U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB




[X]  QUARTERLY  REPORT  UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF  1934

For  the  quarterly  period  ended  September 30, 2004

[_]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(D)  OF THE SECURITIES
EXCHANGE  ACT  OF  1934

                              BLUEGATE CORPORATION
             (Exact name of registrant as specified in its charter)

                         Commission file number: 0-22711


                Nevada                               76-0640970
   (State or Other Jurisdiction of       (I.R.S. Employer Identification No.)
   Incorporation or Organization)


     701 North Post Oak, Road, Suite 630, Houston, Texas    77024
     (Address of Principal Executive Office)               (Zip Code)

                                 (713) 682-7400
              (Registrant's Telephone Number, Including Area Code)


                          CRESCENT COMMUNICATIONS, INC.
                                  (Former Name)

 Check whether the issuer (1) filed all reports required to be filed by Section
 13 or 15(d) of the exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
     subject to such filings requirements for the past 90 days. Yes [X]  No [_]

      APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
                            THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [_]  No [_]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each the issuer's classes of common
equity, as of the latest practicable date: 48,655,665 common shares outstanding
as of October 31, 2004.

Transitional Small Business Disclosure Format (Check One): Yes [_]  No [X]

--------------------------------------------------------------------------------


<PAGE>
<TABLE>
<CAPTION>
                                    BLUEGATE CORPORATION
                          (FORMERLY CRESCENT COMMUNICATIONS, INC.)
                                     TABLE OF CONTENTS
                                         __________


                              PART I.   FINANCIAL INFORMATION

<S>                                                                                    <C>

ITEM 1.  FINANCIAL STATEMENTS

         Unaudited Condensed Consolidated Financial Statements. . . . . . . . . . . .  F-1

           Condensed Consolidated Balance Sheet as of September 30, 2004  (Unaudited)
             and December 31, 2003. . . . . . . . . . . . . . . . . . . . . . . . . .  F-2

           Unaudited Condensed Consolidated Statement of Operations for three
             months and nine months ended  September 30, 2004 and 2003. . . . . . . .  F-3

           Unaudited Condensed Consolidated Statement of  Stockholders' Equity for
             the nine months ended September 30, 2004 . . . . . . . . . . . . . . . .  F-4

           Unaudited Condensed Consolidated Statement of Cash Flows for the nine
             months ended September 30, 2004 and 2003 . . . . . . . . . . . . . . . .  F-5

           Notes to Unaudited Condensed Consolidated Financial Statements . . . . . .  F-6

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. . . . . . . . . .  I-1

ITEM 3.  CONTROLS AND PROCEDURES. . . . . . . . . . . . . . . . . . . . . . . . . . .  I-4


                                PART II.  OTHER  INFORMATION

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. . . . . . . . .  II-1

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . .  II-1

         SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  II-2

         CERTIFICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  II-3
</TABLE>


                                        2
<PAGE>
ITEM  1.   FINANCIAL  STATEMENTS




                               BLUEGATE CORPORATION

                    (FORMERLY CRESCENT COMMUNICATIONS, INC.)
                                   __________




              UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

     FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003


                                      F-1
<PAGE>
<TABLE>
<CAPTION>
                                      BLUEGATE CORPORATION
                            (FORMERLY CRESCENT COMMUNICATIONS, INC.)
                              CONDENSED CONSOLIDATED BALANCE SHEET
                                           __________

                                                                 SEPTEMBER 30,    DECEMBER 31,
                                                                     2004             2003
     ASSETS                                                       (UNAUDITED)        (NOTE)
     ------                                                     ---------------  --------------
<S>                                                             <C>              <C>
Current assets:
  Cash and cash equivalents                                     $       14,566   $       9,485
  Accounts receivable, net                                             255,777         155,425
  Note receivable                                                      201,608               -
  Prepaid expenses and other                                            10,223           2,100
                                                                ---------------  --------------


      Total current assets                                             482,174         167,010

Property and equipment, net                                             49,395          61,191

Net non-current assets of discontinued operations                            -         542,372
                                                                ---------------  --------------

        Total assets                                            $      531,569   $     770,573
                                                                ===============  ==============


LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Current liabilities:
  Book overdraft                                                $            -   $      63,705
  Notes payable                                                         29,275         124,658
  Notes payable to related parties                                     287,709         514,670
  Accounts payable                                                     670,996         717,188
  Accrued liabilities                                                  384,394         297,693
  Deferred revenue                                                     189,783         193,038
                                                                ---------------  --------------

    Total current liabilities                                        1,562,157       1,910,952
                                                                ---------------  --------------

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 pre share liquidation
    preference($578,630 aggregate liquidation preference)                    -               -
  Series B Convertible Non-Redeemable Preferred stock,
    $.001 par value, 10,000,000 shares authorized; no
    shares issued and outstanding                                            -               -
  Common stock, $.001 par value, 85,000,000 shares
    authorized, 47,796,432 and 34,540,174 shares issued
    and outstanding at September 30, 2004 and December 31,
    2003, respectively                                                  47,796          34,540
  Additional paid-in capital                                         6,058,884       5,540,467
  Deferred compensation                                                      -         (12,008)
  Accumulated deficit                                               (7,137,268)     (6,703,378)
                                                                ---------------  --------------

      Total stockholders' deficit                                   (1,030,588)     (1,140,379)
                                                                ---------------  --------------

        Total liabilities and stockholders' equity              $      531,569   $     770,573
                                                                ===============  ==============
</TABLE>

Note:  The  balance sheet at December 31, 2003 has been derived from the audited
financial  statements  at  that date but does not include all of the information
and footnotes required by accounting principles generally accepted in the United
States  of  America  for  complete  financial  statements.


                             See accompanying notes.
                                       F-2
<PAGE>
<TABLE>
<CAPTION>
                                   BLUEGATE CORPORATION
                         (FORMERLY CRESCENT COMMUNICATIONS, INC.)
                 UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
          FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
                                        __________


                                       THREE MONTHS ENDED          NINE MONTHS ENDED
                                          SEPTEMBER 30,               SEPTEMBER 30,
                                   --------------------------  --------------------------
                                       2004          2003          2004          2003
                                   ------------  ------------  ------------  ------------
<S>                                <C>           <C>           <C>           <C>

Service revenue                    $   362,235   $   101,180   $   734,412   $   553,786

Cost of services                       154,527        26,540       379,158       339,702
                                   ------------  ------------  ------------  ------------

  Gross margin                         207,708        74,640       355,254       214,084

Selling, general and adminis-
  trative expenses                     303,616       227,148       899,151     1,147,436
                                   ------------  ------------  ------------  ------------

Loss from operations                   (95,908)     (152,508)     (543,897)     (933,352)

Interest Income                          2,611             -         2,611             -
Interest expense                        (8,425)       (3,362)      (25,231)       (9,472)
                                   ------------  ------------  ------------  ------------

    Loss from continuing
      operations                      (101,722)     (155,870)     (566,517)     (942,824)
                                   ------------  ------------  ------------  ------------

Discontinued operations:
  Gain from sale of discontinued             -             -       643,627             -
    broadband internet segment
  Loss from operation of
    discontinued broadband
    internet segment                         -      (303,709)     (511,000)     (831,709)
                                   ------------  ------------  ------------  ------------

    Income (loss) from
      discontinued operations                -      (303,709)      132,627      (810,279)
                                   ------------  ------------  ------------  ------------


      Net income (loss)            $  (101,722)  $  (459,579)  $  (433,890)  $(1,774,533)
                                   ============  ============  ============  ============


Basic and diluted net income
  (loss) per common share
  Continuing operations            $     (0.00)  $     (0.01)  $     (0.01)  $     (0.04)
  Discontinued operations                    -         (0.01)         0.00         (0.04)
                                   ------------  ------------  ------------  ------------

                                   $     (0.00)  $     (0.02)  $     (0.01)  $     (0.08)
                                   ============  ============  ============  ============

Weighted average shares out-
  standing                          45,183,755    26,772,026    40,625,894    21,759,311
                                   ============  ============  ============  ============
</TABLE>


                             See accompanying notes.
                                       F-3
<PAGE>
<TABLE>
<CAPTION>
                                                        BLUEGATE CORPORATION
                                             (FORMERLY CRESCENT COMMUNICATIONS, INC.)
                                          CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                           FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
                                                            __________


                                                SERIES A          SERIES B
                                           -----------------  ----------------
                         COMMON STOCK       PREFERRED STOCK    PREFERRED STOCK  ADDITIONAL   DEFERRED
                      -------------------  -----------------  ----------------    PAID-IN     COMPEN-   ACCUMULATED
                        SHARES    AMOUNT    SHARES    AMOUNT   SHARES   AMOUNT    CAPITAL     SATION      DEFICIT        TOTAL
                      ----------  -------  ---------  ------  --------  ------  -----------  ---------  ------------  ------------
<S>                   <C>         <C>      <C>        <C>     <C>       <C>     <C>          <C>        <C>           <C>
Balance at December
  31, 2003            34,540,174  $34,540       116   $    -         -  $    -  $5,540,467   $(12,008)  $(6,703,378)  $(1,140,379)

Issuance of common
 stock for compensa-
 tion                     50,000       50         -        -         -       -      11,950          -             -        12,000

Conversion of Series A
  preferred stock to
  common stock         1,283,188    1,283        (5)       -         -       -      (1,283)         -             -             -

Issuance of common
  stock for cash      11,923,070   11,923         -        -         -       -     507,750          -             -       519,673

Amortization of
  deferred compen-
  sation                       -        -         -        -         -       -           -     12,008             -        12,008

Net loss                       -        -         -        -         -       -           -          -      (433,890)     (433,890)
                      ----------  -------  ---------  ------  --------  ------  -----------  ---------  ------------  ------------

Balance at September
  30, 2004            47,796,432  $47,796       111   $    -         -  $    -  $6,058,884   $      -   $(7,137,268)  $(1,030,588)
                      ==========  =======  =========  ======  ========  ======  ===========  =========  ============  ============
</TABLE>


                             See accompanying notes.
                                       F-4
<PAGE>
<TABLE>
<CAPTION>
                                    BLUEGATE CORPORATION
                          (FORMERLY CRESCENT COMMUNICATIONS, INC.)
                  UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                   FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
                                         __________


                                                            SEPTEMBER 30,    SEPTEMBER 30,
                                                                2004             2003
                                                           ---------------  ---------------
<S>                                                        <C>              <C>
Cash flows from operating activities:
  Net loss                                                 $     (433,890)  $   (1,774,533)
  Adjustments to reconcile net loss to net cash
    used by operating activities:                                (647,771)         742,551
                                                           ---------------  ---------------

      Net cash used in continuing operations                     (527,844)        (289,058)
      Net cash used in discontinued operations                   (522,863)        (742,924)
                                                           ---------------  ---------------

        Net cash used by operating activities                  (1,081,661)      (1,031,982)
                                                           ---------------  ---------------

Cash flows from investing activities:
  Proceeds from sale of connectivity services business            900,000                -
  Proceeds from note receivable                                    48,392                -
  Proceeds from sale of property and equipment                      4,366                -
  Capital expenditures                                                  -          (16,138)
                                                           ---------------  ---------------

      Net cash provided by continuing operations                    4,366                -
      Net cash provided (used) by discontinued operations         948,392          (16,138)
                                                           ---------------  ---------------

        Net cash provided (used) by investing activities          952,758          (16,138)
                                                           ---------------  ---------------

Cash flows from financing activities:
  Decrease in book overdraft                                      (63,705)          (6,457)
  Proceeds from notes payable                                      40,000           78,116
  Payments on notes payable                                      (362,344)         (61,300)
  Issuance of common stock for cash                               519,673        1,041,110
                                                           ---------------  ---------------

      Net cash provided by continuing operations                  133,624        1,051,469
      Net cash provided by discontinued operations                      -                -
                                                           ---------------  ---------------

        Net cash provided by financing activities                 133,624        1,051,469
                                                           ---------------  ---------------

Net increase in cash and cash equivalents                           4,721            3,349

Cash and cash equivalents at beginning of period                    9,845                -
                                                           ---------------  ---------------

Cash and cash equivalents at end of period                 $       14,566   $        3,349
                                                           ===============  ===============
</TABLE>


                             See accompanying notes.
                                       F-5
<PAGE>
                               BLUEGATE CORPORATION
                    (FORMERLY CRESCENT COMMUNICATIONS, INC.)
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   __________


1.   BASIS  OF  PRESENTATION
     -----------------------

     The  unaudited  consolidated condensed financial statements included herein
     have  been  prepared without audit pursuant to the rules and regulations of
     the  Securities  and  Exchange Commission. Certain information and footnote
     disclosures  normally  included  in  financial  statements  prepared  in
     accordance  with  accounting  principles  generally  accepted in the United
     States  of  America  have been condensed or omitted, pursuant to such rules
     and  regulations.  These  unaudited  consolidated  condensed  financial
     statements  should  be  read  in  conjunction with the audited consolidated
     financial  statements  and  notes  thereto  of  Bluegate  Corporation  (the
     "Company")  included  in the Company's Annual Report on Form 10-KSB for the
     year  ended  December  31,  2003.

     In  the  opinion  of  management,  the  unaudited  consolidated  condensed
     financial  information  included herein reflect all adjustments, consisting
     only  of  normal,  recurring  adjustments,  which  are necessary for a fair
     presentation of the Company's financial position, results of operations and
     cash flows for the interim periods presented. The results of operations for
     the  interim periods presented herein are not necessarily indicative of the
     results  to  be  expected  for  a  full  year  or any other interim period.

     The  preparation  of  consolidated  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  consolidated  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.


2.   GOING  CONCERN  CONSIDERATIONS
     ------------------------------

     During  the  nine  months  ended  September  30,  2004  and the years ended
     December  31,  2003  and 2002, the Company has been unable to generate cash
     flows  sufficient  to support its operations and has been dependent on debt
     and  equity  raised  from  qualified individual investors. During the years
     ended  December  31,  2003  and  2002,  the  Company  experienced  negative
     financial  results  as  follows:

<TABLE>
<CAPTION>
                                        2003          2002
                                    ------------  ------------
<S>                                 <C>           <C>
Net loss                            $(2,543,629)  $(2,946,382)
Negative cash flow from operations   (1,423,363)   (1,774,837)
Negative working capital             (1,743,942)   (1,276,547)
Stockholders' deficit                (1,140,379)     (442,332)
</TABLE>

     These  negative  factors  have  continued  during  the  nine  months  ended
     September  30, 2004 and raise substantial doubt about the Company's ability
     to  continue  as  a  going  concern.

     The  Company  has  supported  current  operations  by:  1)  selling off its
     traditional connectivity services business, 2) raising additional operating
     cash  through  private  placements  of  its  common  stock, 3) issuing debt
     convertible  to  common  stock  to  certain key stockholders and 4) issuing
     stock  and options as compensation to certain employees and vendors in lieu
     of  cash  payments.

     These  steps  have provided the Company with the cash flows to continue its
     business  plan,  but  have  not  resulted in significant improvement in the
     Company's  financial  position.  Management  is considering alternatives to
     address  its  critical  cash  flow  situation  that  include:


                                       F-6
<PAGE>
                               BLUEGATE CORPORATION
                    (FORMERLY CRESCENT COMMUNICATIONS, INC.)
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   __________


2.  GOING  CONCERN  CONSIDERATIONS,  CONTINUED
    ------------------------------------------

     -    Raising  capital  through  additional sale of its common and preferred
          stock  and/or  debt  securities.

     -    Merging  the  Company  with  another business that compliments current
          activities.

     -    Reducing  cash  operating  expenses  to  levels  that are in line with
          current  revenues.  Reductions can be achieved through the issuance of
          additional  common  shares  of  the  Company's  stock  in lieu of cash
          payments  to  employees  or  vendors.


     These  alternatives  could  result  in  substantial  dilution  of  existing
     stockholders.  There  can  be  no  assurances  that  the  Company's current
     financial  position  can  be improved, that it can raise additional working
     capital  or  that  it  can achieve positive cash flows from operations. The
     Company's  long-term  viability  as  a  going concern is dependent upon the
     following:

     -    The  Company's  ability to locate sources of debt or equity funding to
          meet  current  commitments  and  near  term  future  requirements.

     -    The  ability  of  the  Company to achieve profitability and ultimately
          generate  sufficient  cash  flow  from  operations  to  sustain  its
          continuing  operations.


3.   SALE  OF  CONNECTIVITY  BUSINESS
     --------------------------------

     Effective  June  21, 2004, the Company entered into an Asset Sale Agreement
     (the  "Agreement")  with  DFW  Internet  Services,  Inc.  ("DFW"),  a Texas
     corporation  and a wholly-owned subsidiary of MobilePro Corporation for the
     sale of certain assets related to connectivity services including wireless,
     digital  subscriber  line  and  traditional  communication  technologies to
     business  and residential customers. Under the terms of this Agreement, the
     Company  will  receive a total of $1,150,000 of which $900,000 was cash and
     $250,000  was a one-year promissory note. Additionally, DFW acquired 85% of
     accounts  receivable  associated  with  services  provided to the Company's
     customers  through  June  17,  2004.  Further,  DFW entered into a one-year
     sublease for the Company's leased space at 701 N. Post Oak Road, Suite 630,
     Houston,  Texas,  for  rental  rate  of  $3,000  per  month.  The terms and
     conditions  of the transactions were the result of arms-length negotiations
     by  the  parties. As a result of the Agreement the Company's operations are
     now  solely  based on Bluegate (TM) , our branded HIPAA compliant broadband
     digital  connectivity  offering  for  health  care  providers  nationally.
     Following  is  analysis  of  assets  sold  under  the  agreement:

<TABLE>
<CAPTION>
<S>                                               <C>
Assets sold:
  Property and equipment                          $  306,027
  Goodwill associated with connectivity business     200,346
                                                  ----------

                                                     443,281
                                                  ----------
Consideration received
  Cash                                               900,000
  Note receivable                                    250,000
                                                  ----------

                                                   1,150,000
                                                  ----------

Gain recognized                                   $  643,627
                                                  ----------
</TABLE>


                                       F-7
<PAGE>
                               BLUEGATE CORPORATION
                    (FORMERLY CRESCENT COMMUNICATIONS, INC.)
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   __________


3.   SALE  OF  CONNECTIVITY  BUSINESS,  CONTINUED
     --------------------------------------------

     In  addition  to  the  above  assets,  the Company sold 85% of the accounts
receivable  associated  with  it's  traditional  connectivity  business.

     Following  is  an  analysis  of  discontinued  operations:

<TABLE>
<CAPTION>
                              THREE MONTHS ENDED        NINE MONTHS ENDED
                                 SEPTEMBER 30,            SEPTEMBER 30,
                           ------------------------  -----------------------
                              2004         2003         2004        2003
                           -----------  -----------  ----------  -----------

<S>                        <C>          <C>          <C>         <C>
Service revenue            $        -   $  420,605   $ 847,551   $1,152,052

Cost of services                    -      291,019     680,830      797,113
                           -----------  -----------  ----------  -----------

  Gross margin                      -      129,586     166,721      354,939

Selling, general and
  administrative expenses           -      424,931     657,395    1,163,093
                           -----------  -----------  ----------  -----------

Loss from operations                -     (295,345)   (490,674)    (808,154)

Interest expense                    -        8,364      20,326       23,555
                           -----------  -----------  ----------  -----------

Loss from operations       $        -   $( 303,709)  $(511,000)  $ (831,709)
                           ===========  ===========  ==========  ===========
</TABLE>


4.   INCOME  TAX
     -----------

     The difference between the Federal statutory income tax rate of 34% and the
     Company's  effective  rate  is  primarily  attributable to increases in the
     valuation  allowance offset against deferred tax assets associated with the
     Company's  net  operating  losses.


5.   NOTES  PAYABLE  TO  RELATED  PARTIES
     ------------------------------------

     Certain  notes payable to related parties totaling $300,185 are convertible
     into  shares  of  the  Company's  common  stock  at  $.05 per share, at the
     election  of  the  payee,  any  time  prior  to  repayment  of the note. At
     September  30, 2004 the notes are convertible into 6,003,700 common shares.

     During  the  nine  months  ended  September 30, 2004 certain members of the
     executive  management  team  advanced  $80,000  under  short term borrowing
     agreements.  All  amounts  were  subsequently  repaid.


                                       F-8
<PAGE>
                               BLUEGATE CORPORATION
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   __________


6.   STOCKHOLDERS'  EQUITY
     ---------------------

     During  the  nine  months  ended September 30, 2004, the Company engaged in
various  transactions  affecting  stockholders'  equity,  as  follows:

     -    The  Company  sold  common stock under Regulation S to various foreign
          investors  under  investment  agreements entered into during 2003. The
          investment  agreements  generally  provide  for the sale of restricted
          common stock at 35% of the current trading price in the United States.
          During  the  nine  month  period  ended September 30, 2004, 11,923,070
          shares  were  issued  for  $519,673.

     -    The  Company  issued  common  stock  for legal and consulting services
          totaling  $12,000.

     -    The  Company  issued options to acquire shares of the Company's common
          stock  to employees and consultants. The options are exercisable after
          a  vesting  period  at  $.20  per  share.


                                       F-9
<PAGE>

ITEM  2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  OPERATIONS

This  Management's  Discussion and Analysis as of September 30, 2004 and for the
three  and  nine  months ended September 30, 2004, should be read in conjunction
with the unaudited condensed financial statements and notes thereto set forth in
Item  1  of this report and in conjunction with our Annual Report on Form 10-KSB
for  the year ended December 31, 2003. The results of operations for the interim
periods  presented  herein  are  not necessarily indicative of the results to be
expected  for  a  full  year  or  any  other  interim  period.

The  information  in  this discussion contains forward-looking statements within
the  meaning  of  Section  27A  of  the  Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.  Such statements
are  based  upon current expectations that involve risks and uncertainties.  Any
statements  contained  herein that are not statements of historical facts may be
deemed  to  be  forward-looking  statements.  For example, words such as, "may,"
"will,"  "should,"  "estimates," "predicts," "potential," continue," "strategy,"
"believes,"  "anticipates,"  "plans,"  "expects,"  "intends,"  and  similar
expressions  are  intended  to  identify forward-looking statements.  Our actual
results  and  the  timing  of  certain  events may differ significantly from the
results  discussed  in the forward-looking statements.  Factors that might cause
or  contribute  to  such a discrepancy include, but are not limited to the risks
discussed in our other SEC filings.  These forward-looking statements speak only
as  of  the date hereof.  We expressly disclaim any obligation or undertaking to
release  publicly  any  updates  or  revisions to any forward-looking statements
contained  herein  to reflect any change in our expectations with regard thereto
or any change in events, conditions or circumstances on which any such statement
is  based.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

The  Company believes the following critical accounting policies affect its more
significant  judgments and estimates used in the preparation of its consolidated
financial  statements.

REVENUE RECOGNITION
-------------------

Revenue  from  Bluegate (TM) , HIPAA compliant broadband digital connectivity is
recognized  based  upon  contractually  determined  monthly  service  charges to
individual customers.  Services are billed in advance and, accordingly, revenues
are  deferred until the period in which the services are provided.  At September
30,  2004,  deferred  service  revenue  was  $189,783.


                                       I-1
<PAGE>
STOCK-BASED  COMPENSATION
-------------------------

Financial Accounting Standard No. 123, "Accounting for Stock-Based Compensation"
("SFAS  No.  123")  established financial accounting and reporting standards for
stock-based  employee  compensation plans.  It defined a fair value based method
of  accounting  for  an  employee  stock option or similar equity instrument and
encouraged  all  entities  to  adopt  that method of accounting for all of their
employee  stock  compensation plans and include the cost in the income statement
as  compensation  expense.  However,  it  also  allows  an entity to continue to
measure compensation cost for those plans using the intrinsic value based method
of  accounting prescribed by Accounting Principles Board ("APB") Opinion No. 25,
"Accounting  for  Stock  Issued  to  Employees".  The  Company  accounts  for
compensation  cost for stock option plans in accordance with APB Opinion No. 25.

GENERAL

Crescent  Communications  is  a Nevada corporation that began operations on July
23,  2001,  providing  co-location  hosting and connectivity systems to small to
mid-size businesses in Texas.  The Company, headquartered in Houston, Texas is a
Value  Added  Network  provider that develops and deploys specific technological
internet  related  solutions  for  businesses.

The  Company was formed through a Stock Exchange Agreement ("Agreement") whereby
the shareholders of Solis Communications, Inc ("Solis") exchanged all the issued
and  outstanding  shares  of  Solis  for  600  shares  of  newly issued Series A
Convertible  Non-Redeemable  Preferred  Stock  of  Berens  Industries,  Inc.
("Berens").  Solis,  the  ultimate  acquirer  of  Berens in this reverse merger,
agreed  to  contribute  $600,000  cash  and  cash  equivalents.  Berens  was  a
development  stage  enterprise  involved in the development of an online auction
site  for  exclusive  paintings  and  other  art  works.  At  the  date  of  the
Agreement,  Berens  had  ceased  all activity due to their inability to generate
sufficient  revenue  or obtain additional capital funding.  This transaction was
exempt  from  Section  4(2)  of  the  Securities  Act  of  1933,  as  amended.

On  September  17,  2001  Berens filed a name change to Crescent Communications,
Inc.  d.b.a. Crescent Broadband and approved a 5-for-1 reverse stock split to be
effective  on  September 24, 2001.  On a fully convertible post-split basis, the
former  shareholders  of  Solis beneficially owned an aggregate of approximately
28,000,000  shares of common  stockAs a result, the former shareholders control
approximately  52%  of  the common stock.  The Series A Preferred Stock does not
receive  dividends.

Effective  June 17, 2004, the Company entered into an Asset Sale Agreement  (the
"Agreement") with DFW Internet Services, Inc. ("DFW"), a Texas corporation and a
wholly-owned  subsidiary of MobilePro Corporation for the sale of certain assets
related to connectivity services including wireless, digital subscriber line and
traditional  communication  technologies  to business and residential customers.
Under  the  terms  of  this  Agreement,  the  Company  will  receive  a total of
$1,150,000  of  which  $900,000  was cash and $250,000 was a one-year promissory
note.  Additionally,  DFW  acquired  85%  of accounts receivable associated with
services  provided  to the Company's customers through June 17, 2004.   Further,
DFW  entered  into  a one-year sublease for the Company's leased space at 701 N.
Post  Oak  Road, Suite 630, Houston, Texas, for rental rate of $3,000 per month.
The  terms  and  conditions  of  the transactions were the result of arms-length
negotiations by the parties.  We received a fairness opinion from an independent
third party that the asset sale was fair and equitable to us. As a result of the
Agreement  our  operations  are  now solely based on Bluegate (TM) , our branded
HIPAA  compliant  broadband  digital  connectivity  offering  for  health  care
providers  nationally.

The Company has incurred a significant loss from operations since inception, and
is in a negative working capital and stockholders' deficit position at September
30,  2004.  The  Company  remains  dependent  on  outside sources of funding for
continuation  of  its operations.  Based on these factors, our auditors issued a
qualified opinion at December 31, 2003 that reflects the significant doubt about
the  company's  ability  to  continue  as  a  going  concern.


                                       I-2
<PAGE>
RESULTS  OF  OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2004 AS COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2003

     During  the  three  months  ended September 30, 2004, the Company's revenue
from Bluegate (TM) , HIPAA compliant broadband digital connectivity connectivity
was  $362,235  versus  $101,180  for  the three month period ended September 30,
2003.  This  represents an increase of $261,055 and is primarily attributable to
our efforts to market Bluegate (TM) as it has become the center of our business.

     Cost  of  sales  for the three months ended September 30, 2004 was $154,527
versus  $26,540  for  the comparable 2003 period.  The increase is due to higher
interconnect fees and costs associated with Bluegate (TM).  The gross margin for
the  three-month  period  just ended improved substantially over the three-month
period ended September 30, 2003. The improvement in gross margin is attributable
to  the  fact  that our margins improve as revenues increase due to fixed costs.

     Selling,  general  and  administrative  expenses  of $303,616 for the three
months  ended  September 30, 2004, represents an increase of $76,468 as compared
to  three months ended September 30, 2003. The increase is attributable to fixed
costs  that  remained  after  sale  of  our  broadband  internet  business.

     No  significant  capital  expenditures  were  made  during  the  period.

NINE MONTHS ENDED SEPTEMBER 30, 2004 AS COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 2003

     During the nine months ended September 30, 2004, the Company's revenue from
Bluegate  (TM)  ,  HIPAA  compliant broadband digital connectivity  was $734,412
versus  $553,786  for  the  nine  month  period ended  September 30, 2003.  This
increase of $180,626 is primarily attributable to our efforts to market Bluegate
(TM)  as  it  has  become  the  center  of  our  business.

     Cost  of  sales  for the nine months ended September 30, 2004 were $379,158
versus  $339,702  for the comparable 2003 period.  The increase is due to higher
interconnect fees and costs associated with Bluegate (TM).  The gross margin for
the  nine  month  period  just  ended  improved over the nine month period ended
September  30,  2003.  The  improvement  is  attributable  to  the fact that our
margins  improve  as  revenues  increase  due  to  fixed  costs.

     Selling,  general  and  administrative  expenses  of  $889,151 for the nine
months  ended  September 30, 2004, represents a decrease of $258,295 as compared
to  nine  months ended September 30, 2003. The decrease is attributable to lower
costs  arising  from  stock  based  compensation.

     Interest  expense  is higher in 2004 by due to assignment of all debt costs
to  Bluegate  (TM) after sale of our broadband Internet business. Certain of the
debt  was  repaid  upon  sale of our traditional connectivity services business.

     No  significant  capital  expenditures  were  made  during  the  period.


                                       I-3
<PAGE>
PLAN  OF  OPERATIONS,  LIQUIDITY  AND  CAPITAL  RESOURCES

Operations  for  the nine-month period ended September 30, 2004 have been funded
by the issuance of common stock for cash of  $519,673, and proceeds from sale of
the  Company's  traditional  connectivity  business of $900,000. The Company has
continued to take steps to reduce its monthly operating expenses relating to its
core  business  and has expanded its efforts in creating a market for the health
care  industry.  Because  of  the  uncertainty  associated with this new market,
breakeven  cash  flow  is  not  expected  until  late  2004,  at  the  earliest.

The  Company  is seeking additional capital to fund expected operating costs and
has  engaged  in  negotiations  to merge or sell part or all of the Company.  No
commitments  for mergers or acquisitions have been obtained at this time and the
Company  continues  to  negotiate  with certain parties to address the operating
cash  flow  shortfalls. We believe future funding may be obtained from public or
private  offerings  of equity securities, debt or convertible debt securities or
other  sources.  Stockholders  should  assume  that  any additional funding will
likely  be  dilutive.

If  we  are  unable  to  raise  additional  funding,  we  may  have to limit our
operations  to  an extent that we cannot presently determine.  The effect on our
business may include the sale of certain assets, the reduction or curtailment of
new  customer  acquisition,  reduction in the scope of current operations or the
cessation  of  business  operations.

Our  ability  to  achieve  profitability  will  depend upon our ability to raise
additional  operating  capital,  continued  growth  in  demand  for connectivity
services  and  our  ability  to  execute  and  deliver  high  quality,  reliable
connectivity  services.


ITEM  3.  CONTROLS  AND  PROCEDURES

Manfred  Sternberg,  our  Chief  Executive  Officer and Mike McDonald, our Chief
Financial  Officer,  have  concluded that our disclosure controls and procedures
are appropriate and effective. They have evaluated these controls and procedures
as of the end of the period covered by this report on Form 10-QSB. There were no
significant  changes  in  our  internal  controls or in other factors that could
significantly  affect  these  controls subsequent to the date of his evaluation,
including  any  corrective  actions  with regard to significant deficiencies and
material  weaknesses.


                           PART II. OTHER INFORMATION

ITEM  2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During  the  calendar  quarter  ending  September 30, 2004 the Company completed
placements of 4,397,214 shares of common stock with investors located outside of
the  United  States.  The  shares  were  offered  pursuant  to an exemption from
registration afforded by Regulation S to the Securities Act of 1933.  Share sold
pursuant  to  Regulation S are deemed restricted and may not be sold to any U.S.
Person  (as that term is defined in the Regulation) for a period of one (1) year
from  date  of sale.  Thereafter, the shares will be subject to the restrictions
of  Rule  144.  The  Company  received  a total of $164,661 for the shares.  The
proceeds  were  used  for  general  business  purposes.

Among  other  things,  the placement agreement provided for the Company to issue
shares  of  Regulation  S  stock at prices substantially below the quoted market
price  of  the  shares


                                       I-4
<PAGE>
The  transactions  during  the quarter ended September 30, 2004 were as follows:

<TABLE>
<CAPTION>
Date Issued         Title of Securities   Shares     Amount
-----------         -------------------  -------    -------
<S>                 <C>                  <C>        <C>

July 8, 2004        Common Stock           398,300  $ 15,534
July 13, 2004       Common Stock            75,000     2,925
July 14, 2004       Common Stock           806,673    32,859
July 19, 2004       Common Stock           356,000    14,124
July 21, 2004       Common Stock           215,000     9,129
July 22, 2004       Common Stock            45,000     1,191
July 26, 2004       Common Stock            35,000     1,365
July 28, 2004       Common Stock            70,000     2,760
August 2, 2004      Common Stock           135,000     5,835
August 3, 2004      Common Stock           174,000     6,786
August 17, 2004     Common Stock           126,000     5,292
August 18, 2004     Common Stock           145,000     4,935
August 19, 2004     Common Stock           199,897     6,252
August 23, 2004     Common Stock            70,000     3,030
August 31, 2004     Common Stock            35,700     1,242
September 2, 2004   Common Stock           812,644    20,956
September 9, 2004   Common Stock           213,000     8,946
September 13, 2004  Common Stock           150,000     6,450
September 24, 2004  Common Stock            50,000     2,250
September 29, 2004  Common Stock           235,000    10,550
September 30, 2004  Common Stock            50,000     2,250
                                         ---------  --------

                                         4,397,214  $164,661
                                         =========  ========
</TABLE>


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(A)  Exhibits

     Exhibit  31.1  -  Certification  of  Chief  Executive  Officer  of Bluegate
     Corporation  required  by  Rule  13a  -  14(1)  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.

     Exhibit  31.2  -  Certification  of  Chief  Financial  Officer  of Bluegate
     Corporation  required  by  Rule  13a  -  14(1)  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.

     Exhibit  32.1  --  Certification  of  Chief  Executive  Officer of Bluegate
     Corporation  pursuant  to Section 906 of the Sarbanes-Oxley Act of 2002 and
     Section  1350  of  18  U.S.C.  63.

     Exhibit  32.2  --  Certification  of  Chief  Financial  Officer of Bluegate
     Corporation  pursuant  to Section 906 of the Sarbanes-Oxley Act of 2002 and
     Section  1350  of  18  U.S.C.  63.


                                      II-1
<PAGE>
(B)  Reports on Form 8-K

     None

                                   SIGNATURES


In  accordance  with the Exchange Act, the registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized




                                           Bluegate Corporation

Date:  November 22, 2004                   /s/  Manfred Sternberg
                                           ----------------------

                                           Manfred Sternberg,
                                           Chief Executive Officer



                                           Bluegate Corporation

Date:  November 22, 2004                   /s/  Mike McDonald
                                           ------------------
                                           Mike McDonald,
                                           Chief Financial Officer


                                      II-2
<PAGE>