- Quarterly Report (10-Q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended June 30, 2011

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

For the Transition Period from to .

Commission File Number 000-51661

BIGSTRING CORPORATION

(Exact name of registrant as specified in its charter)

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

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

(Address of principal executive offices) (Zip Code)

(732) 741-2840

(Registrant's telephone number, including area code)

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

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

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

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

Large accelerated filer ¨ Accelerated filer ¨

Non-accelerated filer ¨ Smaller reporting company x

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

Number of shares of Common Stock outstanding at August 15, 2011:

Common Stock, par value $0.0001 per share		137,027,690
(Class)		(Number of Shares)

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BIGSTRING CORPORATION

FORM 10-Q

JUNE 30, 2011

INDEX TO FO RM 10-Q

		PAGE
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	1

	Consolidated Balance Sheets (unaudited) at June 30, 2011 and December 31, 2010	2

	Consolidated Statements of Operations (unaudited) for the Three and Six Months Ended June 30, 2011 and 2010	3

	Consolidated Statements of Stockholders’ Deficiency (unaudited) for the Period Ended June 30, 2011	4

	Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2011 and 2010	5

	Notes to Unaudited Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23

Item 4.	Controls and Procedures	23

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	24

Item 1A.	Risk Factors	24

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24

Item 3.	Defaults Upon Senior Securities	24

Item 4.	(Removed and Reserved.)	24

Item 5.	Other Information	24

Item 6.	Exhibits	24

Signatures		25

Index of Exhibits		E-1

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain information included in this quarterly report on Form 10-Q and other filings of the Registrant under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well as information communicated orally or in writing between the dates of such filings, contains or may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements in this Quarterly Report on Form 10-Q may include, without limitation, statements related to our plans, strategies, objectives, expectations, intentions and adequacy of resources. Such statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from expected results. Among these risks, trends and uncertainties are the availability of working capital to fund our operations, the competitive market in which we operate, the efficient and uninterrupted operation of our computer and communications systems, our ability to generate a profit and execute our business plan, the retention of key personnel, our ability to protect and defend our intellectual property, the effects of governmental regulation and other risks identified in the Registrant’s filings with the Securities and Exchange Commission from time to time. The safe harbor provisions of the Private Securities Litigation Reform Act of 1995 most likely do not apply to our forward-looking statements because we are currently considered a penny stock issuer.

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

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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-K for the year ended December 31, 2010 of BigString Corporation (“BigString” or the “Company”).

The results of operations for the three and six months ended June 30, 2011 and 2010 are not necessarily indicative of the results of the entire fiscal year or for any other period.

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BIGSTRING CORPORATION AND SUBSIDIARY

CONSOLIDATED BAL ANC E SHEETS

(Unaudited)

	June 30, 2011			December 31, 2010
ASSETS
Current assets:
Cash and cash equivalents	$	512,561		$	15,225
Accounts receivable - net of allowance of $10 and $25, respectively		1,240			1,888
Prepaid expenses and other current assets		4,600			11,842
Total current assets		518,401			28,955
Property and equipment - net		6,814			13,731
Other assets		3,000			3,000
TOTAL ASSETS	$	528,215		$	45,686

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Accounts payable	$	125,038		$	192,826
Accrued expenses		286,874			262,119
Unearned revenue		40			1,303
Accrued interest		44,602			86,234
Short-term debt		-			928,646
Total current liabilities		456,554			1,471,128
Long term liabilities:
Long-term debt		155,500			-
TOTAL LIABILITIES		612,054			1,471,128

Stockholders' deficiency:
Preferred stock, $0.0001 par value - authorized 1,000,000 shares; issued and outstanding 79,657 and 79,657 shares, respectively		8			8
Common stock, $0.0001 par value - authorized 249,000,000 shares; issued and outstanding 137,027,690 and 98,640,640 shares, respectively		13,703			9,864
Additional paid in capital		14,596,798			14,228,180
Deficit		(14,694,348	)		(15,663,494	)
Total stockholders' deficiency		(83,839	)		(1,425,442	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY	$	528,215		$	45,686

See notes to unaudited consolidated financial statements.

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BIGSTRING CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Operating revenues	$	14,441		$	16,733		$	31,728		$	32,814
Operating expenses
Cost of revenues		12,687			11,100			26,690			24,724
Research, development, sales, general and administrative		206,852			36,674			490,052			69,366
Total operating expenses		219,539			47,774			516,742			94,090
Loss from operations		(205,098	)		(31,041	)		(485,014	)		(61,276	)
Other income (expense)
Interest income		235			9			254			29
Interest expense		(6,338	)		(22,463	)		(104,249	)		(43,765	)
Other, net		206,574			(92,131	)		1,558,155			(205,538	)
Total other income (expenses)		200,471			(114,585	)		1,454,160			(249,274	)
(Loss) earnings before provision for income taxes		(4,627	)		(145,626	)		969,146			(310,550	)
Provision for income taxes		-			-			-			-
Net (loss) earnings	$	(4,627	)	$	(145,626	)	$	969,146		$	(310,550	)

Net (loss) earnings per common share calculation:
Basic	$	(0.00	)	$	(0.00	)	$	0.01		$	(0.00	)
Diluted	$	(0.00	)	$	(0.00	)	$	0.01		$	(0.00	)
Weighted average common shares outstanding:
Basic		121,377,161			73,307,696			121,377,161			68,759,281
Diluted		121,377,161			73,307,696			171,950,397			68,759,281

See notes to unaudited consolidated financial statements.

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BIGSTRING CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF ST OC KHOLDERS’ DEFICIENCY

(Unaudited)

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

Balance, January 1, 2010	$	(1,414,865	)		79,657	$	8		63,329,761	$	6,333	$	13,701,687		$	(15,122,893	)
Stock-based compensation expense		361			-		-		-		-		361			-
Issuance of common stock for accrued interest (at $0.015 per share)		71,171			-		-		4,744,715		474		70,697			-
Issuance of common stock for conversion of promissory notes (at $0.015 per share)		458,492			-		-		30,566,164		3,057		455,435			-
Net loss		(540,601	)		-		-		-		-		-			(540,601	)
Balance, December 31, 2010		(1,425,442	)		79,657		8		98,640,640		9,864		14,228,180			(15,663,494	)
Issuance of common stock for accrued interest (at $0.015 per share)		36,730			-		-		2,448,642		245		36,485			-
Issuance of common stock for conversion of promissory notes (at $0.015 per share)		539,076			-		-		35,938,408		3,594		535,482			-
Deferred financing		(203,349	)		-		-		-		-		(203,349	)		-
Net earnings		969,146			-		-		-		-		-			969,146
Balance, June 30, 2011	$	(83,839	)		79,657	$	8		137,027,690	$	13,703	$	14,596,798		$	(14,694,348	)

See notes to unaudited consolidated financial statements.

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BIGSTRING CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEM EN TS OF CASH FLOWS

(Unaudited)

	For the Six Months Ended
	June 30,
	2011			2010
Cash flows from operating activities:
Net earnings (loss)	$	969,146		$	(310,550	)
Adjustments to reconcile net earnings (loss) to net cash (used in) provided by operating activities:
Depreciation and amortization of property and equipment, intangible and other assets		6,917			59,838
Gain on sale of investments		(1,668,827	)		-
Accretion for beneficial conversion feature, note discount, note cost amortization and deferred financing		212,581			160,374
Stock-based compensation		-			361
Changes in operating assets and liabilities:
Decrease in accounts receivable, net		648			2,241
Decrease in prepaid expenses and other assets		7,242			310,690
(Decrease) in accounts payable		(67,788	)		(32,935	)
Increase (decrease) in accrued expenses and other liabilities		19,853			(167,367	)
(Decrease) increase in unearned revenue		(1,263	)		1,139
Net cash (used in) provided by operating activities		(521,491	)		23,791
Cash flows from investing activities:
Proceeds from sale of marketable securities		1,018,827			-
Net cash provided by investing activities		1,018,827			-
Net change in cash and cash equivalents		497,336			23,791
Cash and cash equivalents - beginning of period		15,225			3,039
Cash and cash equivalents - end of period	$	512,561		$	26,830

Supplementary information:
Cash paid during the periods for:
Interest	$	-		$	-
Income taxes	$	-		$	-
Non-cash transactions during the periods for:
Conversion of promissory notes	$	539,076		$	-
Issuance of common stock for accrued interest	$	36,730		$	55,876
Exchange of assets for elimination of common stock warrants and deferred financing	$	650,000		$	-
Stock-based compensation: common stock options	$	-		$	361

See notes to unaudited consolidated financial statements.

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BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2011 AND 2010

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

BASIS OF PRESENTATION

The consolidated balance sheet as of June 30, 2011, and the consolidated statements of operations, stockholders’ deficiency and cash flows for the periods presented herein have been prepared by the Company 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' deficiency and cash flows for all periods presented have been made. The information for the consolidated balance sheet as of December 31, 2010 was derived from audited financial statements. The results of operations for the three and six months ended June 30, 2011 are not necessarily indicative of the results to be expected for the year ending December 31, 2011.

These Notes to Unaudited Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s 2010 annual report on Form 10-K for the year ended December 31, 2010.

ORGANIZATION

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

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

PeopleString Corporation (“PeopleString”), incorporated in the state of Delaware, was formed by BigString in early 2009 to develop technology relating to social networks. BigString currently owns approximately 15% of PeopleString’s outstanding common stock.

At June 30, 2011, BigString was no longer considered a development stage enterprise in accordance with the guidance contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, “Development Stage Entities.”

PRINCIPLES OF CONSOLIDATION

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

RECLASSIFICATIONS

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

RECENT ACCOUNTING PRONOUNCEMENTS

The Company’s significant accounting policies are summarized in Note 1 of the Company’s annual report on Form 10-K for the year ended December 31, 2010. There were no significant changes to these accounting policies during the six months ended June 30, 2011 and the Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.

NOTE 2. 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. For the three months ended June 30, 2011 and the three and six months ended June 30, 2010, all potentially dilutive securities, which include convertible notes, outstanding preferred stock, warrants and options, have been excluded from the computation, as their effect is antidilutive.

NOTE 3. FAIR VALUE MEASUREMENTS

The Company utilizes the accounting guidance for fair value measurements and disclosures for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the condensed consolidated financial statements on a recurring basis or on a nonrecurring basis during the reporting period. The fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based upon the best use of the asset or liability at the measurement date. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability. The accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers are defined as follows:

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BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Level 1 - Observable inputs such as quoted market prices in active markets.

Level 2 - Inputs other than quoted prices in active markets that are either directly or indirectly observable.

Level 3 - Unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of June 30, 2011 and December 31, 2010, the Company held certain financial assets that are measured at fair value on a recurring basis. These consisted of cash and cash equivalents and investments. The fair value of the cash and cash equivalents is determined based on quoted market prices in public markets and is categorized as Level 1. The fair value of BigString’s investment in PeopleString is determined based on quoted market prices in public markets and is categorized as Level 1, and was previously determined based on the most recent private placement per share purchase price for PeopleString’s common stock and was categorized as Level 2. The Company does not have any financial assets measured at fair value on a recurring basis as Level 3 and there were no transfers in or out of Level 3 during the six months ended June 30, 2011 and the year ended December 31, 2010.

The following table sets forth by level, within the fair value hierarchy, the Company’s financial assets accounted for at fair value on a recurring basis as of June 30, 2011 and December 31, 2010:

			Assets at Fair Value at Period End, Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Assets:	Total		(Level 1)		(Level 2)		(Level 3)
June 30, 2011
Cash and cash equivalents	$	512,561	$	512,561	$	-	$	-
Investments		1,697,436		1,697,436		-		-
	$	2,209,997	$	2,209,997	$	-	$	-
December 31, 2010
Cash and cash equivalents	$	15,225	$	15,225	$	-	$	-
Investments		1,250,000		-		1,250,000		-
	$	1,265,225	$	15,225	$	1,250,000	$	-

There were no financial assets accounted for at fair value on a nonrecurring basis at June 30, 2011 and December 31, 2010.

The Company has other financial instruments, such as receivables, accounts payable and other liabilities which have been excluded from the table above. Due to the short-term nature of these instruments, the carrying value of receivables, accounts payable and other liabilities approximate their fair values. The Company did not have any other financial instruments within the scope of the fair value disclosure requirements as of June 30, 2011 and December 31, 2010.

NOTE 4. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

	June 30, 2011		December 31, 2010
Computer equipment and internal software	$	159,313	$	159,313
Furniture and fixtures		5,721		5,721
		165,034		165,034
Less accumulated depreciation		158,220		151,303
	$	6,814	$	13,731

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BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Depreciation expense for the three months ended June 30, 2011 and 2010 was $2,660 and $7,194, respectively. Depreciation expense for the six months ended June 30, 2011 and 2010 was $6,917 and $14,674, respectively.

NOTE 5. INVESTMENTS

Equity Investment:

The Company owned approximately 15% of PeopleString’s outstanding common stock at June 30, 2011, which had a fair market value of $1,697,436 based on the closing price of PeopleString common stock at such date. A consolidated balance sheet for PeopleString is as follows:

	June 30, 2011		December 31, 2010
Assets	$	1,240,620	$	613,236

Liabilities		263,683		312,641
Stockholders' equity		976,937		300,595
Total liabilities and stockholders' equity	$	1,240,620	$	613,236

At June 30, 2011, the historical cost value of equity investments was $0.

Cost Method Investment:

At June 30, 2011, the Company held a $3,000 investment in FindItAll, Inc. at cost in other assets on the Company’s consolidated balance sheets.

NOTE 6. OTHER INCOME (EXPENSE)

Other income (expense) consists of interest income, interest expense, and other, net. The components of other, net consist of gain on investments, and amortization of expenses related to the convertible debenture, preferred stock, warrant and common stock financings, and are as follows:

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Gain on sale of investments	$	260,000		$	-		$	1,668,827		$	-
Amortization of debt issue costs		(1,162	)		(19,052	)		(7,242	)		(45,164	)
Amortization of promissory note discount		(1,214	)		(13,669	)		(6,629	)		(26,047	)
Amortization of beneficial conversion feature		(8,750	)		(59,410	)		(26,301	)		(134,327	)
Amortization of deferred financing		(42,300	)		-			(70,500	)		-
	$	206,574		$	(92,131	)	$	1,558,155		$	(205,538	)

For the three months ended June 30, 2011, gain on sale of investment contained $260,000 from the sale of PeopleString common shares in April 2011. For the six months ended June 30, 2011, gain on sale of investment contained $260,000, $740,000 and $18,826 from the sale of PeopleString common shares in April 2011, March 2011 and January 2011, respectively, and $650,000 from the issuance of PeopleString common shares in January 2011 as part of several Agreement and Releases as discussed in Note 8.

Deferred financing costs were $65,000, $250,000 and $22,500 for the June 2009, February 2008 and May 2007 financings, respectively, and are being amortized over the incremental term of each note issued in those financings, as such terms may have been extended pursuant to the Agreement and Releases.

NOTE 7. INCOME TAXES

BigString applies the provisions of the ASC 740, “Income Taxes.” A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Valuation allowances as of June 30, 2011 and December 31, 2010 have been applied to offset the deferred tax assets in recognition of the uncertainty that such tax benefits will be realized as BigString may continue to incur losses.

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BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Components of deferred income tax assets are as follows:

	June 30, 2011			December 31, 2010
Deferred tax assets - current	Tax Effect			Tax Effect
Benefit due to loss carryforward	$	4,975,022		$	(5,314,223	)
Valuation allowance		(4,975,022	)		5,314,223
	$	-		$	-

The Company files income tax returns in all jurisdictions in which it has reason to believe it is subject to tax. The Company is subject to examination by various taxing jurisdictions. To date, there have been no examinations. Nonetheless, any tax jurisdiction may contend that a filing position claimed by the Company regarding one or more of its transactions is contrary to that jurisdiction’s laws or regulations. Significant judgment is required in determining the worldwide provisions for income taxes. In the ordinary course of business of a global business, the ultimate tax outcome is uncertain for many transactions. It is the Company’s policy to establish provisions for taxes that may become payable in future years as a result of an examination by tax authorities. The Company establishes the provisions based upon management’s assessment of exposure associated with permanent tax differences and tax credits applied to temporary difference adjustments. The tax provisions are analyzed periodically (at least quarterly) and adjustments are made as events occur that warrant adjustments to those provisions.

At December 31, 2010, BigString had available NOL carry forwards of approximately $13.3 million for federal income tax reporting purposes and $1.9 million for state income tax reporting purposes, which expire in various years through 2030. The differences between book income and tax income primarily relates to amortization of intangible assets and other expenditures. Pursuant to Section 382 of the Internal Revenue Code of 1986, as amended, the annual utilization of a company’s NOL and research credit carry forwards may be limited, and, as such, BigString’s NOL carry forwards available to offset future federal taxable income may be limited. Similarly, BigString may be restricted in using its research credit carry forwards to offset future federal income tax expense.

NOTE 8. DEBT

On June 23, 2009, BigString entered into a Subscription Agreement with Whalehaven Capital Fund Limited, Alpha Capital Anstalt and Excalibur Special Opportunities LP (collectively, the “2009 Subscribers”), pursuant to which the 2009 Subscribers purchased convertible notes in the aggregate principal amount of $180,000, which notes are convertible into shares of BigString’s common stock, and warrants to purchase up to 6,000,000 shares of BigString's common stock, resulting in net proceeds of approximately $146,500 after transaction fees of approximately $33,500. Proceeds from the financing have been used to support ongoing operations and the advancement of BigString’s technology, and fund the marketing and the development of its business. BigString accounted for the convertible notes under ASC 815-15-10, and related interpretations including ASC 815-40-05. Approximately $35,000 of the proceeds was allocated to the warrants based on fair value, and included as additional paid in capital. Due to the beneficial conversion feature of the convertible notes, $168,000 was included as additional paid in capital based on the conversion discount.

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

On January 31, 2011, BigString entered into a separate Agreement and Release with each of Alpha Capital Anstalt and Whalehaven Capital Fund Limited which extended the terms of the June 23, 2009 convertible notes and other convertible notes issued by BigString to each of them by two years. As a result, the term of the June 23, 2009 convertible notes has been extended to June 23, 2013. The Agreement and Releases are discussed in greater detail below in this Note 8.

At June 30, 2011, the outstanding aggregate principal amount of the June 23, 2009 convertible notes was $75,000.

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

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

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BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

BigString incurred transaction fees of approximately $19,000 in connection with the August 25, 2008 financing. BigString accounted for the convertible feature of the notes under ASC 815-15-10, and related interpretations including ASC 815-40-05. Due to the conversion rights only upon an event of default, $2,080 was included as additional paid in capital based on a weighted conversion discount. The warrants did not have a conversion discount, and accordingly, no proceeds were allocated to the warrants based on fair value, nor included as additional paid in capital.

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

In December 2008, all amounts due under the notes issued to Dwight Lane Capital, LLC and Mr. Dutton were paid by BigString, including accrued interest of $9,328, and, as a result, the notes were cancelled.

On February 29, 2008, BigString entered into a Subscription Agreement with Whalehaven Capital Fund Limited, Alpha Capital Anstalt and Excalibur Small Cap Opportunities LP (collectively, the “2008 Subscribers”), pursuant to which the 2008 Subscribers purchased convertible notes in the aggregate principal amount of $700,000, which notes are convertible into shares of BigString’s common stock, and warrants to purchase up to 2,333,333 shares of BigString's common stock, resulting in net proceeds of approximately $608,000 after transaction fees of approximately $92,000. Proceeds from the financing have been used to support ongoing operations and the advancement of BigString’s technology, and fund the marketing and the development of its business. BigString accounted for the convertible notes under ASC 815-15-10, and related interpretations including ASC 815-40-05. Approximately $76,200 of the proceeds was allocated to the warrants based on fair value, and included as additional paid in capital. Due to the beneficial conversion feature of the convertible notes, $186,660 was included as additional paid in capital based on the conversion discount.

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

The convertible notes issued on February 29, 2008 were scheduled to mature on February 28, 2011. On January 31, 2011, BigString entered into a separate Agreement and Release with each of Alpha Capital Anstalt and Whalehaven Capital Fund Limited which extended the terms of the February 29, 2008 convertible notes and other convertible notes issued by BigString to each of them by two years. As a result, the term of the February 29, 2008 convertible notes has been extended to February 28, 2013. The Agreement and Releases are discussed in greater detail below in this Note 8.

At June 30, 2011, the outstanding aggregate principal amount of the February 29, 2008 convertible notes was $250,000.

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

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

On May 1, 2007, BigString entered into a Subscription Agreement with Whalehaven Capital Fund Limited, Alpha Capital Anstalt, Chestnut Ridge Partners LP, Iroquois Master Fund Ltd. and Penn Footwear (collectively, the “2007 Subscribers”), pursuant to which the 2007 Subscribers purchased convertible notes in the aggregate principal amount of $800,000, which notes are convertible into shares of BigString’s common stock, and warrants to purchase up to 1,777,779 shares of BigString's common stock, resulting in net proceeds of approximately $551,000 after transaction fees of approximately $249,000. BigString accounted for the convertible notes under ASC 815-15-10, and related interpretations including ASC 815-40-05. 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.

Index

BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

At June 30, 2011, the outstanding aggregate principal amount of the May 1, 2007 convertible notes was $97,500.

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

On May 1, 2010, the convertible notes issued by BigString on May 1, 2007 to each of Alpha Capital Anstalt, Iroquois Master Fund and Whalehaven Capital Fund Limited matured. On November 5, 2010, BigString received a notice of default from Iroquois Capital Management, LLC demanding immediate repayment of the entire balance of the convertible note in cash plus all accrued and unpaid interest and penalties. Subsequently, Iroquois Capital Management, LLC verbally rescinded such demand. The convertible notes issued to each of Alpha Capital Anstalt and Whalehaven Capital Fund Limited were extended by two years pursuant to the terms of the Agreement and Release between BigString and each of them, described below in this Note 8. As a result, the term of the convertible notes issued to each of Alpha Capital Anstalt and Whalehaven Capital Fund Limited have been extended to May 1, 2012. The term of the convertible note issued to Iroquois Capital Management, LLC was not extended.

On January 31, 2011, BigString entered into a separate Agreement and Release (each an “Agreement and Release”) with each of Alpha Capital Anstalt and Whalehaven Capital Fund Limited (collectively, the “Releasors”). As discussed above in this Note 8, each of the Releasors is the holder of convertible notes previously issued to each of them by BigString on the following dates and in the following principal amounts: May 1, 2007 in the principal amount of $250,000; February 29, 2008 in the principal amount of $250,000; and June 23, 2009 in the principal amount of $75,000 (collectively the “Notes”). Each of the Releasors is also the holder of certain warrants to acquire shares of BigString’s common stock that were previously issued to each of them by BigString on the following dates: February 29, 2008 for the right to purchase 833,333 shares (including an additional 729,167 shares as adjusted) of BigString’s common stock; and June 23, 2009 for the right to purchase 2,500,000 shares of BigString’s common stock (collectively, the “Warrants”). Pursuant to the terms of each Agreement and Release, the Warrants held by each of the Releasors were cancelled and each of the Notes held by each of them was amended to extend the term by two years. In addition, the Releasors released any claims they each had or may have had against BigString through the date of their respective Agreement and Release. In consideration of the foregoing, BigString has transferred 500,000 shares of PeopleString common stock to Alpha Capital Anstalt and 1,500,000 shares of PeopleString common stock to Whalehaven Capital Fund Limited. BigString accounted for the transaction as a gain on investment, waived accrued interest expense, cancellation of warrants, interest expense and deferred financing cost which will be accrued over the remaining life of the notes.

For the six months ended June 30, 2011 and 2010, $539,076 and $212,500, respectively, of the convertible notes were converted resulting in 35,938,408 and 14,166,666 shares, respectively, of BigString’s common stock being issued to the holders of the convertible notes.

Information regarding the convertible notes outstanding at June 30, 2011 and December 31, 2010 is as follows:

	June 30, 2011			December 31, 2010
Convertible notes, May 1, 2007, maturing May 1, 2010 and May 1, 2012	$	97,500		$	292,500
Beneficial conversion feature		-			-
Note Discount		-			-
Deferred financing		(15,000	)		-
		82,500			292,500

Convertible notes, February 29, 2008, maturing February 28, 2013		250,000			594,076
Beneficial conversion feature		-			(8,801	)
Note Discount		-			(3,592	)
Deferred financing		(200,000	)		-
		50,000			581,683

Convertible notes, June 23, 2009, maturing June 23, 2013		75,000			75,000
Beneficial conversion feature		-			(17,500	)
Note Discount		-			(3,037	)
Deferred financing		(52,000	)		-
		23,000			54,463
	$	155,500		$	928,646

Index

BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended June 30, 2011 and 2010, BigString issued 2,448,642 and 3,725,148 shares, respectively, of BigString’s common stock in lieu of $36,730 and $55,876, respectively, of accrued interest. Future accrued interest payments, which may include shares of BigString’s common stock in lieu of accrued interest, on the May 1, 2007, February 29, 2008 and June 23, 2009 convertible notes are currently estimated as follows:

	Accrued
Years Ending	Interest
December 31,	Payments
2011	$	21,784
2012		25,221
2013		19,500
	$	66,505

Change in Control

Management believes that a change in control of BigString may occur in the future in the event that Alpha Capital Anstalt converts and exercises all or substantially all of the convertible notes of BigString’s common stock held by it.

NOTE 9. COMMON STOCK

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

In 2010, BigString issued 4,744,715 shares of its common stock, at $0.015 per share, for accrued interest on convertible promissory notes totaling $71,171.

In 2010, BigString issued 30,566,164 shares of its common stock upon the conversion of convertible promissory notes totaling $458,492. The conversion price was $0.015 per share.

In January 2011, BigString issued 25,265,762 shares of its common stock upon the conversion of convertible promissory notes totaling $378,986. The conversion price was $0.015 per share.

In February 2011, BigString issued 3,000,000 shares of its common stock upon the conversion of convertible promissory notes totaling $45,000. The conversion price was $0.015 per share.

In March 2011, BigString issued 7,672,646 shares of its common stock upon the conversion of convertible promissory notes totaling $115,090. The conversion price was $0.015 per share.

In March 2011, BigString issued 2,448,642 shares of its common stock, at $0.015 per share, for accrued interest on convertible promissory notes totaling $36,730.

NOTE 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 its common stock to Witches Rock Portfolio Ltd., The Tudor BVI Global Portfolio Ltd. and Tudor Proprietary Trading, L.L.C., for an aggregate purchase price of $2,000,000. The shares of Series A Preferred Stock are convertible under certain circumstances into shares of BigString’s common stock, and have certain dividend, voting, liquidation and conversion rights. The warrants are convertible into shares of BigString’s common stock at an exercise price per share of $1.25, as adjusted. BigString has registered the shares of common stock issuable upon conversion of the shares of Series A Preferred Stock and the shares of common stock underlying the warrants.

Currently, there are 79,657 shares of Series A Preferred Stock outstanding.

Index

BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11. SHARE-BASED COMPENSATION

Warrants:

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

On May 2, 2006, BigString granted warrants to purchase shares of BigString’s common stock in consideration for business consultant services to be provided by Lifeline Industries, Inc. A total of $135,300 of the deferred compensation in connection with the warrants has been expensed over a period of 36 months. The warrants expired on May 1, 2011. The fair value of the warrants granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used: dividend yield of 0%; expected volatility of 47%; risk free rate of return of 5%; and expected life of 2 years. The weighted average fair value of these warrants was $0.42 and $0.18 per share.

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

As discussed in Note 8, on May 1, 2007, BigString granted warrants to purchase up to 1,991,112 shares of BigString's common stock to the 2007 Subscribers and Gem Funding LLC. Each of the warrants has a term of five years from May 1, 2007 and was fully vested on the date of issuance. The warrants are exercisable at $0.30 per share of common stock, as adjusted. A total of $31,320 of the purchase price for the convertible notes and warrants was allocated to the warrants based on fair value.

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

As discussed in Note 8, on February 29, 2008, BigString granted warrants to purchase up to 2,706,666 shares of BigString's common stock to the 2008 Subscribers and Gem Funding LLC. Each of the warrants has a term of five years from February 29, 2008 and was fully vested on the date of issuance. The warrants are exercisable at $0.15 per share of common stock, as adjusted. A total of $76,176 of the purchase price for the convertible notes and warrants was allocated to the warrants based on fair value. As a result of this transaction, certain warrants to purchase shares of BigString’s common stock issued to the 2007 Subscribers and Gem Funding LLC were adjusted.

As discussed in Note 8, on August 25, 2008, BigString granted warrants to purchase up to 800,000 shares of BigString's common stock to Dwight Lane Capital, LLC and Marc W. Dutton. Each of the warrants has a term of ten years from August 25, 2008 and was fully vested on the date of issuance. The warrants are exercisable at $0.08 per share of common stock. The warrants did not have a conversion discount, and accordingly, no proceeds for the convertible notes and warrants was allocated to the warrants, based on fair value, nor included as additional paid in capital. As a result of this transaction, certain warrants to purchase shares of BigString’s common stock issued to the 2007 Subscribers, the 2008 Subscribers and Gem Funding LLC were adjusted.

Index

BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

As discussed in Note 8, on June 23, 2009, BigString granted warrants to purchase up to 6,000,000 shares of BigString's common stock to the 2009 Subscribers. Each of the warrants has a term of five years from June 23, 2009 and was fully vested on the date of issuance. The warrants are exercisable at $0.015 per share of common stock, as adjusted. A total of $34,992 of the purchase price for the convertible notes and warrants was allocated to the warrants based on fair value. As a result of this transaction, certain warrants to purchase shares of BigString’s common stock issued to the 2007 Subscribers, the 2008 Subscribers and Gem Funding LLC were adjusted.

As discussed in Note 8, on January 31, 2011, BigString entered into a separate Agreement and Release with each of the Releasors. Pursuant to the terms of each Agreement and Release, the Releasors have each agreed to forfeit the Warrants held by each of them to BigString for cancellation. Warrants to purchase 8,125,000 shares of BigString’s common stock, exercisable at $0.015 per share of common stock, were cancelled, resulting in a reduction of additional paid in capital of $203,349.

The number of warrants outstanding as of January 1, 2011 and changes to such number during the six months ended June 30, 2011 are as follows:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
	Shares			Price		Term		Value
Warrants outstanding at January 1, 2011		14,050,000		$	0.13		3.2	$	175,500
Warrants granted		-		$	-
Warrants exercised		-		$	-
Warrants cancelled/forfeited/expired		(8,575,000	)	$	0.05
Warrants outstanding at June 30, 2011		5,475,000		$	0.26		3.2	$	-
Warrants exercisable at June 30, 2011		5,475,000		$	0.26		3.2	$	-

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

Warrants granted during the six months ended June 30, 2011 and 2010 were 0 and 0, respectively.

No warrants were exercised and no cash received during the six months ended June 30, 2011 and 2010.

During the six months ended June 30, 2011 and 2010, 8,125,000 and 0 warrants were cancelled, respectively, with an aggregate intrinsic value of $121,875 and $0, respectively, at the date of cancellation. During the six months ended June 30, 2011 and 2010, 450,000 and 0 warrants were forfeited or expired, respectively, with an aggregate intrinsic value of $0 and $0, respectively, at the date of forfeit or expiration.

Equity Incentive Plan and Stock Options Issued to Consultant:

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

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

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

Index

BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

For the three months ended June 30, 2011 and 2010, BigString recorded stock-based option compensation expense of $0 and $241, respectively. For the six months ended June 30, 2011 and 2010, BigString recorded stock-based option compensation expense of $0 and $361, respectively. ASC 718 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, 2011 and changes to such number during the six months ended June 30, 2011 are as follows:

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
			Exercise		Contractual		Intrinsic
	Shares		Price		Term		Value
Options outstanding at January 1, 2011		6,950,100	$	0.36		3.4	$	-
Options granted		-	$	-
Options exercised		-	$	-
Options cancelled/forfeited/expired		-	$	-
Options outstanding at June 30, 2011		6,950,100	$	0.36		2.9	$	-
Options exercisable at June 30, 2011		6,950,100	$	0.36		2.9	$	-

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

Options granted during the six months ended June 30, 2011 and 2010 were 0 and 0, respectively.

No options were exercised and no cash was received from, and no tax benefit was attributable to, option exercises and purchases of shares for the six months ended June 30, 2011 and 2010.

Index

BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

During the six months ended June 30, 2011 and 2010, options to purchase a total of 0 and 2,200,000 shares of BigString’s common stock, respectively, were cancelled, forfeited or expired with an aggregate intrinsic value of $0 and $0, respectively, at the date of expiration.

The fair value of each option award is estimated on the date of grant using the Black-Scholes valuation model, consistent with the provisions of ASC 718. Because option-pricing models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. BigString has limited relevant historical information to support the expected exercise behavior because no exercises have taken place.

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

	Six Months Ended
	June 30,
	2011			2010
Risk-free interest rate		-	%		-	%
Expected volatility		-	%		-	%
Expected life (in years)		-			-
Dividend yield		-			-

The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of the grant. BigString estimates the volatility of its common stock at the date of the grant based on historical volatility, expected volatility and publicly traded peer companies. The expected life of stock options granted under the Equity Incentive Plan is based on management judgment, historical experience and publicly traded peer companies. BigString has no history or expectations of paying cash dividends on its common stock.

NOTE 12. RELATED PARTY TRANSACTIONS

On December 29, 2008, BigString signed an agreement with Digital BobKat, LLC, a limited liability company in which Robert S. DeMeulemeester, an officer and director of BigString, has an interest, to provide business consulting services, including, but not limited to, management, product development, marketing, research, advertising and general business and administrative procedures and processes. The agreement renews annually, is subject to adjustment periodically, and may be terminated at will by either party upon three days notice. Payments are due monthly and are based on fair market value of the services provided, similar to the terms of a transaction with an unrelated party. Expenses for the three months ended June 30, 2011 and 2010 were $0 and $0, respectively. Expenses for the six months ended June 30, 2011 and 2010 were $69,310 and $78,436, respectively.

On April 2, 2009, PeopleString entered into a verbal agreement with BigString to license BigString’s messaging technology and share the cost of certain common services. At June 30, 2011, BigString was a significant, non-majority stockholder of PeopleString. The agreement renews annually, is subject to adjustment periodically, and may be terminated at will by either party upon three days notice. Under the agreement, BigString provides messaging services to PeopleString users. The licensing fee was based on BigString’s experience providing services to other third parties and was determined by BigString’s management. Based on volume, BigString charges PeopleString fees that are higher in aggregate than BigString charges other third parties for outsourced messaging services. BigString recorded revenue for the three months ended June 30, 2011 and 2010 of $10,500 and $10,500, respectively. BigString recorded revenue for the six months ended June 30, 2011 and 2010 of $21,000 and $21,000, respectively.

Shared services costs are quantified based on management’s estimate of the percentage of time devoted to each company. Payments are due quarterly. In 2009, the shared services included hosting, insurance, rent, payroll and miscellaneous general and administrative expenses, and were primarily paid by BigString. In 2010, the shared services included hosting, insurance, rent and miscellaneous general and administrative expenses, and were primarily paid by PeopleString by year-end. PeopleString determined, in its sole discretion, based on its subjective estimate of the amount of time devoted to each company, the amount incurred and paid for the shared services that is allocated to PeopleString. For the three months ended June 30, 2011 and 2010, BigString recorded expense of $38,977 and $(3,280), respectively. For the six months ended June 30, 2011 and 2010, BigString recorded expense of $76,098 and $(26,353), respectively.

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BIGSTRING CORPORATION AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13. COMMITMENTS AND CONTINGENCIES

Leases:

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

	Minimum
Years Ending	Lease
December 31,	Payments
2011	$	16,460
2012		5,487
	$	21,947

Rental expense, excluding shared service costs, was $0 and $4,600 for the three months ended June 30, 2011 and 2010, respectively. Rental expense, excluding shared service costs, was $0 and $11,500 for the six months ended June 30, 2011 and 2010, respectively.

Computer co-location, power and Internet access expense, including shared service costs, was $8,229 and $3,329 for the three months ended June 30, 2011 and 2010, respectively. Computer co-location, power and Internet access expense, including shared service costs, was $16,425 and $9,005 for the six months ended June 30, 2011 and 2010, respectively.

Other Commitments:

In the ordinary course of business, BigString may agree to indemnify 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. To date, the Company has not incurred material costs as a result of obligation under these agreements and has not accrued any liabilities related to such agreements.

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

We have provided below information about BigString‘s financial condition and results of operations for the three and six months ended June 30, 2011 and 2010. This information should be read in conjunction with BigString’s unaudited consolidated financial statements for the three and six months ended June 30, 2011 and 2010, including the related notes thereto, which begin on page 1 of this report. These unaudited consolidated financial statements should be read in conjunction with the year-end consolidated financial statements and notes thereto included in BigString’s annual report on Form 10-K for the year ended December 31, 2010. The following discussion and analysis contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.

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 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.

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

PeopleString, incorporated in the state of Delaware, was formed by BigString in early 2009 to develop technology relating to social networks. PeopleString is a separate reporting company under the Exchange Act. As of August 15, 2011, BigString owned approximately 15% of PeopleString’s outstanding common stock.

Overview

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

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

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

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

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

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

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BigString currently markets to Internet users who seek to utilize the Internet as their source for email and messaging services. Generally, BigString products and services can be readily accessed through the Internet and thus from virtually anywhere the Internet is accessible. Email users can access BigString’s English language site, www.BigString.com, on a global basis, 24 hours a day.

In December 2009, BigString received a patent from the United States Patent and Trademark Office for Universal, Recallable, Erasable, Secure and Timed Delivery Email.

During the past several years, BigString significantly reduced its marketing efforts from prior years due to financial constraints. BigString also reduced expenses in other areas, such as rent and headcount, to better position the company financially. As a result of recent sales of shares of PeopleString common stock by BigString, which strengthened BigString’s cash position, management is currently evaluating new marketing strategies and product development.

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

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

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

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

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

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

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

· the acquisition cost per user for each of the services;

· the cost and effectiveness for each of the promotional efforts;

· the revenue and effectiveness of advertisements served; and

· the revenue, impressions, clicks and actions per user.

Critical Accounting Policies

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

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 ASC 605, “Revenue Recognition.”

Consistent with the provisions of ASC 605-45-05, 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.

Consistent with ASC 605-50-15, BigString accounts for cash considerations given to customers, for which it does not receive a separately identifiable benefit or cannot reasonably estimate fair value, as a reduction of revenue rather than an expense. Accordingly, any corresponding distributions to customers 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.

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Stock-Based Compensation. BigString accounts for stock-based compensation under ASC 718, “Compensation-Stock Compensation.” 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 ASC 718.

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

Research and Development. BigString accounts for research and development costs in accordance with accounting pronouncements, including ASC 730, “Research and Development,” and ASC 985, “Software.” 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.

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 ASC 815-15-10, “Hedging and Derivatives-Embedded Derivatives” and related interpretations including ASC 815-40-05, “Hedging and Derivatives-Contracts in Entity’s Own Equity.”

Recent Accounting Pronouncements. BigString’s significant accounting policies are summarized in Note 1 of BigString’s annual report on Form 10-K for the year ended December 31, 2010. There were no significant changes to these accounting policies during the six months ended June 30, 2011 and BigString does not expect that the adoption of other recent accounting pronouncements will have a material impact on its consolidated financial statements.

Results of Operations

For the Three and Six Months Ended June 30, 2011 and 2010

Net Loss/Earnings. For the three months ended June 30, 2011, net loss was $4,627, as compared to a net loss of $145,626 for the three months ended June 30, 2010. The $140,999 decrease in net loss was primarily attributable to an increase in other income of $315,056 primarily related to a gain on the sale of investments.

For the six months ended June 30, 2011, net earnings were $969,146, as compared to a net loss of $310,550 for the six months ended June 30, 2010. The $1,279,696 increase in net earnings was primarily attributable to a $1,703,434 increase in other income primarily related to a gain on the sale investments and the Agreement and Release with each of Alpha Capital Anstalt and Whalehaven Capital Fund Limited.

Revenues. For the three months ended June 30, 2011, revenues were $14,441, a $2,292 decrease from revenues of $16,733 generated in the three months ended June 30, 2010. Of the revenues generated for the three months ended June 30, 2011, $9,686 was generated from product and service fees and $4,755 was generated from advertisers, as compared to $13,118 from product and service fees and $3,615 from advertisers for the three months ended June 30, 2010.

For the six months ended June 30, 2011, revenues were $31,728, a $1,086 decrease from revenues of $32,814 generated in the six months ended June 30, 2010. Of the revenues generated for the six months ended June 30, 2011, $22,807 was generated from product and service fees and $8,921 was generated from advertisers, as compared to $26,406 from product and service fees and $6,408 from advertisers for the six months ended June 30, 2010.

At June 30, 2011, unearned revenue from product and service fees decreased to $40 from $1,303 at December 31, 2010.

Operating Expenses. For the three months ended June 30, 2011, operating expenses were $219,539, a $171,765 increase from operating expenses of $47,774 incurred in the three months ended June 30, 2010.

·	Cost of revenues: Cost of revenues for the three months ended June 30, 2011 was $12,687, as compared to $11,100 for the same prior year period. The $1,587 increase in cost was primarily attributable to increased hosting costs.

Research, development, sales, general and administrative: Research, development, sales, general and administrative expenses for the three months ended June 30, 2011 were $206,852, as compared to $36,674 for the same prior year period. The increase in expenses was primarily attributable to increased compensation and professional fees.

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For the six months ended June 30, 2011, operating expenses were $516,742, a $422,652 increase from operating expenses of $94,090 incurred during the six months ended June 30, 2010.

·	Cost of revenues: Cost of revenues for the six months ended June 30, 2011 was $26,690, as compared to $24,724 for the same prior year period. The $1,966 increase in cost was primarily attributable to increased hosting costs.

Research, development, sales, general and administrative: Research, development, sales, general and administrative expenses for the six months ended June 30, 2011 were $490,052, as compared to $69,366 for the same prior year period. The increase in expenses was primarily attributable to increased compensation and professional fees.

Other income (expense). For the three months ended June 30, 2011, other income was $200,471, a $315,056 increase over other expenses of $114,585 during the three months ended June 30, 2010.

·	Interest income: Interest income for the three months ended June 30, 2011 was $235, as compared to $9 for the same prior year period. The $226 increase was primarily attributable to higher cash balances.

·	Interest expense: Interest expense for the three months ended June 30, 2011 was $6,338, as compared to $22,463 for the same prior year period. The $16,125 decrease was primarily attributable to decreased balances on the convertible notes due to conversions.

·	Other, net: Other, net income for the three months ended June 30, 2011 was $206,574, as compared to other, net expenses of $92,131 for the same prior year period. The $298,705 increase was primarily attributable to a gain on sale of investments.

For the six months ended June 30, 2011, other income were $1,454,160, a $1,703,434 increase over other expenses of $249,274 during the six months ended June 30, 2010.

·	Interest income: Interest income for the six months ended June 30, 2011 was $254, as compared to $29 for the same prior year period. The $225 increase was primarily attributable to higher cash balances.

Interest expense: Interest expense for the six months ended June 30, 2011 was $104,249, as compared to $43,765 for the same prior year period. The $60,484 increase was primarily attributable to expenses partially offsetting gains associated with the Agreement and Release with each of Alpha Capital Anstalt and Whalehaven Capital Fund Limited.

Other, net: Other, net income for the six months ended June 30, 2011 was $1,558,155, as compared to other, net expenses of $205,538 for the same prior year period. The $1,763,693 increase was primarily attributable to a gain on sale of investments, and the Agreement and Release with each of Alpha Capital Anstalt and Whalehaven Capital Fund Limited.

Income Taxes. For the three and six months ended June 30, 2011 and 2010, BigString applied valuation allowances to offset the deferred tax assets in recognition of the uncertainty that such tax benefits will be realized.

At December 31, 2010, BigString had available net operating loss carry forwards of approximately $13.3 million for federal income tax reporting purposes and $1.9 million for state income tax reporting purposes which expire in various years through 2030. The differences between book income and tax income primarily relates to amortization of intangible assets and other expenditures. Pursuant to Section 382 of the Internal Revenue Code of 1986, as amended, the annual utilization of a company’s net operating loss and research credit carry forwards may be limited, and, as such, BigString may be restricted in using its net operating loss and research credit carry forwards to offset future federal income tax expense.

Liquidity and Capital Resources

BigString’s operating and capital requirements have exceeded its cash flow from operations as BigString has been building its business. Since inception through June 30, 2011, BigString has expended $4,858,972 for operating and investing activities, which has been primarily funded by investments of $5,371,533 from BigString’s stockholders and convertible note and warrant holders. For the six months ended June 30, 2011, BigString generated $497,336 for operating and investing activities, an increase of $473,545 from the amount generated during the six months ended June 30, 2010.

At June 30, 2011, BigString’s unaudited consolidated financial statements reflect total current assets of $518,401, total current liabilities of $456,554 and working capital of $61,847. BigString’s cash balance as of June 30, 2011 was $512,561, which was an increase of $497,336 from the cash balance of $15,225 as of December 31, 2010. This increase to the cash balance was primarily attributable to sales of investments.

For the year ended December 31, 2009, BigString participated in the state of New Jersey’s Corporation Business Tax Benefit Certificate Transfer program, which allows certain high technology and biotechnology companies to sell unused NOL carryforwards and research and development credits to other New Jersey corporation business taxpayers. On January 11, 2010, BigString received net proceeds of $310,108. BigString may also be able to transfer its unused New Jersey net operating losses and research and development credits in future years and may apply for participation again in future years.

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BigString realized $18,826 from the sale of shares of PeopleString common stock in January 2011, $740,000 from the sale of shares of PeopleString common stock in March 2011 and $260,000 from the sale of shares of PeopleString common stock in April 2011. As of August 15, 2011, BigString owned 5,475,600 shares of PeopleString common stock, representing approximately 15% of the issued and outstanding shares of PeopleString’s common stock.

Management believes BigString’s current cash balance of $493,649 at August 9, 2011 is sufficient to fund the minimum level of operations for the next twelve months.

We expect to continue development of our messaging, email and related service offerings. We also expect sales, marketing and advertising expenses and cost of revenues to increase as we seek to promote and grow our products and services. However, if our revenue and cash balance are insufficient to fund our operations, 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.

If the revenue from our operations is 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.

Our current 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. Quantitative and Qualitative Disclosures About Market Risk

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

Item 4 . Controls and Procedures

(a) Evaluation of disclosure controls and procedures.

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

Based on management’s evaluation, our chief executive officer and chief financial officer concluded that, as of June 30, 2011, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting.

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

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

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 1A . Risk Factors

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

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

None.

Item 3 . Defaults Upon Senior Securities

None.

Item 4. (Removed and Reserved.)

Item 5. Other Information

None.

Item 6. Exhibits

See Index of Exhibits commencing on page E-1.

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SIGNA TU RES

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

	BigString Corporation
	Registrant


Dated: August 15, 2011	By:	/s/ Darin M. Myman
		Darin M. Myman
		President and Chief Executive Officer (Principal Executive Officer)


Dated: August 15, 2011	By:	/s/ Robert S. DeMeulemeester
		Robert S. DeMeulemeester Executive Vice President, Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer)

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INDEX OF EXH IBIT S

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 $0.0001 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.

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

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

4.5		Amendment No. 1, dated as of January 31, 2011, to Convertible Notes issued by BigString to each of Alpha Capital Anstalt and Whalehaven Capital Fund Limited on May 1, 2007, February 29, 2008 and June 23, 2009, incorporated by reference to Exhibits 4.1, 4.2, 4.3, 4.4, 4.5, and 4.6 to the Current Report on Form 8-K filed with the SEC on February 4, 2011.

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

10.2		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.

10.3		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.

E-1

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10. 4		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. 5		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.

10.6		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.

10.7		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.

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

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

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

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

10.12		Agreement and Release, dated as of January 31, 2011, by and between BigString and Alpha Capital Anstalt, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on February 4, 2011 .

10.13		Agreement and Release, dated as of January 31, 2011, by and between BigString and Whalehaven Capital Fund Limited, incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on February 4, 2011.

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.