UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant To Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): SEPTEMBER 26, 2005
BLUEGATE CORPORATION
Exact name of registrant as specified in its Charter)
Nevada 000-22711 76-0640970
(State or other (Commission File (IRS Employer
jurisdiction of Incorporation) Number) Identification Number)
701 North Post Oak, Road, Suite 630, Houston, Texas 77024
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
Including Area Code: (713) 686-1100
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[_] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER
AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
On September 26, 2005, we borrowed $500,000 by issuing 10% Convertible
Promissory Notes with Detachable Warrants. The Note is senior to all other
indebtedness of the Company, with the exception of up to $150,000 in principal
amount of senior debt secured by accounts receivable issued by the Company.
Interest is ten (10) percent annually and will be accrued and added to the then
outstanding principal amount of the Notes daily. Repayment will be within five
(5) days of receipt of funds by the Company of any subsequent offering, raising
gross proceeds to the Company of at least $1,000,000 or the date which is one
hundred and eighty (180) days after the date of the Note. The Holder has the
right to convert the Note into shares of common stock at a conversion price of
$0.75 per share. The Company may extend the repayment date for two successive
periods of ninety (90) days each by providing written notice to the Holder and
then delivering to the Holder of the Note an "Extension Warrant" for shares of
Common Stock of the Company equal to 50% of the of the number of shares
underlying the Note at the time of each extension, exercisable at $0.75 per
share. These Extension Warrants have a term of five years beginning as of the
date of issue. See, Item 3.02 below.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES.
On September 26, 2005, we received the gross amount of $500,000 through the
sale of unit securities to 14 investors.
These transactions were made in reliance upon exemptions from registration
under Section 4(2) of the Securities Act and Regulation D thereunder. Each
certificate issued for unregistered securities contained a legend stating that
the securities have not been registered under the Securities Act and setting
forth the restrictions on the transferability and the sale of the securities.
Westminster Securities Corporation, a member of the New York Stock Exchange,
acted as the placement agent and received a sales commission of 12%. This
transaction did not involve a public offering. The investors were knowledgeable
about our operations and financial condition. The investors had knowledge and
experience in financial and business matters that allowed them to evaluate the
merits and risk of receipt of these securities.
Each unit consisted of the face amount of $30,000 of a 10% Convertible
Promissory Notes with Detachable Warrants. The Notes are convertible at a
conversion price of $0.75 per share of common stock. Each unit included a
warrant for the purchase of 40,000 shares of common stock at an exercise price
of $1.00 per share expiring five years from the issue date.
Other material terms of the 10% Convertible Promissory Notes are as
follows:
The Note is senior to all other indebtedness of the Company, with the
exception of up to $150,000 in principal amount of senior debt secured by
accounts receivable issued by the Company. Interest is ten (10) percent annually
and will be accrued and added to the then outstanding principal amount of the
Notes daily. Repayment will be within five (5) days of receipt of funds by the
Company of any subsequent offering, raising gross proceeds to the Company of at
least $1,000,000 or the date which is one hundred and eighty (180) days after
the
date of the Note. The Holder has the right to convert the Note into shares of
common stock at a conversion price of $0.75 per share. The Company may extend
the repayment date for two successive periods of ninety (90) days each by
providing written notice to the Holder and then delivering to the Holder of the
Note an "Extension Warrant" for shares of Common Stock of the Company equal to
50% of the of the number of shares underlying the Note at the time of each
extension, exercisable at $0.75 per share. These Extension Warrants have a term
of five years beginning as of the date of issue.
ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF
DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS.
Effective September 30, 2005, Greg Micek resigned as CFO. Mr. Micek did not
provide us with a written letter of resignation nor did Mr. Micek voice any
concerns to us. Mr. Micek will continue working with us in a consulting capacity
in the role of Director of Corporate Strategies.
Effective October 1, 2005, Steven M. Plumb became our new CFO. Mr.
Plumb, age 46, is a CPA licensed to practice in Texas. Mr. Plumb is a financial
manager and senior executive experienced in operations, finance and marketing.
He has Big 4 CPA experience, a background in IT, biotech, Fortune 500 firms,
medical and utility companies, distribution, real estate, construction,
governmental entities, and non-profit organizations.
During 1981-1982, Mr. Plumb was a staff accountant at
PriceWaterhouseCoopers. During 1982-1984, Mr. Plumb was a staff accountant at
Kalman Phillips & Leon, P.C. During 1984-1987, Mr. Plumb was a supervising
senior accountant at KPMG. During 1987-1990, Mr. Plumb was the controller of
Memorial Hermann Rehabilitation Hospital. During 1990-1992, Mr. Plumb was the
CFO of DePelchin Children's Center. During 1992-present, Mr. Plumb was the
President of Steven M. Plumb, P.C. During 1997-2001, Mr. Plumb was the President
of Orchard Consulting Group, Inc. During 2002-2004, Mr. Plumb was the CFO of
ADVENTRX Pharmaceuticals, Inc. During 2003-present, Mr. Plumb was the President
of Clear Financial Solutions, Inc.
Mr. Plumb is a member of: American Institute of Certified Public
Accountants; Texas Society of Certified Public Accountants; Houston Chapter of
Texas Society of Certified Public Accountants; Houston Technology Center; and
Association for Corporate Growth. Mr. Plumb is active in BioHouston and the Rice
Alliance.
Mr. Plumb has a Bachelor of Business Administration degree from the ,
University of Texas at Austin, Austin, Texas, 1981.
There is no family relationship between Mr. Plumb and any of our officers
or directors.
We have a contract with Clear Financial Solutions, Inc., a company owned by
Mr. Plumb, which has agreed to provide us with a so called "contract" CFO,
namely Mr. Plumb. We will pay a fee directly to Clear Financial Solutions, Inc.
in the estimated amount of approximately $6,600 to $9,900 per month for Mr.
Plumb's services as our CFO and some additional services provided to us by Clear
Financial Solutions, Inc. In addition we will also
grant to Mr. Plumb an option to purchase 350,000 shares of our common stock at
an exercise price of $1.00 per share. The option will vest on a pro rate basis
monthly over a period not to exceed 24 months and expire at the end of no less
than 5 years. The option will be issued under our 2005 Stock and Stock Option
Plan and the shares underlying the option were previously registered on Form
S-8.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
4.1 Form of 10% Convertible Promissory Note
4.2 Form of Detachable Warrant
10.1 Steven Plumb employment agreement
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BLUEGATE CORPORATION
Date: September 27, 2005 /s/ Manfred Sternberg
Manfred Sternberg
Chief Executive Officer