used in operations of
$941,540, working capital deficit of $146,672, a deficit accumulated during the
development stage of $9,052,978 and an accumulated deficit of $8,572,978. These
matters raise doubt about the ability of BigString to continue as a going
concern. BigString's 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
11
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BIGSTRING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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.
3. ACQUISITIONS
On December 11, 2006, BigString completed the acquisition of the website,
DailyLOL.com, 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, and
accordingly, pro forma summary results have not been included.
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. 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, and
accordingly, pro forma summary results have not been included.
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.
12
<page>
BIGSTRING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
4. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
September 30, December, 31,
2007 2006
-------- --------
Computer equipment and internal software $253,115 $253,115
Furniture and fixtures 8,600 8,600
-------- --------
261,715 261,715
Less accumulated depreciation 85,992 47,103
-------- --------
$175,723 $214,612
======== ========
Depreciation expense for the three months ended September 30, 2007 and 2006 was
$12,963 and $12,208, respectively.
Depreciation expense for the nine months ended September 30, 2007 and 2006, and
for the period October 8, 2003 (Date of Formation) through September 30, 2007,
was $38,889, $24,270 and $86,566, respectively.
5. GOODWILL AND OTHER INTANGIBLES
Other intangibles consist of patent and trademark fees, logos, source codes and
websites. Amounts assigned to these intangibles have been 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. Amortization expense was $270,803 and $270,000
for the three months ended September 30, 2007 and 2006, respectively.
Amortization expense was $812,409, $760,000 and $3,249,025 for the nine months
ended September 30, 2007 and 2006, and for the period October 8, 2003 (Date of
Formation) through September 30, 2007, respectively.
Other intangible assets consist of the following:
September 30, 2007 December, 31, 2006
----------- -----------
Patent application, trademark,
logos, websites and source codes $ 5,416,067 $ 5,416,067
Accumulated amortization (3,249,025) (2,436,616)
----------- -----------
$ 2,167,042 $ 2,979,451
=========== ===========
Should the patent for BigString's Universal Recallable, Erasable and Timed
Delivery Email not be issued, BigString will write-off the unamortized amount of
the patent intangible amount. Estimated remaining amortization expenses for
intangible assets for the next five years, are as follows:
Estimated
Remaining
Years Ending Amortization
December 31, Expense
------- -----------
2007 $ 270,804
2008 1,083,213
2009 642,933
2010 122,600
2011 47,492
13
<page>
BIGSTRING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
6. INTEREST EXPENSE/INCOME
The components of interest expense/income were as follows:
<TABLE>
<CAPTION>
Period
Three Months Ended Nine Months Ended October 8, 2003
September 30, September 30, (Date of
Formation)
Through
September 30,
2007 2006 2007 2006 2007
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Interest income $ 3,785 $ 14,446 $ 13,255 $ 29,299 $ 67,169
Interest expense (70,164) -- (116,940) -- (116,940)
--------- --------- --------- --------- ---------
Interest expense/income $ (66,379) $ 14,446 $(103,685) $ 29,299 $ (49,771)
========= ========= ========= ========= =========
</TABLE>
7. 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.
At September 30, 2007, BigString has a net operating loss carry-forward of
approximately $7.1 million, which expires in various years through 2028.
Deferred income taxes reflect the impact of net operating carry-forwards. In
recognition of the uncertainty regarding the ultimate amount of income tax
benefits to be derived from BigString's net operating loss carry-forward,
BigString has recorded a valuation allowance for the entire amount of the
deferred tax asset.
8. LONG-TERM DEBT
On May 1, 2007, BigString entered into a financing arrangement with several
accredited financing parties. Proceeds from the financing will be used to
support ongoing operations and the advancement of BigString's technology, and
fund marketing and the development of its business.
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 "Subscribers"),
the 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 $576,000 after transaction fees of
approximately $224,000. BigString accounted for the convertible notes 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 Included to, and Potentially Settled in, a
Company's Own Stock." 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. For the
three months ended September 30, 2007, $55,554, $2,610 and $12,000 were included
in interest expense for the amortization of the beneficial conversion feature,
amortization of the convertible note discount, and accrued debt expense,
respectively. For the nine months ended September 30, 2007, $92,590, $4,350 and
$20,000 were included in interest expense for the amortization of the beneficial
conversion feature, amortization of the convertible note discount, and accrued
debt expense, respectively.
14
<page>
BIGSTRING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
As provided for in the Subscription Agreement, the Subscribers agreed to
purchase additional convertible notes in the aggregate principal amount of
$800,000 and warrants to purchase up to 1,777,779 shares of BigString's common
stock, for a total subscription of $1,600,000, provided that we registered the
shares of our common stock underlying the additional convertible notes and
warrants by September 13, 2007 and met certain other closing conditions. Because
we were unable to register the shares of common stock underlying the additional
convertible notes and warrants by September 13, 2007, the Subscribers have not
purchased the additional convertible notes and warrants, and we are required to
pay liquidated damages equal to two percent of the purchase price of the
outstanding convertible notes, or $16,000, for the first thirty days following
September 13, 2007, and one percent of the purchase price of the outstanding
convertible notes, or $8,000, for each thirty days thereafter, until the shares
of common stock underlying the outstanding convertible notes are registered.
BigString must pay the liquidated damages in cash. Effective November 13, 2007,
the shares of common stock underlying the outstanding convertible notes and
warrants were registered. As of that date, BigString owed $24,267 in liquidated
damages relating to the outstanding convertible notes.
Each convertible note has a term of three 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 $0.18 per share. 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.
BigString paid Gem Funding LLC (the "Finder") $64,000 and issued a warrant to
purchase 213,333 shares of 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 Subscribers.
9. COMMON STOCK
On July 18, 2005, BigString amended its Certificate of Incorporation to, among
other things, (i) change its name from Recall Mail Corporation to BigString
Corporation, and (ii) 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.
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.
15
<page>
BIGSTRING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
During 2005, BigString issued 50,000 shares of common stock valued at $0.25 per
share for business advisory services.
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.
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 common stock.
The market value of BigString's common stock at May 19, 2006 was $0.80 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.
10. 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
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 common stock. The warrants are convertible into
shares of common stock at an exercise price per share of $1.25 (market price
$0.80 per share). 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,
"Accounting for Derivative Instruments and Hedging Activities," and related
interpretations including EITF Issue No. 00-19, "Accounting for Derivative
Financial Instruments Included to, and Potentially Settled in, a Company's Own
Stock." 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 convertible preferred stock and credited to additional paid-in-capital.
The recorded discount of $480,000 resulting from allocation
16
<page>
BIGSTRING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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.
11. SHARE-BASED COMPENSATION
On January 1, 2006, BigString adopted SFAS No. 123(R), "Share-Based Payment,"
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, "Share-Based Payment." SAB No. 107 expresses 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 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 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 the 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 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 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 rated 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 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 common stock with a per share
exercise price of $0.20. Each of these warrants is due to expire on September
23, 2010 and the grants are 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 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
17
<page>
BIGSTRING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
47%; risk free rated return of 5%; and expected life of 2 years.
The weighted average fair value of these warrants was $0.07 per share.
On May 2, 2006, BigString granted warrants to purchase shares of 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 will be expensed over a period of 36 months. For the nine
months ended September 30, 2007, BigString expensed $33,822 in connection with
these services, and the balance of $71,413 of total unrecognized compensation
cost is 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
rated 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 rated return of 4.5%; and expected life of 2.6 years. The
weighted average fair value of these warrants was $0.08 per share.
As discussed in Note 8, on May 1, 2007, BigString granted warrants to purchase
up to 1,991,112 shares of BigString's common stock. Each of the warrants issued
to the Subscribers and the Finder, respectively, have 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. A total of $31,320 of the
purchase price for the convertible notes and warrants was allocated to the
warrants based on fair value.
The number of warrants outstanding as of January 1, 2007 and changes to such
number during the nine months ended September 30, 2007 is presented below:
<TABLE>
<CAPTION>
Weighted
Weighted Average
Average Remaining Aggregate
Exercise Contractual Intrinsic
Shares Price Term Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Warrants outstanding at January 1, 2007 3,943,545 $ 0.52 5.2 $1,501,939
========== ========== ========== ==========
Warrants granted 1,991,112 0.30
Warrants exercised -- --
Warrants cancelled/forfeited/expired (50,000) 0.25
---------- ----------
Warrants outstanding at September 30, 2007 5,884,657 $ 0.45 4.6 $ --
========== ========== ========== ==========
Warrants exercisable at September 30, 2007 5,884,657 $ 0.45 4.6 $ --
========== ========== ========== ==========
</TABLE>
The aggregate intrinsic value in the table above represents the total pre-tax
intrinsic value (the aggregate difference between the closing stock price of
BigString's common stock on September 28, 2007, the last trading day closest to
our period end date of September 30, 2007, and the exercise price for
in-the-money warrants) that would have been received by the warrant holders if
all in-the-money warrants had been exercised on September 28, 2007.
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BIGSTRING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
No warrants were exercised during the nine months ended September 30, 2007 and
2006. Cash received during the nine months ended September 30, 2007 and 2006
from the exercise of warrants was $16,250 and $0, respectively. For the period
October 8, 2003 (Date of Formation) through September 30, 2007, a total of
210,000 shares of BigString's common stock were purchased upon the exercise of
warrants.
Warrants granted in the nine months ended September 30, 2007 and 2006 were
1,991,112 and 1,450,000, respectively. For the period October 8, 2003 (Date of
Formation) through September 30, 2007, warrants to purchase a total of 6,144,657
shares of BigString's common stock were granted.
During the nine months ended September 30, 2007 and the period October 8, 2003
(Date of Formation) through September 30, 2007, 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. No warrants were cancelled,
forfeited or expired during the nine months ended September 30, 2006.
Equity Incentive Plan and Stock Options Issued to Consultant:
At the 2006 Annual Meeting of Stockholders, the BigString Corporation 2006
Equity Incentive Plan (the "Equity Incentive Plan") was approved by a majority
of BigString's stockholders. Under the Equity Incentive Plan, incentive and
nonqualified stock options and rights to purchase 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 common stock to Kieran Vogel in connection with
his participation in OurPrisoner, the interactive Internet television program
available through the entertainment portal being operated by BigString's
wholly-owned subsidiary, BigString Interactive. As of December 16, 2006, Mr.
Vogel completed his obligation in connection with his participation in the
OurPrisoner program and subsequently entered into a contractual relationship
with BigString. 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 common stock under its Equity Incentive Plan to certain of
BigString's employees. Incentive stock options to purchase 1,450,000 shares of
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 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 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 common stock under its Equity Incentive Plan to BigString's
newly appointed Executive Vice President, Chief Financial Officer and Treasurer.
When vested, 400,000 shares of common stock will be eligible for purchase at the
per share price equal to $0.24; 600,000 shares of common stock will be eligible
for purchase at $0.50 per share; 400,000 shares of common stock will be eligible
for purchase at $.90 per share; and 400,000 shares of 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 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.
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BIGSTRING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended September 30, 2007 and 2006 and the period October 8,
2003 (Date of Formation) through September 30, 2007, BigString recorded
stock-based option compensation expense of $60,471, $18,541 and $146,944,
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, 2007 and changes to
such number during the nine months ended September 30, 2007 is presented below:
<TABLE>
<CAPTION>
Weighted
Average
Weighted Remaining
Average Contractual Aggregate
Shares Exercise Price Term Intrinsic Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Options outstanding at January 1, 2007 5,595,100 $ 0.50 7.8 $1,763,195
========== ========== ========== ==========
Options granted -- --
Options exercised -- --
Options cancelled/forfeited/expired (245,000) 0.50
---------- ----------
Options outstanding at September 30, 2007 5,350,100 $ 0.50 7.0 $ --
========== ========== ========== ==========
Options exercisable at September 30, 2007 3,081,350 $ 0.35 5.5 $ --
========== ========== ========== ==========
</TABLE>
The aggregate intrinsic value in the table above represents the total pretax
intrinsic value (the aggregate difference between the closing stock prices of
BigString's common stock on September 28, 2007, the last trading day closest to
our period end date of September 30, 2007, and the exercise price for
in-the-money options) that would have been received by the option holders if all
in-the-money options had been exercised on September 28, 2007.
No options were exercised, and no cash received from option exercises and
purchases of shares for the nine months ended September 30, 2007 and 2006 and
the period October 8, 2003 (Date of Formation) through September 30, 2007.
No options were granted in the nine months ended September 30, 2007. For the
period October 8, 2003 (Date of Formation) through September 30, 2007, options
to purchase a total of 5,595,100 shares of BigString's common stock were
granted.
For the nine months ended September 30, 2007 and the period October 8, 2003
(Date of Formation) through September 30, 2007, options to purchase a total of
245,000 shares of BigString's common stock were forfeited with an aggregate
intrinsic value of $0 at the date of expiration. No options were cancelled,
forfeited or expired during the nine months ended September 30, 2006.
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)
and SAB No. 107. Because option-pricing models require the use of subjective
assumptions, changes in these assumptions can materially affect the fair value
of the options. We have limited relevant historical information to support the
expected exercise behavior because our stock has been publicly traded only since
May 1, 2006.
20
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BIGSTRING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
12. COMMITMENTS AND CONTINGENCIES
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 $30,104 and $74,323 for the nine months ended September 30,
2007 and 2006, and $133,608 for the period October 8, 2003 (Date of Formation)
through September 30, 2007, including $96,000 as share-based compensation.
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 $290,071, $161,150 and $547,913 for the nine months ended
September 30, 2007 and 2006 and the period October 8, 2003 (Date of Formation)
through September 30, 2007, respectively.
On February 26, 2007, BigString entered into a six month agreement for
consulting services to be provided by CEOcast, Inc. BigString agreed to issue
140,000 shares of common stock to CEOcast, Inc. Total investor relations
expenses, including the services of CEOcast, Inc., were $129,912, $50,000 and
$185,911 for the nine months ended September 30, 2007 and 2006 and the period
October 8, 2003 (Date of Formation) through September 30, 2007, respectively,
including $70,000 as share-based compensation.
On April 27, 2007, BigString entered into an agreement with CAC, Inc., effective
May 1, 2007. The minimum term of the agreement is four months. 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. Total
online marketing expenses, including the services of CAC, Inc. and CAC, Inc.'s
recommended vendors, were approximately $188,000 for the nine months ended
September 30, 2007 and the period October 8, 2003 (Date of Formation) through
September 30, 2007, including $33,000 as share-based compensation.
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 revenues, to its marketing affiliates. As of September 30, 2007
and 2006, 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 September 30, 2007, BigString did not have any relationships with
unconsolidated entities or financial partnerships, such as structured finance or
special purpose entities, which would have been
21
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BIGSTRING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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.
13. SUBSEQUENT EVENTS
On June 15, 2007, BigString filed a registration statement on Form SB-2 (File
No. 333-143793) with the SEC. BigString filed the registration statement for
purposes of registering shares of its common stock issuable upon the conversion
of certain convertible notes and upon the exercise of certain warrants held by
Whalehaven Capital Fund Limited, Alpha Capital Anstalt, Chestnut Ridge Partners
LP, Iroquois Master Fund Ltd. and Penn Footwear, as well as shares of
BigString's common stock previously issued by BigString in several private
placements. See Note 8. The registration statement was subsequently declared
effective by the SEC on November 13, 2007.
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Item 2. Management's Discussion and Analysis or Plan of Operation
---------------------------------------------------------
We have provided below information about BigString's financial condition
and results of operations for the three and nine months ended September 30, 2007
and 2006, respectively. This information should be read in conjunction with
BigString's consolidated financial statements for the three and nine months
ended September 30, 2007 and 2006, and the period October 8, 2003 (Date of
Formation) through September 30, 2007, including the related notes thereto,
which are included on pages 1 through 22 of this report.
Background
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, together
with Email Emissary, incorporated in the State of Oklahoma on August 7, 2003, 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. Email Emissary was later 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 the
Financial Accounting Standards Board Statement No. 7, Accounting and Reporting
for Development Stage Companies. 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.
Overview
BigString is a technology firm with a global client base, focused on
providing a superior online communications experience for our users. Our
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. We serve three main markets: free and paid email accounts
for individuals, professional business email solutions, and email marketing
services.
Our development efforts in 2006 were primarily focused on the redesign of
our email system, which was launched in December 2006 as BigString Beta 2.0.
This release was a significant revision to the application to allow dynamic
scalability, feature upgrades and improved user interfaces. Our development
efforts in 2007 have focused primarily on improving the overall customer
experience with feature upgrades, such as our Triple Layer Secure Email, and
development of advanced user interfaces. We also developed a third core product,
email marketing services, to complement our consumer email services and
professional business email solutions.
In order for us to grow our business and increase our revenue, it is
critical for us to attract and retain new customers. For us to increase our
revenue, we need to establish a large customer base. A large customer base of
our free email services provides us with more opportunities to sell our premium
services, which could result in increased revenue. In addition, a large customer
base may allow us to increase our advertising rates and attract other Internet
based advertising and marketing firms to advertise and form marketing
affiliations with us, which could result in increased advertising revenues.
We commenced our online marketing efforts in May 2007, with the hiring of
an experienced online marketing firm, CAC, Inc. and CAC, Inc.'s recommended
vendors. Online marketing efforts include search engine optimization, viral
video production, copywriting, online
23
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promotions, and posts of blogs and videos to online social networking
communities. The efforts through September 30, 2007 included further development
of our marketing infrastructure base, promotions, advertising and public
relations.
During the three months ended September 30, 2007, we increased advertising
expenditures related to promotional messages while online marketing and public
relations expenses remained at approximately the same level as the three months
ended June 30, 2007. Our growth of new member sign-ups increased 63% for the
three months ended September 30, 2007, as compared to the three months ended
June 30, 2007. In addition, during the three months ended September 30, 2007,
member sign-ups from viral activity (non-promotional) increased by 71% over the
three months ended June 30, 2007. While the growth of new member sign-ups was
predominately driven by increased advertising, the number of customers acquired
for every marketing dollar spent (advertising and online marketing efforts)
increased 29% for the three months ended September 30, 2007, as compared to the
three months ended June 30, 2007.
Other certain criteria we review to measure our performance are set forth
below:
o the number of first time and repeat users of our email services;
o the number of pages of our website viewed by a user;
o the number of free and/or paid accounts for each service;
o the number of users of our free email services who purchase one of our
premium product packages;
o the length of time between the activation of a free account and the
conversion to a paid account;
o the retention rate of customers, including the number of account
closures and the number of refund requests;
o the acquisition cost per user for each of our email services;
o the cost and effectiveness for each of our promotional efforts;
o the revenue and effectiveness of advertisements we serve; and
o the revenue, impressions, clicks and actions per user.
In 2006, we formed BigString Interactive and launched a new interactive
entertainment portal. We began our programming initiative in June 2006 with the
debut of OurPrisoner, BigString's interactive Internet television reality
program. OurPrisoner concluded its six month run in December 2006. The most
popular video clips were archived and continue to be accessed at
www.OurPrisoner.com. OurPrisoner allowed us to develop core video technology
that has been incorporated into our enterprise email offerings. We also plan to
leverage our experience with OurPrisoner in future BigString Interactive
programs.
In December 2006, BigString launched a beta version of FindItAll.com, a
video and photo search engine which BigString had acquired in May 2006.
FindItAll.com, in conjunction with the Pixsy Media Search platform, provides
Internet users a comprehensive search facility for online viral videos,
television programs, news events, movies and movie trailers, music videos and
other similar media. Also in December 2006, BigString acquired DailyLOL.com, a
viral video website that provides humorous videos, games and pictures.
DailyLOL.com was launched as part of the company's interactive entertainment
portal.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of
operations are based upon BigString's consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States of America. The preparation of these 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
24
<page>
date of the 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.
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 the SAB No. 104, "Revenue Recognition
in Financial Statements."
BigString recognizes online service revenue over the period that services
are provided. Other revenues, which consist principally of electronic commerce
and advertising revenues, as well as data network service revenues, are
recognized as the services are performed. BigString recognizes these revenues as
such because the services have been provided, the fees are fixed or
determinable, and collectibility is reasonably assured. Unearned revenue
consists primarily of prepaid electronic commerce and annual prepaid
subscription fees billed in advance.
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 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.
STOCK-BASED COMPENSATION. BigString has one stock-based compensation plan
under which incentive and nonqualified stock options and rights to purchase
stock may be granted to employees, directors and other eligible participants.
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 modified prospective 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."
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<page>
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 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.
INTANGIBLE ASSETS. In June 2001, the FASB issued SFAS No. 142, "Goodwill
and other Intangible Assets." SFAS No. 142 specifies the financial accounting
and reporting for acquired goodwill and other 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, "Accounting for Derivative Instruments and Hedging Activities," and related
interpretations, including EITF 00-19, "Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Company's Own Stock."
Results of Operations
For the Three and Nine Months Ended September 30, 2007 and 2006
NET LOSS. For the three months ended September 30, 2007, our net loss was
$902,735, as compared to a $966,135 net loss for the same period in 2006. The
$63,400 decrease in net loss was primarily attributable to a $7,020 increase in
revenue, a $100,355 decrease in general and administrative expenses, a $52,855
decrease in cost of revenues and a $44,059 decrease in research and development,
partially offset by a $59,261 increase in sales and marketing expenses and a
$80,825 change in net interest expense/income.
For the nine months ended September 30, 2007, our net loss was $2,597,063,
as compared to a $2,216,690 net loss for the same period in 2006. The $380,373
increase in net loss was primarily attributable to a $224,118 increase in sales
and marketing expenses, a $98,195 increase in general and administrative
expenses, a $52,409 increase in amortization of intangibles, and a
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$132,984 change in net interest expense/income, partially offset by a $20,148
increase in revenue, a $57,710 decrease in cost of revenues and a $49,475
decrease in research and development expenses.
REVENUES. For the three months ended September 30, 2007, our total revenues
were $10,863, as compared to $3,843 in total revenues for the same period in
2006. Of the revenues generated for the three months ended September 30, 2007,
$7,215 was generated from the purchase of our services and $3,648 was generated
from advertisers, whereas for the three months ended September 30, 2006, $1,706
was generated from the purchase of our services and $2,139 was generated from
advertisers.
For the nine months ended September 30, 2007, our total revenues were
$30,050, as compared to $9,902 in total revenues for the same period in 2006. Of
the revenues generated for the nine months ended September 30, 2007, $17,720 was
generated from the purchase of our services and $12,330 was generated from
advertisers, whereas for the nine months ended September 30, 2006, $6,838 was
generated from the purchase of our services and $3,064 was generated from
advertisers.
Our advertising revenues are paid based on a mix of impressions, clicks and
actions. On a normalized impression basis, the average revenue per
paid-impression for the three months ended September 30, 2007 increased by 160%
over the three months ended June 30, 2007 and increased 379% from January 2007.
During the nine months ended September 30, 2007, BigString offered three
services for purchase: premium upgrades for individual accounts; professional
business email solutions; and email marketing services. Pre-paid purchases are
recognized as revenues as the services are performed. Total purchases increased
227% for the nine months ended September 30, 2007, as compared to the same
period in 2006. Changes in purchases for the nine months ended September 30,
2007, over the nine months ended September, 2006, for each service is as
follows: premium upgrade purchases increased by 39%; professional business email
solutions increased over 2,350% ; and email marketing services are new services
and did not have sales in the nine months ended September 30, 2006.
As of September 30, 2007, unearned revenue from the purchase of our
services increased to $11,907 from $3,031 at September 30, 2006 and $4,681 at
December 31, 2006.
EXPENSES. Operating expenses for the three months ended September 30, 2007
were $847,219, a $137,205 decrease from operating expenses of $984,424 incurred
in the same period in 2006. Operating expenses, excluding amortization,
depreciation and share-based compensation expenses, for the three months ended
September 30, 2007, decreased by $164,191 from the operating expenses, excluding
amortization, depreciation and share-based compensation expenses, from the same
prior year period.
o General and administrative: General and administrative expenses for
the three months ended September 30, 2007, were $288,709, as compared
to $389,064 for the same prior year period. The $100,355 decrease in
expenses was primarily attributable to reduced consulting, legal and
other professional expenses of $106,272.
o Sales and marketing: Sales and marketing expenses for the three months
ended September 30, 2007, were $148,962, as compared to $89,701 for
the same prior year period. The $59,261 increase in expenses was
primarily attributable to increased online marketing expenses of
$94,154 and increased advertising expenses of $26,711, partially
offset by an accrual of $68,000 for public relations services in
September 2006.
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o Amortization: Amortization expense for the three months ended
September 30, 2007, was $270,803, as compared to $270,000 for the same
prior year period. The $803 increase in expense was primarily
attributable to the increase in intangible assets related to the 2006
website acquisitions of FindItAll.com, AmericanMoBlog.com and
DailyLOL.com.
o Cost of revenues: Cost of revenues for the three months ended
September 30, 2007, was $21,874, as compared to $74,729 for the same
prior year period. The $52,855 decrease in cost was primarily
attributable to reduced staffing and associated overhead expenses.
o Research and development: Research and development expenses for the
three months ended September 30, 2007, were $116,871, as compared to
$160,930 for the same prior year period. The $44,059 decrease in
expenses was primarily attributable to reduced development staffing
and associated overhead costs.
Operating expenses for the nine months ended September 30, 2007 were
$2,523,428, a $267,537 increase over operating expenses of $2,255,891 incurred
in the same period in 2006. Operating expenses, excluding amortization,
depreciation and share-based compensation expenses, for the nine months ended
September 30, 2007, decreased by $196,235 from the operating expenses, excluding
amortization, depreciation and share-based compensation expenses, from the same
prior year period.
o General and administrative: General and administrative expenses for
the nine months ended September 30, 2007, were $893,066, as compared
to $794,871 for the same prior year period. The $98,195 increase in
expenses was primarily attributable an increase in non-cash
share-based compensation of $219,839, primarily for consultants, and
investor relations expenses of $79,912, partially offset by a decrease
in consulting, legal and other professional fees of $81,977 and rent
and other discretionary expenses.
o Sales and marketing: Sales and marketing expenses for the nine months
ended September 30, 2007, were $352,701, as compared to $128,583 for
the same prior year period. The $224,118 increase in expenses was
primarily attributable to 2007 marketing consultant expenses of
$187,954 and an increase in advertising expenses of $50,052.
o Amortization: Amortization expense for the nine months ended September
30, 2007, was $812,409, as compared to $760,000 for the same prior
year period. The $52,409 increase in expense was primarily
attributable to the increase in intangible assets related to the 2006
website acquisitions of FindItAll.com, AmericanMoBlog.com and
DailyLOL.com.
o Cost of revenues: Cost of revenues for the nine months ended September
30, 2007, was $90,994, as compared to $148,704 for the same prior year
period. The $57,710 decrease in cost was primarily attributable to
reduced staffing and associated overhead expenses.
o Research and development: Research and development expenses for the
nine months ended September 30, 2007, were $374,258, as compared to
$423,733 for the same prior year period. The $49,475 decrease in
expenses was primarily attributable to reduced development staffing
and associated overhead expenses.
INTEREST EXPENSE AND INCOME. Net interest expense was $66,379 for the three
months ended September 30, 2007, as compared to $14,446 of interest income for
the same prior year period. This change from interest income to interest expense
was primarily attributable to non-cash expenses of $55,554 for the accretion for
the beneficial conversion feature of the convertible notes recorded as
additional paid in capital, $12,000 for accrued debt for interest on the
convertible notes,
28
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and $2,610 for the amortization of the convertible note discount. Interest
income of $790 was earned for the three months ended September 30, 2007, as
compared to $14,446 earned for the same prior year period, due to smaller cash
balances maintained by BigString.
Net interest expense was $103,685 for the nine months ended September 30,
2007, as compared to $29,299 of interest income for the same prior year period.
This change from interest income to interest expense was primarily attributable
to non-cash expenses discussed above relating to the three months ended
September 30, 2007.
INCOME TAXES. No tax provision has been recorded for the three and nine
months ended September 30, 2007 and 2006 as a result of our accumulated
operating losses.
Liquidity and Capital Resources
Our operating and capital requirements have exceeded our cash flow from
operations as we have been building our business. Since inception through
September 30, 2007, we have expended $3,928,416 for operating and investing
activities, which has been primarily funded by investments of $4,096,240 from
our stockholders and convertible note holders. For the nine months ended
September 30, 2007, we expended $941,540 for operating and investing activities,
a decrease of $461,087 from the amount expended during the nine months ended
September 30, 2006.
Our cash balance as of September 30, 2007 was $167,824, which was a
decrease of $710,406 from our cash balance of $878,230 as of September 30, 2006.
This decrease to our cash balance related to operating and investment expenses
of $1,320,696, which included expenses associated with the development of our
products and services, marketing, the 2006 interactive promotional show,
OurPrisoner, and professional fees. These expenses were partially offset by
$610,290 raised by BigString through exercise of warrants and private placement
of convertible notes and warrants.
Management believes its current cash balance of $94,814 at November 7,
2007, is not sufficient to fund the minimum level of operations for the next
twelve months.
Our consolidated financial statements beginning on page 2 have been
prepared assuming we will continue as a going concern. As more fully explained
in Note 2 to our consolidated financial statements, we have a working capital
deficit and have incurred losses since operations commenced. Our continued
existence is dependent upon our ability to obtain needed working capital through
additional equity and/or debt financing and revenue to cover expenses as we
continue to incur losses. These uncertainties raise substantial doubt about our
ability to continue as a going concern. Our consolidated financial statements do
not include any adjustments that might result from the outcome of these
uncertainties should we be unable to continue as a going concern.
On May 1, 2007, we entered into a financing arrangement with Whalehaven
Capital Fund Limited, Alpha Capital Anstalt, Chestnut Ridge Partners, LP,
Iroquois Master Fund Ltd. and Penn Footwear, pursuant to which these Subscribers
purchased convertible notes in the aggregate principal amount of $800,000, which
notes are convertible into shares of our common stock and warrants to purchase
up to 1,777,779 shares of our common stock. Each convertible note has a term of
three 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 our common stock
at a conversion price of $0.18 per share. As provided for in the subscription
agreement, the Subscribers agreed to purchase at a second closing additional
convertible notes in the aggregate principal amount of $800,000 and warrants to
purchase up to 1,777,779 shares of our common stock, for a total subscription of
$1,600,000, provided that we registered the shares of our common stock
underlying the additional convertible notes and warrants by September 13, 2007
and
29
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met certain other closing conditions. Because we were unable to register the
shares of common stock underlying the additional convertible notes and warrants
by September 13, 2007, Whalehaven Capital Fund Limited, Alpha Capital Anstalt,
Chestnut Ridge Partners LP, Iroquois Master Fund Ltd. and Penn Footwear have not
purchased the additional convertible notes and warrants, and we are required to
pay liquidated damages equal to two percent of the purchase price of the
outstanding convertible notes, or $16,000, for the first thirty days following
September 13, 2007, and one percent of the purchase price of the outstanding
convertible notes, or $8,000, for each thirty days thereafter, until the shares
of common stock underlying the outstanding convertible notes are registered.
BigString must pay the liquidated damages in cash. Effective November 13, 2007,
the shares of common stock underlying the outstanding convertible notes and
warrants were registered. As of that date, BigString owed $24,267 in liquidated
damages relating to the outstanding convertible notes.
Based upon our current financial status, and assuming that the outstanding
convertible notes are not converted into shares of common stock, we will not be
able to pay the principal and interest on the convertible notes when they become
due.
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.
We recently received notice that our application for the State of New
Jersey's Technology Business Tax Certificate Program was approved by the New
Jersey Economic Development Authority, as indicated in the authority's monthly
minutes. This program allows certain, approved businesses to sell their unused
net operating loss carryover and unused research and development tax credits to
unaffiliated, profitable corporate taxpayers in the State of New Jersey.
We expect to receive net payments between $250,000 and $500,000 through the
program. A corporation has signed a commitment to buy a portion of our net
operating loss carryforwards and unused research and development tax credits.
Payment is anticipated in late December of this year.
We have completed significant development of our email service 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 discussed under
Results of Operations, we have reduced operating expenses, excluding
amortization, depreciation and share-based compensation expenses, by $164,191
and $196,235 for the three and nine months ended September 30, 2007,
respectively, as compared to the same prior year periods.
We expect to continue development on our email service and related service
offerings. We also expect sales, marketing and advertising expenses and cost of
revenues to increase as we promote and grow our email service and related
service offerings. However, our revenue and cash balance are insufficient to
fund the continued growth of our business, and, therefore, 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.
Our officers and directors have not, as of the date of this filing, loaned
any funds to BigString. There are no formal commitments or arrangements to
advance or loan funds to BigString or repay any such advances or loans.
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Item 3. Controls and Procedures
-----------------------
As required by Rule 13a-15 under the Exchange Act, as of the end of the
period covered by this Quarterly Report on Form 10-QSB, BigString carried out an
evaluation of the effectiveness of the design and operation of BigString's
disclosure controls and procedures. This evaluation was carried out under the
supervision and with the participation of BigString's management, including
BigString's President and Chief Executive Officer and BigString's Chief
Financial Officer, who concluded that BigString's disclosure controls and
procedures are effective. There has been no significant change in BigString's
internal controls during the last fiscal quarter that has materially affected,
or is reasonably likely to materially affect, BigString's internal control over
financial reporting.
Disclosure controls and procedures are controls and other procedures that
are designed to ensure that information required to be disclosed in BigString's
reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the SEC's rules
and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed in BigString's reports filed under the Exchange Act is accumulated and
communicated to management, including BigString's Chief Executive Officer and
Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
We are not a party to, and none of our property is the subject of, any
pending legal proceedings. To our knowledge, no governmental authority is
contemplating any such proceedings.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
-----------------------------------------------------------
Not Applicable.
Item 3. Defaults Upon Senior Securities
-------------------------------
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not Applicable.
Item 5. Other Information
-----------------
Not Applicable.
Item 6. Exhibits
--------
See Index of Exhibits commencing on page E-1.
32
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SIGNATURES
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: November 14, 2007 /s/ Darin M. Myman
--------------------------------------------
Darin M. Myman
President and Chief Executive Officer
(Principal Executive Officer)
Dated: November 14, 2007 /s/ Robert S. DeMeulemeester
--------------------------------------------
Robert S. DeMeulemeester
Chief Financial Officer
(Principal Financial and Accounting Officer)
33
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INDEX 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); Chestnut Ridge Partners LP ($125,000); Iroquois
Master Fund Ltd. ($125,000); and Penn Footwear ($50,000),
incorporated by reference to Exhibit 4.2 to the Current
Report on Form 8-K filed with the SEC on May 3, 2007.
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.
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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.
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.
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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.
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 Georgia 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 10.25
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 Association, 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.
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10.24 Lease between BigString, as Tenant, and Walter Zimmerer &
Son, as Landlord, dated May 8, 2007, for the premises
located at 3 Harding Road, Suite F, Red Bank, New Jersey
07701, incorporated by reference to Exhibit 10.24 to the
Registration Statement on Form SB-2 (Registration No.
333-143793) filed with the SEC on June 15, 2007.
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.
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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.
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.
14.1 Code of Ethics of BigString, incorporated by reference to
Exhibit 14.1 to the Annual Report on Form 10-KSB filed with
the SEC on March 31, 2006.
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.
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EXHIBIT 31.1
CERTIFICATION
I, Darin M. Myman, certify that:
1. I have reviewed this report on Form 10-QSB of BigString Corporation;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the small business
issuer as of, and for, the periods presented in this report;
4. The small business issuer's other certifying officer and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the small business issuer and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the small business issuer,
including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report
is being prepared;
(b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
(c) Evaluated the effectiveness of the small business issuer's
disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on
such evaluation; and
(d) Disclosed in this report any change in the small business issuer's
internal control over financial reporting that occurred during the small
business issuer's most recent fiscal quarter (the small business issuer's
fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the small business
issuer's internal control over financial reporting; and
5. The small business issuer's other certifying officer and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the small business issuer's ability
to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the small business issuer's
internal control over financial reporting.
Dated: November 14, 2007 /s/ Darin M. Myman
-------------------------------------
Darin M. Myman
President and Chief Executive Officer
<page>
EXHIBIT 31.2
CERTIFICATION
I, Robert S. DeMeulemeester, certify that:
1. I have reviewed this report on Form 10-QSB of BigString Corporation;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the small business
issuer as of, and for, the periods presented in this report;
4. The small business issuer's other certifying officer and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the small business issuer and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the small business issuer,
including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report
is being prepared;
(b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
(c) Evaluated the effectiveness of the small business issuer's
disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on
such evaluation; and
(d) Disclosed in this report any change in the small business issuer's
internal control over financial reporting that occurred during the small
business issuer's most recent fiscal quarter (the small business issuer's
fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the small business
issuer's internal control over financial reporting; and
5. The small business issuer's other certifying officer and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the small business issuer's ability
to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the small business issuer's
internal control over financial reporting.
Dated: November 14, 2007 /s/ Robert S. DeMeulemeester
----------------------------
Robert S. DeMeulemeester
Chief Financial Officer
<page>
EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of BigString Corporation (the
"Company") on Form 10-QSB for the period ended September 30, 2007 (the
"Report"), I, Darin M. Myman, President and Chief Executive Officer of the
Company, do hereby certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant
to ss.906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) the Report fully complies with the requirements of ss.13(a) or 15(d) of the
Securities Exchange Act of 1934, 15 U.S.C. ss.78m or 78o(d), and,
(2) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Dated: November 14, 2007 /s/ Darin M. Myman
-------------------------------------
Darin M. Myman
President and Chief Executive Officer
<page>
EXHIBIT 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of BigString Corporation (the
"Company") on Form 10-QSB for the period ended September 30, 2007 (the
"Report"), I, Robert S. DeMeulemeester, Chief Financial Officer of the Company,
do hereby certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906
of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) the Report fully complies with the requirements of ss.13(a) or 15(d) of the
Securities Exchange Act of 1934, 15 U.S.C. ss.78m or 78o(d), and,
(2) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Dated: November 14, 2007 /s/ Robert S. DeMeulemeester
----------------------------
Robert S. DeMeulemeester
Chief Financial Officer
<page>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
November 15, 2007
BIGSTRING CORPORATION
--------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware 000-51661 20-0297832
--------------------------------------------------------------------------------
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
3 Harding Road, Suite E, Red Bank, New Jersey 07701
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (732) 741-2840
----------------------------------------------------------------------
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[_] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2 (b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4 (c) under the
Exchange Act (17 CFR 240.13e-4 (c))
<page>
Section 8 - Other Events
Item 8.01. Other Events.
--------- ------------
On November 15, 2007, BigString Corporation issued a press release
announcing the launch of a new application that enables Facebook users to send
messages and pictures which can be programmed to self-destruct at a specific
time. A copy of the press release is attached hereto as Exhibit 99.1.
Section 9 - Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits.
--------- ---------------------------------
(d) Exhibits:
Exhibit
Number Description
------ -----------
99.1 Press Release Re: BigString Launches Facebook
Application That Enables Users to Send Messages
and Photos Programmed to Self-Destruct.
<page>
SIGNATURES
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 hereunto duly authorized.
BIGSTRING CORPORATION
-----------------------------------------
(Registrant)
By: /s/ Darin M. Myman
-------------------------------------
Darin M. Myman
President and Chief Executive Officer
Date: November 15, 2007
<page>
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
99.1 Press Release Re: BigString Launches Facebook Application
That Enables Users to Send Messages and Photos Programmed to
Self-Destruct.
<page>
EXHIBIT 99.1
BIGSTRING LAUNCHES FACEBOOK APPLICATION THAT ENABLES USERS TO
SEND MESSAGES & PHOTOS PROGRAMMED TO SELF-DESTRUCT
Part of BigString's Initiative to Develop Social Networking Messaging
Applications Built Around The Company's Core Technology
RED BANK, N.J., November 15, 2007 - A new application that enables Facebook
users to send exploding messages and pictures that can be programmed to
self-destruct at a specific time, has been launched by BigString Corporation
(OTCBB: BSGC). This new Facebook application is part of BigString's initiative
to develop social networking messaging applications built around the company's
core technology.
This application is based on BigString's self-destructing email feature. With
it, senders can determine when and how their Facebook message disappears by
choosing from more than 100 animations and effects, including fiery death,
exploding emoticons, explosions, etc.
Darin Myman, president and CEO of BigString Corporation stated, "We believe that
the rapid growth of social networks such as Facebook are creating a large and
important market opportunity for BigString's messaging technology. Our Facebook
application will be the first of many that will adapt our patent-pending email
technology for social networks."
About BigString
---------------
BigString Corporation, owner and operator of BigString.com, is a provider of
social networking messaging applications and user-controllable email services.
In addition to permitting users to send recallable, erasable, self-destructing
messages and video, Big String's patent-pending technology allows emails and
pictures to be rendered non-forwardable, non-printable and non-savable before or
after the recipients read them, no matter what email service provider is used.
Forward-Looking Statements
--------------------------
Statements about the future expectations of BigString Corporation, and all other
statements in this press release other than historical facts, are
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, and as that term is defined in the Private Securities Litigation
Reform Act of 1995. BigString Corporation intends that such forward-looking
statements shall be subject to the safe harbors created thereby. Since these
statements involve certain risks and uncertainties and are subject to change at
any time, BigString Corporation's actual results could differ materially from
expected results.
CONTACT: Darin Myman, BigString Corporation, 732-741-2840, darin@bigstring.com
Howard Greene, Greene Inc., 516-825-0400, greenepr@bigstring.com or
greenepr@aol.com
<page>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
November 19, 2007
BIGSTRING CORPORATION
--------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware 000-51661 20-0297832
--------------------------------------------------------------------------------
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
3 Harding Road, Suite E, Red Bank, New Jersey 07701
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (732) 741-2840
----------------------------------------------------------------------
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[_] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2 (b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4 (c) under the
Exchange Act (17 CFR 240.13e-4 (c))
<page>
Section 8 - Other Events
Item 8.01. Other Events.
--------- ------------
On November 19, 2007, BigString Corporation (the "Company") issued a
press release announcing the introduction of a "private label" partnership
program that allows websites in the social networking, online dating, search and
video-content markets to offer the Company's recallable, erasable,
self-destructing and video email system to their respective user bases. A copy
of the press release is attached hereto as Exhibit 99.1.
Section 9 - Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits.
--------- ---------------------------------
(d) Exhibits:
Exhibit
Number Description
------ -----------
99.1 Press Release Re: BigString Corporation Introduces
"Private Label" Partnership Program.
<page>
SIGNATURES
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 hereunto duly authorized.
BIGSTRING CORPORATION
------------------------------------------
(Registrant)
By: /s/ Darin M. Myman
--------------------------------------
Darin M. Myman
President and Chief Executive Officer
Date: November 19, 2007
<page>
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
99.1 Press Release Re: BigString Corporation Introduces "Private Label"
Partnership Program.
<page>
EXHIBIT 99.1
BIGSTRING CORPORATION INTRODUCES "PRIVATE LABEL"
PARTNERSHIP PROGRAM
RED BANK, N.J., November 19, 2007 - BigString Corporation (OTCBB: BSGC)
announced today that it is introducing a "private label" partnership program
that allows websites in the social networking, online dating, search and
video-content markets to offer BigString's recallable, erasable,
self-destructing and video email system to its user base.
"Opening up our private label partnership program to consumer-focused websites
creates new traffic and revenue opportunities for both our partners and
BigString," stated Darin Myman, President and CEO of BigString Corporation. "Our
email system brings additional value-added services, especially to websites
focused on social networking, online dating or user-generated content where
protecting a user's privacy and digital-rights management is a concern."
About BigString
---------------
BigString Corporation, owner and operator of BigString.com, is a provider of
social networking messaging applications and user-controllable email services.
In addition to permitting users to send recallable, erasable, self-destructing
messages and video, BigString's patent-pending technology allows emails and
pictures to be rendered non-forwardable, non-printable and non-savable before or
after the recipients read them, no matter what email service provider is used.
Forward-Looking Statements
--------------------------
Statements about the future expectations of BigString Corporation, and all other
statements in this press release other than historical facts, are
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, and as that term is defined in the Private Securities Litigation
Reform Act of 1995. BigString Corporation intends that such forward-looking
statements shall be subject to the safe harbors created thereby. Since these
statements involve certain risks and uncertainties and are subject to change at
any time, BigString Corporation's actual results could differ materially from
expected results.
CONTACT: Darin Myman, BigString Corporation, 732-741-2840, darin@bigstring.com
Howard Greene, Greene Inc., 516-825-0400, greenepr@bigstring.com or
greenepr@aol.com
</TEXT>
</DOCUMENT>