10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2014
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from __________  to __________

Commission file number: 000-22711

BLUEGATE CORPORATION

(Exact name of registrant as specified in its charter)

Nevada	76-0640970
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

701 North Post Oak Road, Suite 350, Houston, Texas	77024
(Address of principal executive offices)	(Zip Code)
voice: 713-686-1100	fax: 713-682-7402
Issuer's telephone number

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 filings requirements for the past 90 days. Yes þ No ¨

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions in 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	þ

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each the issuer's classes of common stock, as of the latest practicable date: 46,033,565 common shares outstanding as of April 25, 2014.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Unaudited Financial Statements	F-1
Balance Sheets as of March 31, 2014 and December 31, 2013	F-1
Statements of Operations for the three months ended March 31, 2014 and 2013	F-2
Statement of Stockholders’ Deficit for the three months ended March 31, 2014	F-3
Statements of Cash Flows for the three months ended March 31, 2014 and 2013	F-4
Notes to Financial Statements	F-5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	I-1
ITEM 4. CONTROLS AND PROCEDURES	I-4
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS	II-1
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	II-1
ITEM 5. OTHER INFORMATION	II-1
ITEM 6. EXHIBITS	II-1
SIGNATURES	II-2

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

BLUEGATE CORPORATION

BALANCE SHEETS

UNAUDITED

	March 31,			December 31,
	2014			2013
ASSETS
Current assets:
Cash and cash equivalents	$	857		$	4,723
Accounts receivable, net		548			357
Prepaid expenses and other		9,777			9,777
Total current assets	$	11,182		$	14,857
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	17,433		$	11,097
Accounts payable to related party		765,066			717,266
Accrued liabilities		4,095			6,228
Note payable to related party		1,320,600			1,310,600
Accrued liabilities to related parties		828,258			749,600
Deferred revenue		1,081			2,237
Total current liabilities		2,936,533			2,797,028
Stockholders’ deficit:
Undesignated preferred stock, $.001 par value, 9,999,942 shares authorized, none issued and outstanding		-			-
Series C Convertible Non-Redeemable preferred stock, $.001 par value, 48 shares authorized, issued and outstanding at March 31, 2014 and December 31, 2013; $12,500 per share liquidation preference ($600,000 aggregate liquidation preference at March 31, 2014)		-			-
Series D Convertible Non-Redeemable preferred stock, $.001 par value, 10 shares authorized, issued and outstanding at March 31, 2014 and December 31, 2013; $8,725 per share liquidation preference ($87,250 aggregate liquidation preference at March 31, 2014)		-			-
Common stock, $.001 par value, 50,000,000 shares authorized, 46,033,565 shares issued and outstanding at March 31, 2014 and December 31, 2013		46,034			46,034
Additional paid-in capital		22,400,286			22,400,286
Accumulated deficit		(25,371,671	)		(25,228,491	)
Total stockholders’ deficit		(2,925,351	)		(2,782,171	)
Total liabilities and stockholders’ deficit	$	11,182		$	14,857

See accompanying notes to unaudited financial statements

F-1

BLUEGATE CORPORATION

STATEMENTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2014 AND 2013

UNAUDITED

	2014			2013
Service revenue	$	19,528		$	32,153
Cost of services		23,513			26,965
Gross profit (loss)		(3,985	)		5,188
Selling, general and administrative expenses		60,538			62,041
Loss from operations		(64,523	)		(56,853	)
Interest expense		(78,657	)		(76,249	)
Net loss	$	(143,180	)	$	(133,102	)
Net loss per share - basic and diluted	$	(0.00	)	$	(0.00	)
Basic and diluted weighted average shares outstanding		46,033,565			46,033,565

See accompanying notes to unaudited financial statements

F-2

BLUEGATE CORPORATION

STATEMENT OF STOCKHOLDERS' DEFICIT

THREE MONTHS ENDED MARCH 31, 2014

UNAUDITED

					PREFERRED STOCK								ADDITIONAL
	COMMON STOCK				SERIES C				SERIES D				PAID-IN		ACCUMULATED
	SHARES		CAPITAL		SHARES		CAPITAL		SHARES		CAPITAL		CAPITAL		DEFICIT			TOTAL
Balance at December 31, 2013		46,033,565	$	46,034		48	$	-		10	$	-	$	22,400,286	$	(25,228,491	)	$	(2,782,171	)
Net loss																(143,180	)		(143,180	)
Balance at March 31, 2014		46,033,565	$	46,034		48	$	-		10	$	-	$	22,400,286	$	(25,371,671	)	$	(2,925,351	)

See accompanying notes to unaudited financial statements

F-3

BLUEGATE CORPORATION

STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2014 AND 2013

UNAUDITED

	2014			2013
Cash flows from operating activities:
Net loss	$	(143,180	)	$	(133,102	)
Adjustments to reconcile net loss to net cash used in operating activities:
Changes in operating assets and liabilities:
Accounts receivable		(191	)		1,072
Accounts payable and accrued liabilities		4,203			(14,662	)
Accounts payable to related party		47,800			49,525
Accrued liabilities to related parties		78,658			76,248
Deferred revenue		(1,156	)		(6,778	)
Net cash used in operating activities		(13,866	)		(27,697	)
Cash flows from financing activities:
Proceeds from related party short term debt		10,000			26,600
Net cash provided by financing activities		10,000			26,600
Net (decrease) in cash and cash equivalents		(3,866	)		(1,097	)
Cash and cash equivalents at beginning of period		4,723			3,762
Cash and cash equivalents at end of period	$	857		$	2,665
Supplemental information:
Cash paid for interest	$	-		$	-
Cash paid for income taxes		-			-

See accompanying notes to unaudited financial statements

F-4

BLUEGATE CORPORATION

NOTES TO FINANCIAL STATEMENTS

UNAUDITED

1. BASIS OF PRESENTATION

The accompanying unaudited interim financial statements of Bluegate Corporation (“we”, “our”, “Bluegate” or the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in Bluegate's Annual Report filed with the SEC on Form 10-K.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein.  The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.  Notes to the financial statements which substantially duplicate the disclosure contained in the audited financial statements for fiscal 2013 as reported in the Form 10-K have been omitted.

2. GOING CONCERN CONSIDERATIONS

During the three months ended March 31, 2014, Bluegate has been unable to generate cash flows sufficient to support its operations and has been dependent on debt and equity raised from qualified individual investors and loans from a related party. In addition to negative cash flow from operations, Bluegate has experienced recurring net losses, and has a negative working capital and shareholders’ deficit.

These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if Bluegate is unable to continue as a going concern.

3. ACCOUNTS PAYABLE TO RELATED PARTY

The accounts payable to related party balance is owed to Sperco, LLC ("SLLC") (an entity controlled by Stephen J. Sperco, Bluegate's CEO/President/Director) and is summarized below:

	3/31/2014		12/31/2013
During November 2009, Bluegate entered into an Asset Sale and Purchase Agreement to sell certain assets to SLLC, and as a result, these balances represent funds collected by Bluegate on behalf of SLLC. These balances were reduced by $52,000 as a result of SLLC agreeing to pay Bluegate for office space and associated services for the Sperco entities for the period from July 1, 2010 through July 31, 2011.	$	45,066	$	46,766
As a result of the November 2009 transaction, commencing January 1, 2010, Bluegate had no employees and agreed to pay SLLC a monthly amount of $15,000 for management, accounting and administrative services, as well as, infrastructure and network engineering support. In August 2012 the monthly amount was $18,500 and beginning September 2012 the monthly amount was revised to $15,500 to reflect support for a new project engagement.		688,000		641,500
Commencing August 1, 2011, SLLC and Bluegate moved from Suite 600 to Suite 350 and Bluegate agreed to pay SLLC $1,000 rent on a month-to-month basis.		32,000		29,000
	$	765,066	$	717,266

F-5

4. NOTE PAYABLE TO RELATED PARTY

Note payable at March 31, 2014 and December 31, 2013 is summarized below:

	3/31/2014		12/31/2013
Secured note payable to related party: During 2007, the Company entered into a line of credit agreement with SAI Corporation ("SAIC"), a corporation controlled by our CEO, Stephen J. Sperco, to borrow up to $500,000. The line of credit has been amended several times due to Bluegate’s need to borrow funds for working capital purposes and has been increased to $1,321,000 from the previous balance of $1,311,000. As a condition to and as additional consideration for SAIC’s agreement to lend additional funds to the Company, the Company granted SAIC a security interest in its assets as more specifically detailed in the Promissory Note and Security Agreement. Principal and interest is due on demand. Interest is at the rate of 15% per annum and payments are due and payable monthly at the end of each month until the outstanding principal balance is paid in full. The Company agreed to pay a late charge in the amount of $10,000 on any interest payment more than fifteen days delinquent. During the three months ended March 31, 2014 and the year ended December 31, 2013, Bluegate borrowed $10,000 and $65,600, respectively for working capital purposes.	$	1,320,600	$	1,310,600

5. ACCRUED LIABILITIES TO RELATED PARTIES

The accrued liabilities to related parties is summarized below:

	3/31/2014		12/31/2013
Accrued interest on the note payable to SAIC	$	784,339	$	705,681
Fees accrued through March 31, 2009 to former Board of Director, Dale Geary		20,419		20,419
Fees accrued through March 31, 2009 to Board of Director, Stephen J. Sperco		17,500		17,500
Vehicle allowance accrued through December 31, 2008 to Stephen J. Sperco		6,000		6,000
	$	828,258	$	749,600

6. EQUITY TRANSACTIONS

As of March 31, 2014, the company has outstanding: (i) 46,033,565 shares of common stock; and, (ii) preferred stock that is convertible into 1,450,000 shares of common stock, resulting on a fully diluted basis, 47,483,565 shares of common stock. The company has 50,000,000 shares of common stock authorized by our Articles of Incorporation.

7. LEASE COMMITMENT

Commencing August 1, 2011, SLLC and Bluegate moved from Suite 600 to Suite 350 and Bluegate agreed to pay SLLC $1,000 rent on a month-to-month basis.

F-6

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENT

This Management's Discussion and Analysis of Financial Condition and Results of Operations as of March 31, 2013 and for the three months then ended, should be read in conjunction with the audited financial statements and notes thereto set forth in our annual report on Form 10-K for 2013.

Certain statements contained in this report, including, without limitation, statements containing the words, "likely", "forecast", "project", "believe", "anticipate", "expect", and other words of similar meaning, constitute "forward-looking statements" within the meaning of Section 27A of the Securities Exchange Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such factors or to announce publicly the results of any revision of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments. In addition to the forward-looking statements contained in this Form 10-Q, the following forward-looking factors could cause our future results to differ materially from our forward-looking statements: competition, capital resources, credit resources, funding, government compliance and market acceptance of our products and services.

OUR BUSINESS

Bluegate consists of the networking service (carrier/circuit) business that provides internet connectivity to corporate clients on a subscription basis; essentially operating as a value added provider.

COMPETITION

Most of our competitors have greater financial and other resources than we have, and there is no assurance that we will be able to successfully compete.

Our web site is www.bluegate.com.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based upon financial statements which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.  On an ongoing basis, we evaluate these estimates.  We base our estimates on historical experience and on assumptions that are believed to be reasonable.  These estimates and assumptions provide a basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions, and these differences may be material.

We believe that the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements.

REVENUE RECOGNITION

Revenue is recognized based upon contractually determined monthly service charges to individual customers. Some services are billed in advance and, accordingly, revenues are deferred until the period in which the services are provided.

STOCK-BASED COMPENSATION

Accounting Standard 718, "Accounting for Stock-Based Compensation" ("ASC 718") established financial accounting and reporting standards for stock-based employee compensation plans. It defines a fair value based method of accounting for an employee stock option or similar equity instrument. In January 2006, Bluegate implemented ASC 718, and accordingly, Bluegate accounts for compensation cost for stock option plans in accordance with ASC 718.

I-1

Bluegate accounts for share based payments to non-employees in accordance with ASC 505-50 “Accounting for Equity Instruments Issued to Non-Employees for Acquiring, or in Conjunction with Selling, Goods or Services”.

DERIVATIVE FINANCIAL INSTRUMENTS

Bluegate does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks.  Bluegate evaluates all of it financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives.  For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income.  For option-based derivative financial instruments, Bluegate uses the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.  Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

GOING CONCERN

We remain dependent on outside sources of funding for continuation of our operations.  Our independent registered public accounting firm issued a going concern qualification in their report dated January 22, 2014 (included in our annual report on Form 10-K for the year ended December 31, 2013), which raises substantial doubt about our ability to continue as a going concern.

During the three months ended March 31, 2014 and the year ended December 31, 2013, we have been unable to generate cash flows sufficient to support our operations and have been dependent on debt and equity raised from qualified individual investors and loans from a related party.

During the three months ended March 31, 2014 and 2013, we experienced negative financial results as follows:

	Three Months Ended March 31,
	2014			2013
Net loss	$	(143,180	)	$	(133,102	)
Negative cash flow from operations		(13,866	)		(27,697	)
Negative working capital		(2,925,351	)		(2,359,049	)
Stockholders’ deficit		(2,925,351	)		(2,359,049	)

These factors raise substantial doubt about our ability to continue as a going concern.  The financial statements contained herein do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should we be unable to continue in existence.  Our ability to continue as a going concern is dependent upon our ability to generate sufficient cash flows to meet our obligations on a timely basis, to obtain additional financing as may be required,  and ultimately to attain profitable operations.  However, there is no assurance that profitable operations or sufficient cash flows will occur in the future.

RESULTS OF OPERATIONS

	Three Months Ended March 31,									Increase (Decrease)
	2014			2013			2012			2014 from 2013			2013 from 2012
Service revenue	$	19,528		$	32,153		$	40,230		$	(12,625	)	$	(8,077	)
Cost of services		23,513			26,965			33,652			(3,452	)		(6,687	)
Gross profit (loss)		(3,985	)		5,188			6,578			(9,173	)		(1,390	)
Selling, general and administrative expenses		60,538			62,041			62,363			(1,503	)		(322	)
Loss from operations		(64,523	)		(56,853	)		(55,785	)		7,670			1,068
Interest expense		(78,657	)		(76,249	)		(75,259	)		2,408			990
Net loss	$	(143,180	)	$	(133,102	)	$	(131,044	)	$	10,078		$	2,058

I-2

Service Revenue.

The decrease in Service Revenue of $8,077 from 2012 to 2013 and $12,625 from 2013 to 2014 is due to a reduction in our networking service (carrier/circuit) business that provides internet connectivity to corporate clients on a subscription basis.

Cost of Services.

The net decrease in Cost of Services of $6,687 from 2012 to 2013 and $3,452 from 2013 to 2014 is due to a reduction in our networking service (carrier/circuit) business that provides internet connectivity to corporate clients on a subscription basis.

Gross Profit.

Our Gross Profit decreased $1,390 from 2012 to 2013 and $9,173 from 2013 to 2014. Our Gross Profit as a percentage of Service Revenue decreased from 16% in 2012 and 2013 to negative 20% in 2014 primarily as a result of the changes in the Service Revenue and Cost of Services as described above.

Selling, General and Administrative Expenses (SG&A).

The SG&A decreases of $322 from 2012 to 2013 and $1,503 from 2013 to 2014 are insignificant.

Interest Expense.

The increase in Interest Expense of $990 from 2012 to 2013 and of $2,408 from 2013 to 2014 was a result of the increase in borrowings under the secured note payable to related party.

Net Loss.

The Net Loss increased $2,058 from 2012 to 2013 and $10,078 from 2013 to 2014 due to the items described above.

FINANCIAL CONDITION

	Three Months Ended March 31,									Increase (Decrease)
	2014			2013			2012			2014 from 2013			2013 from 2012
Net cash (used in) by operating activities	$	(13,866	)	$	(27,697	)	$	(13,175	)	$	(13,831	)	$	14,522
Net cash provided by financing activities		10,000			26,600			15,000			(16,600	)		11,600
Net (decrease) increase in cash	$	(3,866	)	$	(1,097	)	$	1,825		$	(2,769	)	$	(2,922	)
Cash balance at end of period	$	857		$	2,665		$	7,762

Operating Activities.

The increase of $14,522 and decrease of $13,831 in cash used in operations from 2012 to 2013 and from 2013 to 2014, respectively are primarily due to the effects of the reduction in our networking service (carrier/circuit) business that provides internet connectivity to corporate clients on a subscription basis.

Financing Activities.

The increase of $11,600 in cash provided by financing activities from 2012 to 2013 is due to an increase in related party short term debt. The decrease of $16,600 in cash provided by financing activities from 2013 to 2014 is due to a decrease in related party short term debt.

BLUEGATE STRATEGY

Our strategy is to stabilize our internet connectivity business and pursue expansion of our market outside of the Healthcare industry.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2014, our cash and cash equivalents were $857; total current assets were $11,182, total current liabilities were $2,936,533 and total stockholders’ deficit was $2,925,351.

I-3

We intend to use debt to cover the anticipated negative cash flows until we can operate at a break-even cash flow mode.  We may seek additional capital to fund potential costs associated with possible expansion and/or acquisitions. We believe that future funding may be obtained from public or private offerings of equity securities, debt or convertible debt securities, or other sources. Stockholders should assume that any additional funding will likely be dilutive.

Our ability to achieve profitability will depend upon our ability to execute and deliver high quality, reliable connectivity services.  Our growth is dependent on attaining profit from our operations and our raising additional capital either through the sale of stock or borrowing.  There is no assurance that we will be able to raise any equity financing or sell any of our products at a profit.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures.

The Company’s Chief Executive Officer and Principal Accounting Officer participated in an evaluation by management of the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of March 31, 2014.  Based on their participation in that evaluation, the Company’s Chief Executive Officer and Principal Accounting Officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2014 to ensure that required information is disclosed on a timely basis in its reports filed or furnished under the Exchange Act.

Changes in internal control over financial reporting.

There was no change in the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the quarter ended March 31, 2014 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

I-4

PART II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

NONE.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

NONE.

ITEM 5.

OTHER INFORMATION

NONE

ITEM 6.

EXHIBITS

Exhibit
Number	Name
31.1	CERTIFICATION REQUIRED BY RULE 13a - 14(a) OR RULE 15d - 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 OF THE CHIEF EXECUTIVE OFFICER
31.2	CERTIFICATION REQUIRED BY RULE 13a - 14(a) OR RULE 15d - 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 OF THE CHIEF FINANCIAL OFFICER AND PRINCIPAL ACCOUNTING OFFICER
32.1	CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350), OF THE CHIEF EXECUTIVE OFFICER
32.2	CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350), OF THE CHIEF FINANCIAL OFFICER AND PRINCIPAL ACCOUNTING OFFICER

II-1

SIGNATURES

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

	Bluegate Corporation
Date:  April 25, 2014	By:	/s/ Stephen J. Sperco
		Stephen J. Sperco,
		Chief Executive Officer
	Bluegate Corporation
Date:  April 25, 2014	By:	/s/ Charles E. Leibold
		Charles E. Leibold,
		Chief Financial Officer and Principal Accounting Officer

II-2

EX-31.1

EXHIBIT 31.1

CERTIFICATION REQUIRED BY RULE 13a - 14(a) OR RULE 15d - 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 OF THE CHIEF EXECUTIVE OFFICER

I, Stephen J. Sperco, certify that:

1.

I have reviewed this report on Form 10-Q for the quarter ended March 31, 2014 of Bluegate Corporation;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 25, 2014

/s/ Stephen J. Sperco

Stephen J. Sperco

Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION REQUIRED BY RULE 13a - 14(a) OR RULE 15d - 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 OF THE CHIEF FINANCIAL OFFICER AND PRINCIPAL ACCOUNTING OFFICER

I, Charles E. Leibold, certify that:

1.

I have reviewed this report on Form 10-Q for the quarter ended March 31, 2014 of Bluegate Corporation;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 25, 2014

/s/ Charles E. Leibold

Charles E. Leibold

Chief Financial Officer and

Principal Accounting Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350), OF THE CHIEF EXECUTIVE OFFICER

In connection with the accompanying Quarterly Report of Bluegate Corporation (the “Company”) on Form 10-Q for the period ended March 31, 2014 (as filed with the U.S. Securities and Exchange Commission on the date hereof, the “Report”), I, Stephen J. Sperco, Chief Executive Officer of the Company, hereby certify that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 25, 2014

/s/ Stephen J. Sperco

Stephen J. Sperco

Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350), OF THE CHIEF FINANCIAL OFFICER AND PRINCIPAL ACCOUNTING OFFICER

In connection with the accompanying Quarterly Report of Bluegate Corporation (the “Company”) on Form 10-Q for the period ended March 31, 2014 (as filed with the U.S. Securities and Exchange Commission on the date hereof, the “Report”), I, Charles E. Leibold, Chief Financial Officer and Principal Accounting Officer of the Company, hereby certify that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 25, 2014

/s/ Charles E. Leibold

Charles E. Leibold

Chief Financial Officer and

Principal Accounting Officer

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Accounts Payable To Related Party

3 Months Ended

Mar. 31, 2014

Accounts Payable To Related Party

Accounts Payable To Related Party

3. ACCOUNTS PAYABLE TO RELATED PARTY

The accounts payable to related party balance is owed to Sperco, LLC ("SLLC") (an entity controlled by Stephen J. Sperco, Bluegate's CEO/President/Director) and is summarized below:

	3/31/2014		12/31/2013
During November 2009, Bluegate entered into an Asset Sale and Purchase Agreement to sell certain assets to SLLC, and as a result, these balances represent funds collected by Bluegate on behalf of SLLC. These balances were reduced by $52,000 as a result of SLLC agreeing to pay Bluegate for office space and associated services for the Sperco entities for the period from July 1, 2010 through July 31, 2011.	$	45,066	$	46,766
As a result of the November 2009 transaction, commencing January 1, 2010, Bluegate had no employees and agreed to pay SLLC a monthly amount of $15,000 for management, accounting and administrative services, as well as, infrastructure and network engineering support. In August 2012 the monthly amount was $18,500 and beginning September 2012 the monthly amount was revised to $15,500 to reflect support for a new project engagement.		688,000		641,500
Commencing August 1, 2011, SLLC and Bluegate moved from Suite 600 to Suite 350 and Bluegate agreed to pay SLLC $1,000 rent on a month-to-month basis.		32,000		29,000
	$	765,066	$	717,266

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Going Concern Considerations

3 Months Ended

Mar. 31, 2014

Going Concern Considerations

Going Concern Considerations

2. GOING CONCERN CONSIDERATIONS

During the three months ended March 31, 2014, Bluegate has been unable to generate cash flows sufficient to support its operations and has been dependent on debt and equity raised from qualified individual investors and loans from a related party. In addition to negative cash flow from operations, Bluegate has experienced recurring net losses, and has a negative working capital and shareholders’ deficit.

These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if Bluegate is unable to continue as a going concern.

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Balance Sheets (Unaudited) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 857	$ 4,723
Accounts receivable, net	548	357
Prepaid expenses and other	9,777	9,777
Total current assets	11,182	14,857
Current liabilities:
Accounts payable	17,433	11,097
Accounts payable to related party	765,066	717,266
Accrued liabilities	4,095	6,228
Note payable to related party	1,320,600	1,310,600
Accrued liabilities to related parties	828,258	749,600
Deferred revenue	1,081	2,237
Total current liabilities	2,936,533	2,797,028
Stockholders' deficit:
Preferred stock
Common stock, $.001 par value, 50,000,000 shares authorized, 46,033,565 shares issued and outstanding at March 31, 2014 and December 31, 2013	46,034	46,034
Additional paid-in capital	22,400,286	22,400,286
Accumulated deficit	(25,371,671)	(25,228,491)
Total stockholders' deficit	(2,925,351)	(2,782,171)
Total liabilities and stockholders' deficit	11,182	14,857
Series C Convertible Non-Redeemable preferred stock
Stockholders' deficit:
Preferred stock
Series D Convertible Non-Redeemable preferred stock
Stockholders' deficit:
Preferred stock
Undesignated preferred stock
Stockholders' deficit:
Preferred stock

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Statements of Cash Flows (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash flows from operating activities:
Net loss	$ (143,180)	$ (133,102)
Changes in operating assets and liabilities:
Accounts receivable	(191)	1,072
Accounts payable and accrued liabilities	4,203	(14,662)
Accounts payable to related party	47,800	49,525
Accrued liabilities to related parties	78,658	76,248
Deferred revenue	(1,156)	(6,778)
Net cash used in operating activities	(13,866)	(27,697)
Cash flows from financing activities:
Proceeds from related party short term debt	10,000	26,600
Net cash provided by financing activities	10,000	26,600
Net (decrease) in cash and cash equivalents	(3,866)	(1,097)
Cash and cash equivalents at beginning of period	4,723	3,762
Cash and cash equivalents at end of period	857	2,665
Supplemental information:
Cash paid for interest
Cash paid for income taxes

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Lease Commitment (Details Narrative) (USD $)	Aug. 01, 2011
Commitments and Contingencies Disclosure [Abstract]
Term	month-to-month
Monthly rent	$ 1,000

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Basis of Presentation

3 Months Ended

Mar. 31, 2014

Basis Of Presentation

Basis of Presentation

1. BASIS OF PRESENTATION

The accompanying unaudited interim financial statements of Bluegate Corporation (“we”, “our”, “Bluegate” or the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in Bluegate's Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which substantially duplicate the disclosure contained in the audited financial statements for fiscal 2013 as reported in the Form 10-K have been omitted.

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Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Common stock, par value per share	$ 0.001	$ 0.001
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	46,033,565	46,033,565
Common stock, shares outstanding	46,033,565	46,033,565
Series C Convertible Non-Redeemable preferred stock
Preferred stock, par value per share	$ 0.001	$ 0.001
Preferred stock, shares authorized	48	48
Preferred stock, shares issued	48	48
Preferred stock, shares outstanding	48	48
Preferred stock, per share liquidation preference	$ 12,500	$ 12,500
Preferred stock, aggregate liquidation value	$ 600,000
Series D Convertible Non-Redeemable preferred stock
Preferred stock, par value per share	$ 0.001	$ 0.001
Preferred stock, shares authorized	10	10
Preferred stock, shares issued	10	10
Preferred stock, shares outstanding	10	10
Preferred stock, per share liquidation preference	$ 8,725	$ 8,725
Preferred stock, aggregate liquidation value	$ 87,250
Undesignated preferred stock
Preferred stock, par value per share	$ 0.001	$ 0.001
Preferred stock, shares authorized	9,999,942	9,999,942
Preferred stock, shares issued
Preferred stock, shares outstanding

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Accrued Liabilities To Related Parties (Table)

3 Months Ended

Mar. 31, 2014

Accrued Liabilities To Related Parties

Accrued Liabilites To Related Parties

	3/31/2014		12/31/2013
Accrued interest on the note payable to SAIC	$	784,339	$	705,681
Fees accrued through March 31, 2009 to former Board of Director, Dale Geary		20,419		20,419
Fees accrued through March 31, 2009 to Board of Director, Stephen J. Sperco		17,500		17,500
Vehicle allowance accrued through December 31, 2008 to Stephen J. Sperco		6,000		6,000
	$	828,258	$	749,600

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Document and Entity Information	3 Months Ended
	Mar. 31, 2014	Apr. 25, 2014
Document And Entity Information
Entity Registrant Name	BLUEGATE CORP
Entity Central Index Key	0000768216
Document Type	10-Q
Document Period End Date	Mar. 31, 2014
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		46,033,565
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2014

XML

Accounts Payable To Related Party (Details) (USD $)				13 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Aug. 01, 2011	Jul. 31, 2011 SLLC	Mar. 31, 2014 Asset Sale and Purchase Agreement SLLC	Dec. 31, 2013 Asset Sale and Purchase Agreement SLLC	Sep. 01, 2012 General and Administrative Fees	Aug. 01, 2012 General and Administrative Fees	Jan. 01, 2010 General and Administrative Fees	Mar. 31, 2014 General and Administrative Fees SLLC	Dec. 31, 2013 General and Administrative Fees SLLC	Mar. 31, 2014 Rent SLLC	Dec. 31, 2013 Rent SLLC	Aug. 01, 2011 Rent Payable
Amounts due to related party					$ 45,066	$ 46,766				$ 688,000	$ 641,500	$ 32,000	$ 29,000
Administrative fees due from related party				52,000
Total	765,066	717,266
Initial monthly fee									15,000
Increase/decrease in monthly fee							15,500	18,500
Monthly rent			$ 1,000											$ 1,000
Term			month-to-month				Monthly	Monthly	Monthly					Month-to-Month

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Statements of Operations (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Income Statement [Abstract]
Service revenue	$ 19,528	$ 32,153
Cost of services	23,513	26,965
Gross profit (loss)	(3,985)	5,188
Selling, general and administrative expenses	60,538	62,041
Loss from operations	(64,523)	(56,853)
Interest expense	(78,657)	(76,249)
Net loss	$ (143,180)	$ (133,102)
Net loss per share, basic and diluted	$ 0.00	$ 0.00
Basic and diluted weighted average shares outstanding	46,033,565	46,033,565

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Equity Transactions

3 Months Ended

Mar. 31, 2014

Stockholders' Equity Note [Abstract]

Equity Transactions

6. EQUITY TRANSACTIONS

As of March 31, 2014, the company has outstanding: (i) 46,033,565 shares of common stock; and, (ii) preferred stock that is convertible into 1,450,000 shares of common stock, resulting on a fully diluted basis, 47,483,565 shares of common stock. The company has 50,000,000 shares of common stock authorized by our Articles of Incorporation.

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Accrued Liabilities To Related Parties

3 Months Ended

Mar. 31, 2014

Accrued Liabilities To Related Parties

Accrued Liabilities To Related Parties

5. ACCRUED LIABILITIES TO RELATED PARTIES

The accrued liabilities to related parties is summarized below:

	3/31/2014		12/31/2013
Accrued interest on the note payable to SAIC	$	784,339	$	705,681
Fees accrued through March 31, 2009 to former Board of Director, Dale Geary		20,419		20,419
Fees accrued through March 31, 2009 to Board of Director, Stephen J. Sperco		17,500		17,500
Vehicle allowance accrued through December 31, 2008 to Stephen J. Sperco		6,000		6,000
	$	828,258	$	749,600

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Notes Payable Related Party (Details) (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013	Dec. 31, 2007
Note Payable To Related Party
Secured note payable to related party	$ 1,320,600		$ 1,310,600
Credit line issuer				SAI Corporation ("SAIC"), a corporation controlled by our CEO, Stephen J. Sperco
Date of issuance of line of credit				Dec. 31, 2007
Maximimum borrowing capacity of secured line of credit	1,321,000		1,311,000	500,000
Line of credit due date				On demand
Line of credit interest rate				15.00%
Late payment penalty				$10,000 penalty for late payment
Late payment penalty date				15 days after due date
Draws against credit line in this period	$ 10,000	$ 26,600	$ 65,600

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Accounts Payable To Related Party (Table)

3 Months Ended

Mar. 31, 2014

Accounts Payable To Related Party

Schedule of Accounts Payable To Related Party

	3/31/2014		12/31/2013
During November 2009, Bluegate entered into an Asset Sale and Purchase Agreement to sell certain assets to SLLC, and as a result, these balances represent funds collected by Bluegate on behalf of SLLC. These balances were reduced by $52,000 as a result of SLLC agreeing to pay Bluegate for office space and associated services for the Sperco entities for the period from July 1, 2010 through July 31, 2011.	$	45,066	$	46,766
As a result of the November 2009 transaction, commencing January 1, 2010, Bluegate had no employees and agreed to pay SLLC a monthly amount of $15,000 for management, accounting and administrative services, as well as, infrastructure and network engineering support. In August 2012 the monthly amount was $18,500 and beginning September 2012 the monthly amount was revised to $15,500 to reflect support for a new project engagement.		688,000		641,500
Commencing August 1, 2011, SLLC and Bluegate moved from Suite 600 to Suite 350 and Bluegate agreed to pay SLLC $1,000 rent on a month-to-month basis.		32,000		29,000
	$	765,066	$	717,266

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Lease Commitment

3 Months Ended

Mar. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Lease Commitment

7. LEASE COMMITMENT

Commencing August 1, 2011, SLLC and Bluegate moved from Suite 600 to Suite 350 and Bluegate agreed to pay SLLC $1,000 rent on a month-to-month basis.

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Basis of Presentation (Policies)

3 Months Ended

Mar. 31, 2014

Basis Of Presentation

Basis of Presentation

The accompanying unaudited interim financial statements of Bluegate Corporation (“we”, “our”, “Bluegate” or the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in Bluegate's Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which substantially duplicate the disclosure contained in the audited financial statements for fiscal 2013 as reported in the Form 10-K have been omitted.

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Notes Payable Related Party (Tables)

3 Months Ended

Mar. 31, 2014

Note Payable To Related Party

Schedule of Notes Payable to Related Party

	3/31/2014		12/31/2013
Secured note payable to related party: During 2007, the Company entered into a line of credit agreement with SAI Corporation ("SAIC"), a corporation controlled by our CEO, Stephen J. Sperco, to borrow up to $500,000. The line of credit has been amended several times due to Bluegate’s need to borrow funds for working capital purposes and has been increased to $1,321,000 from the previous balance of $1,311,000. As a condition to and as additional consideration for SAIC’s agreement to lend additional funds to the Company, the Company granted SAIC a security interest in its assets as more specifically detailed in the Promissory Note and Security Agreement. Principal and interest is due on demand. Interest is at the rate of 15% per annum and payments are due and payable monthly at the end of each month until the outstanding principal balance is paid in full. The Company agreed to pay a late charge in the amount of $10,000 on any interest payment more than fifteen days delinquent. During the three months ended March 31, 2014 and the year ended December 31, 2013, Bluegate borrowed $10,000 and $65,600, respectively for working capital purposes.	$	1,320,600	$	1,310,600

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Equity Transactions (Details Narrative)	Mar. 31, 2014	Dec. 31, 2013
Stockholders' Equity Note [Abstract]
Common stock outstanding	46,033,565	46,033,565
Preferred stock convertible to common stock outstanding	1,450,000
Common stock outstanding, fully diluted, upon conversion of preferred stock	47,483,565
Common stock authorized	50,000,000	50,000,000

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Statement of Stockholders' Deficit (Unaudited) (USD $)	Common Stock	Preferred Stock - Series C	Preferred Stock - Series D	Additional Paid-In Capital	Accumulated Deficit	Total
Beginning Balance, Amount at Dec. 31, 2013	$ 46,034			$ 22,400,286	$ (25,228,491)	$ (2,782,171)
Beginning Balance, Shares at Dec. 31, 2013	46,033,565	48	10
Net loss					(143,180)	(143,180)
Ending Balance, Amount at Mar. 31, 2014	$ 46,034			$ 22,400,286	$ (25,371,671)	$ (2,925,351)
Ending Balance, Shares at Mar. 31, 2014	46,033,565	48	10

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Note Payable To Related Party

3 Months Ended

Mar. 31, 2014

Note Payable To Related Party

Note Payable To Related Party

4. NOTE PAYABLE TO RELATED PARTY

Note payable at March 31, 2014 and December 31, 2013 is summarized below:

	3/31/2014		12/31/2013
Secured note payable to related party: During 2007, the Company entered into a line of credit agreement with SAI Corporation ("SAIC"), a corporation controlled by our CEO, Stephen J. Sperco, to borrow up to $500,000. The line of credit has been amended several times due to Bluegate’s need to borrow funds for working capital purposes and has been increased to $1,321,000 from the previous balance of $1,311,000. As a condition to and as additional consideration for SAIC’s agreement to lend additional funds to the Company, the Company granted SAIC a security interest in its assets as more specifically detailed in the Promissory Note and Security Agreement. Principal and interest is due on demand. Interest is at the rate of 15% per annum and payments are due and payable monthly at the end of each month until the outstanding principal balance is paid in full. The Company agreed to pay a late charge in the amount of $10,000 on any interest payment more than fifteen days delinquent. During the three months ended March 31, 2014 and the year ended December 31, 2013, Bluegate borrowed $10,000 and $65,600, respectively for working capital purposes.	$	1,320,600	$	1,310,600

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Accrued Liabilities To Related Parties (Details) (USD $)	Mar. 31, 2014		Dec. 31, 2013
Total	$ 828,258		$ 749,600
Former Member of Board of Directors
Accrued fees	20,419	[1]	20,419	[1]
Member of Board of Directors
Accrued fees	17,500	[1]	17,500	[1]
SAIC
Accrued interest	784,339		705,681
CEO
Accrued vehicle allowance	$ 6,000	[2]	$ 6,000	[2]

[1] Accrued through March 31, 2009.

[2] Accrued through December 31, 2008