Quarterly report pursuant to sections 13 or 15(d)

Note 8: Stock Options

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Note 8: Stock Options
 3 Months Ended
Mar. 31, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
Note 8:  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 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 January 1, 2012, the Company issued a Stock Option Grant for services to the Vice President of Sales for the purchase of up to 25,000 shares of common stock, fully vesting as of March 31, 2012.

The Company used the Black-Scholes valuation model to estimate the grant date fair value of the options granted in 2012.  The Company used the following assumptions for the 2012 valuations:

Risk-free interest rate
0.85%
Expected life in years
5
Dividend yield
0
Expected volatility
59.19%

The following schedule summarizes the changes in the Company’s stock option plan for the three months ended March 31, 2012:

   
Options Outstanding
   
Weighted
Average
         
Weighted
Average
 
   
Number
of
Shares
   
Exercise
Price
per Share
   
Remaining
Contractual
Life
   
Aggregate
Intrinsic
Value
   
Exercise
Price
per Share
 
Balance at December 31, 2011
    14,995,000     $ 0.18-0.55    
4.47 years
      -     $ 0.43  
Options Granted
    25,000     $ 0.50    
5.00 years
      -     $ 0.50  
Options Exercised
    -       -       -       -       -  
Options Expired
    -       -       -       -       -  
Balance at March 31, 2012
    15,020,000     $ 0.18-0.55    
4.24 years
      -     $ 0.43  
                                         
Exercisable March 31, 2012
    11,570,000     $ 0.18-0.55    
2.58 years
      -     $ 0.33  

During the three months ended March 31, 2012 and 2011 the Company recognized $61,960 and $1,771 in Stock Compensation expense, respectively.