8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K Amendment Number 2

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 15, 2005

BLUEGATE CORPORATION

(Exact name of registrant as specified in its Charter)

Nevada	000-22711	76-0640970
(State or other jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification Number)

701 North Post Oak, Road, Suite 600, Houston, Texas	77024
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (713) 686-1100

(Former name or former address if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

1

Explanatory Note

On September 21, 2005, Bluegate Corporation, a Nevada corporation (Registrant) filed a Current Report on Form 8-K (the Initial Report) to report the acquisition of substantially all of the assets of Trilliant Corporation for the purchase price of $341,844 (the Trilliant Acquisition). This Amendment No. 2 to Current Report on Form 8-K/A amends Item 9.01 of the Initial Report to provide the financial statements and pro forma financial information required to be filed in connection the Trilliant Acquisition.

Item 9.01 Financial Statements and Exhibits.

(a)  Audited Financial Statements of Business Acquired

Attached hereto as Exhibit 99.1 are the audited balance sheets of Trilliant Corporation as of December 31, 2004 and 2003, and the related statements of operations and stockholders' equity (deficit) and cash flows for each of the two years then ended, together with the auditor's report thereon.

(b)  Interim Financial Statements of the Business Acquired

Attached hereto as Exhibit 99.2 are the unaudited balance sheets of Trilliant Corporation as of June 30, 2005 and December 31, 2004, and the related statements of operations and cash flows for the three and six months ended June 30, 2005 and 2004.

(c)  Pro Forma Financial Information of the Registrant

Attached hereto as Exhibit 99.3 are the unaudited pro forma combined condensed balance sheets of Bluegate Corporation as of June 30, 2005, and the related unaudited pro forma combined statements of operations for the six months then ended and the unaudited pro forma combined statements of operations for the twelve months ended December 31, 2004.

(d)  Exhibits

EXHIBIT
NUMBER	DESCRIPTION
10.1	Asset Sale and Purchase Agreement among Registrant, Trilliant Technology Group, Inc., Trilliant Corporation and William Koehler (1)
10.2	Employment Agreement between Registrant and William Koehler (1)
10.3	Employment Agreement between Registrant and Larry Walker (1)
99.1	Audited financial statements of Trilliant Corporation as of December 31, 2004 and 2003 and for the two years then ended - provided herewith.
99.2	Unaudited financial statements of Trilliant Corporation as of June 30, 2005 and December 31, 2004 for the three and six months ended June 30, 2005 and 2004 - provided herewith.
99.3	Unaudited pro forma combined condensed financial statements of Bluegate Corporation as of June 30, 2005 and for the six months ended June 30, 2005 and the twelve months ended December 31, 2004 - provided herewith.

(1) Previously filed as an exhibit to the Current Report on Form 8-K of Bluegate Corporation filed on September 21, 2005, and incorporated herein by this reference.

2

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 hereunto duly authorized.

	BLUEGATE CORPORATION
	(Registrant)
Date: August 31, 2006		By: /s/ Manfred Sternberg
		Manfred Sternberg,
		Chief Executive Officer

3 

EX-99.1

EXHIBIT 99.1

AUDITED FINANCIAL STATEMENTS OF TRILLIANT CORPORATION AS OF DECEMBER 31, 2004 AND 2003 AND FOR THE TWO YEARS THEN ENDED

TRILLIANT CORPORATION

AUDITED FINANCIAL STATEMENTS

DECEMBER 31, 2004 AND 2003

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TRILLIANT CORPORATION

TABLE OF CONTENTS

	PAGE
Report of Independent Registered Public Accounting Firm	3
Financial Statements:
Balance Sheets as of December 31, 2004 and 2003	4
Statements of Operations for the years ended December 31, 2004 and 2003	5
Statements of Stockholders' Equity (Deficit) for the years ended December 31, 2004 and 2003	6
Statements of Cash Flows for the years ended December 31, 2004 and 2003	7
Notes to Financial Statements	8

2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Directors

Trilliant Corporation

Houston, Texas

We have audited the accompanying balance sheets of Trilliant Corporation as of December 31, 2004 and 2003, and the related statements of operations,  stockholders' equity (deficit) and cash flows for each of the two 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 upon our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the  financial statements. An audit also includes 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 Trilliant Corporation as of  December 31, 2004 and 2003, and the results of its operations and its cash flows for each of the two years then ended, in conformity with accounting principles generally accepted in the United States of America.

Malone and Bailey, P.C.

www.malone-bailey.com

Houston, Texas

January 31, 2006

3

TRILLIANT CORPORATION

BALANCE SHEETS

December 31, 2004 and 2003

	December 31,
	2004			2003
ASSETS
Current assets:
Cash and cash equivalents	$	-		$	67,588
Accounts receivable, net		222,556			363,272
Total current assets		222,556			430,860
Property and equipment, net		19,078			28,138
Intangible assets, net		1,250			1,250
Total assets	$	242, 884		$	460,248
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Bank line of credit	$	50,191		$	33,363
Notes payable - related parties		269,903			160,985
Accounts payable		15,727			14,338
Accrued liabilities		27,410			9,170
Total current liabilities		363,231			217,856
Long term debt - related party		30,249			44,248
Total liabilities		393,480			262,104
Stockholders' equity (deficit):
Common stock, no par value, 10,000,000 shares authorized, issued and outstanding at December 31, 2004 and December 31, 2003, respectively		1,000			1,000
Additional paid-in capital		2,100			2,100
Treasury stock		(39,877	)		(39,877	)
Retained earnings (deficit)		(113,819	)		234,921
Total stockholders' equity (deficit)		(150,596	)		198,144
Total liabilities and stockholders' equity (deficit)	$	242,884		$	460,248

See accompanying summary of accounting policies and notes to financial statements.

4

TRILLIANT CORPORATION

STATEMENTS OF OPERATIONS

Years Ended December 31, 2004 and 2003

	Year Ended December 31,
	2004			2003
Service revenue	$	1,195,640		$	1,925,985
Cost of services		-			-
Gross margin		1,195,640			1,925,985
Selling, general and administrative expenses		1,518,545			1,742,857
Income (loss) from operations		(322,905	)		183,128
Interest expense and other		25,835			19,594
Net income (loss)	$	(348,740	)	$	163,534

See accompanying summary of accounting policies and notes to financial statements.

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TRILLIANT CORPORATION

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

Years ended December 31, 2004 and 2003

	Common Stock				Addi- tional Paid In		Treasury			Retained Earnings			Total Stockholders' Equity
	Amount		Shares		Capital		Stock			(Deficit)			(Deficit)
Balances December 31, 2002	$	1,000		10,000,000	$	-	$	-		$	71,387		$	72,387
Net income		-		-		-		-			163,534			163,534
Additional paid in capital		-		-		2,100		-			-			2,100
Purchase of 692,500 shares of treasury stock		-		-		-		(39,877	)		-			(39,877	)
Balances December 31, 2003		1,000		10,000,000		2,100		(39,877	)		234,921			198,144
Net loss		-		-		-		-			(348,740	)		(348,740	)
Balances December 31, 2004	$	1,000		10,000,000	$	2,100	$	(39,877	)	$	(113,819	)	$	(150,596	)

See accompanying summary of accounting policies and notes to financial statements.

6

TRILLIANT CORPORATION

STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2004 AND 2003

	December 31,			December 31,
	2004			2003
Cash flows from operating activities:
Net income (loss)	$	(348,740	)	$	163,534
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation		14,416			15,062
Bad debt expense		-			13,942
Changes in operating assets and liabilities:
Accounts receivable		140,716			(215,980	)
Accounts payable and accrued liabilities		19,629			(5,188	)
Other assets and liabilities		-			1,315
Net cash used in operating activities		(173,979	)		(27,315	)
Cash flows from investing activities:
Purchase of property and equipment		(5,356	)		(23,405	)
Net cash used in investing activities		(5,356	)		(23,405	)
Cash flows from financing activities:
Proceeds from notes payable to related parties		233,000			256,924
Repayment of notes payable to related parties		(138,081	)		(173,068	)
Proceeds from notes payable		20,139			33,363
Repayment of notes payable		(3,311	)		-
Net cash provided by financing activities		111,747			117,219
Net increase (decrease) in cash and cash equivalents		(67,588	)		66,499
Cash and cash equivalents at beginning of period		67,588			1,089
Cash and cash equivalents at end of period	$	-		$	67,588
Non cash transactions:
Note payable for treasury stock	$	-		$	39,877
Related party forgiveness of debt		-			2,100
Supplemental disclosures:
Cash paid for interest		39,404			35,149

See accompanying summary of accounting policies and notes to financial statements.

7

TRILLIANT CORPORATION

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Trilliant Corporation (Trilliant) is a Texas Corporation that provides assessment, design, vendor selection, procurement and project management for large technology initiatives, particularly in the healthcare arena. Following is a summary of Trilliant's significant accounting policies:

SIGNIFICANT ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the periods. Actual results could differ from estimates making it reasonably possible that a change in the estimates could occur in the near term.

CASH AND CASH EQUIVALENTS

Trilliant considers all highly liquid short-term investments with an original maturity of three months or less when purchased, to be cash equivalents.

ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

Accounts receivable are amounts due on sales and are unsecured. Accounts receivable are carried at their estimated collectible amounts. Credit is generally extended on a short-term basis; thus accounts receivable do not bear interest. Accounts receivable are periodically evaluated for  collectibility based on past credit history with clients. Provisions for losses on accounts receivable are determined on the basis of loss experience, known and inherent risk in the account balance and current  economic conditions.

PROPERTY AND EQUIPMENT

Property and equipment is recorded at cost and depreciated on the straight-line method over the estimated useful lives of the various classes depreciable property as follows:

Furniture and equipment	5-7 years
Computer equipment	3 years

Expenditures for normal repairs and maintenance are charged to expense as incurred. The cost and related accumulated depreciation of assets sold or otherwise disposed of are removed from the accounts, and any gain or loss is included in operations.

8

TRILLIANT CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

IMPAIRMENT OF LONG-LIVED ASSETS

In the event facts and circumstances indicate the carrying value of a long-lived asset, including associated intangibles, may be impaired, an evaluation of recoverability is performed by comparing the estimated future undiscounted cash flows associated with the asset to the asset's carrying amount to determine if a write-down to market value or discounted cash flow is required. Based upon a recent evaluation by management, an impairment write-down of the Company's long-lived assets was not deemed necessary.

INCOME TAXES

Trilliant uses the liability method of accounting for income taxes. Under this method, deferred income taxes are recorded to reflect the tax consequences on future years of temporary differences between the tax basis of assets and liabilities and their financial amounts at year-end. The Company provides a valuation allowance to reduce deferred tax assets to their net realizable value.

REVENUE RECOGNITION

Trilliant recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred and services have been rendered, the sales price is fixed or determinable, and collectibility is reasonably assured. This typically occurs when Trilliant delivers its service to the customer.

2. ACCOUNTS RECEIVABLE, NET

Accounts receivable were $222,556 and $363,272 as of December 31, 2004 and 2003, respectively. There is no allowance for bad debt as of December 31, 2004 and 2003.

3. PROPERTY AND EQUIPMENT, NET

Property and equipment, net consists of the following at December 31, 2004 and 2003, respectively:

	2004			2003
Computer equipment	$	64,343		$	57,986
Office furniture		3,858			3,858
		68,201			61,844
Less accumulated depreciation		(49,123	)		(33,706	)
	$	19,078		$	28,138

Depreciation expense for the years ended December 31, 2004 and 2003 was $14,416 and $15,062, respectively.

9

TRILLIANT CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

4. INTANGIBLE ASSETS, NET

Intangible assets consist of the following at December 31, 2004 and 2003:

	2004		2003
Goodwill	$	1,000	$	1,000
Long term investment		250		250
Total intangible assets, net	$	1,250	$	1,250

5. NOTES PAYABLE

Notes payable at December 31, 2004 and 2003 are summarized below:

	2004		2003
Notes payable:
Note payable to a bank bearing interest at 10%, due on demand	$	50,191	$	33,363
Notes payable to related parties:
Note payable bearing interest at 10%, due on demand		42,051		57,846
Note payable bearing interest at 6%, due on demand		227,852		103,139
Total related party notes payable		269,903		160,985
Total notes payable	$	320,094	$	194,348

6. ACCRUED LIABILITIES

Accrued liabilities consists of the following at December 31, 2004 and 2003:

	2004		2003
Accrued payroll	$	19,719	$	-
Accrued payroll related expense		7,691		9,170
	$	27,410	$	9,170

10

TRILLIANT CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

7. LONG TERM DEBT - RELATED PARTY

Long term debt - related party consists of the following as of December 31, 2004 and 2003:

	2004		2003
Loans	$	11,500	$	11,500
Note for treasury stock		18,749		32,748
	$	30,249	$	44,248

On September 26, 2003, Trilliant entered into an agreement with a related party to purchase 692,500 shares of Trilliant's common stock held by the individual in exchange for a $39,877 note bearing interest at 10% calling for one payment of $5,000, 23 monthly payments of $1,667 and one payment of $1,659.

Future payments on the note are $28,170 and $4,993 for the years ended December 31, 2003 and December 31, 2004, respectively.

8. LEASE COMMITMENT

The Company operates from leased office space under an operating lease that expires in June 2006 and includes no provisions for extension. The lease includes lease payment escalation and provisions for other increases to rental payments should certain costs of the landlord increase. A future annual lease payments due under this lease is as follows:

YEAR	PAYMENTS
2005	$	42,875
2006		21,437

Rent expense incurred under operating leases for years ended December 31, 2004 and 2003 was $40,541 and $42,325, respectively.

9. RELATED PARTY TRANSACTIONS

During the years ended December 31, 2004 and 2003, Trilliant engaged in various related party transactions as follows:

- During 2004 and 2003, Trilliant entered into note payable agreements with various, officers, employees, directors and/or founding stockholders. These notes are described in Notes 5 and 7.

- During the years ended December 31, 2004 and 2003, Trilliant incurred interest expense on related party debt of approximately $8,415 and $40,309, respectively.

11

EX-99.2

EXHIBIT 99.2

UNAUDITED FINANCIAL STATEMENTS OF TRILLIANT CORPORATION AS OF JUNE 30, 2005 AND DECEMBER 31, 2004 AND FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004

TRILLIANT CORPORATION

UNAUDITED FINANCIAL STATEMENTS

JUNE 30, 2005 AND DECEMBER 31, 2004

1

TRILLIANT CORPORATION

TABLE OF CONTENTS

	PAGE
Unaudited Financial Statements:
Unaudited Balance Sheets as of June 30, 2005 and December 31, 2004	3
Unaudited Statements of Operations for the three and six months ended June 30, 2005 and 2004	4
Unaudited Statements of Cash Flows for the six months ended June 30, 2005 and 2004	5
Notes to Unaudited Financial Statements	6

2

TRILLIANT CORPORATION

BALANCE SHEETS

UNAUDITED

	June 30,			December 31,
	2005			2004
ASSETS
Current assets:
Accounts receivable, net	$	153,651		$	222,556
Total current assets		153,651			222,556
Property and equipment, net		12,832			19,078
Intangible assets, net		1,250			1,250
Total assets	$	167,733		$	242,884
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Bank line of credit	$	50,746		$	50,191
Notes payable - related parties		254,542			269,903
Accounts payable		27,555			15,727
Accrued liabilities		14,947			27,410
Total current liabilities		347,790			363,231
Long term debt - related party		24,341			30,249
Total liabilities		372,131			393,480
Stockholders’ deficit:
Common stock, no par value, 10,000,000 shares authorized, issued and outstanding at June 30, 2005 and December 31, 2004, respectively.		1,000			1,000
Additional paid-in capital		2,100			2,100
Treasury stock		(39,877	)		(39,877	)
Accumulated deficit		(167,621	)		(113,819	)
Total stockholders’ deficit		(204,398	)		(150,596	)
Total liabilities and stockholders’ deficit	$	167,733		$	242,884

The accompanying notes are an integral part of the financial statements.

3

TRILLIANT CORPORATION

STATEMENTS OF OPERATIONS

THREE AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004

UNAUDITED

	Three months ended June 30,						Six months ended June 30,
	2005			2004			2005			2004
Service revenue	$	290,962		$	307,093		$	514,382		$	548,499
Selling, general and administrative expenses		309,757			381,113			561,009			830,956
Loss from operations		(18,795	)		(74,020	)		(46,627	)		(282,457	)
Interest expense and other		3,120			1,553			7,175			8,909
Net loss	$	(21,915	)	$	(75,573	)	$	(53,802	)	$	(291,366	)

4

TRILLIANT CORPORATION

STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 2005 AND 2004

UNAUDITED

	June 30,
	2005			2004
Cash flows from operating activities:
Net loss	$	(53,802	)	$	(291,366	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation		6,246			8,504
Changes in operating assets and liabilities:
Accounts receivable		68,905			79,268
Accounts payable and accrued liabilities		(635	)		22,091
Net cash provided by (used in ) operating activities		20,714			(181,503	)
Cash flows from financing activities:
Proceeds from notes payable to related parties		2,784			150,500
Repayment of notes payable to related parties		(8,137	)		(53,193	)
Proceeds from bank line of credit		27,360			18,085
Repayment of bank line of credit		(42,721	)		(1,477	)
Net cash provided by (used in) financing activities		(20,714	)		113,915
Net increase (decrease) in cash and cash equivalents		-			(67,588	)
Cash and cash equivalents at beginning of period		-			67,588
Cash and cash equivalents at end of period	$	-		$	-
Supplemental disclosures:
Cash paid for interest	$	6,416		$	7,420

5

TRILLIANT CORPORATION

NOTES TO FINANCIAL STATEMENTS

UNAUDITED

1. BASIS OF PRESENTATION

The accompanying unaudited interim financial statements of Trilliant Corporation ("Trilliant"), 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 ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in Trilliant's audited financial statements for the year ended December 31, 2004. 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 2004 have been omitted.

6 

EX-99.3

EXHIBIT 99.3

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS OF BLUEGATE CORPORATION AS OF JUNE 30, 2005 AND FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND THE TWELVE MONTHS ENDED DECEMBER 31, 2004.

BLUEGATE CORPORATION

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2005 AND FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND THE TWELVE MONTHS ENDED DECEMBER 31, 2004.

The following unaudited pro forma combined condensed financial statements are based on the historical financial statements of Bluegate Corporation (the "Company" or "Bluegate") and Trilliant Corporation ("Trilliant") after giving effect to our acquisition of Trilliant ("Acquisition") and the assumptions and adjustments described in the accompanying notes to the unaudited pro forma combined condensed financial statements. The Company acquired certain assets of Trilliant in exchange for $161,033 in cash and 258,302 shares of Bluegate's common stock valued at $180,811. The transaction was accounted for using the purchase method of accounting in accordance with Statement of Financial Accounting Standards No. 141 ("SFAS 141"), "Business Combinations." The Acquisition closed on September 15, 2005.

The unaudited pro forma condensed combined balance sheets as of June 30, 2005 is presented to give effect to the acquisition as if it occurred on June 30, 2005 by combining the historical balance sheets of Bluegate and Trilliant at June 30, 2005. The unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2005 is presented as if the acquisition had taken place on January 1, 2005 by combining the historical results of Bluegate and Trilliant for the six months ended June 30, 2005. The unaudited pro forma condensed combined statements of operations for the twelve months ended December 31, 2004 is presented as if the acquisition had taken place on January 1, 2004 by combining the historical results of Bluegate and Trilliant for the twelve months ended December 31, 2004.

The pro forma information presented is for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have been achieved if the Acquisition had occurred on January 1, 2004, nor is it indicative of future operating results or financial position. The unaudited pro forma combined condensed financial statements do not reflect any operating efficiencies and cost savings that we may achieve with respect to the combined companies. The pro forma information should be read in conjunction with the accompanying notes thereto, and in conjunction with the historical consolidated financial statements and accompanying notes of the Company included in our annual reports on Form 10-KSB and quarterly reports on Form 10-QSB. The pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable.

1

BLUEGATE CORPORATION

TABLE OF CONTENTS

	PAGE
Unaudited Pro Forma Combined Condensed Financial Statements:
Unaudited Pro Forma Combined Balance Sheets as of June 30, 2005	3
Unaudited Pro Forma Combined Statements of Operations for the six months ended June 30, 2005	4
Unaudited Pro Forma Combined Statements of Operations for the twelve months ended December 31, 2004	5
Notes to Unaudited Pro Forma Combined Condensed Financial Statements	6

2

BLUEGATE CORPORATION

UNAUDITED PRO FORMA COMBINED BALANCE SHEETS

JUNE 30, 2005

	Historical Bluegate June 30, 2005 (Unaudited)			Historical Trilliant June 30, 2005 (Unaudited)			Eliminate Trilliant June 30, 2005 Historical				Pro Forma Adjustments				Pro Forma Combined
ASSETS
Current assets:
Cash and cash equivalents	$	169,756		$	-		$	-			$	(161,033	)	(D)	$	8,723
Accounts receivable, net		108,109			153,651			-				-				261,760
Inventory		46,231			-			-				-				46,231
Prepaid expenses and other		31,863			-			-				-				31,863
Total current assets		355,959			153,651			-				(161,033	)			348,577
Property and equipment, net		60,516			12,832			-				41,893		(B)		115,241
Long term investment		30,000			-			(166,483	)	(A)		166,483				30,000
Goodwill		-			-			-				28,702		(B)		28,702
Intangible assets, net		-			1,250			(1,250	)	(A)		104,771		(B)		104,771
Total assets	$	446,475		$	167,733		$	(167,733	)		$	180,816			$	627,291
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Convertible notes payable	$	86,734		$	-		$	-			$	-			$	86,734
Notes payable		12,800			-			-				-				12,800
Bank line of credit		-			50,746			(50,746	)	(A)		-				-
Notes payable - related parties		-			254,542			(254,542	)	(A)		-				-
Accounts payable		608,195			27,555			(27,555	)	(A)		-				608,195
Accrued liabilities		487,425			14,947			(14,947	)	(A)		-				487,425
Advance on sale of securities		275,000			-			-				-				275,000
Total current liabilities		1,470,154			347,790			(347,790	)			-				1,470,154
Long term debt - related party		-			24,341			(24,341	)	(A)		-				-
Total liabilities		1,470,154			372,131			(372,131	)			-				1,470,154
Commitments and contingencies		-			-			-				-				-
Stockholders’ deficit:
Series A Convertible Non-Redeemable Preferred stock, $.001 par value, 20,000,000 shares authorized, 110,242 issued and outstanding, $5,000 per share liquidation preference($551,210 aggregate liquidation preference)		-			-			-				-				-
Common stock, $.001 par value, 50,000,000 shares authorized, 5,031,343 shares issued and outstanding at June 30, 2005		5,032			1,000			(1,000	)	(A)		26		(D)		5,058
Additional paid-in capital		9,003,298			2,100			(2,100	)	(A)		180,790		(D)		9,184,088
Subscription receivable		(15,006	)		-			-				-				(15,006	)
Treasury stock		-			(39,877	)		39,877		(A)		-				-
Deferred compensation		(117,365	)		-			-				-				(117,365	)
Accumulated deficit		(9,899,638	)		(167,621	)		167,621		(A)		-				(9,899,638	)
Total stockholders’ deficit		(1,023,679	)		(204,398	)		204,398				180,816				(842,863	)
Total liabilities and stockholders’ deficit	$	446,475		$	167,733		$	(167,733	)		$	180,816			$	627,291

3

BLUEGATE CORPORATION

UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2005

	Six months ended June 30, 2005
	As Reported by Bluegate Unaudited			As Reported by Trilliant Unaudited			Pro Forma Adjustments				Pro Forma Combined
Service revenue	$	875,767		$	514,382		$	-			$	1,390,149
Cost of services		421,731			-			-				421,731
Gross margin		454,036			514,382			-				968,418
Selling, general and administrative expenses		2,051,726			561,009			9,810		(C)		2,622,545
Loss from operations		(1,597,690	)		(46,627	)		(9,810	)			(1,654,127	)
Interest income		(2,932	)		-			-				(2,932	)
Loss on conversion of notes payable to common stock		892,882			-							892,882
Interest expense		70,372			7,175			-				77,547
Other income		(1,952	)		-			-				(1,952	)
Net loss	$	(2,556,060	)	$	(53,802	)	$	(9,810	)		$	(2,619,672	)
Basic and diluted:
Net loss per common share:	$	(0.69	)		-			-			$	(0.66	)
Weighted average shares outstanding		3,710,123			-			258,302		(D)		3,968,425

4

BLUEGATE CORPORATION

UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2004

	Twelve months ended December 31, 2004
	As Reported by Bluegate Audited			As Reported by Trilliant Audited			Pro Forma Adjustments			Pro Forma Combined
Service revenue	$	1,109,502		$	1,195,640		$	-		$	2,305,142
Cost of services		597,818			-			-			597,818
Gross margin		511,684			1,195,640			-			1,707,324
Selling, general and administrative expenses		1,389,723			1,518,545			19,620	(C)		2,927,888
Loss from operations		(878,039	)		(322,905	)		(19,620	)		(1,220,564	)
Interest income		4,400			-			-			4,400
Interest expense		(46,240	)		(25,820	)		-			(72,060	)
Other income		6,467			-			-			6,467
Other expense		-			(15	)		-			(15	)
Loss from continuing operations		(913,412	)		(348,740	)		(19,620	)		(1,281,772	)
Discontinued operations:
Gain from sale of discontinued broadband internet segment		784,213			-			-			784,213
Loss from operation of discontinued broadband internet segment		(511,000	)		-			-			(511,000	)
Income from discontinued operations		273,213			-			-			273,213
Net loss	$	(640,199	)	$	(348,740	)	$	(19,620	)	$	(1,008,559	)
Basic and diluted:
Net income (loss) per common share:
Continuing operations	$	(0.42	)		-			-		$	(0.53	)
Discontinued operations	$	0.12			-			-		$	0.11
Weighted average shares outstanding		2,161,615			-			258,302	(D)		2,419,917

5

BLUEGATE CORPORATION

NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

1.BASIS OF PRO FORMA PRESENTATION

The following unaudited pro forma combined condensed financial statements are based on the historical financial statements of Bluegate Corporation (the Company or Bluegate) and Trilliant Corporation (Trilliant) after giving effect to our acquisition of Trilliant (Acquisition) and the assumptions and adjustments described in the accompanying notes to the unaudited pro forma combined condensed financial statements. We acquired certain of the assets of Trilliant on September 15, 2005.

The unaudited pro forma condensed combined balance sheets as of June 30, 2005 is presented to give effect to the acquisition as if it occurred on June 30, 2005 by combining the historical balance sheets of Bluegate and Trilliant at June 30, 2005. The unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2005 is presented as if the acquisition had taken place on January 1, 2005 by combining the historical results of Bluegate and Trilliant for the six months ended June 30, 2005. The unaudited pro forma condensed combined statements of operations for the twelve months ended December 31, 2004 is presented as if the acquisition had taken place on January 1, 2004 by combining the historical results of Bluegate and Trilliant for the twelve months ended December 31, 2004.

The pro forma information presented is for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have been achieved if the Acquisition had occurred on January 1, 2004, nor is it indicative of future operating results or financial position. The unaudited pro forma combined condensed financial statements do not reflect any operating efficiencies and cost savings that we may achieve with respect to the combined companies. The pro forma information should be read in conjunction with the accompanying notes thereto, and in conjunction with the historical consolidated financial statements and accompanying notes of Bluegate included in its annual reports on Form 10-KSB and quarterly reports on Form 10-QSB. The pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable.

2.TRILLIANT ACQUISITION

On September 15, 2005, Bluegate acquired substantially all of the assets and assumed certain ongoing contractual obligations of Trilliant Corporation, a company that provides assessment, design, vendor selection, procurement and project management for large technology initiatives, particularly in the healthcare arena. The acquisition will strengthen Bluegate as a competitor in the technology management industry. The purchase price consisted of $161,033 in cash and 258,302 shares of Bluegate's common stock valued at $180,811, for a total of $341,844. The asset sale and purchase agreement provides for additional consideration of up to 827,160 common shares depending on the acquired business' revenue over the next two years and royalty payments based on sales over the next two years of certain software acquired. The estimated fair values of the assets acquired at September 15, 2005 are as follows:

Property and equipment	$	17,270
Computer software		41,893
Customer list		28,702
Accounts receivable		170,777
Goodwill		83,202
Total	$	341,844

Additional consideration, if any, will be allocated to goodwill upon payment. Goodwill will be tested periodically for impairment as required by FASB Statement No. 142, "Goodwill and other Intangible Assets."

The allocation of the purchase price was based upon estimates of fair values attributable to the Acquisition. The cost of the identifiable intangible assets will be amortized on a straight-line basis over periods ranging from 3 to 5 years.

3.HISTORICAL INFORMATION

Trilliant's historical financial information as of June 30, 2005 and the six months then ended, as well as of and for the twelve months ended December 31, 2004, are derived from Trilliant's historical financial statements. Certain reclassifications have been made to these financial statements to conform to the presentation used in Bluegate's historical financial statements. Such reclassifications had no effect on Trilliant's previously reported net income or loss or income from operations.

6

BLUEGATE CORPORATION

NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (CONTINUED)

4.PRO FORMA ADJUSTMENTS

(A) Adjustments related to assets not acquired and liabilities not assumed as part of the transaction.

(B) Allocation of the total purchase price of Trilliant's net tangible and identifiable intangible assets is shown as if the transaction had occurred June 30, 2005. The excess of the purchase price over the net tangible and identifiable intangible assets was allocated to goodwill. The total purchase has been allocated as follows:

Accounts receivable, net	$	153,651
Included in property and equipment, net:
Property and equipment		54,720
Identifiable intangible assets:
Customer list		28,702
Goodwill		104,771
	$	341,844

(C) Amortization expense of tangible and intangible assets as a result of the Acquisition of approximately $1,635 per month.

(D) Payment of cash and the issuance of Bluegate's common stock related to the transaction.

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