Item 2. Management's Discussion and Analysis or Plan of Operation

We have provided below information about BigString's financial condition and results of operations for the three and nine months ended September 30, 2007 and 2006, respectively. This information should be read in conjunction with BigString's consolidated financial statements for the three and nine months ended September 30, 2007 and 2006, and the period October 8, 2003 (Date of Formation) through September 30, 2007, including the related notes thereto, which are included on pages 1 through 22 of this report.

Background

BigString was incorporated in the State of Delaware on October 8, 2003 under the name "Recall Mail Corporation." The company's name was formally changed to "BigString Corporation" in July 2005. BigString was formed, together with Email Emissary, incorporated in the State of Oklahoma on August 7, 2003, to develop technology that would allow the user of email services to have comprehensive control, security and privacy relating to the email generated by the user. Email Emissary was later acquired by BigString in July 2004. In September 2006, all of Email Emissary's assets, including its pending patent application, were transferred to BigString. Email Emissary was dissolved on May 17, 2007.

Development Stage Company

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

Overview

BigString is a technology firm with a global client base, focused on providing a superior online communications experience for our users. Our innovations in recallable, erasable email provide a new level of privacy and security for those who wish to protect their proprietary information and manage their digital rights. We serve three main markets: free and paid email accounts for individuals, professional business email solutions, and email marketing services.

Our development efforts in 2006 were primarily focused on the redesign of our email system, which was launched in December 2006 as BigString Beta 2.0. This release was a significant revision to the application to allow dynamic scalability, feature upgrades and improved user interfaces. Our development efforts in 2007 have focused primarily on improving the overall customer experience with feature upgrades, such as our Triple Layer Secure Email, and development of advanced user interfaces. We also developed a third core product, email marketing services, to complement our consumer email services and professional business email solutions.

In order for us to grow our business and increase our revenue, it is critical for us to attract and retain new customers. For us to increase our revenue, we need to establish a large customer base. A large customer base of our free email services provides us with more opportunities to sell our premium services, which could result in increased revenue. In addition, a large customer base may allow us to increase our advertising rates and attract other Internet based advertising and marketing firms to advertise and form marketing affiliations with us, which could result in increased advertising revenues.

We commenced our online marketing efforts in May 2007, with the hiring of an experienced online marketing firm, CAC, Inc. and CAC, Inc.'s recommended vendors. Online marketing efforts include search engine optimization, viral video production, copywriting, online

promotions, and posts of blogs and videos to online social networking communities. The efforts through September 30, 2007 included further development of our marketing infrastructure base, promotions, advertising and public relations.

During the three months ended September 30, 2007, we increased advertising expenditures related to promotional messages while online marketing and public relations expenses remained at approximately the same level as the three months ended June 30, 2007. Our growth of new member sign-ups increased 63% for the three months ended September 30, 2007, as compared to the three months ended June 30, 2007. In addition, during the three months ended September 30, 2007, member sign-ups from viral activity (non-promotional) increased by 71% over the three months ended June 30, 2007. While the growth of new member sign-ups was predominately driven by increased advertising, the number of customers acquired for every marketing dollar spent (advertising and online marketing efforts) increased 29% for the three months ended September 30, 2007, as compared to the three months ended June 30, 2007.

Other certain criteria we review to measure our performance are set forth below:

o the number of first time and repeat users of our email services;

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

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

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

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

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

o the acquisition cost per user for each of our email services;

o the cost and effectiveness for each of our promotional efforts;

o the revenue and effectiveness of advertisements we serve; and

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

In 2006, we formed BigString Interactive and launched a new interactive entertainment portal. We began our programming initiative in June 2006 with the debut of OurPrisoner, BigString's interactive Internet television reality program. OurPrisoner concluded its six month run in December 2006. The most popular video clips were archived and continue to be accessed at www.OurPrisoner.com. OurPrisoner allowed us to develop core video technology that has been incorporated into our enterprise email offerings. We also plan to leverage our experience with OurPrisoner in future BigString Interactive programs.

In December 2006, BigString launched a beta version of FindItAll.com, a video and photo search engine which BigString had acquired in May 2006. FindItAll.com, in conjunction with the Pixsy Media Search platform, provides Internet users a comprehensive search facility for online viral videos, television programs, news events, movies and movie trailers, music videos and other similar media. Also in December 2006, BigString acquired DailyLOL.com, a viral video website that provides humorous videos, games and pictures. DailyLOL.com was launched as part of the company's interactive entertainment portal.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon BigString's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires BigString to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the

date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, BigString evaluates its estimates, including those related to intangible assets, income taxes and contingencies and litigation. BigString bases its estimates on historical expenses and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

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

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

BigString recognizes online service revenue over the period that services are provided. Other revenues, which consist principally of electronic commerce and advertising revenues, as well as data network service revenues, are recognized as the services are performed. BigString recognizes these revenues as such because the services have been provided, the fees are fixed or determinable, and collectibility is reasonably assured. Unearned revenue consists primarily of prepaid electronic commerce and annual prepaid subscription fees billed in advance.

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

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

BigString records its allowance for doubtful accounts based upon an assessment of various factors, including historical experience, age of the accounts receivable balances, the credit quality of customers, current economic conditions and other factors that may affect customers' ability to pay.

STOCK-BASED COMPENSATION. BigString has one stock-based compensation plan under which incentive and nonqualified stock options and rights to purchase stock may be granted to employees, directors and other eligible participants. Effective January 1, 2006, BigString accounts for stock-based compensation under SFAS No. 123(R), "Share-Based Payment." BigString adopted SFAS No. 123(R) using the modified prospective method. Under this modified prospective method, SFAS No. 123(R) applies to new awards and to awards modified, repurchased, or cancelled after the required effective date of SFAS No. 123(R). Additionally, compensation costs for the portion of the awards outstanding as of the required effective date of SFAS No. 123(R), for which the requisite service has not been rendered, are being recognized as the requisite service is rendered after the required effective date of SFAS No. 123(R). The compensation cost for the portion of awards is based on the grant-date fair value of those awards as calculated for either recognition or pro forma disclosures under SFAS No. 123, "Accounting for Stock Based Compensation."

Changes to the grant-date fair value of equity awards granted before the required effective date of SFAS No. 123(R) are precluded. The compensation cost for those earlier awards is attributed to periods beginning on or after the required effective date of SFAS No. 123(R) using the attribution method that was used under SFAS No. 123, except that the method of recognizing forfeitures only as they occur was not continued.

BigString issues shares of its common stock, warrants to purchase common stock and non-qualified stock options to non-employees as stock-based compensation. BigString accounts for the services using the fair market value of the consideration issued.

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

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

INTANGIBLE ASSETS. In June 2001, the FASB issued SFAS No. 142, "Goodwill and other Intangible Assets." SFAS No. 142 specifies the financial accounting and reporting for acquired goodwill and other intangible assets. Goodwill and other indefinite-lived intangible assets are no longer amortized, but are reviewed for impairment at least annually. The valuation of intangible assets has been determined by management after considering a number of factors.

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

Results of Operations
For the Three and Nine Months Ended September 30, 2007 and 2006

NET LOSS. For the three months ended September 30, 2007, our net loss was $902,735, as compared to a $966,135 net loss for the same period in 2006. The $63,400 decrease in net loss was primarily attributable to a $7,020 increase in revenue, a $100,355 decrease in general and administrative expenses, a $52,855 decrease in cost of revenues and a $44,059 decrease in research and development, partially offset by a $59,261 increase in sales and marketing expenses and a $80,825 change in net interest expense/income.

For the nine months ended September 30, 2007, our net loss was $2,597,063, as compared to a $2,216,690 net loss for the same period in 2006. The $380,373 increase in net loss was primarily attributable to a $224,118 increase in sales and marketing expenses, a $98,195 increase in general and administrative expenses, a $52,409 increase in amortization of intangibles, and a

$132,984 change in net interest expense/income, partially offset by a $20,148 increase in revenue, a $57,710 decrease in cost of revenues and a $49,475 decrease in research and development expenses.

REVENUES. For the three months ended September 30, 2007, our total revenues were $10,863, as compared to $3,843 in total revenues for the same period in 2006. Of the revenues generated for the three months ended September 30, 2007, $7,215 was generated from the purchase of our services and $3,648 was generated from advertisers, whereas for the three months ended September 30, 2006, $1,706 was generated from the purchase of our services and $2,139 was generated from advertisers.

For the nine months ended September 30, 2007, our total revenues were $30,050, as compared to $9,902 in total revenues for the same period in 2006. Of the revenues generated for the nine months ended September 30, 2007, $17,720 was generated from the purchase of our services and $12,330 was generated from advertisers, whereas for the nine months ended September 30, 2006, $6,838 was generated from the purchase of our services and $3,064 was generated from advertisers.

Our advertising revenues are paid based on a mix of impressions, clicks and actions. On a normalized impression basis, the average revenue per paid-impression for the three months ended September 30, 2007 increased by 160% over the three months ended June 30, 2007 and increased 379% from January 2007.

During the nine months ended September 30, 2007, BigString offered three services for purchase: premium upgrades for individual accounts; professional business email solutions; and email marketing services. Pre-paid purchases are recognized as revenues as the services are performed. Total purchases increased 227% for the nine months ended September 30, 2007, as compared to the same period in 2006. Changes in purchases for the nine months ended September 30, 2007, over the nine months ended September, 2006, for each service is as follows: premium upgrade purchases increased by 39%; professional business email solutions increased over 2,350% ; and email marketing services are new services and did not have sales in the nine months ended September 30, 2006.

As of September 30, 2007, unearned revenue from the purchase of our services increased to $11,907 from $3,031 at September 30, 2006 and $4,681 at December 31, 2006.

EXPENSES. Operating expenses for the three months ended September 30, 2007 were $847,219, a $137,205 decrease from operating expenses of $984,424 incurred in the same period in 2006. Operating expenses, excluding amortization, depreciation and share-based compensation expenses, for the three months ended September 30, 2007, decreased by $164,191 from the operating expenses, excluding amortization, depreciation and share-based compensation expenses, from the same prior year period.

o General and administrative: General and administrative expenses for the three months ended September 30, 2007, were $288,709, as compared to $389,064 for the same prior year period. The $100,355 decrease in expenses was primarily attributable to reduced consulting, legal and other professional expenses of $106,272.

o Sales and marketing: Sales and marketing expenses for the three months ended September 30, 2007, were $148,962, as compared to $89,701 for the same prior year period. The $59,261 increase in expenses was primarily attributable to increased online marketing expenses of $94,154 and increased advertising expenses of $26,711, partially offset by an accrual of $68,000 for public relations services in September 2006.

o Amortization: Amortization expense for the three months ended September 30, 2007, was $270,803, as compared to $270,000 for the same prior year period. The $803 increase in expense was primarily attributable to the increase in intangible assets related to the 2006 website acquisitions of FindItAll.com, AmericanMoBlog.com and DailyLOL.com.

o Cost of revenues: Cost of revenues for the three months ended September 30, 2007, was $21,874, as compared to $74,729 for the same prior year period. The $52,855 decrease in cost was primarily attributable to reduced staffing and associated overhead expenses.

o Research and development: Research and development expenses for the three months ended September 30, 2007, were $116,871, as compared to $160,930 for the same prior year period. The $44,059 decrease in expenses was primarily attributable to reduced development staffing and associated overhead costs.

Operating expenses for the nine months ended September 30, 2007 were $2,523,428, a $267,537 increase over operating expenses of $2,255,891 incurred in the same period in 2006. Operating expenses, excluding amortization, depreciation and share-based compensation expenses, for the nine months ended September 30, 2007, decreased by $196,235 from the operating expenses, excluding amortization, depreciation and share-based compensation expenses, from the same prior year period.

o General and administrative: General and administrative expenses for the nine months ended September 30, 2007, were $893,066, as compared to $794,871 for the same prior year period. The $98,195 increase in expenses was primarily attributable an increase in non-cash share-based compensation of $219,839, primarily for consultants, and investor relations expenses of $79,912, partially offset by a decrease in consulting, legal and other professional fees of $81,977 and rent and other discretionary expenses.

o Sales and marketing: Sales and marketing expenses for the nine months ended September 30, 2007, were $352,701, as compared to $128,583 for the same prior year period. The $224,118 increase in expenses was primarily attributable to 2007 marketing consultant expenses of $187,954 and an increase in advertising expenses of $50,052.

o Amortization: Amortization expense for the nine months ended September 30, 2007, was $812,409, as compared to $760,000 for the same prior year period. The $52,409 increase in expense was primarily attributable to the increase in intangible assets related to the 2006 website acquisitions of FindItAll.com, AmericanMoBlog.com and DailyLOL.com.

o Cost of revenues: Cost of revenues for the nine months ended September 30, 2007, was $90,994, as compared to $148,704 for the same prior year period. The $57,710 decrease in cost was primarily attributable to reduced staffing and associated overhead expenses.

o Research and development: Research and development expenses for the nine months ended September 30, 2007, were $374,258, as compared to $423,733 for the same prior year period. The $49,475 decrease in expenses was primarily attributable to reduced development staffing and associated overhead expenses.

INTEREST EXPENSE AND INCOME. Net interest expense was $66,379 for the three months ended September 30, 2007, as compared to $14,446 of interest income for the same prior year period. This change from interest income to interest expense was primarily attributable to non-cash expenses of $55,554 for the accretion for the beneficial conversion feature of the convertible notes recorded as additional paid in capital, $12,000 for accrued debt for interest on the convertible notes,

and $2,610 for the amortization of the convertible note discount. Interest income of $790 was earned for the three months ended September 30, 2007, as compared to $14,446 earned for the same prior year period, due to smaller cash balances maintained by BigString.

Net interest expense was $103,685 for the nine months ended September 30, 2007, as compared to $29,299 of interest income for the same prior year period. This change from interest income to interest expense was primarily attributable to non-cash expenses discussed above relating to the three months ended September 30, 2007.

INCOME TAXES. No tax provision has been recorded for the three and nine months ended September 30, 2007 and 2006 as a result of our accumulated operating losses.

Liquidity and Capital Resources

Our operating and capital requirements have exceeded our cash flow from operations as we have been building our business. Since inception through September 30, 2007, we have expended $3,928,416 for operating and investing activities, which has been primarily funded by investments of $4,096,240 from our stockholders and convertible note holders. For the nine months ended September 30, 2007, we expended $941,540 for operating and investing activities, a decrease of $461,087 from the amount expended during the nine months ended September 30, 2006.

Our cash balance as of September 30, 2007 was $167,824, which was a decrease of $710,406 from our cash balance of $878,230 as of September 30, 2006. This decrease to our cash balance related to operating and investment expenses of $1,320,696, which included expenses associated with the development of our products and services, marketing, the 2006 interactive promotional show, OurPrisoner, and professional fees. These expenses were partially offset by $610,290 raised by BigString through exercise of warrants and private placement of convertible notes and warrants.

Management believes its current cash balance of $94,814 at November 7, 2007, is not sufficient to fund the minimum level of operations for the next twelve months.

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

On May 1, 2007, we entered into a financing arrangement with Whalehaven Capital Fund Limited, Alpha Capital Anstalt, Chestnut Ridge Partners, LP, Iroquois Master Fund Ltd. and Penn Footwear, pursuant to which these Subscribers purchased convertible notes in the aggregate principal amount of $800,000, which notes are convertible into shares of our common stock and warrants to purchase up to 1,777,779 shares of our common stock. Each convertible note has a term of three years and accrues interest at a rate of six percent annually. The holder of a convertible note shall have the right from and after the issuance thereof until such time as the convertible note is fully paid, to convert any outstanding and unpaid principal portion thereof into shares of our common stock at a conversion price of $0.18 per share. As provided for in the subscription agreement, the Subscribers agreed to purchase at a second closing additional convertible notes in the aggregate principal amount of $800,000 and warrants to purchase up to 1,777,779 shares of our common stock, for a total subscription of $1,600,000, provided that we registered the shares of our common stock underlying the additional convertible notes and warrants by September 13, 2007 and

met certain other closing conditions. Because we were unable to register the shares of common stock underlying the additional convertible notes and warrants by September 13, 2007, Whalehaven Capital Fund Limited, Alpha Capital Anstalt, Chestnut Ridge Partners LP, Iroquois Master Fund Ltd. and Penn Footwear have not purchased the additional convertible notes and warrants, and we are required to pay liquidated damages equal to two percent of the purchase price of the outstanding convertible notes, or $16,000, for the first thirty days following September 13, 2007, and one percent of the purchase price of the outstanding convertible notes, or $8,000, for each thirty days thereafter, until the shares of common stock underlying the outstanding convertible notes are registered. BigString must pay the liquidated damages in cash. Effective November 13, 2007, the shares of common stock underlying the outstanding convertible notes and warrants were registered. As of that date, BigString owed $24,267 in liquidated damages relating to the outstanding convertible notes.

Based upon our current financial status, and assuming that the outstanding convertible notes are not converted into shares of common stock, we will not be able to pay the principal and interest on the convertible notes when they become due.

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

We recently received notice that our application for the State of New . . .