Note Payable To Related Party

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Note Payable To Related Party

4. NOTE PAYABLE TO RELATED PARTY

Note payable at September 30, 2012 and December 31, 2011 is summarized below:

		9/30/2012		12/31/2011
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 $1,230,000. 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. On January 30, 2012, June 27, 2012 and September 26, 2012, Bluegate borrowed $15,000, $10,000 and $10,000, respectively for working capital purposes.	$	1,235,000	$	1,200,000