Index


UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 
 (Mark One)
 x    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2010
  or
   ̈ 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 333-163290
 
  PEOPLESTRING CORPORATION
 (Exact name of registrant as specified in its charter)
  Delaware

90-0436540(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)
 Securities registered pursuant to Section 12(b) of the Act:
 None
 
 Securities registered pursuant to Section 12(g) of the Act:
 Common Stock, par value $0.00001
 (Title of class)
 
 Indicate by check mark if the Registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. Yes  ̈No x
  Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  ̈No x
  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 xNo  ̈
  Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not 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-K or any amendment to this Form 10-K.  ̈
  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
  Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ̈No x
  At June 30, 2010, the aggregate market value of shares held by non-affiliates of the Registrant (based upon the most recent prior private placement per share purchase price) was $2,050,000.
  At March 31, 2011, there were 34,618,500 shares of the Registrant’s common stock outstanding.
 
 Index
  SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
 Certain information included in this Annual Report on Form 10-K 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 Annual Report on Form 10-K, including without limitation, statements related to our plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from expected results.  Among these risks, trends and uncertainties are the availability of working capital to fund our operations, the competitive market in which we operate, the efficient and uninterrupted operation of our computer and communications systems, our ability to generate a profit and execute our business plan, the retention of key personnel, our ability to protect and defend our intellectual property, the effects of governmental regulation and other risks identified in the Registrant’s filings with the Securities and Exchange Commission from time to time.
 
 In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of such terms or other comparable terminology.  Although the Registrant believes that the expectations reflected in the forward-looking statements contained herein are reasonable, the Registrant cannot guarantee future results, levels of activity, performance or achievements.  Moreover, neither the Registrant, nor any other person, assumes responsibility for the accuracy and completeness of such statements.  The Registrant is under no duty to update any of the forward-looking statements contained herein after the date of this Annual Report on Form 10-K.
   Index
  PEOPLESTRINGCORPORATION
 
 INDEX TO FORM 10-K
   PART I

PAGEItem 1.
Business
2Item 1A.
Risk Factors
4Item 1B.
Unresolved Staff Comments
5Item 2.
Properties
5Item 3.
Legal Proceedings
5Item 4.
(Removed and Reserved)
5PART IIItem 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities
6Item 6.
Selected Financial Data
7Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operation
7Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
10Item 8.
Financial Statements and Supplementary Data
10Item 9.
Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
10Item 9A.
Controls and Procedures
10Item 9B.
Other Information
11PART IIIItem 10.
Directors, Executive Officers and Corporate Governance
12Item 11.
Executive Compensation
14Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
16Item 13.
Certain Relationships and Related Transactions and Director Independence
17Item 14.
Principal Accountant Fees and Services
17Item 15.
Exhibits, Financial Statement Schedules
18Index to Consolidated Financial Statements
F-1Index of Exhibits
E-1Signatures
19
 
 
 -1-
 Index
 
 PART I
   Item1.   Business
  Background
  PeopleString Corporation (“PeopleString” or the “Company”) was incorporated in the State of Delaware on January 2, 2009. The Company was formed to develop technology that would allow users of social networks to earn incentives through online and offline activities by the user and his or her network. In March 2009, PeopleString’s incentive-based social network was introduced to the market.
  RewardString Corporation (“RewardString”), incorporated in the State of Delaware, was formed in late 2010 to develop technology relating to social media marketing. At December 31, 2010, PeopleString owned more than 50% of RewardString’s outstanding common stock.
  RewardString is currently PeopleString’s only subsidiary.
  Overview
  PeopleString began as a technology firm, that created an incentive-based social network which allows users to aggregate and share the revenue generated from their online activities, communication and social networking through its website located at www.PeopleString.com. The company developed an “InstaPortal” technology which helps users design slices of Internet sites they wish to capture and have those slices appear in a convenient, home page. PeopleString has also developed a service, PeopleDeals & Marketplace Platform, which enables local merchants to utilize social media as part of their marketing operations.
  Business Strategy, Products and Services
  The PeopleString Social Network allows individuals, entrepreneurs and small businesses to manage and aggregate their personal, business and social communications into one user-friendly online dashboard. PeopleString provides the tools necessary to manage and streamline social networking into an easy-to-use command center with useful features. Revenues are generated through the use of email, Internet searches, watching videos, shopping rewards programs and our proprietary, opt-in direct mail program.
  The multi-tiered affiliate program has significantly helped increase membership and revenues in our business. Rather than using traditional advertising and marketing methods, we chose to create a multi-tiered affiliate program to develop new customers. Once a user is referred and signed up, they are part of the multi-tiered affiliate program. Every time the user earns money, whether it be by viewing an ad, performing an Internet search, shopping through our Web site, receiving a piece of direct mail or using one of our premium services, the initial user that referred the new user will earn money, as well as those in the tiered affiliate program above them for five levels. Pursuant to this program, we share revenue generated from advertising and marketing affiliations with the “active users” of our services, which are defined as those users who are registered users and have logged onto their account within 90 days of the date that the revenue is shared with users. “Active users” consist of both paying (e.g., Premium) and non-paying users of our services.
  In January 2011, we introduced an InstaPortal technology that allows users to view continuously updating slices of their favorite websites on their PeopleString homepage. Increased ‘stickiness’ on the PeopleString website may lead to increased traffic, page views and advertising, affiliate and product/services revenue.
  The PeopleDeals & Marketplace Platform was developed to allow local merchants to utilize new social marketing tools to promote the merchants’ business. Merchants create unique social applications, attract and retain customers and leverage their social connections. Merchants can leverage their social connections through PeopleString, email and other social networks, such as Facebook and Twitter, to reach potential customers with special offers.
  In order for us to grow our business and increase our revenue, it is critical for us to attract and retain new users. For us to increase our revenue, we need to establish a large customer base. A large customer base of our free 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 and product fee revenues.
   -2-
 Index
  Certain criteria we review to measure our performance is set forth below:
  ·  the number of first time users of our social network;
  ·  the number of repeated users of our social network;
  ·  the number of free users;
  ·  the number of paid users; and
  ·  the number of referrals by each of our users.
  Promotion
  We promote our service and products primarily through word of mouth by our members to potential members. We augment this viral marketing with tools that our members can leverage to help recruit additional members, including hosted landing pages and collateral. We also allow ‘up-line’ members to volunteer to lead webinars where they can work more closely with potential members.
  While we have not advertised to date, we may initiate branding and/or direct response campaigns in the future, 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.
  Our promotions may also include partnerships, hosting, private label, co-branded solutions and software as a service (“SaaS”). Web publishers and content sites may offer our services to their existing registered member base as well as all future members that register. Web publishers and content sites are responsible for marketing. PeopleString 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 services to marketing affiliates, PeopleString 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 PeopleString’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.
  Protection of Proprietary Rights
 
 We rely on a combination of U.S. and foreign patent, copyright, trademark and trade secret laws to establish and protect our proprietary rights. In particular, we rely upon our patent application for Method and Apparatus for Web Page Glancing, Serial No. 12/943,760 (“InstaPortal”); a confidential patent application; our service mark application for the word “PeopleString,” Serial No. 85/238,154; and the protection of our proprietary information afforded by the Lanham Act of 1946, 15 U.S.C. §§ 1051-1127; the Economic Espionage Act of 1996, 18 U.S.C. §1832; the Uniform Trade Secrets Act; as well as by common-law.  If issued by the United States Patent and Trademark Office, the patents will expire 20 years following the date our patent applications were filed, including November 10, 2030 for Method and Apparatus for Web Page Glancing.  Our service marks will not expire provided that we continue to make routine filings to keep it current with the United States Patent and Trademark Office.
  Under the U.S. patent laws, our rights to the intellectual property which is the subject of our patent and patent application may not be infringed upon by a third party.  We may assert rights and provisional rights as to the intellectual property covered by the patent and patent application, respectively.  PeopleString may obtain a reasonable royalty from a third party that infringes on a claim, provided actual notice is given to the third party by PeopleString and with respect to the patent application, that a patent issues from the application with a substantially identical claim.
  -3-
 Index
  Market
  PeopleString members are Internet users who seek to utilize the Internet as their source for social networking, news, entertainment, shopping and marketing to other Internet users. Generally, our products and services can be readily accessed through the Internet and thus from virtually anywhere the Internet is accessible. Internet users can access PeopleString’s English language site, http://www.PeopleString.com, on a global basis, 24 hours a day. For the year ended December 31, 2010, PeopleString visitors accessed www.PeopleString.com from 215 countries/territories.
  Competition
  We have existing competitors for our businesses that have greater financial, personnel and other resources, longer operating histories, more technological expertise, more recognizable names and more established relationships in industries that we currently serve or may serve in the future.  Increased competition, our inability to compete successfully against current or future competitors, pricing pressures or loss of market share could result in increased costs and reduced operating margins, which could harm our business, operating results, financial condition and future prospects.  Many of these firms are well established, have reputations for success and have significantly greater financial, marketing, distribution, personnel, and other resources than us.  Further, we may experience price competition, and this competition may adversely affect our financial condition and results of operations or adversely affect our revenues and profitability.
  The markets for our services are highly competitive.  With limited barriers to entry, we believe the competitive landscape will continue to increase both from new entrants to the market as well as from existing players.  We remain focused on delivering better, more advanced and innovative services than our competitors.
  Employees
  We currently have nine employees, a portion of which also share their time and expenses with BigString Corporation (“BigString”). At December 31, 2010, we had seven employees. We believe that our relationship with our employees is satisfactory.  We have not suffered any labor problems since our inception.
  Robert S. DeMeulemeester, Adam M. Kotkin and Darin M. Myman are key executives and members of the board of directors of PeopleString. Mr. DeMeulemeester, Mr. Kotkin and Mr. Myman are also directors of BigString and Mr. DeMeulemeester and Mr. Myman are also key executives of BigString.
  Government Regulation
  We do not currently face direct regulation by any governmental agency, other than laws and regulations generally applicable to businesses.
  Due to the increasing popularity and use of the Internet, it is possible that a number of laws and regulations may be adopted in the U.S. and abroad with particular applicability to the Internet.  It is possible that governments will enact legislation that may be applicable to us in areas including network security, encryption, data and privacy protection, electronic authentication or “digital” signatures, access charges and retransmission activities.  Moreover, the applicability to the Internet of existing laws governing issues including property ownership, content, taxation, defamation and personal privacy is uncertain.
  The majority of laws that currently regulate the Internet were adopted before the widespread use and commercialization of the Internet and, as a result, do not contemplate or address the unique issues of the Internet and related technologies.  Any export or import restrictions, new legislation or regulation or governmental enforcement of existing regulations may limit the growth of the Internet, increase our cost of doing business or increase our legal exposure.  Any of these factors could have a material adverse effect on our business, financial condition and results of operations.
  Violations of local laws may be alleged or charged by state or foreign governments, and we may unintentionally violate local laws.  Local laws may be modified, or new laws enacted, in the future.  Any of these developments could have a material adverse effect on our business, results of operations and financial condition.
  Item1A. Risk Factors
  PeopleString is a smaller reporting company and is therefore not required to provide this information.
  -4-
 Index
 
  Item1B. Unresolved Staff Comments
  None.
  Item2.   Properties
  PeopleString shares approximately 1,426 square feet of office space office space at 157 Broad Street, Suite 109, Red Bank, New Jersey 07701 with BigString and made payments to BigString for the shared office space. Beginning June 1, 2010, PeopleString paid for its shared office space directly to BigString’s landlord; the current occupancy rate is $2,300 per month. PeopleString leases a secondary office and hosting facilities which requires PeopleString to pay for executor costs (such as maintenance). While we believe that the offices are adequate to meet our current requirements, we continue to evaluate facility needs and requirements for the future.
  Item 3.   Legal Proceedings
  We are not a party to, and none of our property is the subject of, any pending legal proceedings. To our knowledge, no governmental authority is contemplating any such proceedings.
  Item4.   (Removed and Reserved)
  
 -5-
 Index
  
  PART II
   Item 5.   Market for Registrant’s Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities
  Market Information
  Our common stock commenced quotation on the NASDAQ OTC Bulletin Board under the trading symbol “PLPE” on January 25, 2011. The NASDAQ OTC Bulletin Board is generally considered to be a less active and efficient market than the NASDAQ Global Market, the NASDAQ Capital Market or any national exchange and will not provide investors with the liquidity that the NASDAQ Global Market, the NASDAQ Capital Market or a national exchange would offer.  As of March 31, 2011, we had over five market makers for our common stock, including:  Archipelago Trading Services, Inc., Buckman, Buckman & Reid, Inc., Delaney Equity Group, Hudson Securities, Inc. and Puma Capital, LLC.
  As of March 31, 2011, the approximate number of registered holders of our common stock was 69. As of March 31, 2011, the number of outstanding shares of our common stock was 34,618,500, and there were 15,424,500 shares of common stock subject to outstanding stock options. As of March 31, 2011, the Equity Incentive Plan had not been registered with the SEC.
  Dividends
  No dividends were declared on PeopleString’s common stock in the years ended December 31, 2010 and 2009, and it is anticipated that cash dividends will not be declared on PeopleString’s common stock in the foreseeable future.  Our dividend policy is subject to the discretion of our board of directors and depends upon a number of factors, including operating results, financial condition and general business conditions.  Holders of common stock are entitled to receive dividends as, if and when declared by our board of directors out of funds legally available therefor.  We may pay cash dividends if net income available to stockholders fully funds the proposed dividends, and the expected rate of earnings retention is consistent with capital needs, asset quality and overall financial condition.
  Details of Issuance of Shares of Our Common Stock
  No shares of PeopleString’s common stock were issued in the year ended December 31, 2010.
  2009 Amended Equity Incentive Plan
  Pursuant to the 2009 Equity Incentive Plan, which was approved by the stockholders of PeopleString at its 2009 annual meeting of stockholders, and amended and approved by the stockholders of PeopleString in 2010, the 2009 Amended Equity Incentive Plan (the “Equity Incentive Plan”), options to purchase up to 20,000,000 shares of Common Stock may be granted to employees, officers, directors, agents and consultants of PeopleString who are in a position to make significant contributions to the success of PeopleString. As of December 31, 2010, no awards had been made under the Equity Incentive Plan.
  Securities Authorized for Issuance under Equity Compensation Plans
  As of December 31, 2010, no awards had been made under the Equity Incentive Plan. The number of stock options outstanding under the Equity Incentive Plan, the weighted-average exercise price of outstanding stock options, and the number of securities remaining available for issuance as of December 31, 2010 were as follows:
  2010 EQUITY COMPENSATION PLAN TABLE
  Plan category

Number of securities

to be issued upon

exercise of

outstanding options,

warrants and rights

(a)


Weighted average

exercise price of

outstanding options,

warrants and rights

(b)


Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in

column (a))

(c)Equity compensation plansapproved by security holders (1)


---
(2)

$
---



20,000,000Equity compensation plans notapproved by security holders


---
(3)

$
---



---Total


---


$
---



20,000,000
   -6-
 Index
  ________________________________
 
 (1)
PeopleString currently has no equity compensation plan other than the Equity Incentive Plan described herein.(2)
Represents options to purchase Common Stock outstanding at December 31, 2010 issued under the Equity Incentive Plan.  See discussion above for additional information.(3)
Includes options, warrants and rights to purchase shares of Common Stock not approved by security holders which were issued and outstanding as of December 31, 2010.
  Equity Compensation Arrangements Not Approved by Stockholders
  As of December 31, 2010, PeopleString had not awarded any equity compensation arrangements not approved by stockholders.
  Item6.  Selected Financial Data
  PeopleString is a smaller reporting company and is therefore not required to provide this information.
  Item7.  Management’s Discussion and Analysis of Financial Condition and Results of Operation
  The following discussion and analysis is intended to provide information about PeopleString’s financial condition and results of operations for the years ended December 31, 2010 and 2009.  This information should be read in conjunction with PeopleString’s audited consolidated financial statements for the years ended December 31, 2010 and 2009, including the related notes thereto, which begin on page F-2 of this report.
  Background
  PeopleString Corporation (“PeopleString” or the “Company”) was incorporated in the State of Delaware on January 2, 2009. The Company was formed to develop technology that would allow users of social networks to earn incentives through online and offline activities by the user and his or her network. In March 2009, PeopleString’s incentive-based social network was introduced to the market.
  RewardString Corporation (“RewardString”), incorporated in the State of Delaware, was formed in late 2010 to develop technology relating to social media marketing. At December 31, 2010, PeopleString owned more than 50% of RewardString’s outstanding common stock.
  RewardString is currently PeopleString’s only subsidiary.
  Overview
  PeopleString began as a technology firm, that created an incentive-based social network which allows users to aggregate and share the revenue generated from their online activities, communication and social networking through its website located at www.PeopleString.com. The company developed an “InstaPortal” technology which helps users design slices of Internet sites they wish to capture and have those slices appear in a convenient, home page. PeopleString has also developed a service, PeopleDeals & Marketplace Platform, which enables local merchants to utilize social media as part of their marketing operations.
  Critical Accounting Policies
  Our discussion and analysis of our financial condition and results of operations are based upon PeopleString’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 PeopleString to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an on-going basis, PeopleString evaluates its estimates, including but not limited to those related to such items as costs to complete performance contracts, income tax exposures, accruals, depreciable/useful lives, allowance for doubtful accounts and valuation allowances. PeopleString bases its estimates on historical experience and on 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 could differ from those estimates.
   -7-
 Index
  PeopleString believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.
  Revenue Recognition.  PeopleString derives revenue from online services, electronic commerce, advertising and data network services. PeopleString also derives revenue from marketing affiliations. PeopleString recognizes revenue in accordance with the guidance contained in the Accounting Standards Codification (“ASC”) 605, “Revenue Recognition.”
  Consistent with the provisions of ASC 605-45-05, PeopleString generally recognizes revenue associated with its advertising and marketing affiliation programs on a gross basis due primarily to the following factors: PeopleString 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, PeopleString 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.
  PeopleString 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.
  Research and Development.  PeopleString accounts for research and development costs in accordance with accounting pronouncements, including ASC 730, “Research and Development” and ASC 985, “Software.”  PeopleString 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.
  Stock-Based Compensation. PeopleString accounts for stock-based compensation under ASC 718, “Compensation-Stock Compensation” (“ASC 718”). 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.
  PeopleString has one stock-based compensation plan under which incentive and nonqualified stock options or rights to purchase stock may be granted to employees, officers, directors and other eligible participants. PeopleString issues shares of its common stock, warrants to purchase common stock and non-qualified stock options to non-employees as stock-based compensation.  PeopleString accounts for the services using the fair market value of the consideration issued.
  Accounting for Derivatives.  PeopleString 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.PeopleString’s significant accounting policies are summarized in Note 1 of PeopleString’s consolidated financial statements for the years ended December 31, 2010 and 2009.  There were no significant changes to these accounting policies during the years ended December 31, 2010 and 2009 and PeopleString does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.
  Results of Operations
  For the Years Ended December 31, 2010 and 2009
  Net Earnings (loss).  For the year ended December 31, 2010, net earnings were $52,644, as compared to a net loss of $338,014 for the year ended December 31, 2009. The $390,658 increase in net earnings was primarily attributable to an increase in revenues of $1,910,530, partially offset by increased operating expenses of $1,520,278.
  Revenues.  For the year ended December 31, 2010, revenues were $2,652,418, a $1,910,530 increase over revenues of $741,888 earned in the year ended December 31, 2009.  Of the revenues generated for the year ended December 31, 2010, $1,775,848 was generated from product and service fees and $876,570 was generated from advertisers and affiliates, as compared to $629,744 from product and service fees and $112,144 from advertisers and affiliates for the year ended December 31, 2009.
  -8-
 Index
   ·
The 182% increase in product and service fees for the year ended December 31, 2010 over the same prior year period was primarily due to new customers registering for premium services and upgrades to premium services by existing members.
  ·
Advertising and affiliate revenues are paid based on a mix of impressions, clicks and actions. The 682% increase in advertising and affiliate fees for the year ended December 31, 2010 over the same prior year period was primarily due to higher traffic driven by a higher number of users and greater amount of time spent on PeopleString’s site by its members.
  Operating Expenses.  For the year ended December 31, 2010, operating expenses were $2,600,805, a $1,520,278 increase from operating expenses of $1,080,527 incurred in the year ended December 31, 2009.
  ·
Cost of revenues: Cost of revenues for the year ended December 31, 2010 were $1,434,580, as compared to $465,694 for the prior year.  The $968,886 increase in cost was primarily attributable to increased network payments associated with increased revenues. Gross margins expanded to 46% from 37% primarily due to the revenue mix, which included a decrease in product sales and increase in advertising and affiliate revenues.
  ·
Research, development, sales, general and administrative: Expenses for the year ended December 31, 2010 were $1,166,225, as compared to $614,833 for the prior year.  The $551,392 increase in expenses was primarily attributable to increased hosting, professional, staffing and associated overhead expenses.
  Other income.  For the year ended December 31, 2010, other income was $1,031, a $406 increase over other income of $625 received in the year ended December 31, 2009.
  ·
Interest income: Interest income for the year ended December 31, 2010 was $1,531, as compared to $625 for the prior year. The $906 increase in income was primarily due to an increase in cash balances.
  ·
Other income: Other income for the year ended December 31, 2010 included a loss on investment of $500, as compared to $0 for the prior year.
  Income Taxes.  For the year ended December 31, 2010 and 2009, PeopleString has applied valuation allowances to offset the deferred tax assets in recognition of the uncertainty that such tax benefits will be realized.
  ·
At December 31, 2010, PeopleString had available net operating loss carry forwards of approximately $0.3 million for federal and state income tax reporting purposes which expire in various years through 2030. The principal items giving rise to deferred taxes are timing differences between book and tax assets, other expenditures and a net operating loss carryforward. 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, PeopleString 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
  PeopleString’s operating and capital requirements have exceeded its cash flow from operations while PeopleString has been building its business.  Since inception through December 31, 2010, PeopleString has used $69,622 in operating and investing activities. PeopleString has also received $519,515 of investments from PeopleString’s stockholders.
  PeopleString’s cash balance as of December 31, 2010 was $449,893, which was an increase of $59,004 from the cash balance of $390,889 as of December 31, 2009. This increase to the cash balance was primarily attributable to increased net earnings, accounts payable and accrued expenses, partially offset by increased receivables.
  Management believes PeopleString’s current cash balance of $313,260 at March 30, 2011 is sufficient to fund the minimum level of operations for the next twelve months.
  PeopleString may seek additional equity financing and/or debt financing.  It is also possible that PeopleString will seek to borrow money from traditional lending institutions, such as banks.
  -9-
 Index
   PeopleString expects to continue development of its offerings. PeopleString also expect sales, marketing and advertising expenses and cost of revenues to increase as it promotes and grows its products and services. However, if PeopleString’s revenue and cash balance are insufficient to fund its operations, it will seek additional funds. There can be no assurance that such funds will be available to PeopleString or that adequate funds for its operations, whether from debt or equity financings, will be available when needed or on terms satisfactory to PeopleString. PeopleString’s failure to obtain adequate additional financing may require it to delay or curtail some or all of its business efforts and could cause PeopleString to seek bankruptcy protection. Any additional equity financing may involve substantial dilution to PeopleString’s then-existing stockholders.
  PeopleString’s current officers and directors have not, as of the date of this filing, loaned any funds to PeopleString. There are no formal commitments or arrangements to advance or loan funds to PeopleString or repay any such advances or loans.
  Item 7A. Quantitative and Qualitative Disclosure About Market Risk
  PeopleString is a smaller reporting company and is therefore not required to provide this information.
  Item 8. Financial Statements and Supplementary Data
  The consolidated financial statements and supplementary data of PeopleString called for by this item are submitted under a separate section of this report.  Reference is made to the Index of Financial Statements contained on page F-1 herein.
  Item9.  Changes In and Disagreements With Accountants on Accounting and FinancialDisclosure
  None.
  Item 9A.  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 December 31, 2010, 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 last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
  -10-
 Index
    (c) Management’s report on internal control over financial reporting.
  Management is responsible for establishing and maintaining adequate control over financial reporting for PeopleString.  Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.  Internal controls over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of PeopleString; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of PeopleString are being made only in accordance with authorizations of management and directors of PeopleString; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of PeopleString’s assets that could have a material effect on the financial statements.
  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluations of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
  Management, with the participation of our principal executive officer and principal financial and accounting officer, conducted an evaluation of the effectiveness of PeopleString’s internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2010.
  This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this Annual Report on Form 10-K. There have been no changes in our internal controls over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
  Item9B.Other Information
  None.
  -11-
 Index
 PART III
 
  Item 10. Directors, Executive Officers and Corporate Governance
  Directors
  Number of Directors. Our board of directors currently consists of three individuals. Our Amended and Restated Bylaws provide that the board of directors may consist of a minimum of three directors and a maximum of nine, as determined by the board of directors from time to time.
  Director Qualifications. While the selection of directors is a complex and subjective process that requires considerations of many intangible factors, the Company believes that candidates should generally meet the following criteria:
  ·
Broad training, experience and a successful track record at senior policy-making levels in business, government, education, technology, accounting, law, consulting and/or administration;·
The highest personal and professional ethics, integrity and values;
 ·
Commitment to representing the long-term interests of the Company and all of its shareholders;·
An inquisitive and objective perspective, strength of character and the mature judgment essential to effective decision-making;
 ·
Expertise that is useful to the Company and complementary to the background and experience of other Board members; and·
Sufficient time to devote to Board and committee activities and to enhance their knowledge of our business, operations and industry.
  The Board believes that all of our directors meet these criteria. In addition, as outlined below, each director brings a strong and unique background and set of skills to the Board, giving the Board as a whole competence and experience in a wide variety of areas, including the social networking industry, related Internet industries, finance and accounting, operations, corporate governance, board service and executive management. We believe that the Board as a whole and each of our directors possess the necessary qualifications and skills to effectively advise management on strategy, monitor our performance and serve our best interests and the best interests of our shareholders.
  Audit Committees. The Audit Committee of the Board is responsible for developing and monitoring the audit of PeopleString. The Audit Committee selects the outside auditor and meets with the Board to discuss the results of the annual audit and any related matters. The Audit Committee also receives and reviews the reports and findings and any other information presented to members of the Audit Committee by the officers of PeopleString regarding financial reporting policies and practices.
  Compensation for Board of Directors: Currently members of the board of directors do not receive compensation for their services as Board members.  In the future, the Company may adopt a policy which will compensate existing and/or new board members. Board members may receive additional compensation for participating in the Committees. The amount of any compensation paid to board members and/or committee members will be set and approved by the Board based on the Board’s review of compensation paid by companies which are similarly situated to the Company.
  Each director serves for a term set to expire at the next annual meeting of stockholders of PeopleString. The name, age, principal occupation or employment and biographical information of each member of the Board of Directors of PeopleString who served as of December 31, 2010 are set forth below:
  Name and Address

Age

Principal Occupation or EmploymentDarin M. Myman

46

President and Chief Executive Officer of PeopleStringRobert S. DeMeulemeester

44

Executive Vice President, Chief Financial Officer and Treasurer of PeopleStringAdam M. Kotkin

31

Chief Operating Officer of PeopleString Corporation
 
 There are no family relationships among PeopleString’s directors and executive officers. None of the directors of PeopleString is a director of any company registered pursuant to Section 12 of the Exchange Act, or subject to the requirements of Section 15(d) of the Exchange Act, or any company registered as an investment company under the Investment Company Act of 1940, as amended, except that Mr. Myman, Mr. DeMeulemeester and Mr. Kotkin are directors of BigString Corporation; Mr. Myman and Mr. DeMeulemeester are executive officers of BigString Corporation; and Mr. Kotkin is a director and executive officer of AppsGenius Corporation.
  -12-
 Index
   Biographical Information
  Darin M. Myman (Age 46) – President and Chief Executive Officer and Director.Mr. Myman is a co-founder of PeopleString and has served as the President and Chief Executive Officer of PeopleString since its inception on January 2, 2009. He also has served as a member of PeopleString’s Board of Directors since PeopleString’s inception. Mr. Myman developed extensive Internet skills through a variety of positions. He has executive management and founder experience having served as a co-founder and CEO of BigString Corporation, a publicly traded company, since October 2003. He also has corporate governance and board experience having served as a member of BigString’s Board of Directors since BigString’s inception. Prior to BigString, Mr. Myman was a co-founder and Chief Executive Officer of LiveInsurance.com, the first online insurance broker that pioneered the electronic storefront for large national insurance agencies. Prior to co-founding LiveInsurance.com, he served as a Vice President of the online brokerage services unit of Westminster Securities Corporation. Mr. Myman’s aforementioned experience and skills make him a valued advisor and highly qualified to serve as our President and Chief Executive Officer and Director.
  Robert S. DeMeulemeester (Age 44) – Executive Vice President, Chief Financial Officer and Treasurer and Director.Mr. DeMeulemeester has served as Executive Vice President, Chief Financial Officer and Treasurer of PeopleString since January 2, 2009. He also has served as a member of PeopleString’s Board of Directors since PeopleString’s inception. Mr. DeMeulemeester developed extensive financial skills through a variety of positions. He also has Internet and executive management experience having served as the Executive Vice President, Chief Financial Officer and Treasurer of BigString Corporation since September 2006. He also has corporate governance and board experience having served as a member of BigString’s Board of Directors since May 30, 2007. Prior to joining BigString, from 1998 to 2006, Mr. DeMeulemeester served as managing director and treasurer of the Securities Industry Automation Corporation ("SIAC"), a New York based provider of automated information and communication systems that supports NYSE Euronext, the American Stock Exchange and related affiliates. He also served as managing director, CFO and controller of Sector, Inc. From 1993 to 1997, he gained marketing, business development and finance experience having served as an executive at Honeywell International Inc. (formerly AlliedSignal, Inc.) and from 1989 to 1991 as a management consultant at Accenture (formerly Andersen Consulting). Mr. DeMeulemeester earned his MBA at Columbia Business School, Columbia University and his Bachelor of Science, in Industrial Engineering at Lehigh University. Mr. DeMeulemeester’s aforementioned experience and skills make him a valued advisor and highly qualified to serve as our Executive Vice President, Chief Financial Officer and Treasurer and Director.
  Adam M. Kotkin (Age 31) – Chief Operating Officer and Secretary and Director. Mr. Kotkin has served as the Chief Operating Officer of PeopleString Corporation since January 2, 2009. He also has served as a member of PeopleString’s Board of Directors since PeopleString’s inception. Mr. Kotkin has executive management and founder experience having served as the Chief Operating Officer of BigString since October 2003 and as the Chief Executive Officer of AppsGenius Corporation since its inception on December 17, 2009. He also has corporate governance and board experience having served as a member of BigString’s Board of Directors since June 29, 2005 and as the sole member of AppsGenius’ Board of Directors since AppsGenius’ inception. Prior to joining BigString, he gained operating and Internet experience having served as a business manager for InsuranceGenie.com. Prior thereto, Mr. Kotkin developed sales skills having served as business developer and sales manager at LiveInsurance.com from March 1999 until December 2000. Mr. Kotkin graduated with distinction from New York University with a BA in Economics. Mr. Kotkin’s aforementioned experience and skills make him a valued advisor and highly qualified to serve as our Chief Operating Officer and Secretary and Director.
  Executive Officers
  The name, age, current position and biographical information of each executive officer of PeopleString are set forth below:
  Name

Age

PositionDarin M. Myman

46

President and Chief Executive OfficerRobert S. DeMeulemeester

44

Executive Vice President, Chief Financial Officer and TreasurerAdam M. Kotkin

31

Chief Operating Officer and Secretary
 
 For the biographical information for the above listed executive officers, see “Directors.”
  -13-
 Index
   Section 16 Compliance
  Section 16(a) of the Exchange Act requires PeopleString’s executive officers and directors, and persons who own more than ten percent of a registered class of PeopleString’s equity securities, to file reports of ownership and changes of ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission. Executive officers, directors and greater than ten percent stockholders are required by Securities and Exchange Commission regulation to furnish PeopleString with copies of all Forms 3, 4 and 5 they file.
  PeopleString believes that all filings required to be made by its executive officers and directors pursuant to Section 16(a) of the Exchange Act have been filed within the time periods prescribed.
  Chief Executive and Senior Financial Officer Code of Ethics
  The chief executive and senior financial officers of PeopleString are held to the highest standards of honest and ethical conduct when conducting the affairs of PeopleString. All such individuals must act ethically at all times in accordance with the policies contained in PeopleString’s Chief Executive and Senior Financial Officer Code of Ethics. Copies of the Chief Executive and Senior Financial Officer Code of Ethics will be furnished without charge upon written request received from any stockholder of record. Requests should be directed to PeopleString Corporation, 157 Broad Street, Suite 109, Red Bank, New Jersey 07701, Attention: Secretary.
  Item 11.Executive Compensation
  EXECUTIVE COMPENSATION
  The following table sets forth information concerning the annual and long-term compensation of the Named Executive Officers (as defined below) for services in all capacities to PeopleString for the years ended December 31, 2010 and 2009. The Named Executive Officers are (1) Darin M. Myman, President and Chief Executive Officer, (2) Robert S. DeMeulemeester, Executive Vice President, Chief Financial Officer and Treasurer, and (3) Adam M. Kotkin, Chief Operating Officer and Secretary (the “Named Executive Officers”).
  2010 SUMMARY COMPENSATION TABLE
 Name and Principal

Position

Year

Salary

($)


Bonus

($)


Stock

Awards

($)


Option

Awards

($) (1)


Non-Equity

Incentive Plan

Compensation

($)


Nonqualified

Deferred

Compensation

Earnings

($)


All Other

Compensation

($)


Total

($)Darin M. Myman,

President and Chief

2010

$
125,586


$
---


$
---


$
---


$
---


$
---


$
---


$
125,586Executive Officer

2009

$
36,170


$
---


$
---


$
---


$
---


$
---


$
---


$
36,170Robert S.

DeMeulemeester,

Executive Vice

President, Chief

Financial Officer

2010

$
63,660


$
---


$
---


$
---


$
---


$
---


$
---


$
63,660and Treasurer

2009

$
13,516


$
---


$
---


$
---


$
---


$
---


$
---


$
13,516Adam M. Kotkin,

Chief Operating

Officer and

2010

$
110,216


$
---


$
---


$
---


$
---


$
---


$
---


$
110,216Secretary

2009

$
33,125


$
---


$
---


$
---


$
---


$
---


$
---


$
33,125
 ________________________________
 
 (1)
The amounts in this column reflect the dollar amount recognized for financial statement reporting purposes for the years ended December 31, 2010 and 2009 in accordance with ASC 718, of stock option awards pursuant to the Equity Incentive Plan (as defined below). The fair value of each option award is estimated on the date of grant using the Black-Scholes model.  Assumptions used in the calculation of these amounts are included in the footnotes to PeopleString’s audited financial statements furnished herewith.
 
 -14-
 Index
  Outstanding Equity Awards at Fiscal Year End
  The following table provides information about all equity compensation awards held by the Named Executive Officers at December 31, 2010:
  OUTSTANDING EQUITY AWARDS FOR THE YEAR ENDED DECEMBER 31, 2010Name

Date of

Grant

Number of

Securities

Underlying

Unexercised

Options

(#) Exercisable

Number of

Securities

Underlying

Unexercised

Options

(#) Unexercisable

Equity Incentive

Plan Awards:

Number of Securities

Underlying Unexercised

Unearned Options

(#)

Option

Exercise

Price

($)

Option

Expiration

DateDarin M.Myman,

President and

Chief ExecutiveOfficer


---


---


---


---

$
---


---Robert S.DeMeulemeester,

Executive VicePresident,

ChiefFinancial Officer

and Treasurer


---


---


---


---

$
---


---Adam M. Kotkin,

Chief OperatingOfficer and

Secretary


---


---


---


---

$
---


---
  Risk Management
  The Board of Directors does not believe that PeopleString’s executive compensation program gives rise to any risks that are reasonably likely to have a material adverse effect on PeopleString.  Executive officers are compensated on a salary basis and have not been awarded any bonuses or other compensation in 2010 and 2009 that might encourage the taking of unnecessary or excessive risks that threaten the long-term value of PeopleString. The Board has sought to align the interests of the executive officers with the long-term interests of PeopleString and its stockholders though the Equity Incentive Plan, thereby giving the executive officers additional motivation to protect the long-term value of PeopleString.
  DIRECTOR COMPENSATION
  The following table sets forth information concerning the compensation of the directors of PeopleString for the year ended December 31, 2010.
  2010 DIRECTOR COMPENSATION TABLE
  Name

Fees

Earned or

Paid inCash

($)(1)

Stock

Awards

($)

Option

Awards

($)

Non-Equity

Incentive Plan

Compensation

($)

Nonqualified

Deferred

Compensation

Earnings

($)

All Other

Compensation

($)

Total

($)Darin M. Myman

$
--


$
--


$
--


$
--


$
--


$
--


$
--Robert S. DeMeulemeester

$
--


$
--


$
--


$
--


$
--


$
--


$
--Adam M. Kotkin

$
--


$
--


$
--


$
--


$
--


$
--


$
--
 ________________________
 
 (1)
PeopleString does not currently pay its directors any retainer or other fees for service on the Board or any committee thereof.
  PeopleString did not have non-employee directors as of December 31, 2010.
  -15-
 Index
  Item 12. Security Ownership of Certain Beneficial Owners and Management and RelatedStockholder Matters
  Principal Stockholders and Security Ownership of Management
  The following table sets forth information as of March 31, 2011 with respect to the beneficial ownership (as defined in Rule 13d-3 of the Exchange Act) of PeopleString’s Common Stock by (1) each director of PeopleString, (2) the Named Executive Officers of PeopleString, (3) each person or group of persons known by PeopleString to be the beneficial owner of greater than 5% of PeopleString’s outstanding Common Stock, and (4) all directors and officers of PeopleString as a group:
  BENEFICIAL OWNERSHIP OF COMMON STOCK
  Name of Beneficial Owner:




PercentDirectors, Officers and 5% Stockholders

No. of Shares (1)


of ClassDarin M. Myman (2)(3)(4)(5)(6)


8,938,100



25.59
%Robert S. DeMeulemeester (2)(3)(4)(5)(7)


8,938,100



25.59
%Adam M. Kotkin (2)(3)(4)(5)(8)


8,938,100



25.59
%BigString Corporation (9)


6,125,600



17.69
%Alan S. Honig (10)


2,350,000



6.79
%Barry Honig (11)


1,737,500



5.02
%All Directors and Executive Officers as a Group (3 persons) (6)(7)(8)


14,563,100



40.96
%
 ________________________________
 
 (1)
In accordance with Rule 13d-3 of the Exchange Act, a person is deemed to be the beneficial owner, for purposes of this table, of any shares of PeopleString’s Common Stock if he or she has voting or investment power with respect to such security. This includes shares (a) subject to options exercisable within sixty (60) days, and (b)(1) owned by a spouse, (2) owned by other immediate family members, or (3) held in trust or held in retirement accounts or funds for the benefit of the named individuals, over which shares the person named in the table may possess voting and/or investment power.(2)
This executive officer and/or director maintains a mailing address at 157 Broad Street, Suite 109, Red Bank, New Jersey 07701.(3)
Such person currently serves as a director of PeopleString.(4)
Such person currently serves as an executive officer and/or director of BigString Corporation and includes 6,125,600 shares of common stock owned by BigString Corporation.(5)
Includes options to purchase 312,500 shares of common stock.(6)
Mr. Myman serves as the President and Chief Executive Officer of PeopleString.(7)
Mr. DeMeulemeester serves as Executive Vice President, Chief Financial Officer and Treasurer of PeopleString.(8)
Mr. Kotkin serves as Chief Operating Officer and Secretary of PeopleString.(9)
The officers/directors of PeopleString Corporation are also the officers and directors of BigString Corporation, a public company.(10)
Includes 2,040,000 shares of common stock held in the name of Alan S. Honig Custodian for Cameron Honig UTMA F/L, Alan S. Honig Custodian for Harrison Honig UTMA F/L, Alan S. Honig Custodian for Jacob Honig UTMA F/L and Alan S. Honig Custodian for Ryan Honig UTMA F/L, for the benefit of Mr. Barry Honig’s minor children, Cameron, Harrison, Jacob and Ryan, under the Uniform Transfers to Minors Act, as to which shares Mr. Barry Honig disclaims any beneficial ownership.(11)
Includes 250,000 shares of common stock held in the name of GRQ Consultants, Inc. 401K, of which Mr. Barry Honig is a trustee.
  -16-
 Index
  Item 13. Certain Relationships and Related Transactions and Director Independence
  Related Party Transactions
  On August 3, 2009, PeopleString entered into a verbal agreement with Digital BobKat, LLC, a limited liability company in which Robert S. DeMeulemeester, an officer and director of PeopleString, 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 years ended December 31, 2010 and 2009 were $51,411 and $43,761, respectively.
  Meetings and Committees of the Board of Directors
  The Board of Directors of PeopleString conducts business through meetings of the Board or by unanimous written consents of the Board. The Board of Directors for 2010 consisted of: Robert S. DeMeulemeester, Adam M. Kotkin and Darin M. Myman following the election of directors at the 2009 annual meeting of stockholders. PeopleString held a special meeting of shareholders in 2010. None of Mr. DeMeulemeester, Mr. Kotkin or Mr. Myman qualifies as an independent director in accordance with NASDAQ’s definition of “independent director” and the rules and regulations of the Securities and Exchange Commission. During 2010, the Board held two (2) meetings, and the Board acted by unanimous written consent on three(3)occasions.
  For the year ended December 31, 2010, the Audit Committee consisted of directors Robert S. DeMeulemeester and Adam M. Kotkin. Mr. DeMeulemeester served as the Chair of the Audit Committee. Mr. DeMeulemeester and Mr. Kotkin did not qualify as an independent director under NASDAQ’s definition of “independent director” in fiscal 2010. In addition, the Board has determined that Mr. DeMeulemeester qualifies as a financial expert under the rules of the Securities and Exchange Commission. The Audit Committee selected the accounting firm of Madsen & Associates CPAs, Inc. to act as PeopleString’s independent public accounting firm for the year ended December 31, 2010 and audit the financial statements of PeopleString for such year. The Audit Committee met five times during 2010, with all members attending such meeting.
  Item 14. Principal Accounting Fees and Services.
  Audit Fees
  PeopleString incurred fees of approximately $40,000 and $25,000 in 2010 and 2009, respectively, to Madsen & Associates CPAs, Inc. for audit services, which included work related to the audits rendered for the years ended December 31, 2010 and 2009. PeopleString also incurred fees of approximately $13,000 in 2009 to Wiener, Goodman & Company, P.C. for audit services, which included work related to the audit rendered for the period commencing January 2, 2009 (Date of Formation) through June 30, 2009.
  Audit Related Fees
  As of December 31, 2010, PeopleString has not paid any fees associated with audit related services to Madsen & Associates CPAs, Inc., Wiener, Goodman & Company, P.C., or any other accounting firm.
  Tax Fees
  As of December 31, 2010, PeopleString has not paid any fees associated with tax compliance, tax advice or tax planning to Madsen & Associates CPAs, Inc., Wiener, Goodman & Company, P.C., or any other accounting firm.
  All Other Fees
  As of December 31, 2010, PeopleString has not paid any fees associated with non-audit services to Madsen & Associates CPAs, Inc., Wiener, Goodman & Company, P.C., or any other accounting firm.
   -17-
 Index
  Policy on Pre-Approval of Audit and Permissible Non-Audit Services
  The Audit Committee is responsible for appointing, setting compensation and overseeing the work of the independent registered public accounting firm. In accordance with its Charter, the Audit Committee approves, in advance, all audit and permissible non-audit services to be performed by the independent registered public accounting firm. Such approval process ensures that the independent registered public accounting firm does not provide any non-audit services to PeopleString that are prohibited by law or regulation.
  Item 15. Exhibits and Financial Statement Schedules.
 
 (a)      Exhibits
 Reference is made to the Index of Exhibits beginning on page E-1 herein.
  (b)      Financial Statements
 Reference is made to the Index to Consolidated Financial Statements on page F-1.
  -18-
 Index
 
  SIGNATURES
 
 In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
  PEOPLESTRING CORPORATIONDate:  March 31, 2011
By:
/s/ Darin M. MymanDarin M. Myman

President and Chief Executive Officer
  KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Darin M. Myman and Robert S. DeMeulemeester and each of them, his true and lawful attorneys-in-fact and agents for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as they might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents may lawfully do or cause to be done by virtue hereof.
  In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has caused this report to be signed by the following persons in the capacities and on the dates stated.
  
 Signatures

Title

Date/s/ Darin M. Myman

President and Chief Executive Officer and Director (Principal Executive Officer)

March 31, 2011Darin M. Myman/s/ Robert S. DeMeulemeester

Executive Vice President, Chief Financial Officer and Treasurer and Director (Principal Financial and Accounting Officer)

March 31, 2011Robert S. DeMeulemeester/s/ Adam M. Kotkin

Chief Operating Officer and Director

March 31, 2011Adam M. Kotkin
 -19-
 Index
  
  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
  PEOPLESTRING CORPORATION AND SUBSIDIARY
 
  Report of Independent Registered Public Accounting Firm
F-2Consolidated Balance Sheets at December 31, 2010 and 2009
F-3Consolidated Statement of Operations for the years ended December 31, 2010 and 2009
F-4Consolidated Statement of Stockholders’ Equity for the Period ended December 31, 2010
F-5Consolidated Statement of Cash Flows for the years ended December 31, 2010 and 2009
F-6Notes to Consolidated Financial Statements
F-7
   F-1
 Index
   Madsen & Associates, CPA's Inc.
 684 East Vine Street
 Murray, UT 84107
  
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To the Board of Directors and Stockholders of
 PeopleString Corporation
 Red Bank, New Jersey
 
 We have audited the accompanying consolidated balance sheets of PeopleString Corporation and Subsidiary (collectively, the “Company”) as of December 31, 2010 and 2009, and the related consolidated statements of operations, stockholders’ equity and cash flows for the years then ended.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.
 
 We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.
 
 In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2010 and 2009, and the results of its operations and its cash flows for each of the years in the periods ended December 31, 2010 and 2009, in conformity with accounting principles generally accepted in the United States of America.
 
 
 /s/ Madsen & Associates, CPAs Inc.
 
 
 March 31, 2011
 
 F-2
 Index
 
 PEOPLESTRING CORPORATION AND SUBSIDIARY
 CONSOLIDATED BALANCE SHEETS
 
  December 31,2010


2009ASSETSCurrent assets:Cash and cash equivalents

$
449,893


$
390,889Accounts receivable - net of allowance of $5,350 and $650


162,665



57,421Prepaid expenses and other current assets


678



687Total current assets

$
613,236


$
448,997LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable

$
30,905


$
10,533Accrued expenses


281,736



190,513Total current liabilities


312,641



201,046Stockholders' equity:Common stock, $0.00001 par value - authorized 250,000,000 shares; issued and outstanding 33,900,000 and 33,900,000 shares, respectively


339



339Additional paid in capital


585,626



585,626Deficit


(285,370
)


(338,014
)Total stockholders' equity


300,595



247,951Total liabilities and stockholders' equity

$
613,236


$
448,997
  See notes to consolidated financial statements.
  F-3
 Index
  PEOPLESTRING CORPORATION AND SUBSIDIARY
 CONSOLIDATED STATEMENT OF OPERATIONS
 
  For the Years EndedDecember 31,2010


2009Revenues

$
2,652,418


$
741,888Operating expenses:Cost of revenues


1,434,580



465,694Research, development, sales, general and administrative


1,166,225



614,833Total operating expenses


2,600,805



1,080,527Income (loss) from operations


51,613



(338,639
)Other income:Interest income


1,531



625Other income


(500
)Total other income


1,031



625Earnings (loss) before provision for income taxes


52,644



(338,014
)Provision for income taxes


-



-Net earnings (loss)

$
52,644


$
(338,014
)Earnings (loss) per common share:Basic and diluted

$
0.00


$
(0.01
)Weighted average common shares outstanding:Basic and diluted


33,900,000



24,373,400
  See notes to consolidated financial statements.
  F-4
 Index
  PEOPLESTRING CORPORATION AND SUBSIDIARY
 CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
  Common Stock


AdditionalNo. of





Paid-InTotal


Shares


Amount


Capital


DeficitBalance, January 2, 2009

$
-



-


$
-


$
-


$
-Issuance of common stock (at $0.00005 per share)


500



10,000,000



100



400



-Sale of common stock (at $0.00005 per share)


415



8,300,000



83



332



-Issuance of common stock for services (valued at $0.001 per share)


1,450



1,450,000



14



1,436



-Sale of common stock (at $0.001 per share)


3,000



3,000,000



30



2,970



-Sale of common stock (at $0.03 per share)


182,100



6,900,000



69



182,031



-Sale of common stock (at $0.05 per share)


23,500



470,000



5



23,495



-Issuance of common stock for services (valued at $0.05 per share)


65,000



1,300,000



13



64,987



-Sale of common stock (at $0.13 per share)


310,000



2,480,000



25



309,975



-Net loss


(338,014
)


-



-



-



(338,014
)Balance, December 31, 2009


247,951



33,900,000



339



585,626



(338,014
)Net earnings


52,644



-



-



-



52,644Balance, December 31, 2010

$
300,595



33,900,000


$
339


$
585,626


$
(285,370
)
  See notes to consolidated financial statements.
  F-5
 Index
 
 PEOPLESTRING CORPORATION AND SUBSIDIARY
 CONSOLIDATED STATEMENT OF CASH FLOWS
 
  For the Years EndedDecember 31,2010


2009Cash flows from operating activities:Net earnings (loss)

$
52,644


$
(338,014
)Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities:Non-cash stock-based compensation


-



66,450Changes in operating assets and liabilities:(Increase) in accounts receivable, net


(105,244
)


(57,421
)Decrease (increase) in prepaid expenses and other current assets


9



(687
)Increase in accounts payable


20,372



10,533Increase in accrued expenses


91,223



190,513Net cash provided by (used in) operating activities


59,004



(128,626
)Cash flows from financing activities:Proceeds from issuance of common stock


-



519,515Net cash from financing activities


-



519,515Net change in cash and cash equivalents


59,004



390,889Cash and cash equivalents - beginning of year


390,889



-Cash and cash equivalents - end of year

$
449,893


$
390,889Supplementary information:Cash paid during the period for:Interest

$
-


$
-Income taxes

$
-


$
-Non-cash transactions during the periods for:Common stock issued for services

$
-


$
66,450
  See notes to consolidated financial statements.
  F-6
 Index
 PEOPLESTRING CORPORATION AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
  NOTE 1.  DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  ORGANIZATION
  PeopleString Corporation (“PeopleString” or the “Company”) was incorporated in the State of Delaware on January 2, 2009. The Company was formed to develop technology that would allow users of social networks to earn incentives through online and offline activities by the user and his or her network. In March 2009, PeopleString’s incentive-based social network was introduced to the market.
  RewardString Corporation (“RewardString”), incorporated in the State of Delaware, was formed in late 2010 to develop technology relating to social media marketing. At December 31, 2010, PeopleString owned more than 50% of RewardString’s outstanding common stock.
  RewardString is currently PeopleString’s only subsidiary.
  PRINCIPLES OF CONSOLIDATION
  The consolidated financial statements include the accounts of PeopleString and its subsidiary, RewardString Corporation, which is a majority-owned subsidiary. All significant intercompany transactions and balances have been eliminated. The noncontrolling interest of PeopleString's earnings or loss is classified as net income attributable to noncontrolling interest in the consolidated statement of operations.  As of December 31, 2010, RewardString did not commence operations.
  USE OF ESTIMATES
  The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities.  On an ongoing basis, PeopleString evaluates its estimates, including but not limited to those related to such items as costs to complete performance contracts, income tax exposures, accruals, depreciable/useful lives, allowance for doubtful accounts and valuation allowances. PeopleString bases its estimates on historical experience and on 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 could differ from those estimates.
  CASH AND CASH EQUIVALENTS
  Cash equivalents include short-term investments in United States treasury bills and commercial paper with an original maturity of three months or less when purchased. At December 31, 2010 and 2009, cash and cash equivalents approximated $450,000 and $391,000, respectively.
  CERTAIN RISKS AND CONCENTRATION
  Financial instruments which potentially subject PeopleString to concentrations of credit risk consist principally of temporary cash investments and accounts receivable.
  PeopleString places its temporary cash investments with quality financial institutions and commercial issuers of short term paper.
  PeopleString grants credit to customers based on an evaluation of the customer’s financial condition, sometimes without requiring collateral. Exposure to losses on receivables is principally dependent on each customer’s financial condition. PeopleString controls its exposure to credit risk through credit approvals, credit limits and monitoring procedures and establishes allowances for anticipated losses.
  REVENUE RECOGNITION
  PeopleString derives revenue from online services, electronic commerce, advertising and data network services. PeopleString also derives revenue from marketing affiliations. PeopleString recognizes revenue in accordance with the guidance contained in the Accounting Standards Codification (“ASC”) 605, “Revenue Recognition” (“ASC 605”).
   F-7
 Index
  PEOPLESTRING CORPORATION AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Consistent with the provisions of ASC 605-45-05, PeopleString generally recognizes revenue associated with its advertising and marketing affiliation programs on a gross basis due primarily to the following factors: PeopleString is the primary obligor; has latitude in establishing prices; has discretion in supplier selection; performs part of the service; and determines specifications.
  Consistent with ASC 605-50-15, PeopleString 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.
  PeopleString 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. At December 31, 2010 and 2009, allowances for doubtful accounts were $5,350 and $650, respectively.
  RESEARCH AND DEVELOPMENT
  PeopleString accounts for research and development costs in accordance with accounting pronouncements, including ASC 730, “Research and Development” and ASC 985, “Software.”  PeopleString 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.
  ADVERTISING
  Advertising costs incurred by PeopleString are expensed as incurred.
  INCOME TAXES
  PeopleString accounts for income taxes using an asset and liability approach under which deferred income taxes are recognized by applying enacted tax rates applicable to future years to the differences between the financial statement carrying amounts and the tax basis of reported assets and liabilities. A valuation allowance reduces the deferred tax assets to the amount estimated more likely than not to be realized.
  The principal items giving rise to deferred taxes are timing differences between book and tax assets, other expenditures and a net operating loss carryforward.
  STOCK-BASED COMPENSATION
  PeopleString accounts for stock-based compensation under ASC 718, “Compensation-Stock Compensation” (ASC 718). 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.
  PeopleString issues shares of common stock to non-employees as stock-based compensation. PeopleString accounts for the services using the fair market value of the consideration issued, generally measured as the most recent price in the sale of PeopleString’s common stock, or the closing price of PeopleString’s common stock at the date of the agreement. For the years ended December 31, 2010 and 2009, PeopleString recorded compensation expense of $0 and $66,450 in connection with the issuance of shares of common stock to non-employees.
  PeopleString has one stock-based compensation plan under which incentive and nonqualified stock options or rights to purchase stock may be granted to employees, officers, directors, agents and consultants of PeopleString. The fair values of the stock options are estimated on the date of grant using the Black-Scholes option-pricing model. For the years ended December 31, 2010 and 2009, PeopleString did not grant stock options.
  ACCOUNTING FOR DERIVATIVES
  PeopleString 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.”
   F-8
 Index
  PEOPLESTRING CORPORATION AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  NEW FINANCIAL ACCOUNTING STANDARDS
  The Financial Accounting Standards Board (the “FASB”) has published an update to the accounting guidance on fair value measurements and disclosures as it relates to investments in certain entities that calculate net asset value per share (or its equivalent). This accounting guidance permits a reporting entity to measure the fair value of certain investments on the basis of the net asset value per share of the investment (or its equivalent). This update also requires new disclosures, by major category of investments, about the attributes of investments included within the scope of this update. The guidance in this update is effective for interim and annual periods ending after December 15, 2009. The adoption of this standard did not have a material impact on the Company’s results of operations, financial condition or cash flows.
  NOTE 2. EARNINGS 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. 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. PeopleString does not have any contingent securities.
  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:
  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 December 31, 2010 and 2009, the Company held certain financial assets that are measured at fair value on a recurring basis. These consisted of cash and cash equivalents. 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 Company does not have any financial assets measured at fair value on a recurring basis as Level 2 or Level 3 and there were no transfers in or out of Level 2 or Level 3 during the years ended December 31, 2010 and 2009.
  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 December 31, 2010 and 2009:
  Assets at Fair Value at Period End, UsingQuoted Prices in Active Markets for Identical Assets


Significant Other Observable Inputs


Significant Unobservable InputsAssets:

Total


(Level 1)


(Level 2)


(Level 3)Cash and cash equivalentsDecember 31, 2010

$
449,893


$
449,893


$
-


$
-December 31, 2009

$
390,889


$
390,889


$
-


$
-
  There were no financial assets accounted for at fair value on a nonrecurring basis at December 31, 2010 and 2009.
  F-9
 Index
 PEOPLESTRING CORPORATION AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  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 December 31, 2010 and 2009.
  NOTE 4. INCOME TAXES
  PeopleString applies the provisions of ASC 740, “Income Taxes” (ASC 740). 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 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 PeopleString may incur losses.
  Components of deferred income tax assets are as follows:
  December 31,2010


2009Deferred tax assets - current

Tax Effect


Tax EffectBenefit due to loss carryforward

$
99,880


$
118,305Valuation allowance


(99,880
)


(118,305
)$
-


$
-
  The Company will file 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.
  NOTE 5. ACCRUED EXPENSES
  PeopleString’s incentive-based social network allows users to earn money based on their online and offline activities. PeopleString makes payments twice a month to premium users who have an earned balance of at least $25 and have been active users in the past 90 days, and once a month to free users who have an earned balance of at least $25 and have been active users in the past 90 days. Network earnings are monitored by PeopleString’s management. For the years ended December 31, 2010 and 2009, PeopleString made payments totaling $995,327 and $272,391, respectively. In addition, for active users, PeopleString accrues amounts earned, but not yet paid. Accrued expenses for network earnings at December 31, 2010 and 2009 were $226,596 and $110,526, respectively.
  Other accrued expenses at December 31, 2010 and 2009 were $55,140 and $79,987, respectively, primarily for professional fees.
  NOTE 6. COMMON STOCK
  On January 2, 2009, PeopleString was incorporated in the state of Delaware. Under PeopleString’s amended Certificate of Incorporation, the number of shares of common stock PeopleString is authorized to issue is 250,000,000 shares of common stock, par value $0.00001 per share.
  In January 2009, the month of PeopleString’s formation, PeopleString issued 10,000,000 shares of its common stock to BigString Corporation (“BigString”) at a per share purchase price of $0.00005.
  Also in January 2009, PeopleString offered to issue 8,300,000 shares of its common stock to its founders at a per share purchase price of $0.00005. In April 2009, PeopleString received $415 and issued 8,300,000 shares of its common stock.
  F-10
 Index
 PEOPLESTRING CORPORATION AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  In February 2009, PeopleString offered to issue 3,000,000 shares of its common stock to a strategic shareholder at a per share purchase price of $0.001. In April 2009, the offer was accepted. PeopleString issued 3,000,000 shares of its common stock. The resulting subscription receivable of $3,000 was received in July 2009.
  In April 2009, PeopleString issued 1,450,000 shares of its common stock, valued at $0.001 per share, in consideration for consulting services provided by four marketing consultants. The services included marketing advice and survey design. PeopleString recorded consulting expense of $1,450 in connection with the issuance of these shares. Fair market value was based on the most recent prior private placement per share purchase price.
  In June 2009, PeopleString initiated a private placement of securities to sell 6,900,000 shares of its common stock at a per share purchase price of $0.03. PeopleString received $150,000 in gross proceeds in June 2009 and issued 5,683,690 shares of its common stock in June 2009. PeopleString received $32,100 in gross proceeds in July 2009 and issued 1,216,310 shares of its common stock in July 2009
  Also in June 2009, PeopleString initiated a private placement of securities to sell shares of its common stock at a per share purchase price of $0.05. PeopleString received deposits on its common stock of $23,500 in gross proceeds in June 2009 and then issued 470,000 shares of its common stock in July 2009.
  In August 2009, PeopleString issued 1,300,000 shares of its common stock, valued at $0.05 per share, in consideration for sales and legal services provided by two vendors. PeopleString recorded expense of $65,000 in connection with the issuance of these shares. Fair market value was based on the most recent prior private placement per share purchase price.
  In October 2009, PeopleString issued 2,480,000 shares of its common stock at a per share purchase price of $0.13 and received $310,000 in gross proceeds.
  NOTE 7. SHARE-BASED COMPENSATION
  Equity Incentive Plan:
  PeopleString adopted its 2009 Equity Incentive Plan, approved by a majority of PeopleString stockholders at the 2009 annual meeting of stockholders, and amended and approved by a majority of the stockholders of PeopleString in 2010 (the “Equity Incentive Plan”). Under the Equity Incentive Plan, incentive and nonqualified stock options and rights to purchase PeopleString’s common stock may be granted to eligible participants. Options granted under the Equity Incentive Plan are generally priced to be at least 100% of the fair market value of PeopleString’s common stock at the date of the grant. Options granted under the Equity Incentive Plan are generally granted for a term of three to ten years. Options granted under the Equity Incentive Plan generally vest between one to five years.
  For the years ended December 31, 2010 and 2009, PeopleString did not grant stock options.
  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. PeopleString has limited relevant historical information to support the expected exercise behavior because PeopleString’s common stock had not been publicly traded at the time of the grants.
  NOTE 8. RELATED PARTY TRANSACTIONS
  Technology License and Shared Services Agreement:
  On April 2, 2009, PeopleString entered into a verbal agreement with BigString, a related party, to license BigString’s messaging technology and share the cost of certain common services. At December 31, 2010, BigString was a significant, non-majority stockholder of PeopleString’s common stock. 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. For the years ended December 31, 2010 and 2009, the amount incurred by PeopleString for the licensing was $42,000 and $33,000, respectively.
   F-11
 Index
 PEOPLESTRING CORPORATION AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  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. For the years ended December 31, 2010 and 2009, the amount expensed to BigString by PeopleString for the shared expense was $5,403 and $132,340, respectively. PeopleString’s management determined, in their sole discretion, based on their 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.
  On August 3, 2009, PeopleString entered into a verbal agreement with Digital BobKat, LLC, a limited liability company in which Robert S. DeMeulemeester, an officer and director of PeopleString, 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 years ended December 31, 2010 and 2009 were $51,411 and $43,761, respectively.
  NOTE 9. COMMITMENTS AND CONTINGENCIES
  Leases:
  PeopleString shares office space with BigString and made payments to BigString for the shared office space. Beginning June 1, 2010, PeopleString paid for its shared office space directly to BigString’s landlord. PeopleString leases a secondary office and hosting facilities. Future minimum lease payments for operating leases are approximately as follows:
  MinimumYears Ending

LeaseDecember 31,

Payments2011

$
23,939
  Rental expenses were $20,026 and $3,967 for the years ended December 31, 2010 and 2009, respectively.
  Excluding shared services and a licensing fee to BigString, computer co-location, power and Internet access expenses were $46,980 and $9,954 for the years ended December 31, 2010 and 2009, respectively.
  Other Commitments:
  In the ordinary course of business, PeopleString may provide indemnifications to customers, vendors, lessors, marketing affiliates, directors, officers and other parties with respect to certain matters. It is not possible to determine the aggregate maximum potential loss under these indemnification agreements due to the limited history of prior indemnification claims and unique circumstances involved in each agreement. To date, PeopleString has not incurred material costs as a result of obligation under these agreements and has not accrued any liabilities related to such agreements.
  NOTE10. SUBSEQUENT EVENTS
  In January 2011, PeopleString issued 668,500 shares of its common stock, valued at $0.125 per share, in consideration for marketing services to be provided by 34 consultants. The common stock is restricted and subject to the terms of signed agreements. PeopleString recorded expense of $83,563 in connection with the issuance of these shares. Fair market value was based on the most recent prior private placement per share purchase price.
  Also in January 2011, PeopleString issued 50,000 shares of its common stock, valued at $0.125 per share, in consideration for investment banking services to be provided by Buckman, Buckman & Reid. The common stock is restricted. PeopleString recorded expense of $6,250 in connection with the issuance of these shares. Fair market value was based on the most recent prior private placement per share purchase price.
  F-12
 Index
 PEOPLESTRING CORPORATION AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  In January 2011, PeopleString granted incentive stock options to purchase 4,475,000 shares of PeopleString’s common stock under its Equity Incentive Plan to certain of PeopleString’s employees. The incentive stock options were granted at an exercise price of $0.20 per underlying share and vest over a period of one or two years. In addition, PeopleString granted non-qualified stock options to purchase 10,949,500 shares of PeopleString’s common stock under its Equity Incentive Plan to certain of PeopleString’s consultants. The non-qualified stock options were granted at an exercise price of $0.20 or $0.60 per underlying share and vest over a period of two years.
  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. PeopleString will record $45,593 of stock-based compensation expense, net of estimated forfeitures, over the expected lives of the grants, which range from 18 to 30 months.
  As of March 29, 2011, the Equity Incentive Plan had not been registered with the SEC. As of March 29, 2011, no options were exercised, and no cash received from option exercises and purchases of shares.
   F-13
 Index
 
  INDEX OF EXHIBITS
  Exhibit No.
Description of Exhibit3.1
Certificate of Incorporation of PeopleString, placed into effect on January 2, 2009, incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 (Registration No. 333-163290) filed with the SEC on November 23, 2009.3.2
Amended and Restated By-laws of PeopleString, incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (Registration No. 333-163290) filed with the SEC on November 23, 2009.10.1
PeopleString Corporation 2009 Equity Incentive Plan, incorporated by reference to Exhibit 10.1 to the Registration Statement on Form S-1/A (Registration No. 333-163290) filed with the SEC on January 10, 2010.10.2
PeopleString Corporation 2009 Amended Equity Incentive Plan.16.1
Letter From Former Accountant regarding Changes in and Disagreements with Accountants on Accounting and Financial Disclosure, incorporated by reference to Exhibit 16.1 to the Registration Statement on Form S-1/A (Registration No. 333-163290) filed with the SEC on July 2, 2010.16.1.1
Updated Letter From Former Accountant regarding Changes in and Disagreements with Accountants on Accounting and Financial Disclosure, incorporated by reference to Exhibit 16.1 to the Registration Statement on Form S-1/A (Registration No. 333-163290) filed with the SEC on August 23, 2010.21.1
Subsidiary of PeopleString.23.1
Consent of Madsen & Associates CPAs, Inc., independent registered public accountants, as to the report relating to the consolidated financial statements of PeopleString.24.1
Powers of Attorney of officers and directors of PeopleString, included in the signature page to this report.31.1
Section 302 Certification of Chief Executive Officer.31.2
Section 302 Certification of Chief Financial Officer.32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
  
 E-1