Item 405 of Regulation S-B contained in this
form, and no disclosure will be contained, to the best of the Registrant’s
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this Form
10-KSB. ¨
Indicate by check mark whether the
Registrant is a shell company (as defined in rule 12b-2 of the Exchange
Act). Yes ¨
No x
Revenues for the year ended December
31, 2007: $41,165.
The aggregate market value of the
shares of the Registrant’s common stock, par value $0.0001 per share, held by
non-affiliates of the Registrant, as of March 28, 2008, was
$7,207,915.
As of March 28, 2008, 51,052,681 shares
of the Registrant’s common stock were outstanding.
DOCUMENTS INCORPORATED BY
REFERENCE
Part III of this Annual Report on Form
10-KSB incorporates certain information by reference from the Registrant’s Proxy
Statement for the Annual Meeting of Stockholders scheduled to be held on May 29,
2008. The Proxy Statement will be filed with the Securities and
Exchange Commission (the “SEC”) on or before April 29, 2008.
Transitional Small Business Disclosure
Format (check one): Yes ¨
No x
SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS
Certain information included in this
Annual Report on Form 10-KSB and other filings of the Registrant under the
Securities Act of 1933, as amended (the “Securities Act”), and the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), as well as information
communicated orally or in writing between the dates of such filings, contains or
may contain “forward-looking statements” within the meaning of Section 27A of
the Securities Act and Section 21E of the Exchange Act. Such
statements are subject to certain risks, trends and uncertainties that could
cause actual results to differ materially from expected
results. Among these risks, trends and uncertainties are the
availability of working capital to fund our operations, the competitive market
in which we operate, the efficient and uninterrupted operation of our computer
and communications systems, our ability to generate a profit and execute our
business plan, the retention of key personnel, our ability to protect and defend
our intellectual property, the effects of governmental regulation and other
risks identified in the Registrant’s filings with the SEC from time to time,
including our registration statement on Form SB-2 (Registration No. 333-143793),
filed with the SEC on June 15, 2007, and the subsequent amendments and
supplements thereto.
In some cases, forward-looking
statements can be identified by terminology such as “may,” “will,” “should,”
“could,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,”
“potential” or “continue” or the negative of such terms or other comparable
terminology. Although the Registrant believes that the expectations
reflected in the forward-looking statements contained herein are reasonable, the
Registrant cannot guarantee future results, levels of activity, performance or
achievements. Moreover, neither the Registrant, nor any other person,
assumes responsibility for the accuracy and completeness of such
statements. The Registrant is under no duty to update any of the
forward-looking statements contained herein after the date of this Annual Report
on Form 10-KSB.
BIGSTRING CORPORATION
INDEX TO FORM
10-KSB
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PART
I
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PAGE
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Item
1.
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Item
2.
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Item
3.
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Item
4.
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PART
II
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Item
5.
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Item
6.
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Item
7.
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Item
8.
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Item
8A(T).
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Item
8B.
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PART
III
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Item
9.*
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Item
10.*
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Item
11.*
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Item
12.*
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Item
13.
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Item
14.*
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*
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The
information required under this Item is contained in the Registrant’s
Proxy Statement for the Annual Meeting of Stockholders scheduled to be
held on May 29, 2008, and is incorporated herein by
reference. The Proxy Statement will be filed with the SEC on or
before April 29, 2008.
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PART
I
|
Item
1.
|
Description of
Business
|
Background
BigString
Corporation (“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, Inc. (“BigString Interactive”), incorporated in the State of New
Jersey, was formed by BigString in early 2006 to develop technology relating to
interactive web portals. BigString Interactive is currently
BigString’s only operating subsidiary.
Email
Emissary, Inc. (“Email Emissary”), incorporated in the State of Oklahoma, was
acquired by BigString in July 2004. In September 2006, all of Email Emissary’s
assets, including its pending patent application, were transferred to
BigString. Email Emissary was dissolved on May 17, 2007.
BigString
has developed an innovative messaging service that allows users to easily send,
recall, erase, self-destruct and secure email transmissions. BigString’s goal is
to make Internet communication more efficient, reliable and valuable, while
protecting individual privacy and intellectual property. The concept
of recallable email was conceived by one of BigString’s founders and current
President and Chief Executive Officer, Darin M. Myman. After
inadvertently sending an email to a prospective client which contained sensitive
pricing and customer information, Mr. Myman unfortunately learned that there was
no way for him to retrieve the email before the prospective client had the
opportunity to review the contents thereof. As a result of this
frustrating experience, Mr. Myman and certain other members of BigString’s
management team focused on developing a technology that would allow users to
have comprehensive control, security and privacy of their email. In
March 2004, the BigString email service was introduced to the
market.
Business
Strategy
In the past several years, the email
industry has migrated from an advertising model to a blended model that includes
advertising and subscriptions. Email service providers now offer
premium services and products which include, among other features,
value-added services such as advanced spam filters, advanced virus protection,
additional storage, multiple email addresses and secure email. In
addition to our free email service product, which includes the aforementioned
features plus our proprietary features, we offer premium email
services, products and applications such as domain/vanity names, POP3 email
client access (a protocol used to retrieve email from a mail server), advanced
email management and campaign management tools, which are offered in several
different packages at various prices and may be purchased by the users of our
BigString email service.
BigString
includes advertising with our email services. Advertisements are
primarily displayed to users of our free service. Advertisements
customarily include text and banner ads
and are
paid based on a mix of impressions, clicks and actions. BigString
currently has agreements with a number of firms that provide advertising
services. In the future, we may add additional types of
advertisements and additional advertising service firms, as well as direct
advertisers and sponsors, as we increase the monetization of our user
base.
Certain
Internet service providers (“ISPs”), portals, social networks and content
providers have started to use email as a tool to compete against each
other. This strategy incorporates email as part of their offering
because email is one of the most effective web applications in bringing users
back to a site, multiple times a day, day after day. Many service
providers have recently launched beta versions. These beta email
developments consist primarily of storage and anti-spam/anti-virus
filters. BigString continuously strives to provide a superior user
experience with features that we believe exceed those of other
providers.
Leveraging
the ‘stickiness’ of email and the advantage it can offer an Internet property,
we recently introduced email hosting, private label, and co-branded solutions.
These solutions offer BigString’s unique email features under the logos and
marks of web publishers and content sites, such as search engines, social
networks, online dating sites, ISPs and social media portals. Web publishers and
content sites can further their image and differentiate their services from
competitors, while increasing incremental traffic, page views and ad revenue
from their existing members. Most agreements include a revenue share
arrangement, and we may also charge development and maintenance fees. Web
publishers and content sites provide the marketing, which expands awareness of
BigString’s unique services beyond BigString’s marketing and can help us grow
more quickly.
The low
average cost per lead for email marketing (6% of that for direct mail) has
created a rapidly growing service industry. Most firms outsource
email marketing to service providers. Our enterprise level offerings,
BigString Marketer Pro
and BigString Marketer
SMB, allow for the sending of interactive video email commercials that
can be programmed to self-destruct at a set time. This advertising
medium permits advertisers to send video email messages and commercials to their
customers that introduce a sense of urgency and excitement by creating
time-sensitive video offers that self destruct. Interactive
self-destructing video email commercials enable marketers to create a call for
action that generally is not possible with traditional email
marketing. We pursue marketing affiliations where we offer unique
capabilities to existing email marketers as well as outsourced services to
advertisers seeking call to action email marketing.
Through
our wholly-owned subsidiary, BigString Interactive, we launched a new
interactive entertainment portal in June 2006, built around BigString’s
recallable, erasable and self-destructing email platform. BigString’s
entertainment portal contains streaming audio and video
programming.
Building
on the vast 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 skills in messaging and streaming audio and video to create
complementary messaging applications. Our development efforts are focused to
address security and privacy gaps in social networking messaging
applications.
Promotion
We
promote our email service and products through the Internet, including messaging
and email tag lines, organic search, paid search, banners, blogs, social
networks, video and other viral tactics, multimedia, print, and radio as well as
through alliances with marketing affiliates and programs contained on our
interactive entertainment portal, such as www.DailyLOL.com, www.FindItAll.com
and the OurPrisoner interactive Internet television program, which debuted in
June 2006 and concluded its six month run in December 2006.
Our
promotions also include email hosting, private label, and co-branded solutions.
The web publishers and content sites may offer our 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.
Market
Affiliations
We enter
into market affiliations with other Internet companies regarding advertisements
and other marketing promotions which can be accessed through our website.
Through these marketing affiliations, advertisements, such as banner ads, are
posted on our website and may be accessed by our users. In addition,
advertising websites may be accessed directly through our
website. Our marketing affiliates are obligated to pay us a portion
of the revenue they receive from advertisers as compensation for BigString’s
sale of promotional space on our website.
We generate revenue when our users
access the advertisements or advertising websites and purchase products and
services. In addition, we generate revenue based on the number of our
users accessing advertisements and advertisers’ websites. We also generate
revenue based upon the number of impressions per advertisement.
Products
and Services
BigString Messaging and Email
Services – BigString is a web-based, POP3 server, email service
solution. Our patent pending technology provides a user with the
ability to manage and control content sent by email. The user’s email
executes through the BigString server but such execution is transparent to the
sender and recipients of the email.
A user of our BigString email services
will have his, her or its email transposed from a text-based message through
BigString’s server, and an exact, replicated image of the email will be
instantaneously streamed to the recipient. The recipient never
actually receives the content, but only receives images of the
content.
The user of the BigString email service
and products can transparently edit, recall, cancel, and erase the email as well
as insert or delete attachments, even after the email has been sent out and
opened. All the subsequent changes by the sender will be completely
transparent to the recipient. In addition, the sender has complete
control over the life and duration of the email.
The
sender can have the email self-destruct or disappear after a defined number of
views or after a certain time period.
In June
2007, BigString launched its new email service, BigString 3.0, which replaced
BigString Beta 2.0, launched in December 2006. This service 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 destroying 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 opened the
email. In addition, BigString 3.0 allows senders to direct emails to
disintegrate in front of their recipient’s eyes and allows senders to create,
save and send self-destructing video email.
BigString
has continued to introduce a number of upgrades and features for our email
service while increasing penetration into global markets and expanding into
adjacent messaging markets:
|
|
·
|
In
January 2007, BigString introduced self-destructing video email that can
be programmed to self-destruct after a specific number of viewings or a
set time. Also in January 2007, BigString launched Chinese versions of our
email service.
|
|
|
·
|
In
February 2007, BigString began offering a hosted video email marketing
platform with interactive video email commercials that can be programmed
to self-destruct at a set time; this advertising medium creates a sense of
urgency through time-sensitive
offers.
|
|
|
·
|
In
March 2007, BigString began offering private label email services to
clients to expand its customer base and create additional exposure for
advertising partners.
|
|
|
·
|
In
June 2007, BigString launched Version 3.0 which provided users with four
Gigabytes of storage – two GB of email and two GB of file storage, as well
as new tracking tools to enable the sender to know when and how many times
their email has been opened and if it has been
forwarded.
|
|
|
·
|
In
July 2007, in response to user demand from its Version 3.0 launch,
BigString introduced unlimited email
storage.
|
|
|
·
|
In
August 2007, BigString unveiled Three Layer Secure Email for sensitive
correspondence which enables users to send encrypted, password-protected
email with BigString’s unique auto-expiration and non-forward features.
Also in August 2007, BigString created an email and video alliance program
which enables users access to the hottest new videos from partners while
providing hosted email services to
partners.
|
|
|
·
|
In
November 2007, BigString launched its first social networking messaging
widget, a Facebook application that enables Facebook users to send
messages and photos programmed to
self-destruct.
|
|
|
·
|
In
December 2007, BigString launched another social networking application
for Facebook which enables Facebook users to send self-destructing
videos.
|
|
|
·
|
In
January 2008, BigString launched email service for the iPhone™ and other
next-generation wireless devices to send self-destructing email and
pictures. Also in January 2008, as part of our efforts to continue
innovation of communications privacy initiatives, we released a new video
email platform for the Chinese
market.
|
Products Offered – BigString
currently offers its consumer, business and enterprise customers the following
packages:
Email
|
|
·
|
BigString
Free Email (No Charge).
|
|
|
·
|
BigString
Premium Email ($29.95 per year).
|
|
|
·
|
BigString
Business Email ($149.95+ per year).
|
|
|
·
|
BigString
Mobile Email (No Charge).
|
Email
Marketing
|
|
·
|
BigString
Marketer SMB (Small & Medium Businesses) ($499.95+ per
year).
|
|
|
·
|
BigString
Marketer Pro (Enterprise level) ($20,000.00 per year + revenue
share).
|
Email
Hosting
|
|
·
|
BigString
Co-branded Email (No Charge).
|
|
|
·
|
BigString
Private Label Email ($5,000.00 development, $500.00 per year + revenue
share).
|
|
|
·
|
BigString
Email Hosting (Enterprise level) ($11,500.00+ per
year).
|
Social Network
Messaging
|
|
·
|
BigString
Exploding Messages & Pictures (No
Charge).
|
|
|
·
|
BigString
Exploding Video (No Charge).
|
BigString Free Email provides
all the features of BigString Version 3.0, includes unlimited GB email storage
and permits the user to send unlimited emails per month. It is
accessed by the user through the web as web-based email, or webmail, and each
user is given one address. Individuals can signup for multiple
“disposable” accounts. Wizards help users import previously saved
contacts. To personalize their email, users can create an alias,
create their own font, add signatures, add pictures to both their profile and
their contacts’ profiles, create multiple expire messages, and create custom
templates with editable fields and then access the saved templates to save time
while composing messages.
BigString Premium Email
offers all the features of the BigString Free Email account,
plus vanity domains (yourname@yourdomain.com), POP3 access using any email
client (such as Microsoft Outlook®), 30
minute video email and reduced banner advertising.
BigString Business Email
offers all the features of the BigString Premium account,
plus 10 email accounts, global filter notification and advanced email
management. Small and medium sized businesses can customize the
number of additional addresses for an additional fee.
BigString Mobile Email
provides access to a user’s email account from the iPhone™ and other
next-generation wireless devices.
BigString Marketer SMB
provides a hosted video email marketing platform for small and medium size
businesses. Customized video players, campaign wizards and tracking
reports deliver tools for cost effective marketing.
BigString Marketer Pro
provides an enterprise marketing software application which allows for the
sending of interactive video email commercials that can be programmed to
self-destruct at a set time.
BigString Co-branded Email
provides web publishers and content sites BigString’s hosted email
platform as a value-added service for their members and helps generate
incremental traffic, page views and ad revenue from their existing
members.
BigString Private Label Email
offers web publishers and content sites all the features of BigString Co-branded Email,
in a package which is private labeled, or white labeled, and offers a revenue
share of advertising and/or premium fees generated by BigString.
BigString Email Hosting
offers enterprise level firms all the features of BigString Private Label
Email, in a licensed package which can be customized to integrate with
the firms’ messaging, networking and video applications.
BigString Exploding Messages &
Pictures offers social networking members integrated self-destructing
messaging applications through their current social network.
BigString Exploding Video
offers social networking members integrated self-destructing video applications
through their current social network.
Following
the release of BigString Beta 2.0 in December 2006, BigString began compiling
new email and webpage metrics. From December 31, 2006, to December
31, 2007, product usage has grown among active users as follows:
|
Product
|
Growth
|
|||
|
BigString
Free Email
|
504 | % | ||
|
BigString
Premium Email
|
41 | % | ||
|
BigString
Business Email
|
608 | % | ||
|
Active
Email Accounts
|
470 | % | ||
During
2007, members accessed over 150 million pages, averaging 60 pages per sign-in
and 148 pages per unique daily sign-in.
Technical and Customer
Support – Customer support for BigString’s email service and products is
available in two different ways:
|
|
·
|
Email
Support. The ability for customers to contact BigString
support through email.
|
|
|
·
|
Phone
Support. The ability for customers to contact BigString
support via the telephone.
|