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Note 9: Stock Options
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Dec. 31, 2011
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| Disclosure of Compensation Related Costs, Share-based Payments [Text Block] |
Note
9: Stock Options
The
Company has adopted the provisions of Topic 718,
Compensation, of the Accounting Standards Codification, which
requires companies to measure the cost of employee services
received in exchange for equity instruments based on the
grant date fair value of those awards and to recognize the
compensation expense over the requisite service period during
which the awards are expected to vest.
On
December 29, 2008, the Company adopted the Pacific
Entertainment Corporation 2008 Stock Option Plan
(the “Plan”), which provides for the issuance of
qualified and non-qualified stock options to officers,
directors, employees and other qualified persons. The Plan is
administered by the Board of Directors of the Company or a
committee appointed by the Board of Directors. The number of
shares of the Company’s common stock initially reserved
for issuance under the Plan was 11 million. On
September 2, 2011, the shareholders holding a majority of the
Company’s outstanding common stock adopted an amendment
to the Company’s 2008 Stock Option Plan to increase the
number of shares of common stock issuable under the plan to
50 million.
On
June 21, 2010, the Company issued a Stock Option Grant notice
to James Sommers, pursuant to a an agreement for consulting
services rendered, under the 2008 Stock Option Plan, as
amended. An option to purchase up to 250,000
shares of common stock at an exercise price of $0.50 per
share was granted with a 3 year life, fully vesting on the
date of grant. The exercise price was determined
using an average of the closing price of the five days
immediately preceding the Date of Grant. The
Company’s calculation of the fair market value of the
stock-based award was $0.26 per option, or
$63,894. The full value of the option was expensed
in 2010.
On
October 3, 2010 the Company issued a Stock Option Grant
notice to Anthony Dates, Vice President of Sales, pursuant to
a an agreement for a salary reduction effective on that date,
under the 2008 Stock Option Plan, as amended. An
option to purchase up to 25,000 shares of common stock at an
exercise price of $0.50 per share was granted with a 5 year
life, fully vesting on December 31, 2010. The
exercise price was determined using an average of the closing
price of the five days immediately preceding the Date of
Grant. The Company’s calculation of the fair
market value of the stock-based award was $0.32 per option,
or $16,046. The full value of the option was
expensed in 2010.
On
December 31, 2010 the Company issued Stock Option Grant
notices to ten employees and service providers under the 2008
Stock Option Plan, as amended. An option to
purchase up to 100,000 shares of common stock at an exercise
price of $0.336 per share was granted with a 5 year life,
fully vesting on December 31, 2010. The exercise
price was determined using an average of the closing price of
the five days immediately preceding the Date of
Grant. The Company’s calculation of the fair
market value of the stock-based award that was granted was
$0.15 per option, or $15,068 for all of the options
granted. The full value of the option was expensed
in 2010.
On
December 31, 2010, the Company issued a Stock Option Grant
notice to Jeanene Morgan in conjunction with her appointment
as Chief Accounting and Operating Officer under the 2008
Stock Option Plan, as amended. An option to
purchase up to 450,000 shares of common stock at an exercise
price of $0.336 per share was granted with a vesting schedule
of 150,000 shares on December 31, 2010 and 100,000 vesting
each year thereafter on Decembers 31, 2011, 2012 and
2013. The option has a 5 year life from the date
of vesting. The exercise price was determined
using an average of the closing price of the five days
immediately preceding the Date of Grant. The
Company’s calculation of the fair market value of the
stock-based award that was granted was $0.15 per option, or
$67,806 for all of the options granted. Expense
was recorded in 2010 for 150,000 vested options in the amount
of $22,602, with the remaining $45,204 to be amortized on a
straight line basis over the remaining three years of the
vesting schedule. For the twelve month period
ended December 31, 2011, an additional expense was recorded
in the amount of $15,068.
The
Company used the Black-Scholes valuation model to estimate
the grant date fair value of the options granted in
2010. The Company used the following assumptions
for the 2010 valuations:
On
January 1, 2011, the Company issued a Stock Option Grant to
Anthony Dates for the purchase of up to 25,000 shares of
common stock, fully vesting as of March 31,
2011. The exercise price of $0.336 was determined
using an average of the closing price of the five days
immediately preceding the Date of Grant. The
Company’s calculation of the fair market value of the
stock-based award that was granted was $0.14 per option, or
$3,426 for the option granted. The full value of
the options was expensed in 2011.
On
April 1, 2011, pursuant to employment agreements between the
Company and Messrs. Moeller, Meader, Larry Balaban and Howard
Balaban each executive has been granted a non-qualified
stock option to purchase up to 1,000,000 shares of the
Company’s common stock at an exercise price of $0.44
per share, vesting as to 250,000 shares on April 1, 2011 and
250,000 shares per year on the anniversary date of the
agreements. The options have a 10 year life from
the date of grant. The exercise price was
determined using 110% of the average of the closing price of
the five days immediately preceding the Date of
Grant. The Company’s calculation of the fair
market value of the stock-based award that was granted was
$0.19 per option, or $756,304 for all of the options
granted. Expense was recorded in 2011 in the
amount of $330,883 representing 1,000,000 options vested on
April 1, 2011 and the amortized expense for the remaining
3,000,000 options recognized on a straight line basis over
the remaining three years of the vesting schedule.
On
April 1, 2011, the Company issued a stock option grant to
Anthony Dates for the purchase of up to 25,000 shares of
common stock, fully vesting as of June 30, 2011. The
Company’s calculation of the fair market value of the
stock-based award that was granted was $0.15 per option, or
$3,448 for the option granted. The full value of
the option was expensed in 2011.
On
June 1, 2011, as a result of a consulting agreement with Al
Kahn to provide certain management and advisory services, the
Company issued a stock option grant notice to purchase up to
1,000,000 shares of the Company’s common stock, vesting
as to 500,000 shares each on May 31, 2012 and
2013. The exercise price is $0.44 per
share. The Company’s calculation of the fair
market value of the stock-based award that was granted was
$0.05 per option, or $49,257 for the option
granted. The expense was amortized over the
vesting schedule on a straight line basis. A total
expense of $14,367 was recognized in 2011.
On
July 1, 2011, the Company issued a stock option grant to
Anthony Dates for the purchase of up to 25,000 shares of
common stock, fully vesting as of September 30, 2011. The
Company’s calculation of the fair market value of the
stock-based award that was granted was $0.04 per option, or
$1,122 for the option granted. The full value of
the options was expensed in 2011.
On
October 1, 2011, the Company issued a stock option grant to
Anthony Dates for the purchase of up to 25,000 shares of
common stock, fully vesting as of December 31, 2011. The
Company’s calculation of the fair market value of the
stock-based award that was granted was $0.05 per option, or
$1,250 for the option granted. The full value of
the options was expensed in 2011.
On
December 31, 2011 the Company issued Stock Option Grant
notices to eighteen employees and service providers under the
2008 Stock Option Plan, as amended. Options to
purchase 715,000 shares of common stock at an average
exercise price of $0.21 per share were granted with a 5 year
life, fully vesting on December 31, 2011. The
exercise price was determined using an average of the closing
price of the five days immediately preceding the Date of
Grant. The Company’s calculation of the fair
market value of the stock-based award that was granted was
$0.09 per option, or $65,890 for all of the options
granted. The full value of the options was
expensed in 2011.
On
December 31, 2011, the Company issued a Stock Option Grant
notice to Denise Kovac in conjunction with her employment as
Marketing Director under the 2008 Stock Option Plan, as
amended. An option to purchase up to 250,000
shares of common stock at an exercise price of $0.44 per
share was granted fully vesting on September 30,
2012. The Company’s calculation of the fair
market value of the stock-based award that was granted was
$0.06 per option, or $14,007 for all of the option
granted. Expense was recorded in 2011 in the
amount of $3,502, with the remaining balance to be expensed
in 2012.
The
Company used the Black-Scholes valuation model to estimate
the grant date fair value of the options granted in
2011. The Company used the following assumptions
for the 2011 valuations:
As
of September 30, 2011, options to purchase up to 40,000
shares of the Company’s common stock previously issued
in 2009 and 2010 expired due to the termination of
employees.
The
following schedule summarizes the changes in the
Company’s stock option plan:
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