|   | [X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES      EXCHANGE ACT OF 1934 For the quarterly period ended June 30,      2008 |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | [ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES      EXCHANGE ACT OF 1934 For the transition period from _ to  _ |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

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

| 701      North Post Oak Road, Suite 600, Houston,Texas | 77024                        |
|--------------------------------------------------------|------------------------------|
| (Address      of principal executive offices)          | (Zip      Code)              |
|                                                   |                         |
| voice:  713-686-1100                         | fax:  713-682-7402 |
| Issuer's      telephone number                         |

| Large      accelerated filer | [      ] | Accelerated      filer       | [      ] |
|------------------------------|----------|------------------------------|----------|
| Non-accelerated      filer   | [      ] | Small      reporting company | [X]      |

----

| TABLE OF CONTENTS                                                                                                |   |
|------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                             |   |
| PART I. FINANCIAL    INFORMATION                                                                                 |   |
|                                                                                                             |   |
| ITEM      1. FINANCIAL STATEMENTS                                                                                |   |
|                                                                                                             |   |
| Unaudited Consolidated Financial    Statements                                                                   | F-1    |
|                                                                                                             |   |
|   Consolidated Balance Sheets as of June 30, 2008 and December      31, 2007                           | F-1    |
|                                                                                                             |   |
|   Consolidated Statements of Operations for the three and      six months ended June 30, 2008 and 2007 | F-2    |
|                                                                                                             |   |
|   Consolidated Statement of Stockholders’ Deficit for the six      months ended June 30, 2008    | F-3    |
|                                                                                                             |   |
|   Consolidated Statements of Cash Flows for the six months      ended June 30, 2008 and 2007           | F-4    |
|                                                                                                             |   |
|   Notes to Consolidated 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-6    |
|                                                                                                             |   |
| 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   |
|                                                                                                             |   |
| CERTIFICATIONS                                                                                                   | II-3   |

----

Table of Contents

ITEM  1.   FINANCIALSTATEMENTS

| BLUEGATE      CORPORATION                                                                                                                                                                                                                                                                       |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| CONSOLIDATED      BALANCE SHEETS                                                                                                                                                                                                                                                                |   |
| UNAUDITED                                                                                                                                                                                                                                                                                       |   |
|                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                            |   | June      30, |   |   | December      31, |   |
|                                                                                                                                                                                                                                                                                            |   | 2008 |   |   | 2007 |   |
| ASSETS                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |
| Current      assets:                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |
| Cash      and cash equivalents                                                                                                                                                                                                                                                                  |   | $ | 74,672 |   |   | $ | 43,703 |   |
| Accounts      receivable, net                                                                                                                                                                                                                                                                   |   |   | 215,910 |   |   |   | 400,023 |   |
| Prepaid      expenses and other                                                                                                                                                                                                                                                                 |   |   | 17,044 |   |   |   | 23,917 |   |
| Total      current assets                                                                                                                                                                                                                                                                       |   |   | 307,626 |   |   |   | 467,643 |   |
| Property      and equipment, net                                                                                                                                                                                                                                                                |   |   | 51,962 |   |   |   | 63,525 |   |
| Intangibles,      net                                                                                                                                                                                                                                                                           |   |   | 1,994 |   |   |   | 6,775 |   |
| Total      assets                                                                                                                                                                                                                                                                               |   | $ | 361,582 |   |   | $ | 537,943 |   |
|                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’      DEFICIT                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |
| Current      liabilities:                                                                                                                                                                                                                                                                       |   |   |   |   |   |   |   |   |
| Accounts      payable                                                                                                                                                                                                                                                                           |   | $ | 164,780 |   |   | $ | 289,583 |   |
| Accounts      payable to related party                                                                                                                                                                                                                                                          |   |   | 103,996 |   |   |   | 40,089 |   |
| Accrued      liabilities                                                                                                                                                                                                                                                                        |   |   | 89,214 |   |   |   | 149,221 |   |
| Notes      payable                                                                                                                                                                                                                                                                              |   |   | 12,800 |   |   |   | 12,800 |   |
| Notes      payable to related parties                                                                                                                                                                                                                                                           |   |   | 770,246 |   |   |   | 612,738 |   |
| Accrued      liabilities to related parties                                                                                                                                                                                                                                                     |   |   | 154,310 |   |   |   | 344,598 |   |
| Deferred      revenue                                                                                                                                                                                                                                                                           |   |   | 255,525 |   |   |   | 153,579 |   |
| Total      current liabilities                                                                                                                                                                                                                                                                  |   |   | 1,550,871 |   |   |   | 1,602,608 |   |
|                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Stockholders’      deficit:                                                                                                                                                                                                                                                               |   |   |   |   |   |   |   |   |
| Undesignated      preferred stock, $.001 par value, 9,999,952 shares authorized, none issued      and outstanding                                                                                                                                                                               |   |   | - |   |   |   | - |   |
| Series      C Convertible Non-Redeemable  Preferred stock, $.001 par value,      48 shares authorized, issued and outstanding at June 30, 2008 and December      31, 2007; $12,500 per share liquidation preference ($600,000 aggregate      liquidation preference at June 30, 2008) |   |   | - |   |   |   | - |   |
| Common      stock, $.001 par value, 50,000,000 shares authorized, 24,783,565 and      15,163,565 shares issued and outstanding at June 30, 2008 and December 31,      2007, respectively                                                                                                        |   |   | 24,784 |   |   |   | 15,164 |   |
| Additional      paid-in capital                                                                                                                                                                                                                                                                 |   |   | 26,037,030 |   |   |   | 24,746,778 |   |
| Accumulated      deficit                                                                                                                                                                                                                                                                        |   |   | (27,251,103 | ) |   |   | (25,826,607 | ) |
| Total      stockholders’ deficit                                                                                                                                                                                                                                                          |   |   | (1,189,289 | ) |   |   | (1,064,665 | ) |
| Total      liabilities and stockholders’ deficit                                                                                                                                                                                                                                          |   | $ | 361,582 |   |   | $ | 537,943 |   |

----

Table of Contents

| BLUEGATE CORPORATION                                                                        |   |
|---------------------------------------------------------------------------------------------|--------|
| CONSOLIDATED      STATEMENTS OF OPERATIONS                                                  |   |
| UNAUDITED                                                                                   |   |
|                                                                                        |   | Three      Months EndedJune      30, |   |   | Six      Months EndedJune      30, |   |
|                                                                                        |
|                                                                                        |   | 2008 |   |   | 2007 |   |   | 2008 |   |   | 2007 |   |
| Service      revenue                                                                        |   | $ | 1,022,405 |   |   | $ | 1,807,255 |   |   | $ | 2,064,932 |   |   | $ | 3,168,322 |   |
| Cost      of services                                                                       |   |   | 845,281 |   |   |   | 1,232,302 |   |   |   | 1,603,025 |   |   |   | 2,193,130 |   |
| Gross      profit                                                                           |   |   | 177,124 |   |   |   | 574,953 |   |   |   | 461,907 |   |   |   | 975,192 |   |
| Selling,      general and administrative expenses                                           |   |   | 174,328 |   |   |   | 413,619 |   |   |   | 412,420 |   |   |   | 1,263,217 |   |
| Compensation      expense                                                                   |   |   | 308,364 |   |   |   | 1,240,031 |   |   |   | 1,414,555 |   |   |   | 2,827,701 |   |
| Loss      from operations                                                                   |   |   | (305,568 | ) |   |   | (1,078,697 | ) |   |   | (1,365,068 | ) |   |   | (3,115,726 | ) |
| Interest      expense                                                                       |   |   | (32,108 | ) |   |   | (8,337 | ) |   |   | (59,428 | ) |   |   | (47,514 | ) |
| Net      loss                                                                               |   |   | (337,676 | ) |   |   | (1,087,034 | ) |   |   | (1,424,496 | ) |   |   | (3,163,240 | ) |
| Deemed      dividend on preferred stock                                                     |   |   | - |   |   |   | (600,000 | ) |   |   | - |   |   |   | (600,000 | ) |
| Net      loss attributable to common shareholders                                           |   | $ | (337,676 | ) |   | $ | (1,687,034 | ) |   | $ | (1,424,496 | ) |   | $ | (3,763,240 | ) |
|                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss attributable to common shareholders per common share - basic and      diluted |   | $ | (0.01 | ) |   | $ | (0.12 | ) |   | $ | (0.06 | ) |   | $ | (0.29 | ) |
|                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic      and diluted weighted average shares outstanding                                  |   |   | 24,783,565 |   |   |   | 13,650,035 |   |   |   | 23,153,400 |   |   |   | 13,181,331 |   |
|                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

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| BLUEGATE CORPORATION                                                                                       |   |
|------------------------------------------------------------------------------------------------------------|--------|
| CONSOLIDATED      STATEMENT OF STOCKHOLDERS' DEFICIT                                                       |   |
| SIX      MONTHS ENDED JUNE 30, 2008                                                                        |   |
| UNAUDITED                                                                                                  |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   | ADDITIONAL |   |   |   |   |   |   |   |
|                                                                                                       |   | COMMON      STOCK |   |   | PREFERRED      STOCK |   |   | PAID-IN |   |   | ACCUMULATED |   |   |   |   |
|                                                                                                       |   | SHARES |   |   | CAPITAL |   |   | SHARES |   |   | CAPITAL |   |   | CAPITAL |   |   | DEFICIT |   |   | TOTAL |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2007                                                                          |   |   | 15,163,565 |   |   | $ | 15,164 |   |   |   | 48 |   |   | $ | - |   |   | $ | 24,746,778 |   |   | $ | (25,826,607 | ) |   | $ | (1,064,665 | ) |
| Issuance      of common stock and warrants for cash                                                        |   |   | 170,000 |   |   |   | 170 |   |   |   |   |   |   |   |   |   |   |   | 84,830 |   |   |   |   |   |   |   | 85,000 |   |
| Issuance      of common stock to related party for:                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  -      cash                                                                                          |   |   | 111,111 |   |   |   | 111 |   |   |   |   |   |   |   |   |   |   |   | 9,889 |   |   |   |   |   |   |   | 10,000 |   |
|  -      compensation                                                                                  |   |   | 188,889 |   |   |   | 189 |   |   |   |   |   |   |   |   |   |   |   | 16,811 |   |   |   |   |   |   |   | 17,000 |   |
| Issuance      of common stock for:                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  -      related party debt                                                                            |   |   | 3,388,889 |   |   |   | 3,389 |   |   |   |   |   |   |   |   |   |   |   | 301,611 |   |   |   |   |   |   |   | 305,000 |   |
|  -      compensation                                                                                  |   |   | 5,761,111 |   |   |   | 5,761 |   |   |   |   |   |   |   |   |   |   |   | 512,739 |   |   |   |   |   |   |   | 518,500 |   |
| Issuance      of common stock warrants as additional consideration to borrow funds from      related party |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 109,028 |   |   |   |   |   |   |   | 109,028 |   |
| Common      stock options issued for employee services                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 255,344 |   |   |   |   |   |   |   | 255,344 |   |
| Net      loss                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (1,424,496 | ) |   |   | (1,424,496 | ) |
| Balance      at June 30, 2008                                                                              |   |   | 24,783,565 |   |   | $ | 24,784 |   |   |   | 48 |   |   | $ | - |   |   | $ | 26,037,030 |   |   | $ | (27,251,103 | ) |   | $ | (1,189,289 | ) |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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| BLUEGATE CORPORATION                                                                                                       |   |
|----------------------------------------------------------------------------------------------------------------------------|--------|
| CONSOLIDATED      STATEMENTS OF CASH FLOWS                                                                                 |   |
| UNAUDITED                                                                                                                  |   |
|                                                                                                                       |   | Six      Months Ended |   |
|                                                                                                                       |   | June      30, |   |
|                                                                                                                       |   | 2008 |   |   | 2007 |   |
| Cash      flows from operating activities:                                                                                 |   |   |   |   |   |   |
| Net      loss                                                                                                              |   | $ | (1,424,496 | ) |   | $ | (3,163,240 | ) |
| Adjustments      to reconcile net loss to net cash used in operating      activities:                                      |   |   |   |   |   |   |   |   |
| Depreciation      and amortization                                                                                         |   |   | 29,214 |   |   |   | 32,019 |   |
| Common      stock issued for outside services                                                                              |   |   | - |   |   |   | 329,525 |   |
| Common      stock options issued for employee services                                                                     |   |   | 255,344 |   |   |   | 1,767,530 |   |
| Common      stock issued for delay in filing a registration statement                                                      |   |   | - |   |   |   | 29,250 |   |
| Common      stock warrants issued to borrow funds from related party                                                       |   |   | 109,028 |   |   |   | - |   |
| Common      stock issued for employee compensation                                                                         |   |   | - |   |   |   | 142,500 |   |
| Common      stock issued for compensation                                                                                  |   |   | 535,500 |   |   |   | - |   |
| Common      stock and warrants issued for services                                                                         |   |   | - |   |   |   | 172,850 |   |
| Changes      in operating assets and liabilities:                                                                          |   |   |   |   |   |   |   |   |
| Accounts      receivable                                                                                                   |   |   | 184,113 |   |   |   | (179,034 | ) |
| Prepaid      expenses and other current assets                                                                             |   |   | 6,873 |   |   |   | 30,045 |   |
| Accounts      payable and accrued liabilities                                                                              |   |   | (184,810 | ) |   |   | 213,627 |   |
| Accounts      payable to related party                                                                                     |   |   | 63,907 |   |   |   | 71,525 |   |
| Accrued      liabilities to related party                                                                                  |   |   | 114,712 |   |   |   | - |   |
| Deferred      revenue                                                                                                      |   |   | 101,946 |   |   |   | (520,055 | ) |
|                                                                                                                       |   |   |   |   |   |   |   |   |
| Net      cash used in operating activities                                                                                 |   |   | (208,669 | ) |   |   | (1,073,458 | ) |
|                                                                                                                       |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities:                                                                                 |   |   |   |   |   |   |   |   |
| Purchase      of property and equipment                                                                                    |   |   | (12,870 | ) |   |   | (29,101 | ) |
|                                                                                                                       |   |   |   |   |   |   |   |   |
| Net      cash used in investing activities                                                                                 |   |   | (12,870 | ) |   |   | (29,101 | ) |
|                                                                                                                       |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                                                                                 |   |   |   |   |   |   |   |   |
| Proceeds      from related party short term debt                                                                           |   |   | 200,000 |   |   |   | 428,934 |   |
| Payments      on related party short term debt                                                                             |   |   | (42,492 | ) |   |   | (378,250 | ) |
| Net      change in bank line of credit                                                                                     |   |   | - |   |   |   | 132 |   |
| Proceeds      from note payable from individual                                                                            |   |   | - |   |   |   | 315,000 |   |
| Common      stock and warrants issued for cash                                                                             |   |   | 95,000 |   |   |   | 400,000 |   |
| Preferred      stock and common stock warrants issued for cash                                                             |   |   | - |   |   |   | 100,000 |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |
| Net      cash provided by financing activities                                                                             |   |   | 252,508 |   |   |   | 865,816 |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |
| Net      increase (decrease) in cash and cash equivalents                                                                  |   |   | 30,969 |   |   |   | (236,743 | ) |
|                                                                                                                       |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents at beginning of period                                                                      |   |   | 43,703 |   |   |   | 256,121 |   |
| Cash      and cash equivalents at end of period                                                                            |   | $ | 74,672 |   |   | $ | 19,378 |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |
| Non      Cash Transactions:                                                                                                |   |   |   |   |   |   |   |   |
| Deemed      dividend from beneficial conversion feature on preferred    stock                                              |   | $ | - |   |   | $ | 600,000 |   |
| Issuance      of common stock for conversion of related party accounts payable, accrued      expenses and accrued interest |   |   | 305,000 |   |   |   | - |   |
| Subscription      receivable                                                                                               |   |   | - |   |   |   | 500,000 |   |
| Issuance      of common stock and warrants for conversion of accounts      payable                                         |   |   | - |   |   |   | 15,000 |   |
| Supplemental      information:                                                                                             |   |   |   |   |   |   |   |   |
| Cash      paid for interest                                                                                                |   |   | 59,478 |   |   |   | 47,514 |   |

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NOTES 

|  Notes      payable at June 30, 2008 and December 31, 2007 are summarized      below:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   | 6/30/2008    |          | 12/31/2007   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------------|---------------|--------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |    |          |    |
| Unsecured notes      payable:                                                                  10%      note payable due on demand                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $      | 12,800       |   $ | 12,800       |
|  Note      payable to related parties:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |         |          |         |
| 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 Sperco, to borrow up to $500,000. On February 28, 2008, the      line of credit agreement with SAIC was amended to increase the borrowing      to $700,000 and on February 28, 2008, Bluegate borrowed the additional      $200,000 from SAIC for working capital purposes. As condition to and as      additional consideration for SAIC’s agreement to lend the 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,      and increased the interest rate from 12% to 15% per annum. See footnote 5,      Subsequent Event.Note      payable to SAI Corporation due on demand |   | $      | 700,000      |   $ | 500,000      |
|  Unsecured notes payable to      related parties: During 2006, the Company entered into a line of      credit agreement with Manfred Sternberg ("MS"), Chief Strategy Officer and      William Koehler ("WK"), President and COO, for Bluegate to borrow up to      $500,000 from each of them. As of June 30, 2008, the interest rates on the      underlying credit cards pertaining to funds borrowed from MS and WK were      17.24% and 17.23%, respectively. During the six months ended June 30,      2008, we made payments of $42,492 on these related party      notes.                                                                                                                                                                                                                                                                                                                      |   |   |         |          |         |
| Notes      payable to William Koehler due on demand                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   | 35,748       |          | 36,569       |
| Notes      payable to Manfred Sternberg due on demand                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   | 34,498       |          | 76,169       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |         |          |         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $      | 770,246      |   $ | 612,738      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |         |          |         |

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|         |   |     |                         |   |                                             |                                          |   |      |   |               |                                             |   |                                          |
|--------------|--------|----------|------------------------------|--------|--------------------------------------------------|-----------------------------------------------|--------|-----------|--------|--------------------|--------------------------------------------------|--------|-----------------------------------------------|
|         |   |     |                         |   |                                             |                                          |   |      |   |               |                                             |   |                                          |
|         |   | Exercise |                         | Fair   |                                             | Expiration                                    |   | Vesting   |   | 2008               |
| Options      |   | Price    |                         | Value  |                                             | Date                                          |   | Period    |   | Expense            |
| 15,000       |   | $        |     0.25 |   | $                                                |      1,811           |   | 1/2/2013  |   | Through      6/08  |                                             | $      |      1,811           |
|  3,332  |   |     |     0.25 |   |                                             |        280 |   | 1/15/2013 |   | Through      4/08  |                                             |   |        280 |
| 5,000        |   |     |     0.25 |   |                                             |        465 |   | 1/21/2013 |   | Through      12/08 |                                             |   |        234 |
| 50,000       |   |     |     0.25 |   |                                             |      3,743           |   | 2/1/2011  |   | Immediately        |                                             |   |      3,743           |
|         |   |     |                         |   |                                             |                                          |   |      |   |               |                                             |   |                                          |
|  73,332 |   |     |                         |   | $       6,299 |                                          |   |      |   |               | $       6,068 |
|         |   |     |                         |   |                                             |                                          |   |      |   |               |                                             |   |                                          |

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ITEM  2. MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS

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| -   | Access      and content providers, such as AOL, Microsoft, EarthLink and Time      Warner; |
|---------------|--------------------------------------------------------------------------------------------|

| -   | Professional      Service organizations, such as IBM, CSC, Perot Systems, and      EDS; |
|---------------|-----------------------------------------------------------------------------------------|

| -   | Regional,      national and international telecommunications companies, such as AT&T,      Verizon, Qwest, and Sprint; |
|---------------|----------------------------------------------------------------------------------------------------------------------------|

| -   | On-line      services offered by incumbent cable providers such as Comcast and      Cox; |
|---------------|------------------------------------------------------------------------------------------|

| -   | DSL      providers such as the RBOC’s andCLEC’s. |
|---------------|--------------------------------------------------------------|

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|                                              |   |      Six Months      Ended   |
|---------------------------------------------------|--------|------------------------------------------------------------|
|                                              |   | June 30,                                                   |
|                                              |   | 2008                                                       |   | 2007 |
|                                              |   |                                                       |   |   |
| Net      loss attributable to common shareholders | $      | (1,424,496)                                                | $ | (3,763,240) |
| Negative      cash flow from operations           |   | (208,669)                                                  |   | (1,073,458) |
| Negative      working capital                     |   | (1,243,245)                                                |   | (1,369,237) |
| Stockholders'      deficit                        |   | (1,189,289)                                                |   | (1,267,823) |

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|   | -      Our ability to locate sources of debt or equity funding to meet current      commitments and near-term futurerequirements. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | -      Our ability to achieve profitability and ultimately generate sufficient      cash flow from operations to sustain our continuing      operations. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

| $      | (648,000) | decrease      related to options issued for employee services |
|--------|-----------|---------------------------------------------------------------|
|   | (240,000) | decrease      related to the reduction in personnel           |
|   |      |                                                          |

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| $      | (1,512,000 | )      | decrease      related to options issued for employee services                      |
|--------|------------|--------|------------------------------------------------------------------------------------|
|   | (500,000   | )      | decrease      related to the reduction in personnel                                |
|   | (143,000   | )      | decrease      related to issuance of shares for employee compensation              |
|   | 519,000    |   | increase      related to conversion of related party debt for common    stock      |
|   | 109,000    |   | increase      related to warrants issued to borrow funds from a related      party |
|   | 17,000     |   | increase      related to related party purchase of common stock for  cash          |

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| -   | The      cost of operating and delivering the Medical Grade Network®      services |
|---------------|-----------------------------------------------------------------------------------------|

| -   | The      cost of sales and marketing |
|---------------|--------------------------------------|

| -   | The      rate at which we expand ouroperations |
|---------------|------------------------------------------------|

| -   | Attractive      acquisition opportunities |
|---------------|-------------------------------------------|

| -   | The      response of competitors |
|---------------|----------------------------------|

| -   | Capital      expenditures |
|---------------|---------------------------|

ITEM 4.

|   | (a)      Evaluation of disclosure controls and  procedures. |
|--------|-------------------------------------------------------------|

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PART II.

ITEM1. 

ITEM2.                      UNREGISTEREDSALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ITEM5. 

ITEM6.     

| 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 15a - 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                                                                                                                                                                                                              |

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| 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:                                                                                                                                                                                                   | July      28, 2008 | /s/ | Stephen      J. Sperco |
|                                                                                                                                                                                                    |   |   |   |
|                                                                                                                                                                                                    |   |   | Stephen      J. Sperco, |
|                                                                                                                                                                                                    |   |   | Chief      Executive Officer |
|                                                                                                                                                                                                    |   |   |   |
|                                                                                                                                                                                                    |   |   |   |
| Bluegate      Corporation                                                                                                                                                                               |
|                                                                                                                                                                                                    |   |   |   |
| Date:                                                                                                                                                                                                   | July      28, 2008 | /s/ | Charles      E. Leibold |
|                                                                                                                                                                                                    |   |   |   |
|                                                                                                                                                                                                    |   |   | Charles      E. Leibold, |
|                                                                                                                                                                                                    |   |   | Chief      Financial Officer and Principal Accounting Officer |
|                                                                                                                                                                                                    |   |   |   |