SENIOR SECURED CONVERTIBLE NOTE	3 Months Ended
Mar. 31, 2013
Debt Disclosure [Abstract]
Debt Disclosure [Text Block]	Note 4 – Senior Secured Convertible Note On March 13, 2013, the Company entered into a Senior Secured Convertible Note agreement (the “Note”) with an investor in the principal amount of $210,000. The Note is collateralized by all of the assets of the Company and bears interest at a rate of 15% per annum, compounded quarterly. Principal and accrued interest on the Note is convertible into shares of the Company’s common stock at an initial conversion price of $1.50 per share (“Initial Conversion Price”). Principal and accrued interest on the Note is due and payable twenty-four (24) months from the date of the Purchase Agreement (the “Maturity Date”). The investor also received a Warrant exercisable for a period of five years from issuance to purchase 1,400,000 shares of the Company’s Common Stock (the “Warrant Shares”) at an initial exercise price of $1.50 per share. The warrant contains certain cashless exercise provisions. The Note and Warrant Shares are subject to certain registration rights. The Initial Conversion Price and the exercise price of the Warrant Shares are subject to full-ratchet price protection in the event that the Company issues or sells, or is deemed to have issued or sold, subject to certain standard exceptions, any shares of its common stock or securities convertible into common stock for consideration per share less than the Initial Conversion Price. As such, the Company determined that the conversion option and warrants, as originally issued, did not contain fixed settlement provisions due to price protection adjustments based on certain subsequent equity issuances. As such, the Company was required to record the conversion option and warrants as derivative liabilities and mark to market all such derivatives to fair value each reporting period through March 31, 2013. The gross proceeds of the convertible note in the amount of $210,000 were recorded net of a debt discount of $172,200. The debt discount consisted of $168,000 related to the fair value of the warrants and $4,200 related to the fair value of the embedded conversion option. The warrants and conversion option were valued using a compound option model that includes characteristics of both a binomial lattice and the Black-Scholes formula. (See Note 3) The debt discount of $172,200 is being accreted over the term of the note. Accordingly, the Company recorded a charge of $4,246 to interest expense for the three months ended March 31, 2013. The change in fair value of the derivative liabilities related to the Note were deemed de minimus to the condensed consoldiated financial statements from the date of issuance (March 13, 2013) to March 31, 2013.

SENIOR SECURED CONVERTIBLE NOTE

3 Months Ended

Mar. 31, 2013

Note 4 – Senior Secured Convertible Note

On March 13, 2013, the Company entered into a Senior Secured Convertible Note agreement (the “Note”) with an investor in the principal amount of $210,000. The Note is collateralized by all of the assets of the Company and bears interest at a rate of 15% per annum, compounded quarterly. Principal and accrued interest on the Note is convertible into shares of the Company’s common stock at an initial conversion price of $1.50 per share (“Initial Conversion Price”). Principal and accrued interest on the Note is due and payable twenty-four (24) months from the date of the Purchase Agreement (the “Maturity Date”). The investor also received a Warrant exercisable for a period of five years from issuance to purchase 1,400,000 shares of the Company’s Common Stock (the “Warrant Shares”) at an initial exercise price of $1.50 per share. The warrant contains certain cashless exercise provisions. The Note and Warrant Shares are subject to certain registration rights.

The Initial Conversion Price and the exercise price of the Warrant Shares are subject to full-ratchet price protection in the event that the Company issues or sells, or is deemed to have issued or sold, subject to certain standard exceptions, any shares of its common stock or securities convertible into common stock for consideration per share less than the Initial Conversion Price. As such, the Company determined that the conversion option and warrants, as originally issued, did not contain fixed settlement provisions due to price protection adjustments based on certain subsequent equity issuances. As such, the Company was required to record the conversion option and warrants as derivative liabilities and mark to market all such derivatives to fair value each reporting period through March 31, 2013.

The gross proceeds of the convertible note in the amount of $210,000 were recorded net of a debt discount of $172,200. The debt discount consisted of $168,000 related to the fair value of the warrants and $4,200 related to the fair value of the embedded conversion option. The warrants and conversion option were valued using a compound option model that includes characteristics of both a binomial lattice and the Black-Scholes formula. (See Note 3) The debt discount of $172,200 is being accreted over the term of the note. Accordingly, the Company recorded a charge of $4,246 to interest expense for the three months ended March 31, 2013. The change in fair value of the derivative liabilities related to the Note were deemed de minimus to the condensed consoldiated financial statements from the date of issuance (March 13, 2013) to March 31, 2013.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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BeesFree, Inc. 10-Q