Note 4. Equity

9 Months Ended

Sep. 30, 2013

Notes

Note 4. Equity

Note 4. Equity

Common Stock

In December 1997, Brenham sold 64,977,093 common shares to a related party for $1,000.

In April 2010, American, the sole stockholder of Brenham Oil & Gas, Inc., entered into a Separation and Distribution Agreement to spin off Brenham Oil & Gas, Inc. from its parent. In conjunction with this transaction, American formed Brenham Oil & Gas, Corp., a Nevada corporation, with authorized common stock of 200,000,000 shares and authorized preferred stock of 10,000,000 shares. Brenham issued 64,977,093 shares of common stock to American for all shares of Brenham Oil & Gas, Inc., of which American issued as a dividend 10,297,019 shares to the existing stockholders of American, on a one-for-one basis. Brenham issued 13,000,000 shares of common stock for cash consideration of $22,100 and 22,000,000 shares for services valued at $45,466.  American maintains control of Brenham through ownership of 65,346,390 shares of Brenham's common stock, representing about 53% of the outstanding shares as of September 30, 2013.

On July 22, 2011, Brenham entered into an Asset Purchase and Sale Agreement (the “Agreement”) with Doug Pedrie, Davis Pedrie Associates, LLC and Energex Oil, Inc., pursuant to which Brenham acquired 700 acres of unproved property located in the Permian Basin near Abilene, Texas. The Agreement provides for the Sellers to complete all oil lease assignments by August 15, 2011. The purchase consideration for the acquisition is the issuance to Sellers of 2,000,000 restricted shares of Brenham common stock valued at $8,400, with an additional 2,000,000 restricted shares to be issued contingent upon realization of certain production targets in 2012. On March 8, 2012, this agreement was rescinded and replaced with an agreement that in consideration for the Brenham share issuance, Brenham has a 2.5% overriding royalty interest in all of the leases associated with this property and any properties acquired or renewed in the future within a ten-mile radius. In addition, the contingency to issue the additional shares was removed. This property is on the balance sheet as "Oil and gas properties” for $8,400(Note 2).

On April 3, 2012, Brenham 100,000 shares valued at $5,000 to a third party for services.  For the year ended December 31, 2012, Brenham paid $1,101 to repurchase 12,000 shares of its common stock for treasury.  For the year ended December 31, 2011, Brenham paid $611 to repurchase 151,472 shares of its common stock for treasury, and issued 4,500,000 shares of its common stock valued at $18,900 for services to employees, directors and third parties, and 4,000,000 shares of its common stock valued at $16,800 to Brenham’s parent, American, for services.

On January 30, 2013, the Board of Directors approved and issued 3,340,000 shares of restricted common stock to AMIN to convert $267,171 owed to AMIN to equity.  These shares were issued during the nine months ended September 30, 2013.

On February 28, 2013, Brenham leased 394 acres in Galveston County for the acquisition of mineral rights for the Gillock Field from Kemah Development Texas, L.P. and Daniel Dror II Trust of 2012 for $300 per acre, or $131,100 and 200,000 shares of AMIN restricted common stock.  Brenham issued 3,326,316 shares of Brenham restricted common stock American as payment in full for the 200,000 shares issued by American on Brenham’s behalf.

On February 28, 2013, Brenham announced that Bryant Mook has been appointed President and Chief Operating Officer (COO).  Also, Mr. Mook and Brenham signed a stock purchase agreement whereby Brenham has agreed to issue 11,050,127 shares of Brenham common stock in exchange for $200,000, to be issued and paid as follows: 5,525,064 shares for $100,000 on June 30, 2013, and 5,525,063 shares for $100,000 on October 31, 2013.  In connection with this agreement, $100,000 in cash was received on June 5, 2013 and 5,525,064 shares of common stock were issued to Mr Mook.

For the nine months ended September 30, 2013, Brenham paid $884 for the repurchase of 26,000 shares of Brenham's common stock for treasury.

On December 5, 2012, Brenham issued 3,000,000 stock options to Brenham’s Vice President - Technology, Mr. L. Rogers Hardy, with an exercise price of 0.035 per share, expiring in 3 years, valued at $104,974 and recorded as stock-based compensation.  Brenham estimated the fair value of each stock option at the grant date as $0.035 by using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in 2012 as follows:

	December 5, 2012
Dividend yield	0.0%
Expected volatility	423.12%
Risk free interest	0.75%
Expected lives	3 years

A summary of the status of Brenham's stock options to employees for the nine months ended September 30, 2013 is presented below:

	Shares	Weighted Average Exercise Price	Intrinsic Value
Outstanding and exercisable as of December 31, 2012	3,000,000	$            0.035
Granted	-	N/A
Exercised	-	N/A
Canceled / Expired	-	N/A
Outstanding and exercisable as of September 30, 2013	3,000,000	$            0.035	$                     -