Edgar Filing: MIRENCO INC

SCHEDULE 14C INFORMATION

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Securities Exchange Act of 1934

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14c-5(d)(2))

MIRENCO, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement)

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MIRENCO, INC.

2001 ANNUAL MEETING OF SHAREHOLDERS

AUGUST 18, 2001

To the Shareholders:

Notice is hereby given that the 2001 Annual Meeting of Shareholders of
Mirenco, Inc., an Iowa company (the "Company"), will be held at Ames Auditorium,
615 Clark, Ames, Iowa 50010-6137, on August 18, 2001 from 9:00 to 11:00 a.m. for
the following purposes:

1. To elect directors of the Company to hold office until the next Annual
Meeting of Shareholders or until their respective successors have been
elected or appointed;
2. To reappoint Grant Thornton LLP as the Company's certified public
accountants for its fiscal year ending December 31, 2001; and
3. To transact any and all other business that may properly come before the
Meeting.

All shareholders of record at the close of business on July 15, 2001 are
entitled to notice of this meeting.

The Company's audited financial statements for the year ended December 31,
2000, together with certain other information concerning the Company, are
included in the exhibits to this notice.

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED
NOT TO SEND US A PROXY.

By order of the Board of Directors,

/s/ Dwayne Fosseen
------------------
Dwayne Fosseen

Chief Executive Officer and Chairman

July ___, 2001

INFORMATION STATEMENT

Table of Contents
PAGE

INTRODUCTION....................................................... 3
PROPOSAL 1 -- ELECTION OF DIRECTORS................................ 4
PROPOSAL 2 - REAPPOINT CERTIFIED PUBLIC ACCOUNTANTS................ 6
EXECUTIVE COMPENSATION............................................. 7
OPTION/SAR GRANTS IN LAST FISCAL YEAR.............................. 7
DIRECTOS' COMPENSATION............................................. 8
REMUNERATION, EMPLOYMENT CONTRACTS AND EMPLOYEE BENEFITS........... 8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..... 10
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................... 11
REPORT OF THE BOARD OF DIRECTORS REGARDING AUDIT ISSUES............ 12
AUDIT FEES......................................................... 12
OTHER MATTERS...................................................... 13

INTRODUCTION

This Information Statement, dated July ___, 2001, is furnished in
connection with the 2001 Annual Meeting of Shareholders of Mirenco, Inc. (the
"Company"), to be held at the Ames Auditorium, on August 18, 2001 from 9:00 to
11:00 a.m., and any adjournments thereof (the "Annual Meeting"), for the
purposes set forth in the notice of such meeting.

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED
NOT TO SEND US A PROXY.

This Information Statement was mailed to shareholders on or about July 25,
2001.

The complete mailing address of the Company's principal executive office is
PO Box 343, Radcliffe, Iowa 50230 (telephone (800) 423-9903).

Only shareholders of record at the close of business on July 20, 2001 are
entitled to participate in the Annual Meeting and any adjournments thereof. At
that record date, the following voting shares of the Company were outstanding:

CLASS SHARES OUTSTANDING VOTING
------------- ------------------ ------------
Common Shares 13,274,687 13,274,687

Holders of all common shares will vote together as a single class on all
matters expected to be acted on at the Annual Meeting. Under the laws of the
State of Iowa (in which the Company is incorporated), abstentions and broker
non-votes are counted in determining the votes present at the Annual Meeting. As
to Proposals 1 and 2, an abstention or broker non-vote has the same effect as a
vote against the proposal.

Appraisal rights are not available to shareholders with respect to any
matter expected to be acted upon at the Annual Meeting.

The Company was not required to file an Annual Report on Form 10-K for the
year ended December 31, 2000 (the "Annual Report"), but has included the audited
financial statements for the year ended December 31, 2000 and certain other
information is included herein as an exhibit. This information has also been
filed with the Securities and Exchange Commission in the Company's Form SB-2
effective May 14, 2001. The Annual Report is not to be regarded as proxy
soliciting material or as a communication by means of which a solicitation of
proxies is to be made.

At the date hereof, management of the Company has no knowledge of any
business other than that described in the notice for the Annual Meeting that
will be presented for consideration at such Annual Meeting.

PROPOSAL 1: ELECTION OF DIRECTORS

At the Annual Meeting, the terms of all of the directors will expire. Under
the laws of the State of Iowa (in which the Company is incorporated), the
election of directors requires the affirmative vote of a majority of the shares
represented at the Annual Meeting. The holders of the Company's common stock
will vote as a single class on Proposal 1. Dwayne Fosseen intends to vote in
favor of this proposal. Mr. Fosseen owns more than 68% of the company's
outstanding shares. Accordingly, Proposal 1 will be approved even if all other
shares currently outstanding that are not held by Mr. Fosseen vote against the
proposal. The name and biography of each nominee are set forth below under
"Nominees."

The Company's Board of Directors is responsible for the affairs of the
Company. The Board of Directors' has established Compensation and Audit
Committees. All other functions are carried out by the Board collectively.

Nominees

It is intended that four directors be elected to hold office until the 2002
Annual Meeting and until their successors shall have been duly elected and
qualified. The nominees listed below have been designated as such by the Board
of Directors, and it is anticipated that the nominees will be candidates when
the election is held. However, if for any reason a nominee is not a candidate at
that time, a substitute nominee will be designated by the Company.

The nominees are currently directors of the Company.

--------------------------------------------------------------------------------------------------------
Name Age Position with the Company Director Since
---- --- ------------------------- --------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------

Dwayne Fosseen 55 Chief Executive Officer, Chairman of the February 21, 1997
Board of Directors and Treasurer
--------------------------------------------------------------------------------------------------------
J. Richard Relick 71 Chief Operating Officer, Director and August 1, 1999
Secretary
--------------------------------------------------------------------------------------------------------
Don D. Williams 66 Director June 1, 1998
--------------------------------------------------------------------------------------------------------
Jerrold Handsaker 51 Director June 1, 1998
--------------------------------------------------------------------------------------------------------

Dwayne L. Fosseen, born in 1946, is founder, President, Chief Executive
Officer, Chairman of the Board of Directors and Principal (controlling)
Shareholder. Mr. Fosseen's inventiveness and ingenuity have led to seven patents
that have been issued in the U.S., Canada and Mexico in the field of energy
conservation. He also has two patents pending. Mr. Fosseen has personally been
involved in major projects with the U.S. Department of Agriculture, U.S.
Department of Energy, Iowa Corn Growers Board, National BioDiesel Board and the
Iowa Soybean Promotion Board. Mr. Fosseen has over 15 years experience in the
field of heavy-duty engines and has directed major EPA testing efforts at Ortech
Corporation, an international emissions testing company. Mr. Fosseen is also the
principal in Fosseen Manufacturing & Development, Inc. Further discussion
regarding Mr. Fosseen is available under the heading "Certain Relationships and
Related Transactions."

J. Richard Relick, born in 1929, Chief Operating Officer, graduated from
Dickinson College, Carlisle, Pennsylvania, in 1951 with a degree in economics
and has a 1963 associate degree in management from Northeastern University,
Boston, Massachusetts. Mr. Relick has extensive management background in the
introduction of new technology, having launched two new companies, one in the
environmental area and another in biotechnology. Mr. Relick was a Group Vice
President of Eco-Labs, a Fortune 500 company, and, as President of Ventron
Europe, formed a new company in Brussels, Belgium to serve the world chemical
and pharmaceutical markets. Mr. Relick served as a captain in the Marine Corps.
Mr. Relick currently serves as director of Certech Corporation, a manufacturer
of reusable oil filters, and Northern Probiotics, a producer of Antibiotic
Replacement Therapy for humans and animals. Further discussion regarding Mr.
Relick is available under the heading "Certain Relationships and Related
Transactions."

Don D. Williams, born in 1934, a lifelong resident of Williams, Iowa, has
been involved in the grain business and is a major producer of livestock. Mr.
Williams has also been associated with real estate as a licensed associate. Mr.
Williams has served as an officer of the County Farm Bureau Board, Heart of Iowa
Realtors Board, and the County Compensation and Extension Board. A director of
the Company since June 1, 1998, Mr. Williams is also a veteran of the Korean
War.

Jerrold Handsaker, born in 1950, practiced general business law in Iowa for
22 years and was admitted to practice in all Iowa Courts, U.S. District Courts
in Northern and Southern Iowa, the U.S. Tax Court and the U.S. Supreme Court. He
holds two U.S. patents and is presently President and CEO of Innovative
Lighting, Inc., an Algona, Iowa manufacturing company that manufactures and
markets products to the worldwide marine and RV industries. He is a member of
the Iowa State Bar Association, the National Marine Manufacturer's Association
and the American Boat and Yacht Council. Mr. Handsaker received his
undergraduate degree from Iowa State University in 1972 and his juris doctorate
degree from Drake University in 1975. Mr. Handsaker has been a director of
Mirenco since June 1, 1998.

Executive Officers

The current executive officers of the Company are as follows:

-------------------------------------------------------------------------------
Name Age Position with the Company
---- --- -------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

Dwayne Fosseen 55 Chief Executive Officer, Chairman of the
Board of Directors and Treasurer
-------------------------------------------------------------------------------
J. Richard Relick 71 Chief Operating Officer, Director and
Secretary
-------------------------------------------------------------------------------
Wayne Allison 40 President
-------------------------------------------------------------------------------
Darrell R. Jolley 38 Chief Financial Officer
-------------------------------------------------------------------------------

Each corporate officer was elected to hold office until he resigns or is
removed by the Board of Directors.

For a biography of Dwayne Fosseen and J. Richard Relick, see "Nominees"
above. The biographies for Mr. Allison and Mr. Jolley follow.

Wayne Allison, born in 1960, has served as President of an international
technology firm publicly traded in Israel and as CEO of a publicly traded
business consolidation holding company. Mr. Allison has served as a director and
officer of public companies since 1994 and has operated in a variety of roles in
growth companies. His background includes high technology development, sales and
marketing and national/international distribution channels. Additionally, Mr.
Allison has devised strategy and conducted a national merger and acquisition
campaign and has created and negotiated the public market capital and equity
strategies for growth companies. Mr. Allison published a book on conducting
Internet Business ("The Internet Business Primer", Sourcebooks, 1995), obtained
his bachelors degree in Behavioral Psychology and Computer Science engineering
from the University of Texas at Arlington, and has completed his Masters Degree
in Managerial Economics/Finance from Oklahoma University.

Darrell R. Jolley, born in 1962, has been a Chief Financial Officer,
Secretary, Treasurer and a director of public, reporting companies since 1996
and has as well served as a Chief Operating Officer for much of that time
period. Mr. Jolley has a natural inclination to new businesses and industries
and has intentionally developed his business skills for start-up and fast growth
companies. His experience and expertise in managing SEC requirements as well as
equity and company valuations has enabled him to devise long-term wealth-
building corporate strategies for shareholders of growing companies. Early in
his career, Mr. Jolley was employed at Deloitte and Touche, international CPA
firm. Mr. Jolley graduated from the University of Texas at Austin majoring in
the Business Honors Program with a specialization in Accounting. Mr. Jolley
obtained his CPA certification in January 1989.

PROPOSAL 2: REAPPOINTMENT OF ACCOUNTANTS
--------------------------------------------------------------------------------

The Company's board of directors, having declared its advisability, submits
for shareholder approval a proposal to reappoint Grant Thornton, LLP as the
Company's independent certified public accountants for the fiscal year ended
December 31, 2001.

Under the laws of the State of Iowa (in which the Company is incorporated),
approval of the proposed amendment to the Certificate of Incorporation require
the affirmative vote of the holders of a majority of all outstanding shares
entitled to vote thereon at the Annual Meeting. Dwayne Fosseen intends to vote
in favor of this Proposal. Accordingly, Proposal 2 will be approved even if all
other shares currently outstanding that are not held by Mirenco, Inc. vote
against the proposal.

SUPPLEMENTAL DISCLOSURES

Summary Executive Compensation

The table below sets forth a summary of the compensation earned by our
named chief executive officer and other executive management for 2000, 1999 and
1998.

Summary Compensation Table
--------------------------

Annual Compensation Long-Term Compensation Awards

Bonus Securities Long-Term
Name and Fiscal and Other Restricted Underlying Incentive All other
Principal Position Year Salary($) Compensation Stock Awards Options Plans Compensation
------------------ ---- --------- ------------ ------------ ------- ----- ------------

Dwayne Fosseen, CEO 2000 $75,000
1999 $35,596 0 0 0 0 0
1998 $26,000

J. Richard Relick, COO 2000 $75,000
1999 $25,365/(1)/ 0 0 100,000 0 0
1998 n/a

Wayne Allison, 2000 $75,000
President 1999 $12,500/(2)/ 0 0 280,000 0 0
1998 n/a

Darrell R. Jolley, CFO 2000 $75,000
1999 $12,500/(2)/ 0 0 280,000 0 0
1998 n/a

---------

(1) Amount represents payments for eight months in 1999.
(2) Amount represents payments for two months in 1999.

Option/SAR Grants in Last Fiscal Year

Option Grants in Fiscal Year 1999
---------------------------------
(Individual Grants)
-------------------

Percent of
Number of Securities Total Options
Underlying Granted to Employees Exercise or Expiration Grant Date
Name Options Granted (#) in Fiscal Year Base Price ($/Share) Date Present Value
---- ------------------- -------------- ------------------- ---- -------------

Dwayne Fosseen 0 N/A N/A N/A N/A

J. Richard Relick 100,000 16% $4.25 June 2009 N/A

Wayne Allison 280,000 42% $5.00 Sept 2008 N/A

Darrell R. Jolley 280,000 42% $5.00 Sept 2008 N/A

There were no options granted in fiscal year 2000.
________________

(1) Options granted to Mr. Relick vest as follows: 50,000 on January 1, 2000;
50,000 on January 1, 2001.

(2) Options granted to Mr. Allison vest as follows: 20,000 on January 1, 2000;
20,000 on March 31, 2000; 20,000 on June 30, 2000; 20,000 on September 30, 2000;
20,000 on January 1, 2001; 20,000 on March 31, 2001; 20,000 on June 30, 2001;
20,000 on September 30, 2001; 15,000 on January 1, 2002; 15,000 on March 31,
2002; 15,000 on June 30, 2002; 15,000 on September 30, 2002; 15,000 on January
1, 2003; 15,000 on March 31, 2003; 15,000 on June 30, 2003; and 15,000 on
September 30, 2003.

(3) Options granted to Mr. Jolley vest as follows: 20,000 on January 1, 2000;
20,000 on March 31, 2000; 20,000 on June 30, 2000; 20,000 on September 30, 2000;
20,000 on January 1, 2001; 20,000 on March 31, 2001; 20,000 on June 30, 2001;
20,000 on September 30, 2001; 15,000 on January 1, 2002; 15,000 on March 31,
2002; 15,000 on June 30, 2002; 15,000 on September 30, 2002; 15,000 on January
1, 2003; 15,000 on March 31, 2003; 15,000 on June 30, 2003; and 15,000 on
September 30, 2003.

Set forth in the table below is information, with respect to each Named
Executive Officer, as to the (a) number of shares acquired during fiscal 2000
upon each exercise of options granted to such individuals; (b) the aggregate
value realized upon each exercise (i.e. the difference between the market value
of the shares at exercise and their exercise price); (c) the total number of
unexercised options held on December 31, 2000, separately identified between
those exercisable and those not exercisable; and (d) the aggregate value of in-
the-money, unexercised options held on December 31, 2000, separately identified
as those exercisable and those not exercisable.

Aggregated Option Exercises in Fiscal
-------------------------------------
Year 2000 and Year-End Option Value
-----------------------------------

Shares Number of Securities Underlying
Acquired on Unexercised Options at Value of Unexercised
Exercise in Value Fiscal Year-End (#) In-The-Money Options
Name 2000 (#) Realized ($) Exercisable/ Un-Exercisable (1) at Fiscal Year-End ($)
---- -------- ------------- ------------------------------- ----------------------

Dwayne Fosseen N/A N/A N/A N/A

J. Richard Relick 0 0 50,000 / 50,000 $37,500 / $ 37,500

Wayne Allison 0 0 120,000 / 160,000 $ 0 / $ 0

Darrell R. Jolley 0 0 120,000 / 160,000 $ 0 / $ 0

________________

(1) Options become exercisable upon specified events such as length of
employment. Options granted to Mr. Relick vest and become exercisable as
follows: 50,000 on January 1, 2000 and 50,000 on January 1, 2001. Options
granted to Mr. Allison and Mr. Jolley vest quarterly between January 1, 2000 and
September 30, 2003.

Directors' Compensation

Directors who are not employees of the Company receive no fee for attending
meetings of the Board of Directors but are reimbursed for any out-of-pocket
expenditures. For information with respect to compensation paid by the Company,
see the Summary Executive Compensation Table above.

[Balance of page left intentionally blank.]

Remuneration, Employment Contracts and Employee Benefits

As the Company's operations develop, it is anticipated that additional
personnel may be hired. It is generally anticipated that any new-hires will
devote full time to the Company. At such time, the Board of Directors may, in
its discretion, approve the payment of additional cash or non-cash compensation
to the foregoing for their services to the Company.

We have entered into employment agreements with Dwayne Fosseen, J. Richard
Relick, Wayne Allison and Darrell Jolley.

On June 15, 1999, Messrs. Fosseen and Relick each entered into two year
employment agreements with Mirenco (collectively, the "Employment Agreements")
that each provides for annual salaries, bonuses and other benefits. Annual
salaries, as set forth in their agreements, are $45,000 through 1999 and $75,000
starting January 1, 2000, or upon successful close of our public offering. It is
anticipated that Messrs. Fosseen and Relick will devote approximately 100% of
their time to Mirenco. The Board of Directors has the right to terminate the
Employment Agreements with or without cause at any time, provided, however, that
termination by the Board of Directors without cause would obligate us to pay the
compensation due under the applicable Employment Agreement for the remainder of
the term involved. Pursuant to the terms of the Employment Agreements, Messrs.
Fosseen and Relick have agreed that they will not compete with us during the
period of their employment and for a one-year period after termination of each
applicable Employment Agreement.

Messrs. Allison and Jolley each entered into a one-year employment
agreement with us dated November 3, 1999, which automatically renews for
successive periods of twelve months. The employment agreements provide for each
to earn compensation at the annual rate of $75,000 as well as other benefits,
including stock options which vest over the period of January 1, 2000 through
September 30, 2003. Upon any future change in control of Mirenco, the options
will immediately and fully vest. It is anticipated that Messrs. Allison and
Jolley will devote approximately 100% of their time to Mirenco. The Board of
Directors has the right to terminate the employment agreements with or without
cause at any time, paying two weeks compensation. Pursuant to the terms of the
employment agreements, Messrs. Allison and Jolley have agreed that they will not
compete with us during the period of their employment and for a one-year period
after termination of each applicable employment agreement.

Mirenco does not provide officers with pension, stock appreciation rights,
long-term incentive or other plans, but it has the intention of implementing
these kinds of employee benefits in the future. Specifically, we anticipate that
we will adopt, in the future, an employee bonus program to provide incentives to
our employees. It is anticipated that an incentive plan would pay bonuses in
cash or stock to employees based upon our pretax or after-tax profit for a
particular period. It is anticipated that we will adopt a retirement plan-- such
as a 401(k) retirement plan -- and that we will implement an employee health
plan. Establishment of retirement plans and their implementation will be at the
discretion of the Board of Directors; any bonus plan(s) will be based on annual
objective, goal-based criteria developed by the Board of Directors for eligible
participants and will be exercisable only at prices greater than or equal to the
market value of the underlying shares on the date of their grant.

[Balance of page left intentionally blank.]

Security Ownership of Certain Beneficial Owners and Management

The table set forth below presents certain information regarding
beneficial ownership of our common stock, our only voting class of
securities, as of March 31, 2001, by (i) each shareholder known to us to
own, or have the right to acquire within sixty days, more than five percent
(5%) of our common stock outstanding; (ii) named executive officers of the
company; and (iii) all officers and director nominees of the company as a
group. All share amounts have been adjusted to reflect the results of stock
splits effective June 1998 and April 1999.

Name and Address Amount of Common Stock
Beneficial Owner /(1)/ Beneficially Owned/(2)(3)/ Percent of Class
--------------------- ------------------------- ----------------

Dwayne Fosseen, Director, Chairman of the Board 9,046,700/(4)/ 68.2%
and Chief Executive Officer
Don Williams, Director 342,800 2.6%
Jerrold Handsaker, Director 44,030 /(8)/
J. Richard Relick, Director and Chief Operating Officer 100,000/(5)/ /(8)/
Wayne Allison, President 120,000/(6)/ /(8)/
Darrell R. Jolley, Chief Financial Officer 120,000/(7)/ /(8)/
All Directors and Officers as a Group 9,735,530 73.7%

----------------

(1) Unless otherwise indicated, the address of each director and officer is c/o
Mirenco, Inc., 206 May Street, P.O. Box 343, Radcliffe, Iowa 50230.

(2) Unless otherwise indicated, we believe that all persons named in the table
have sole voting and investment power with respect to all shares of common
stock beneficially owned by them. A person is deemed to be the beneficial
owner of securities that may be acquired upon the exercise of options,
warrants or convertible securities by such person within 60 days from the
date on which beneficial ownership is to be determined.

(3) Reflects total outstanding 11,697,779 shares plus 1,508,908 of shares
subject to rescission as of March 31, 2001. All share amounts are after the
effect of our 3:1 stock split on June 9, 1998 and 5:1 stock split on April
16, 1999.

(4) Represents 9,008,700 shares owned, issued and outstanding, and 38,000 shares
owned by Betty Fosseen, spouse of our Chairman Dwayne Fosseen, pursuant to
options to purchase shares of common stock at $0.29 per share, exercisable
within 60 days. The options expire on December 31, 2008.

(5) Represents 100,000 shares owned pursuant to options to purchase shares of
common stock at $4.25 per share, exercisable within 60 days. All options
expire on June 15, 2009.

(6) Represents 120,000 shares owned pursuant to options to purchase shares of
common stock at $5.00 per share, exercisable within 60 days. Excludes
unvested options to purchase 160,000 shares at $5.00 per share which vest
20,000 options per quarter between June 30, 2001 and September 30, 2001,
and 15,000 options per quarter between January 1, 2002 and September 30,
2003. All options expire on September 30, 2008.

(7) Represents 120,000 shares owned pursuant to options to purchase shares of
common stock at $5.00 per share, exercisable within 60 days. Excludes
unvested options to purchase 160,000 shares at $5.00 per share which vest
20,000 options per quarter between June 30, 2001 and September 30, 2001,
and 15,000 options per quarter between January 1, 2002 and September 30,
2003. All options expire on September 30, 2008.

(8) Less than 1%.

Certain Relationships and Related Transactions

Because of certain statutory and case law relating to broad discretion
granted management of a company, typically directors and officers of a
corporation are indemnified by and have limited monetary liability to its
shareholders. Failure of management to satisfy its fiduciary responsibility to
shareholders could subject management to certain claims. Prospective investors
should consider the following inherent or potential conflicts of interest before
subscribing for shares.

American Technologies and Fosseen Manufacturing & Development, Inc. share
common shareholders with us. Specifically, our founder and principal
shareholder, Dwayne Fosseen, owns 49.9% of American Technologies and 100% of
Fosseen Manufacturing. Jerrold Handsaker and Don Williams, directors of the
Company, own 2.4% combined of American Technologies.

Effective April 30, 1999, through contractual agreement with American
Technologies, we have acquired patents and trademarks, the exclusive licensing
and distribution rights to the patents, and all rights to the characteristics,
anticipated results, and regulatory compliance, for five products developed by
American Technologies. These five products are DriverMax((R)), DriverMax((R))
Software, HydroFire((R)) Injection, HydroFire((R)) Fluid and HydroFire((R))
Lubricant. Under terms of the agreement, we owed an initial purchase price of
$250,000 to American Technologies shareholders and will pay royalties of 3% of
gross sales for twenty years from sales of the related patents and products. See
also the discussion under the heading "Patents and Trademarks." Our purchase of
the patents was done to reduce any potential conflicts, especially in the
future. Nonetheless, Mr. Fosseen will have a continuing interest in American
Technologies and Fosseen Manufacturing and, to that degree, may have a conflict
of interest relative to Mirenco shareholders.

As part of a negotiated termination agreement originally among American
Technologies, Mirenco and J. Richard Relick, a director and former distributor
for Mirenco, Mr. Relick will be paid ten percent of the royalties received by
American Technologies from Mirenco, not to exceed a cumulative $800,000. These
royalty payments are an obligation of American Technologies.

Moreover, we do not currently own any real estate for the running of our
business. However, we have executed a one-year lease with Fosseen Manufacturing
requiring monthly payments of $1,200 for the use of 2,400 square feet of
facilities for our offices and operations. Upon completion of the contemplated
distribution center, the lease will be terminated and all employees will be
housed in a combination 21,600 square foot office, warehouse and distribution
facility. Dwayne Fosseen, Mirenco's principal shareholder, owns, and will
continue to own, the 1.2 acres of land for the construction, located in
Radcliffe, Iowa. Effective November 14, 2000, we began leasing the land owned by
Mr. Fosseen on a perpetual term at zero monthly rent. Our Board of Directors
unanimously approved the lease. Mr. Fosseen recused himself from the vote. The
intent of the lease is to protect the Company's assets in the event of
unforeseen litigation based on future operations. In the unlikely event we
declare bankruptcy or otherwise default on the lease, the lease may be
terminated and we must vacate the property. We also have a buyout option in the
event of the decease of Mr. Fosseen, at the then fair market value of the
undeveloped land.

While it is not expected to undermine professional representation or have
any other adverse consequence, our securities counsel, Duncan, Blum &
Associates, is being paid for services rendered through significantly reduced
cash compensation and the issuance of warrants to exercise the purchase of
30,000 shares in Mirenco at an exercise price of $0.01, over a term ending March
31, 2003.

In each of these instances, we believe, as does Mr. Fosseen, the agreements
involved are on terms no less competitive than those available through
unaffiliated third parties, if not more advantageous. To that end, we, with Mr.
Fosseen's active support, have instituted the policies enumerated in the
paragraph following.

While we may enter into transactions with affiliates in the future, these
transactions, if any, will be entered only at prices and on terms no less
favorable to us than transactions with independent third parties. In that
context, we will require any director or officer who has a pecuniary interest in
a matter being considered to recuse themselves from any negotiations. The
Company's Articles of Incorporation, as amended, provide that any related party
contract or transaction must be authorized, approved or ratified at a meeting of
the Board of Directors by sufficient vote thereon by directors not interested
therein; or the transaction must be fair and reasonable to the Company. In any
event, any debt instruments of the company in the future are expected generally
to prohibit us from entering into any affiliate transaction on other than arm's-
length terms. In addition, a majority of the Board is, and must continue to be,
neither an officer nor a person with a pecuniary interest, other than as a
shareholder or director, in any transactions with us. In turn, commencing
immediately, a majority of the independent Board of Directors members, defined
as having no pecuniary interest in the transaction under consideration, will be
required to approve all matters involving interested parties. It is expected
that additional independent director(s) will be added to the Board. Moreover, an
independent stock transfer agent has been appointed to assure proper issuance of
stock to shareholders.

At the current time, Mirenco has no provision to issue any additional
securities to management, promoters, or their respective affiliates or
associates. If, as expected, the Board of Directors adopts an employee stock
option or pension plan, any issuance would be in accordance with the terms
thereof and proper approval. Although Mirenco has a very large amount of
authorized but unissued common stock, which may be issued without further
shareholder approval or notice, Mirenco intends to reserve the stock for certain
offerings contemplated for continued expansion, acquisitions and properly
approved employee compensation at the time a stock option plan is adopted.

Report of the Board of Directors Regarding Audit Issues

The Board of Directors has reviewed and discussed with management the
Company's audited financial statements as of and for the year ended December 31,
2000. The Board of Directors has also discussed with Grant Thornton LLP the
matters described in the Statement on Auditing Standards No. 61, Communication
with Audit Committees, as amended, as promulgated by the Auditing Standards
Board of the American Institute of Certified Public Accountants. The Board of
Directors has received and reviewed the written disclosures and the letter from
Grant Thornton LLP described in Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, as amended, and has discussed
with Grant Thornton LLP their independence. Based on the reviews and discussions
described herein, the Board of Directors has included the audited financial
statements referred to above as an exhibit to this information statement and
also the Company's SB-2 effective May 14, 2001 filed with the Securities and
Exchange Commission.

Audit Fees

The aggregate fees billed during the year ended December 31, 2000 for
professional services rendered for the audit and review of (1) the Company's
annual and quarterly financial statements and (2) the Company's registrations by
Form SB-2 were $61,182.

[Balance of page left intentionally blank.]

OTHER MATTERS

Form 10-K

The Company did not become a registered 15(d) reporting company until the
effective date of its SB-2 on January 26, 2001. As such, the Company was not
required to file an Annual Report on Form 10-K for the year ended December 31,
2000 with the Securities and Exchange Commission. However, audited financial
statements and other information are included in the exhibits to this
Information Statement.

Other Business

The Company does not know of any other business that will be presented for
consideration at the Annual Meeting. However, if any other business should come
before the Annual Meeting, management of the Company will have discretion to act
in accordance with its best judgment.

Proposals for 2002 Annual Meeting

Any shareholder wishing to submit a proposal for inclusion in the
Information Statement for the Company's Annual Meeting in 2002 pursuant to the
shareholder proposal rules of the SEC should submit the proposal in writing to
J. Richard Relick, Secretary, Mirenco, Inc., PO Box 343, Radcliffe, Iowa 50230.
The Company must receive a proposal by December 31, 2001 in order to consider it
for inclusion in the Information Statement with respect to the 2002 annual
meeting.

In addition, the Company's By-laws require that shareholders give advance
notice and furnish certain information to the Company in order to bring a matter
of business before an annual meeting or to nominate a person for election as a
director. Any communication relating to those By-law provisions should be
directed to J. Richard Relick at the above address.

Changes in or Disagreements with Accountants

None

Exhibits

Other information required by Rule 14a-3(b)(1) to (13) which has been filed
previously with the Securities and Exchange Commission on Form SB-2 or 10-QSB.

1. Audited Financial Statements for the fiscal year ended December 31, 2000......................... 14
2. Select financial data and Management's Discussion and Analysis of Financial Condition and
Results of Operations for the fiscal year ended December 31, 2000............................... 31
3. Financial Statements for the three months ended March 31, 2001................................... 36
4. Management's Discussion and Analysis of Financial Condition and Results of Operations for the
three months ended March 31, 2001............................................................... 43
5. Description of Business.......................................................................... 46

[Balance of page left intentionally blank.]

Exhibit 1

FINANCIAL STATEMENTS
AND
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS

MIRENCO, INC.
(a development stage company)

December 31, 2000 and 1999

C O N T E N T S

Page

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 16

BALANCE SHEETS 17

STATEMENTS OF OPERATIONS 18

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) 19

STATEMENTS OF CASH FLOWS 20

NOTES TO FINANCIAL STATEMENTS 21

REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
MIRENCO, Inc.

We have audited the accompanying balance sheets of MIRENCO, Inc. (a development
stage company) as of December 31, 2000 and 1999, and the related statements of
operations, changes in stockholders' equity (deficit), and cash flows for the
years ended December 31, 2000 and 1999 and for the period from February 21, 1997
(inception) to December 31, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of MIRENCO, Inc. as of December
31, 2000 and 1999, and the results of its operations and its cash flows for the
years ended December 31, 2000 and 1999 and for the period from February 21, 1997
(inception) to December 31, 2000 in conformity with accounting principles
generally accepted in the United States of America.

/s/ GRANT THORNTON LLP

Kansas City, Missouri
January 19, 2001

MIRENCO, Inc.
(a development stage company)

BALANCE SHEETS

December 31, December 31,
2000 1999
-------------------- --------------------

ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 5,692,063 $ 711,612
Accounts receivable 40,367 108,709
Inventories 92,501 37,050
Other 170,352 77,034
------------------- -------------------
Total current assets 5,995,283 934,405

PROPERTY AND EQUIPMENT, net 651,463 19,001

PATENTS AND TRADEMARKS, net of accumulated amortization
of $1,864 and $328 in 2000 and 1999, respectively 7,936 9,472

OTHER ASSETS 9,766 -
------------------- -------------------
$ 6,664,448 $ 962,878
=================== ===================

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 19,359 $ 83,058
Accrued liabilities 50,551 43,791
------------------- -------------------
Total current liabilities 69,910 126,849

COMMITMENTS AND CONTINGENCIES - -

STOCK SUBJECT TO RESCISSION OFFER
Common stock, no par value; 1,561,248 and 166,220 shares
issued and outstanding at December 31, 2000 7,806,240 831,100
and 1999, respectively

STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, no par value; 30,000,000 shares authorized,
11,697,779 shares issued and outstanding 731,290 876,778
Additional paid-in capital 1,714,954 1,939,954
Deficit accumulated during development stage (3,657,946) (2,811,803)
------------------- -------------------
(1,211,702) 4,929
------------------- -------------------
$ 6,664,448 $ 962,878
=================== ===================

The accompanying notes are an integral part of these statements.

MIRENCO, Inc.
(a development stage company)

STATEMENTS OF OPERATIONS

Period from
February 21,
1997
Year ended Year ended (inception) to
December 31, December 31, December 31,
2000 1999 2000
------------------- ------------------ ------------------

Sales $ 110,128 $ 195,295 $ 357,573

Cost of sales 174,289 144,162 387,158
------------------ ----------------- -----------------

Gross profit (loss) (64,161) 51,133 (29,585)

Salaries and wages 515,705 197,022 712,727
Stock-based compensation - 75,000 1,933,054
Royalty expenses 3,304 8,739 21,833
Marketing and advertising 70,768 27,797 129,878
Other general and administrative expenses 403,390 279,425 1,068,685
------------------ ----------------- -----------------

993,167 587,983 3,866,177
------------------ ----------------- -----------------

Loss from operations (1,057,328) (536,850) (3,895,762)

Other income (expense)
Interest income 226,175 12,351 252,806
Interest expense (14,990) - (14,990)
------------------ ----------------- -----------------
211,185 12,351 237,816
------------------ ----------------- -----------------

NET LOSS $ (846,143) $ (524,499) $ (3,657,946)
================== ================= =================

Net loss per share available for common
shareholders - basic and diluted $ (0.07) $ (0.05)
================== =================

Weighted-average shares outstanding -
basic and diluted 12,721,769 11,735,001
================== =================

The accompanying notes are an integral part of these statements.

MIRENCO, Inc.
(a development stage company)

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

Deficit
Additional accumulated
Common stock paid-in during
---------------------------
Shares Amount capital development stage Total
---------- ----------- ----------- ----------------- ------------

Balance at February 21, 1997 (inception) 9,000,000 $ 500 $ - $ - $ 500
Issuance of stock 749,550 249,850 - - 249,850
Net loss - - - (94,762) (94,762)
---------- ----------- ----------- ----------------- ------------
Balance at December 31, 1997 9,749,550 250,350 - (94,762) 155,588
Issuance of stock 1,065,525 355,175 - - 355,175
Issuance of stock for services rendered 90,000 30,000 - - 30,000
Issuance of stock 550,125 183,375 - - 183,375
Issuance of stock for services rendered 117,000 39,000 - - 39,000
Issuance of stock for services rendered 58,600 58,600 - - 58,600
Issuance of stock options - - 1,730,454 - 1,730,454
Net loss - - - (2,192,542) (2,192,542)
---------- ----------- ----------- ----------------- ------------
Balance at December 31, 1998 11,630,800 916,500 1,730,454 (2,287,304) 359,650
Distribution to stockholders - - (15,200) - (15,200)
Issuance of stock 66,979 334,895 - - 334,895
Offering costs - (374,617) - - (374,617)
Issuance of warrants for services rendered - - 149,700 - 149,700
Issuance of stock options - - 75,000 - 75,000
Net loss - - - (524,499) (524,499)
---------- ----------- ----------- ----------------- ------------
Balance at December 31, 1999 11,697,779 876,778 1,939,954 (2,811,803) 4,929
Offering costs - (145,488) - - (145,488)
Distribution to stockholders - - (225,000) - (225,000)
Net loss - - - (846,143) (846,143)
---------- ----------- ----------- ----------------- ------------
Balance at December 31, 2000 11,697,779 $ 731,290 $ 1,714,954 $ (3,657,946) $ (1,211,702)
========== =========== =========== ================= ============

The accompanying notes are an integral part of this statement.

MIRENCO, Inc.
(a development stage company)

STATEMENTS OF CASH FLOWS

Period from
February 21,
1997
Year ended Year ended (inception) to
December 31, December 31, December 31,
2000 1999 2000
-------------- -------------- --------------

Cash flows from operating activities
Net loss $ (846,143) $ (524,499) $ (3,657,946)
Adjustments to reconcile net loss to net cash
and cash equivalents used in operating activities:
Stock-based compensation - 75,000 1,933,054
Depreciation and amortization 18,783 1,229 20,012
(Increase) decrease in assets:
Accounts receivable 68,342 (102,988) (40,367)
Inventories (55,451) 59,150 (92,501)
Other (103,084) 11,719 (105,268)
Increase (decrease) in liabilities:
Accounts payable (63,699) 78,123 19,359
Accrued liabilities 6,790 43,791 50,551
-------------- -------------- --------------
Net cash used in operating activities (974,462) (358,475) (1,873,106)

Cash flows from investing activities
Purchase of property and equipment (649,709) (19,902) (669,611)
Purchase of patents and trademarks - (9,800) (9,800)
-------------- -------------- --------------
Net cash used in investing activities (649,709) (29,702) (679,411)

Cash flows from financing activities
Proceeds from sale of stock, net
of offering costs 6,829,652 866,228 8,484,780
Distribution to stockholders (225,000) (15,200) (240,200)
-------------- -------------- --------------
Net cash provided by financing activities 6,604,652 851,028 8,244,580
-------------- -------------- --------------

Increase in cash and cash equivalents 4,980,481 462,851 5,692,063

Cash and cash equivalents, beginning of period 711,612 248,761 -
-------------- -------------- --------------

Cash and cash equivalents, end of period $ 5,692,093 $ 711,612 $ 5,692,063
============== ============== ==============

The accompanying notes are an integral part of these statements.

MIRENCO, Inc
(a development stage company)

NOTES TO FINANCIAL STATEMENTS

December 31, 2000 and 1999

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the Company's significant accounting policies consistently
applied in the preparation of the accompanying financial statements
follows.

1. Nature of Business

MIRENCO, Inc. (the Company) was incorporated as an Iowa corporation in
1997. The Company is a marketing company that distributes a variety of
automotive and aftermarket products for which they have exclusive licensing
rights. The products primarily reduce emissions and increase vehicle
performance. The Company's products are sold primarily in the domestic
market.

2. Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents. Interest
income is generated from cash invested in these short-term financial
instruments.

3. Revenue Recognition

Revenue is recognized from sales when a product is shipped and from
services when they are performed.

4. Inventories

Inventories, consisting of purchased finished goods ready for sale, are
stated at the lower of cost (as determined by the first-in, first-out
method) or market.

5. Income Taxes

The Company accounts for income taxes under the asset and liability method
where deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted
tax rates applied to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date. Deferred tax assets are
recognized to the extent management believes that it is more likely than
not that they will be realized.

6. Patents and Trademarks

Patents and trademarks will be amortized on the straight-line method over
their remaining legal lives of 9 years. The Company recorded amortization
expense in 2000 and 1999 of $1,536 and $328, respectively.

MIRENCO, Inc.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2000 and 1999

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

7. Property and Equipment

Property and equipment are stated at cost. The Company provides for
depreciation on the straight-line method over the estimated useful lives of
three years for computer equipment, five years for manufacturing and test
equipment and other equipment, and 39 years for building.

8. Impairment of Long-Lived Assets

Impairment losses are recognized for long-lived assets when indicators of
impairment are present and the undiscounted cash flows are not sufficient to
recover their carrying amounts. The impairment loss is measured by comparing
the fair value of the asset to its carrying amount.

9. Stock-Based Compensation

The Company has adopted the disclosure provisions of Statement of Financial
Accounting Standards No. 123 ("SFAS No. 123"), "Accounting for Stock-Based
Compensation," and elected to continue the accounting set forth in Accounting
Principles Board Opinion No. 25 ("APB No. 25"), "Accounting for Stock Issued
to Employees." This opinion requires that for options granted at less than
fair market value, a compensation charge must be recognized for the
difference between the exercise price and fair market value.

10. Net Loss Per Share

Basic net loss per share is calculated on the basis of the weighted-average
number of common shares outstanding during the periods, which includes the
effects of all stock splits. Net loss per share, assuming dilution, is
calculated on the basis of the weighted-average number of common shares
outstanding and the dilutive effect of all potential common stock
equivalents. Net loss per share assumes dilution for the years ended December
31, 2000 and 1999 is equal to basic net loss per share, since the effect of
common stock equivalents outstanding during the periods is antidilutive.

11. Fair Value of Financial Instruments

The Company's financial instruments consist of cash, accounts receivable,
accounts payable, and accrued expenses. The carrying amounts of financial
instruments approximate fair value due to their short maturities.

12. Royalty Expense

Royalty expense is recorded and paid based upon the sale of products,
services, and rights related to patents according to a contractual agreement
(See Note I).

13. Advertising

Advertising costs are charged to expense as incurred.

MIRENCO, Inc.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2000 and 1999

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

14. Offering Costs

Specific incremental costs directly attributable to the Company's equity
offerings, including advertisements in newspaper, radio and direct mail,
letters, printing costs and certain identifiable legal fees, are charged
against the gross proceeds of the offerings.

15. Software Development Costs

The Company capitalizes software development costs when project technological
feasibility is established and concludes when the product is ready for
release. To date, no amounts have been capitalized. Research and development
costs related to software development are expensed as incurred.

16. Research and Development

The Company expenses research and development costs as incurred. Such costs
include certain prototype products, test parts, consulting fees, and costs
incurred with third parties to determine feasibility of products. Costs
incurred for research and development were $48,253 and $13,415 in 2000 and
1999, respectively.

17. Accounts Receivable

The Company considers accounts receivable to be fully collectible;
accordingly no allowance for doubtful accounts is required. If amounts become
uncollectible, they will be charged to operations when that determination is
made.

18. Use of Estimates

In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and revenues and expenses during the reporting period. Actual
results could differ from those estimates.

NOTE B - REALIZATION OF ASSETS

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of
the Company as a going concern. During the Company's development stage,
management and other personnel are focused on fund raising in lieu of product
sales. This is consistent with the management belief that the Company would
be negatively impacted if it attempted to implement an underfunded business
plan. However, as part of management's strategy, the Company in 1999 hired a
Chief Operating Officer to oversee sales and cost control, a President to
oversee marketing and shareholder relations and a Chief Financial Officer to
establish internal controls, control expenses and oversee external and
internal reporting. These hires were accomplished while management also
sought to maintain a low level of expenses, no debt and low business
liabilities prior to implementing the business plan. The Company's ability to
raise capital through its direct public offering in the State of Iowa is
critical to its continued existence such that failure to raise adequate
capital could materially impact the Company's ability to implement its
business plan. Management believes these steps and the funds raised are
sufficient to provide the Company the ability to continue in existence.

MIRENCO, Inc.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2000 and 1999

NOTE C - OTHER CURRENT ASSETS

Other assets consisted of the following at December 31,

2000 1999
--------------- ---------------

Prepaid legal, stock-based (note K) $ 74,850 $ 74,850
Interest receivable 91,966 -
Nontrade receivables 3,536 2,184
--------------- ---------------
$ 170,352 $ 77,034
=============== ===============

NOTE D - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at December 31,

2000 1999
--------------- ---------------

Computer equipment $ 35,199 $ 19,902
Manufacturing and test equipment 45,811 -
Other equipment 27,499 -
--------------- ---------------
108,509 19,902
Less accumulated depreciation (18,148) (901)
Building-in-progress construction 561,102 -
--------------- ---------------
$ 651,463 $ 19,001
=============== ===============

The Company recorded $17,247 and $901, respectively, of depreciation expense
for the years ended December 31, 2000 and 1999.

NOTE E - ACCRUED LIABILITIES

Accrued expenses consisted of the following at December 31,

2000 1999
------------- -------------

Royalty $ 920 $ 20,024
Payroll and payroll taxes 15,060 12,402
Other 19,581 11,365
Interest 14,990 -
------------- -------------
$ 50,551 $ 43,791
============= =============

MIRENCO, Inc.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2000 and 1999

NOTE F - CONCENTRATION OF CUSTOMERS

The Company had four customers that accounted for 100% of 2000 sales and 91%
of 1999 sales. A major customer is considered to be any customer who accounts
for 10% or more of the Company's total sales.

NOTE G - LEASES

The Company leases office space and equipment from a related party under an
operating lease expiring in December 2001 or at the completion of its new
facility. Future minimum lease payments at December 31, 2000 total $14,400
for the year ending December 31, 2001.

The Company entered into a lease agreement with its majority stockholder for
the land on which the Company is constructing a new facility. The lease
establishes a perpetual term commencing October 1, 2000 at zero rental cost
to the Company (See Note I).

Total rental expense for this operating lease was $14,400 for each of the
years ended December 31, 2000 and 1999.

NOTE H - INCOME TAXES

Deferred taxes relate to amounts recognized for financial reporting which
have not yet been recognized for income tax reporting. The tax effects of
temporary differences related to assets and liabilities were as follows at
December 31,

2000 1999
---------------- ----------------

Deferred tax assets
Net operating loss carryforward $ (990,000) $ (309,900)
Stock-based compensation (613,900) (613,900)
---------------- ----------------
(1,603,900) (923,800)

Deferred tax liability
Accelerated depreciation 2,780 -
Amortization 2,010 -
---------------- ----------------
4,790 -
---------------- ----------------
(1,599,110) (923,800)
Less valuation allowance 1,599,110 923,800
---------------- ----------------
Net deferred tax $ - $ -
================ ================

MIRENCO, Inc.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2000 and 1999

NOTE H - INCOME TAXES - Continued

The valuation allowance was established to reduce the deferred tax asset to an
amount that will more likely than not be realized. The reduction is necessary
given the Company's development stage, inability to generate profitable
operations, and uncertainty about its ability to utilize net operating loss
carryforwards before they expire starting in 2007. The valuation allowance was
increased by $675,310 and $178,300 in fiscal years 2000 and 1999, respectively.

The income tax benefit reflected in the statements of operations differs from
the amounts computed at federal statutory income tax rates. The principal
differences are as follows:

2000 1999
---------- ----------

Federal income tax benefit computed at
statutory rate $(277,800) $(178,300)
Installment of prior NOL carryforward (397,510) -
Increase in valuation allowance 675,310 178,300
--------- ---------
Net deferred tax $ - $ -
========= =========

NOTE I - RELATED PARTY TRANSACTIONS

The Company rents office space and equipment from a company that is wholly
owned by the majority stockholder of the Company. Rental payments for these
operating leases were $14,400 for each of the years ended December 31, 2000 and
1999.

The Company entered into a lease with its majority stockholder for the land on
which the Company is constructing a new facility. The lease establishes a
perpetual term commencing October 1, 2000 at zero cost to the Company. The
lease provides the Company with a buyout option upon the death of the majority
stockholder at the then unimproved fair market value. In the event the Company
defaults on the payment of any taxes or insurance or to perform any other
obligation under the lease, or voluntarily declares bankruptcy, any of which
are not cured within ten days or other reasonable time, the majority
stockholder, as landlord, may terminate the lease, requiring the Company to
vacate.

The Company had an agreement with a company that is wholly owned by the
majority stockholder of the Company to provide personnel and administrative
services during 1999. Total expense incurred under this agreement was $71,911.

On April 30, 1999, the Company entered into an agreement to acquire patents and
trademarks from a company whose stockholders have controlling ownership in the
Company for an initial price of $25,000. The patents and trademarks were
recorded as a lump-sum purchase at the affiliate's carrying value, $9,800, at
the date of purchase. The remaining $15,200 was recorded as a distribution to
stockholders. Another payment per terms of the patent purchase agreement,
$225,000, was paid in July 2000 and accounted for as a distribution to
stockholders upon the completed sale of 1,000,000 shares of stock offered to
the public. Also, the agreement provides for royalty payments in the amount of
3% of gross sales (including product sales, service revenues, and all revenues
from sales of patent rights) for 20 years commencing November 1999. This
agreement can be terminated by the seller if the Company fails to make the
above payments or becomes insolvent. From January 1 to October 31, 1999, the
Company paid royalties for the use and potential marketing of the patents to
the company that owned the patents based on 3% of sales calculated at an
established unit price ($495) and minimum quantities (40 to 80 units per
month), with payments generally made quarterly. The Company paid royalty fees
to a company partially owned by the majority stockholder of the Company for the
years ended December 31, 2000 and 1999 in the amounts of $3,304 and $8,739,
respectively.

MIRENCO, Inc.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2000 and 1999

NOTE J - COMMON STOCK OPTIONS

During 1998, the Company established a nonqualified stock option plan (1998
Plan) pursuant to which options for up to 1,200,000 shares of the Company's
authorized but unissued common stock may be granted to employees and certain
nonemployees. During 1999, the Company adopted the 1999 Stock Option Plan
(1999 Plan), which provides for granting of options to officers, employees,
advisors and consultants of the Company, for the purchase of up to a total of
750,000 shares of the Company's authorized but unissued common stock. At
December 31, 2000, options for an aggregate of 1,027,400 shares had been
granted as shown below. The Company accounts for stock options in accordance
with APB Opinion No. 25 and related interpretations, and compensation expense
has been recorded in the amount of $75,000 for the year ended December 31,
1999, related to stock options granted for services rendered prior to the grant
date.

On December 31, 1998, the Company granted 367,400 options to employees pursuant
to its 1998 plan. The options are fully vested. The option price is $0.29.
Compensation expense of $1,730,454 was recorded related to these options for
the year ended December 31, 1998. The options expire December 31, 2008.

On June 15, 1999, the Company granted 100,000 options to an employee for past
service pursuant to its 1998 plan. The options vest 50,000 shares at January
1, 2000, and the remaining shares vest and are exercisable at January 1, 2001.
Compensation expense of $75,000 was recorded related to these options. The
option price is $4.25 and expires June 15, 2009.

On December 31, 1999, the Company granted 560,000 options to two key employees
pursuant to its 1999 plan. The options vest quarterly, starting January 1,
2000, through September 30, 2003. The option price is $5.00 and expires
September 30, 2008. No compensation expense was recorded related to these
options.

Number of shares Price
-----------------------------------
Outstanding Exercisable per share
----------------- --------------- -----------

Outstanding, January 1, 1999 367,400 367,400 $ 0.29

Granted 660,000 - 4.88
------------- ------------ -----------

Outstanding, December 31, 1999 1,027,400 367,400 3.24

Granted - - -
------------- ------------ -----------

Outstanding, December 31, 2000 1,027,400 367,400 $ 3.24
============= ============ ===========

Had compensation cost for the plan been determined based on the fair value of
the options at the grant date, the Company's net loss would have increased by
$156,000 in 2000 and $638,000 in 1999, resulting in a net loss for the years
ended December 31, 2000 and 1999 in the amounts of $1,002,143 and $1,162,499,
respectively. Net loss per share would have been $(0.08) and $(0.10) for the
years ended December 31, 2000 and 1999, respectively.

The following table summarizes information about options outstanding at
December 31, 2000 and 1999 under the Compensatory Stock Option Plan:

MIRENCO, Inc.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2000 and 1999

NOTE J-COMMON STOCK OPTIONS-Continued

2000 Compensatory Stock Options and Warrants
--------------------------------------------

Options outstanding Options exercisable
---------------------------------------------------------------- -------------------------------------
Weighted average
Range of Number Remaining Weighted-average Number Weighted-average
exercise prices outstanding contractual life exercise price exercisable exercisable price
--------------- ----------- ----------------- ----------------- ----------- -----------------

$0.29 to $5.00 1,027,400 7.91 years $ 3.24 577,400 $ 1.94

1999 Compensatory Stock Options and Warrants
--------------------------------------------

Options outstanding Options exercisable
----------------------------------------------------------------------- --------------------------------
Weighted average
Range of Number Remaining Weighted-average Number Weighted-average
exercise prices outstanding contractual life exercise price exercisable exercisable price
--------------- ----------- ----------------- ----------------- ------------ -------------------

$0.29 to $4.25 1,027,400 8.82 years $ 2.83 367,400 $ 0.29

The fair value of the options granted was estimated on the date of grant
using the Black-Scholes option-pricing model with the following
weighted-average assumptions for 2000 and 1999: dividend yield of zero
percent; risk-free interest rate of 6%; assumed forfeiture of zero percent;
and expected lives of 8-10 years.

NOTE K - STOCKHOLDERS' EQUITY

In May 1997, the Company's Board of Directors authorized the Company to sell
up to 200,000 shares of common stock at $5 per share in a SCOR offering in
the State of Iowa. Total shares issued were 156,680, which resulted in
proceeds of $788,400.

In 1998, the Company issued 6,000 shares of common stock at $5 per share for
legal fees incurred.

In 1998, the Company's Board of Directors authorized the issuance of 19,520
shares of common stock to key employees for services rendered in 1998 and
1999. In conjunction with the issuance of the shares, the Company recorded
compensation expense of $97,600, which approximated the fair market value of
the shares at the time of issuance.

The Company's common stock was split three-for-one in June 1998 and
five-for-one in April 1999.

On May 15, 1999, the Company's stockholders authorized the Company to sell
up to 150,000 shares of the Company's common stock at $5 per share. These
shares will also require the Company to issue four stock warrants for each
share of common stock purchased. The exercise price for these warrants
totals $5 per share and may be exercised at any time prior to June 15, 2002.
Total shares issued were 66,979, which resulted in proceeds of $334,895. At
December 31, 2000 and 1999, the Company had 267,916 outstanding warrants.

MIRENCO, Inc.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2000 and 1999

NOTE K - STOCKHOLDERS' EQUITY - Continued

The Company's stockholders authorized the Company to sell up to 2,000,000
shares of common stock at $5 per share in a direct public offering in the
State of Iowa, the "Iowa Only Offering."

The proceeds from the Iowa-Only Offering will be used to fund additional sales
and marketing activities, research and development efforts for new products,
working capital, and operational costs. (See Note L) In addition, funds will
be used to construct a state-of-the-art warehouse and distribution center,
which will also house the corporate offices of the Company. As of December 31,
2000 and 1999, 1,561,248 and 166,220 shares had been sold, respectively.

In 1999, the Company issued 30,000 warrants at an exercise price of $0.01 for
legal fees. As of December 31, 2000, $74,850 has been accounted for as
offering costs. The remaining $74,850 is accounted for as prepaid legal costs
until the completion of the Company's registration under the Securities Act of
1933.

NOTE L - STOCK SUBJECT TO RESCISSION OFFER

Once approved for distribution, the rescission offer will be outstanding for
approximately thirty days. Iowa-Only Offering Shareholders have the option to
reject the Rescission Offer or to take no action within the thirty days,
thereby retaining their outstanding Iowa-Only Offering Shares, or to accept
the Rescission Offer. For Iowa-Only Offering Shareholders electing to rescind
their ownership, the rescission is expected to be paid in cash. The maximum
obligation is estimated at $8,100,000, including the original investment plus
interest at approximately 8% per year. As of December 31, 2000, the Company
was liable for interest in the amount of $14,990.

As a result of the Rescission Offer, the Company has classified the Iowa-Only
Offering Shares and proceeds as temporary equity. These shares will remain in
temporary equity until such time as the violations under the securities laws
have been cured. Subsequent to the close of the Rescission Offer, the Company
believes that Iowa-Only Offering Shareholders are estopped from arguing
injury. However, the Company will continue to be contingently liable to such
shareholders during the statute of limitations, a period of one year from the
date of the Rescission Offer. The Company is unable to quantify the amount of
such contingent liability, the claim must be brought through individual
lawsuit, the Company intends to vigorously defend any such lawsuit believing
it has valid defenses, and, finally, management considers the probability that
it will incur any obligation under such contingent liability as remote. The
Company will continue to assess the effect of this contingent liability on its
financial statements during the one-year period.

If all of the Iowa-Only Offering Shareholders elect to rescind their
investment, it will materially affect the Company's financial position,
results of operations and cash flows. If, during the subsequent one year that
the Company continues to be contingently liable, to the extent that any of the
Iowa-Only Offering Shareholders obtain a judgment for damages against the
Company, if material, the judgment could impact the Company's liquidity and
its ability to implement its business plan and continue as a going concern.

Exhibit 2
SELECTED FINANCIAL DATA
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

The following table sets forth certain financial data for Mirenco, a
development stage company. The selected financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our Financial Statements and Notes thereto
included elsewhere in this filing. The selected financial data for the years
ended December 31, 2000 and 1999 and cumulative data since inception through
December 31, 2000, have been derived from our financial statements which have
been audited by independent certified public accountants and are included
elsewhere in this filing.

Income Statement Data

Cumulative
February 21,
1997
(Inception)
---------
Year ended Year ended through
-------
December 31, December 31, December 31,
------------
2000 1999 2000
---- ---- ----

Sales $ 110,128 $ 195,295 $ 357,573
Cost of Goods Sold 174,289 144,162 387,158
Operating expenses 993,167 587,983 3,866,177
Loss from Operations (1,057,328) (536,850) (3,895,762)
Interest Income 226,175 12,351 252,806
Net Loss $ (846,143) $ (524,499) $(3,657,946)
Loss per Share $ (0.07) $ (0.05)
Common Shares
Outstanding (1) 12,721,769 11,735,001

Balance Sheet Data

Year ended Year ended
December 31, 2000 December 31, 1999
----------------- -----------------

Working Capital $ 5,925,373 $ 807,556
Total Assets 6,664,448 962,878
Shareholder's Equity
(Deficit)(2) (1,211,702) 4,929
Deficit accumulated
during the development phase $(3,657,946) $(2,811,803)

_____________
(1) Based on the weighted average number of shares outstanding and shares
subject to rescission offer during the period and adjusted for stock splits
approved June 9, 1998 and April 16, 1999.
(2) There have been no, nor are there expected to be, cash dividends. Proceeds
from Iowa-Only Offering Shares are recorded as stock subject to the
Rescission Offer, a temporary equity item, and not as a component of
Shareholders' Equity (Deficit).

[Balance of page intentionally left blank.]

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

1. Introduction

Management has, to date, intentionally focused all of our limited resources
on our business plan, consisting of the following chronological elements:

a. First Round Capitalization
b. Product Development and Testing
c. Empirical Performance Results and Testimonials
d. Launch Planning
e. Second Round Capitalization
f. Launch
g. Licensing, Sales and Marketing

We raised $788,400 in our successful SCOR offered during 1997 and 1998.
These funds supported the completion of our early product testing and first
marketing efforts. Initial product sales occurred to transit authorities in
Memphis, Ann Arbor, and Cedar Rapids.

We added another $334,895 from a private stock offering to our existing
shareholders during 1999 to support our planned follow up offering to raise up
to $10 million. The funds raised in the private stock offering were used
primarily for legal, accounting, printing and marketing costs of our Iowa-Only
Offering which was approved for distribution within the state of Iowa on July
30, 1999. As of July 30, 2000, we raised a cumulative $7,806,240 from the Iowa-
Only Offering The net funds raised in the Iowa-Only Offering was $7,544,540
following conclusion of a rescission offer of the Iowa-Only Offering shares on
February 26, 2001.

From inception to date, we have incurred no significant research and
development costs. Prior to our purchase of the patents from American
Technologies, as discussed at "Certain Relationships and Related Transactions,"
we estimate from records provided to us that American Technologies and other
related entities incurred research and development costs of approximately $4
million. From proceeds of our Iowa-Only Offering, we expect to spend between
$800,000 and $1.8 million over the next three years in research and development
for improving and streamlining our existing products, reducing manufacturing
costs and developing new applications.

We are investing funds from the Iowa-Only Offering in a distribution and
office facility located in Radcliffe, Iowa, on property owned by our principal
shareholder. The total cost is expected to be approximately $1.25 million to
build and furnish the new building. Through December 31, 2000, we have expended
$561,102 to begin construction of a projected $1.25 million headquarters
facility in Radcliffe, Iowa. The project is expected to be completed on budget.
We have worked closely with state and local government officials who have
declared the property to be an enterprise zone where we will be able to take
advantage of certain property tax breaks. Though the number of employees will
grow only slightly during fiscal year 2000, we anticipate we will be adding
additional mechanics and sales personnel as well as sales management as we
continue to implement our business and marketing plans. By December 31, 2001,
with the new facility built and anticipated increased sales, we believe we will
employ 29 full-time employees, including the four existing executive managers.

We have now completed the first five steps as outlined above, with
significant and adequate capital to seek market maker to apply to quote our
securities on the NASD Over-the-Counter Bulletin Board. Such a listing provides
four elements that we desire:

a. Additional awareness and public attention gained from operating as a
publicly traded company;
b. A public market valuation for the Company;
c. An alternative for future equity capitalization if required and desired by
the Company; and
d. An exit vehicle for existing shareholders who desire to sell.

Now that the Rescission Offer is concluded, we intend to use certain
proceeds from the Iowa-Only Offering to launch our products and offer to license
our patents to automakers simultaneous with the NASDAQ listing. Our intent is
to make the automakers aware of our patented technologies, provide a
significantly inexpensive offer for licensing and royalties, and to gain rapid
and significant market awareness for our technologies.

The simultaneous marketing campaign efforts conducted at the time of launch
are intended to jumpstart our sales efforts into the existing-vehicle
aftermarket, to make a strategic, nonexclusive offer to automakers for patent
licensing and to generate awareness and interest in Mirenco within the
investment community. We are hopeful that the unique business method of
launching, licensing, and execution that we have chosen will yield product
marketing, patent licensing, and investment analyst attention more rapidly than
could be obtained via more traditional, smaller-exposure methods.

In parallel and support of our launch, Mirenco products are being utilized,
marketed and sold, albeit on a limited basis, to relatively high-profile
organizations. We are optimistic that the performance data and testimonials
obtained from these high-profile customers will serve to minimize, or eliminate,
potential extended evaluations from prospective customers' acquisition decision-
making cycles.

Our technologies are built on patents issued to our founder and principal
shareholder, Dwayne Fosseen, in a cost sharing CRADA industry/government
research and development project with the U.S. Department of Energy. We have
proven effectiveness in fuel savings, emissions reductions and decreased
maintenance, and our products are applicable and adaptable to vehicles
worldwide. Sufficient prospects regarding buses, heavy trucks and other
vehicles world-wide have been generated that we believe commercially viable
sales will be realized once we direct our emphasis and focus our resources. We
have identified 46 auto manufacturers world-wide that are expected to produce
400 million new vehicles over the next 10 years. We anticipate selling licenses
to our patents to many of the higher-volume auto producers, which will provide
for a per unit royalty. While there is seasonality in the U.S. automobile sales
industry, seasonality is not expected to have a significant impact on our
business in the near future.

Further, while other technologies continue to develop, we believe many of
these alternatives to be 4 to 10 years away from a cost-effective solution
which, in any event, would likely be implemented first and perhaps exclusively
to new vehicles. Our products have the advantage of being currently applicable
and we believe they provide licensees with a foundation to further improve and
develop new applications. In spite of ongoing technological advances in fuel,
engines and our own products, we believe that the world-wide existing number of
cars, buses and trucks is expected to provide a source for our sales for years
to come. Furthermore, our technologies are in relative infancy in that we
intend to incorporate considerably advanced sophistication within our products
as the technological components become economically feasible for mass production
(e.g., Global Positioning System satellite, global road topographical databases,
speed limit databases, bi-directional throttle controls, etc.).

We are eager to launch and maximize the years of research and effort that
have gone into design, development, protection and planning. Management
believes, and performance data demonstrates, that market acceptance of Mirenco's
technologies can provide a global benefit measured both economically and
environmentally. Consequently, management has carefully crafted and implemented
a plan that provides the products, company infrastructure, human-resource skills
and business strategy to leverage and maximize the patents and resultant
technology as quickly as possible, with final company valuation being determined
by the free markets.

2. Background

Our fiscal year ends December 31. The following analysis of our financial
condition and results of operations for the fiscal years ended December 31, 2000
and 1999 should be read in conjunction with our audited financial statements for
the periods and other information presented elsewhere in this filing.

3. General

We develop and market technologically advanced products for throttle
control of internal combustion vehicles that improve fuel efficiency, reduce
environmental emissions and reduce vehicle maintenance. Our primary products are
derived from technology patented in the U.S., Mexico and Canada and are:
DriverMax(R), DriverMax(R) Software, HydroFire(R) Injection, HydroFire(R) Fluid
HydroFire(R) Lubricant and EconoCruise(R). Our newest product offering,
EconoCruise(R), is a new and improved version of our product line utilizing
other input sensors including Global Positioning System technology and ambient
sensor features. We believe that we are the first to provide a product that
incorporates Global Positioning System technology into a throttle-control
application using "Satellite-to-Throttle(TM) technology. We intend to market our
products both domestically and internationally and intend to license our
patented technology to automakers for use on their new model vehicles. We expect
our revenues to increase as a result of the broader market penetration, license
revenues and new products scheduled for introduction over the next 6 to 36
months.

We have incurred losses during our fiscal years ended December 31, 2000 and
1999 while developing and introducing our original products and focusing
management and other resources on capitalizing the Company to support future
growth. DriverMax(R) accounts for more than 90% of our product sales during our
development stage, being the most readily marketable of our fully developed
products. HydroFire(R) units account for the remainder. No sales have been
conditioned on other performance or approval. The losses incurred to date are
considered normal for a development stage company. Other costs were incurred
during the past three years to prepare us for commercialization of our products,
including additional management, personnel, consultants and marketing
expenditures. We expect that, as sales increase, there will also be increases in
the total amounts of distribution and selling, general and administrative
expenses. However, as a percentage of sales, these expenses should decline.

4. Financial Impact of Rescission Offer

The Rescission Offer of our Iowa-Only Offering was declared effective on
January 26, 2001 and terminated on February 26, 2001. We refunded $261,700 for
52,340 shares returned and canceled, incurring total interest expense of
$14,990. The net investment of the Iowa-Only Offering was $7,544,540, having
issued 1,508,908 shares. Though the period of the rescission offer has
terminated, we nonetheless may continue to be liable to Iowa-Only Offering
Shareholders under relevant federal laws for a period of up to one year after
discovery of the violation upon which a claim by an Iowa-Only Offering
Shareholder may be based (or three years from the date of the original July 30,
1999 offering). However, since extending this Rescission Offer is believed to
have eliminated any damages element, the potential financial impact of the
Rescission Offer is highly speculative and, in any event, is not expected to
have a material adverse impact on our operations. While unlikely in the opinion
of Mirenco and its securities attorney, in the event claims are brought against
the company and are successful, the post-rescission financial impact could
result in a maximum obligation of $7,544,540, which is the number of outstanding
shares subject to the prior offering that violated section 5 of the Securities
Act and were not rescinded, multiplied by the offering price.

5. Results of Operations

The fiscal year ended December 31, 2000 compared to the fiscal year ended
December 31, 1999.

Sales were $110,128 for the year ended December 31, 2000 compared to
$195,295 for the same period in 1999, a decrease of 44%. During our development
stage, we focused management and other resources on raising equity capital and
developing our products. This was particularly true during 2000 as we worked to
close the Iowa-Only Offering effective July 30, 2000 whereas we had only limited
equity sales efforts during the same period in 1999. While no trends or
seasonality have yet to be identified, sales have occurred sporadically during
the development stage creating differences between comparative periods. In
1999, we had one large sale to the Transit Authority of River City (TARC -
Louisville, Kentucky) for approximately $95,000. We have continued to follow up
with TARC while further developing our sales documentation and collecting
emissions and fuel savings data. No sale of this size occurred during 2000.

Cost of sales increased $30,127 or 21% from 1999 to 2000, representing 158%
and 74% of sales, respectively. The increase in cost of sales is related to an
approximately $55,000 increase in production personnel during a period of low
sales enabling us to train and prepare for later, anticipated increased sales
levels. This increase was offset by approximately $25,000 in lower cost of
total products sold and savings in supplies due to the lower sales. Management
believes cost of sales will range between 40% and 60% of sales as increased unit
sales levels cover production overhead and unit costs. Through December 31,
1999, our gross margin was $51,133 compared to ($64,161) for the same period in
2000. This difference relates to the higher level of sales in 1999 and
approximately $40,000 less production overhead.

Operating expenses increased $405,184 or 69% from 1999 to 2000. The
increase is primarily attributable to an approximately $320,000 increase in wage
expense because of new personnel and executive management in 2000, offset by
$75,000 of stock-based compensation in 1999 related to options granted to an
officer. The increase at December 31, 2000 is also from an approximately
$60,000 increase in travel and advertising as we began to make sales
presentations to other transit authorities around the country, approximately
$25,000 increased due to purchasing directors' and officers' liability
insurance, approximately $25,000 in increased research and development spending
related to EconoCruise(R), and approximately $15,000 in net additional
accounting, legal and other general and administrative expenses. Throughout our
self-underwritten, Iowa-Only Offering, we updated shareholders and potential
shareholders of company developments as a means to raise awareness and increase
sales of the offer. Such costs were recorded as offering costs, a decrement to
shareholders equity. Upon completion of the Iowa-Only Offering, we continued to
incur similar costs; however, these costs, approximately $30,000 in the 4th
quarter of 2000, were expensed.

Royalty expense for the year ended December 31, 1999 was 4% of sales.
Prior to our purchase of the patents and trademarks from American Technologies
effective November 1, 1999, we incurred royalty expense for use of and
opportunity to market the patents, payable to American Technologies at the
greater of 3% of actual sales or 3% of sales calculated at an established unit
price ($495) and minimum quantities (40 to 80 units per month). The payments
were generally made quarterly. During this period, minimum quantities and the
unit price exceeded both quantities shipped and the actual sales prices with the
result that royalty expense exceeded 3% of actual sales. This royalty agreement
was terminated upon our purchase of the patents effective November 1, 1999. The
TARC sale occurred after November 1, 1999 and was subject to the 3% calculation
for royalty expense. For the year ended December 31, 2000, royalty expense was
calculated according to terms of the purchase agreement with American
Technologies at 3% of actual sales.

Our net loss increased from $524,499 in 1999 to $846,143 in 2000 primarily
as a result of increased management and personnel costs, decreased sales, and
sales and marketing efforts in 2000 that began the sales cycle with new
potential customers,but did not result in sales as of fiscal year end.

6. Liquidity and Capital Resources

We have not yet commenced generating substantial revenue. We expect to
fund development expenditures and incur losses until we are able to generate
sufficient income and cash flows to meet these expenditures and other
requirements. Having closed our Rescission Offer refunding $261,700 or 3.4% of
the original $7,806,240, we believe we currently have adequate cash reserves to
continue to cover anticipated expenditures and cash requirements. Prior to the
effective date of the Rescission Offer, management believed less than 10% of the
Iowa-Only Offering Shareholders would accept the Rescission Offer.

Since our inception in 1997, we have primarily relied on the sources of
funds discussed in "Cash Flows" below to finance our testing and operations. We
believe that the proceeds raised from the Iowa-Only Offering, net of the
Rescission Offer, will be adequate to continue our operations, including the
contemplated expansion of sales efforts, inventories, and accounts receivable
through the next three years.

Since acceptance or the affirmative rejection or failure to respond to the
Rescission Offer does not act as a release of claims, eligible Iowa-Only
Offering Shareholders who have accepted, rejected or failed to respond to the
Rescission Offer would retain any rights of claim they may have under federal
securities laws. Any subsequent claims by an Iowa-Only Offering Shareholder
would be subject to any defenses we may have, including the running of the
statute of limitations and/or estoppel. In general, to sustain a claim based on
violations of the registration provisions of federal securities laws, the claim
must be brought within one year after discovery of the violation upon which the
claim is based in this case, based on the date of January 26, 2001 prospectus,
or three years from the date of the original July 30, 1999 offering. Under the
principle of estoppel, the person bringing a claim must carry the burden of
proof of why he or she took no action under the rescission offer and/or how he
or she may have been injured.

We have been evaluating financing and capitalization alternatives as part
of our long-term business plans. These alternatives include the sale of
preferred stock and warrants. To preserve operating funds, we have also
developed a strategic plan that provides for reductions of expenditures and a
prioritization of development options Further, as a result of this
registration, we could receive up to approximately $2 million from the exercise
of options and warrants by selling shareholders. However, since many of the
options and warrants bear an exercise price of $5.00 per share, we anticipate
that selling shareholders will only exercise if the eventual market price of our
common stock exceeds $5.00 per share. Otherwise, we have no way to estimate the
dollar amount, if any, that we will receive from the exercise of options and
warrants.

According to the terms of our purchase agreement with American Technologies
to acquire the patents and trademarks, we will pay a 3% royalty of annual gross
sales for a period of 20 years, which began November 1, 1999. The agreement
also required the payment of $25,000 at the time we met the Iowa-Only Offering
$500,000 minimum offering, approximately November 1, 1999. Approximately one-
half of the amount due was paid on December 13, 1999 and the other one-half was
paid on February 15, 2000. A $225,000 payment became due American Technologies
per the agreement once we had raised $5,000,000 in the Iowa-Only Offering. The
$225,000 was paid in August 2000.

7. Cash Flows for the Years Ended December 31, 2000 and 1999

Since our inception, February 21, 1997, through December 31, 2000, our
activities have been organizational, devoted to developing a business plan and
raising capital. Where these costs are indirect and administrative in nature,
they have been expensed in the accompanying statements of operations. Where
these costs relate to capital raising and are both directly attributable to our
offerings and incremental, they have been treated as offering costs in the
accompanying balance sheets. Therefore, all indirect costs, such as management
salaries, have been expensed in the period in which they were incurred.

Net cash used in operating activities for the years ended December 31, 2000
and 1999 was $974,462 and $358,475, respectively. The use of cash in operating
activities was primarily related to our net losses and significant changes in
working capital components, including inventory and receivables.

Net cash used in investing activities for the years ended December 31, 2000
and 1999 was $649,709 and $29,702, respectively. The use of cash in investing
activities was primarily attributed to approximately $561,000 construction costs
for our new headquarters facility plus approximately $90,000 in emissions
testing equipment and computer equipment.

Net cash provided by financing activities during the years ended December
31, 2000 and 1999 was $6,576,633 and $851,028, respectively. The primary source
of the financing was proceeds from the issuance of shares of common stock in our
Iowa-Only Offering.

8. Business and Related Party Transactions

On April 30, 1999, Mirenco entered into an agreement to acquire patents and
trademarks from a company whose stockholders have controlling ownership in
Mirenco for a purchase price of $250,000 cash plus future royalty payments,
according to contract terms. Of the cash payment, $9,800 was recorded as a
lump-sum purchase of the affiliate's carrying value at the date of purchase.
The remaining $240,200 was accounted for as a distribution to stockholders, and
is reflected as a decrement to equity.

9. Recent Accounting Pronouncements

There are no recently issued accounting standards for which the impact on
our financial statements at December 31, 2000 and 1999 is not known.

10. Forward-looking Statements

Statements contained in this document which are not historical fact are
forward-looking statements based upon management's current expectations that are
subject to risks and uncertainties that could cause actual results to differ
materially from those set forth in or implied by forward-looking statements.

Exhibit 3

MIRENCO, Inc.
(a development stage company)

BALANCE SHEETS
(unaudited)

March 31, March 31,
2001 2000
----------------------- -----------------------
ASSETS
CURRENT ASSETS

Cash and cash equivalents $ 5,018,855 $ 2,223,050
Accounts receivable 15,799 16,403
Inventories 83,373 62,550
Other 167,759 78,997
------------------- ------------------
Total current assets 5,285,786 2,381,000

PROPERTY AND EQUIPMENT, net 883,954 26,912

PATENTS AND TRADEMARKS, net of accumulated amortization
of $2,353 and $451 in 2001 and 2000, respectively 7,447 9,349

OTHER ASSETS 11,538 -
------------------- ------------------
$ 6,188,725 $ 2,417,261
=================== ==================

LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 72,834 $ 11,873
Accrued liabilities 39,556 35,976
------------------- ------------------
Total current liabilities 112,390 47,849

COMMITMENTS AND CONTINGENCIES - -

STOCK SUBJECT TO RESCISSION OFFER
Common stock, no par value; 1,508,908 and 520,996 shares issued and
outstanding at March 31, 2001 and 2000, respectively 7,544,540 2,604,980

STOCKHOLDERS' DEFICIT
Common stock, no par value; 30,000,000 shares authorized,
11,697,779 shares issued and outstanding 731,290 847,322
Additional paid-in capital 1,714,954 1,939,954
Deficit accumulated during development stage (3,914,449) (3,022,844)
------------------- ------------------
(1,468,205) (235,568)
------------------- ------------------
$ 6,188,725 $ 2,417,261
=================== ==================

MIRENCO, Inc.
(a development stage company)

STATEMENTS OF OPERATIONS
(unaudited)

Period from
February 21,
Three Months Three Months 1997
Ended Ended (inception) to
March 31, March 31, March 31,
2001 2000 2001
---------------------- --------------------- ---------------------

Sales $ 20,629 $ 31,864 $ 378,202

Cost of sales 15,264 30,483 402,422
--------------------- -------------------- --------------------

Gross profit (loss) 5,365 1,381 (24,220)

Salaries and wages 157,173 118,165 869,900
Stock-based compensation - - 1,933,054
Royalty expenses 619 956 22,452
Marketing and advertising 21,229 9,581 151,107
Other general and administrative expenses 163,616 98,138 1,232,301
--------------------- -------------------- --------------------

342,637 226,840 4,208,814
--------------------- -------------------- --------------------

Loss from operations (337,272) (225,459) (4,233,034)

Other income (expense)
Interest income 80,769 14,418 333,575
Interest expense - - (14,990)
--------------------- -------------------- --------------------
80,769 14,418 318,585
--------------------- -------------------- --------------------

NET LOSS $ (256,503) $ (211,041) $ (3,914,449)
===================== ==================== ====================

Net loss per share available for common
shareholders - basic and diluted $ (0.02) $ (0.02)
===================== ====================

Weighted-average shares outstanding -
basic and diluted 13,232,857 12,100,515
===================== ====================

MIRENCO, Inc.
(a development stage company)

STATEMENTS OF CASH FLOWS
(unaudited)

Period from
February 21,
Three Months Three Months 1997
Ended Ended (inception) to
March 31, March 31, March 31,
2001 2000 2001
-------------- -------------- --------------

Cash flows from operating activities
Net loss $ (256,503) $ (211,041) $ (3,914,449)
Adjustments to reconcile net loss to net cash
and cash equivalents used in operating activities:
Stock-based compensation - - 1,933,054
Depreciation and amortization 8,244 1,870 28,256
(Increase) decrease in assets:
Accounts receivable 24,568 92,306 (15,799)
Inventories 9,128 (25,500) (83,373)
Other 821 (1,963) (104,447)
Increase (decrease) in liabilities:
Accounts payable 53,475 (71,185) 72,834
Accrued liabilities (10,995) (7,815) 39,556
-------------- -------------- --------------
Net cash used in operating activities (171,262) (223,328) (2,044,368)

Cash flows from investing activities
Purchase of property and equipment (240,246) (9,658) (909,857)
Purchase of patents and trademarks - - (9,800)
-------------- -------------- --------------
Net cash used in investing activities (240,246) (9,658) (919,657)

Cash flows from financing activities
Proceeds from sale of stock, net
of offering costs - 1,744,424 8,484,780
Refund of common stock in rescission offer (261,700) - (261,700)
Distribution to stockholders - - (240,200)
-------------- -------------- --------------
Net cash provided by financing activities (261,700) 1,744,424 7,982,880
-------------- -------------- --------------

Change in cash and cash equivalents (673,208) 1,511,438 5,018,855

Cash and cash equivalents, beginning of period 5,692,063 711,612 -
-------------- -------------- --------------

Cash and cash equivalents, end of period $ 5,018,855 $ 2,223,050 $ 5,018,855
============== ============== ==============

The accompanying notes are an integral part of these statements.

MIRENCO, Inc.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS

March 31, 2001

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the Company's significant accounting policies consistently
applied in the preparation of the accompanying financial statements follows.

1. Nature of Business

MIRENCO, Inc. (the Company) was incorporated as an Iowa corporation in 1997.
The Company is a marketing company that distributes a variety of automotive
and aftermarket products for which they have exclusive licensing rights. The
products primarily reduce emissions and increase vehicle performance. The
Company's products are sold primarily in the domestic market.

4. Cash and Cash Equivalents

5. Revenue Recognition

Revenue is recognized from sales when a product is shipped and from services
when they are performed.

4. Inventories

Inventories, consisting of purchased finished goods ready for sale, are
stated at the lower of cost (as determined by the first-in, first-out
method) or market.

5. Income Taxes

The Company accounts for income taxes under the asset and liability method
where deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates applied to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date. Deferred tax assets are
recognized to the extent management believes that it is more likely than not
that they will be realized.

6. Patents and Trademarks

Patents and trademarks will be amortized on the straight-line method over
their remaining legal lives of 9 years.

MIRENCO, Inc.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

March 31, 2001

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

7. Property and Equipment

8. Impairment of Long-Lived Assets

9. Stock-Based Compensation

The Company has adopted the disclosure provisions of Statement of Financial
Accounting Standards No. 123 ("SFAS No. 123"), "Accounting for Stock-Based
Compensation," and elected to continue the accounting set forth in
Accounting Principles Board Opinion No. 25 ("APB No. 25"), "Accounting for
Stock Issued to Employees." This opinion requires that for options granted
at less than fair market value, a compensation charge must be recognized for
the difference between the exercise price and fair market value.

10. Net Loss Per Share

Basic net loss per share is calculated on the basis of the weighted-average
number of common shares outstanding during the periods, which includes the
effects of all stock splits. Net loss per share, assuming dilution, is
calculated on the basis of the weighted-average number of common shares
outstanding and the dilutive effect of all potential common stock
equivalents. Net loss per share assumes dilution for the three months ended
March 31, 2001 and 2000 is equal to basic net loss per share, since the
effect of common stock equivalents outstanding during the periods is
antidilutive.

19. Fair Value of Financial Instruments

20. Royalty Expense

Royalty expense is recorded and paid based upon the sale of products,
services, and rights related to patents according to a contractual
agreement.

21. Advertising

Advertising costs are charged to expense as incurred.

MIRENCO, Inc.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

March 31, 2001

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

22. Offering Costs

23. Software Development Costs

The Company capitalizes software development costs when project
technological feasibility is established and concludes when the product is
ready for release. To date, no amounts have been capitalized. Research and
development costs related to software development are expensed as incurred.

24. Research and Development

25. Accounts Receivable

The Company considers accounts receivable to be fully collectible;
accordingly no allowance for doubtful accounts is required. If amounts
become uncollectible, they will be charged to operations when that
determination is made.

26. Use of Estimates

27. Basis of Presentation

The accompanying financial statements of Mirenco, Inc., included herein are
unaudited, but include all adjustments consisting of normal recurring
accruals which the Company deems necessary for a fair presentation of its
financial position, results of operations and cash flows for the interim
period. Such results are not necessarily indicative of results to be
expected for the full year. These financial statements do not include all
disclosures provided in the annual financial statements and should be read
in conjunction with the annual financial statements and notes thereto
included in the Company's Form SB-2 filed on May 11, 2001.

[Balance of page left intentionally blank]

MIRENCO, Inc.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

March 31, 2001

NOTE B - STOCK SUBJECT TO RESCISSION OFFER

On August 12, 2000, the Company determined that resales of Iowa-Only shares
by Iowa residents to non-Iowa residents violated certain provisions of the
Securities Act of 1933. In response, the Company undertook an offering to
rescind the earlier Iowa-Only Offering in an offering effective January 26,
2001. The Rescission Offer terminated on February 26, 2001 with the result
that the Company refunded 52,340 shares or $261,700, incurring interest
expense of $14,990. As a result, at March 31, 2001, the 1,508,908 Iowa-Only
Offering Shares, in the amount of $7,544,540, are classified as temporary
equity. These shares will remain in temporary equity until such time as the
violations under the securities laws have been cured. Subsequent to the
close of the Rescission Offer, the Company believes that Iowa-Only Offering
Shareholders are estopped from arguing injury. However, the Company will
continue to be contingently liable to such shareholders during the statute
of limitations, a period of one year from the date of the Rescission Offer
(or three years from the date of the original offer). The Company is unable
to quantify the amount of such contingent liability, the claim must be
brought through individual lawsuit, the Company intends to vigorously defend
any such lawsuit believing it has valid defenses, and, finally, management
considers the probability that it will incur any obligation under such
contingent liability as remote. The Company will continue to assess the
effect of this contingent liability on its financial statements during the
period of the contingent liability.

[Balance of page left intentionally blank]

EXHIBIT 4

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2001

General and Background

We have incurred losses during our fiscal years ended December 31, 2000
and 1999 while developing and introducing our original products and focusing
management and other resources on capitalizing the Company to support future
growth. DriverMax(R) accounts for more than 90% of our product sales during our
development stage, being the most readily marketable of our fully developed
products. HydroFire(R) units account for the remainder. No sales have been
conditioned on other performance or approval. The losses incurred to date are
considered normal for a development stage company. Other costs were incurred
during the past three years to prepare us for commercialization of our products,
including additional management, personnel, consultants and marketing
expenditures. We expect that, as sales increase, there will also be increases in
the total amounts of distribution and selling, general and administrative
expenses. However, as a percentage of sales, these expenses should decline.

From July 30, 1999 through July 30, 2000, we raised $7,806,240 from our
Iowa-Only Offering. On August 12, 2000, we determined that resales of Iowa-Only
shares by Iowa residents to non-Iowa residents violated certain provisions of
the Securities Act of 1933. In response, we undertook an offering to rescind the
earlier Iowa-Only Offering in an offering effective January 26, 2001. The
Rescission Offer terminated on February 26, 2001 with the result that we
refunded $261,700 for 52,340 shares returned and canceled, incurring total
interest expense of $14,990. The net investment of the Iowa-Only Offering was
$7,544,540, having issued 1,508,908 shares. Though the period of the rescission
offer has terminated, we nonetheless may continue to be liable to Iowa-Only
Offering Shareholders under relevant federal laws for a period of up to one year
after discovery of the violation upon which a claim by an Iowa-Only Offering
Shareholder may be based (or three years from the date of the original July 30,
1999 offering). However, since extending this Rescission Offer is believed to
have eliminated any damages element, the potential financial impact of the
Rescission Offer is highly speculative and, in any event, is not expected to
have a material adverse impact on our operations. While unlikely in the opinion
of Mirenco and its securities attorney, in the event claims are brought against
the company and are successful, the post-rescission financial impact could
result in a maximum obligation of $7,544,540, which is the number of outstanding
shares subject to the prior offering that violated section 5 of the Securities
Act and were not rescinded, multiplied by the offering price.

Results of Operations

Sales decreased $11,235 or 35% for the three months ended March 31,
2001 compared to the same period at 2000. During our development stage, we have
continued to focus management and other resources on raising equity capital and
developing our products. This was again true during the first quarter of 2001 as
we worked toward the effective date of the Resission Offer of January 26, 2001
and the termination of the offer on February 26, 2001. Sales have occurred
sporadically during the development stage creating differences between
comparative periods. No trends or seasonality have yet to be identified. During
the first three months of 2001, we began developing a new sales strategy founded
upon collecting emissions data before and after the use of our products and
providing continuing emission testing services of our installed products.

Cost of sales decreased $15,219 or 50% from 2000 to 2001, costs
representing 96% and 74% of sales, respectively. The decrease in cost of sales
is related to the change in management focus during the first quarter to use
production personnel to gather data from existing customers to meet our ongoing
research and development and customer service needs and thus not be charged to
production overhead. Production overhead was further reduced because 2001 sales
were made to existing customers who require no installation assistance from us.
Management believes cost of sales will range between 40% and 60% of sales as
increased unit sales levels cover production overhead and unit costs.

Operating expenses increased $115,798 or 51% from 2000 to 2001. The
increase is primarily attributable to approximately $54,000 additional
accounting services required to complete the Rescission Offer prospectus.
Another $40,000 increase in operating expenses occurred as a result of
implementing a medical benefit plan, hiring one new employee and charging former
production personnel into R&D and customer service functions. Approximately
$12,000 of increased advertising occurred based on recording shareholder
newsletter mailings as advertising expense instead of a cost of fund raising.
Throughout our self-underwritten, Iowa-Only Offering, we updated shareholders
and potential shareholders regarding company developments as a means to raise
awareness and increase sales of the offer. Such costs were recorded as offering
costs, a decrement to shareholders equity. Upon completion of the Iowa-Only
Offering, we continued to incur similar costs; however, these costs were
expensed as incurred. The remaining approximately $10,000 was from other G&A
changes.

Royalty expense for the three months ended March 31, 2001 and 2000 was
3% of sales calculated per the patent purchase agreement with American
Technologies.

Our net loss increased from $211,041 in 2000 to $256,503 in 2001
primarily as a result of increased costs to complete the rescission offer, low
sales, and increased research and development and marketing efforts in 2001 to
collect emissions data from existing customers.

Liquidity and Capital Resources

Since acceptance or the affirmative rejection or failure to respond to
the Rescission Offer does not act as a release of claims, eligible Iowa-Only
Offering Shareholders who have accepted, rejected or failed to respond to the
Rescission Offer would retain any rights of claim they may have under federal
securities laws. Any subsequent claims by an Iowa-Only Offering Shareholder
would be subject to any defenses we may have, including the running of the
statute of limitations and/or estoppel. In general, to sustain a claim based on
violations of the registration provisions of federal securities laws, the claim
must be brought within one year after discovery of the violation upon which the
claim is based in this case, based on the date of the prospectus (or three years
from the date of the original offer). Under the principle of estoppel, the
person bringing a claim must carry the burden of proof of why he or she took no
action under the rescission offer and/or how he or she may have been injured.

We have been evaluating financing and capitalization alternatives as
part of our long-term business plans. These alternatives include the sale of
preferred stock and warrants. To preserve operating funds, we have also
developed a strategic plan that provides for reductions of expenditures and a
prioritization of development options. Further, as a result of this
registration, we could receive up to approximately $2.25 million from the
exercise of options and warrants by selling shareholders. However, since many of
the options and warrants bear an exercise price of $5.00 per share, we
anticipate that selling shareholders will only exercise if the eventual market
price of our

common stock exceeds $5.00 per share. Otherwise, we have no way to estimate the
dollar amount, if any, that we will receive from the exercise of options and
warrants.

Cash Flows for the Three Months Ended March 31, 2001 and 2000

Since our inception, February 21, 1997, through March 31, 2001, our
activities have been organizational, devoted to developing a business plan and
raising capital. Where these costs are indirect and administrative in nature,
they have been expensed in the accompanying statements of operations. Where
these costs relate to capital raising and are both directly attributable to our
offerings and incremental, they have been treated as offering costs in the
accompanying balance sheets. Therefore, all indirect costs, such as management
salaries, have been expensed in the period in which they were incurred.

Net cash used in operating activities for the three months ended March
31, 2001 and 2000 was $171,262 and $223,328, respectively. The use of cash in
operating activities was primarily related to our net losses and significant
changes in working capital components, including payables and receivables.

Net cash used in investing activities for the three months ended March
31, 2001 and 2000 was $240,246 and $9,658, respectively. The use of cash in
investing activities in 2001 was primarily attributed to approximately $230,000
construction costs for our new headquarters facility.

Net cash provided by financing activities during the three months ended
March 31, 2001 and 2000 was $261,700 and $1,744,424, respectively. The source of
the financing was proceeds from the issuance of shares of common stock in our
Iowa-Only Offering and refunds resulting from the Rescission Offer.

Recent Accounting Pronouncements

There are no recently issued accounting standards for which the impact
on our financial statements at March 31, 2001 and 2000 is not known.

Forward-looking Statements

Exhibit 5

DESCRIPTION OF BUSINESS

General

Mirenco, Inc., a development stage company, was organized and
incorporated in the State of Iowa on February 21, 1997. We develop and market
technologically advanced products for throttle control of internal combustion
vehicles that improve fuel efficiency, reduce environmental emissions and reduce
vehicle maintenance. Our primary products are derived from technology patented
in the U.S., Mexico and Canada and are the following: DriverMax(R), DriverMax(R)
Software, HydroFire(R) Injection, HydroFire(R) Fluid and HydroFire(R) Lubricant.
We also intend to supply new and improved versions of our product line utilizing
other input sensors, including Global Positioning System satellite technology
and ambient sensor features. We believe we are the first to provide a product
that incorporates Global Positioning System technology into a throttle-control
application called "EconoCruise(R)," using "Satellite-to-Throttle(TM)"
technology.

As of July 30, 2000, we closed our Iowa-Only Offering, having raised
$7,806,240, selling 1,561,248 shares at $5 per share. As of February 26, 2001,
the termination date of the rescission offer, the Iowa-Only Offering net
investment is $7,544,540 or 1,508,908 shares. See also "Rescission Offer."

We provide our customers with post-sale services where they are
desired. However, most of our customers employ in-house maintenance, trained by
our employees, to install and maintain our products. All our products are
market-ready at this time, not simply in the design stage. During the past two
years and after completing testing, we focused on introducing our products to
the municipal transportation industry. We limited our sales efforts while we
focused on raising the capital necessary to implement our long-term business
plan.

Because we are still a development stage company, and have had
relatively nominal sales to date, we have been dependent upon just a few larger,
sporadic purchases. However, although 91% of 1999 and 100% of 2000 sales were
concentrated among 4 customers, our customers are primarily metropolitan transit
authorities with finite numbers of buses; therefore, we do not believe we are
dependent upon only these customers to maintain future business. Instead, we
intend to use testimonials and real-world performance data from these customers
to decrease, or eliminate, trials and evaluations from future customers'
decision-making and acquisition processes. Nonetheless, past dependence on a
handful of customers could continue unless our envisioned aggressive marketing
campaign is successful.

Our technology originally grew from the ideas and early inventions of
our founder, Dwayne Fosseen. Mr. Fosseen submitted his ideas to the United
States Department of Energy ("DOE") Kansas City Plant operated by AlliedSignal.
Mr. Fosseen sought, and received, a Federal cost-shared "CRADA" (a Cooperative
Research and Development Agreement) program so that his ideas could be jointly
engineered. Under the DOE's CRADA program, the resulting technology design
became the property of Mr. Fosseen. Mr. Fosseen subsequently filed for and
obtained patents for the technology in the United States, Mexico and Canada.
There is no requirement to promote, acknowledge or provide financial
remuneration for the DOE's efforts, although we have approval to display the
DOE's logo on the resulting technology and do so.

Over the next two years, at a minimum, we intend to sell both the
licensing rights to the patented technology and products that are based on the
patents. We believe that the aftermarket of existing automobiles represents a
potentially substantial market for our products as add-ons. We further believe
that the automobile original equipment manufacturers represent a potential
market for the licensing rights to our patents.

DriverMax(R), currently marketed and in production, is an environmental
product that improves engine exhaust emissions while increasing fuel mileage and
reducing vehicle-maintenance costs. DriverMax(R) is primarily targeted to heavy
start-stop vehicles like buses, trash trucks and construction vehicles. The
benefits recognized from the installation of DriverMax(R) are accomplished by
precise programmable computer management of the vehicle's throttle position. We
believe DriverMax(R) is unique since it has demonstrated improvements without
the usual unacceptable negative performance tradeoff (between fuel mileage,
emissions and speed) found in competing products, is configurable via software
parameters, and self-adjusts as a function of the age of the vehicle.

The HydroFire(R) System, currently marketed and in production, is a
sophisticated superset of the DriverMax(R) technology, providing all of the
benefits of the DriverMax(R) plus the additional benefit of cutting oxides of
nitrogen ("NOx") emissions under performance conditions where NOx is produced.
Specifically, NOx is produced under heavy loads and high engine temperatures.
When these conditions occur, HydroFire(R) Injection injects a patented fluid,
HydroFire(R) Fluid, into the engine to combat the Nox production by
approximately 50%. The HydroFire(R) Fluid is a patented water-alcohol-lubricant
mixture for which we have patented the blending process. Specifically, water
cuts the NOx production, alcohol serves as an antifreeze for the water, and
HydroFire(R) Lubricant serves to thwart the potentially solvent and/or corrosive
characteristics of the alcohol in the engine and/or storage containers.
HydroFire(R) Systems are primarily targeted to heavy transport vehicles,
including as inner and inter-city buses and trucks.

EconoCruise(R), currently in development through a Fund-in
Work-for-Others agreement with the U.S. DOE's Kansas City Plant, operated by
Honeywell (previously operated by Allied Signal), is a highly sophisticated
throttle-control system that provides advanced levels of "intelligence" to
common cruise control technology. EconoCruise(R) utilizes Global Positioning
System signals to "know" the topography of the road ahead, thereby allowing the
vehicle to best manage throttle and emissions. For example, EconoCruise(R)
allows a user-programmed limit of momentum to be gained on downhill sections and
limits the traditional uphill over acceleration found in standard cruise
controls. Additional sensors can and will be employed within EconoCruise(R) to
provide further "intelligence" to the system - for example, calculating wind
direction/speed/resistance, real time engine performance (RPM, MPG, temperature,
emissions, etc.) as well as the potential of automatically "knowing" the speed
limit and terrain-imposed areas of acceleration and deceleration based on
programming the software and identifying the vehicle's position according to
Global Positioning System technology.

EconoCruise(R) is beyond the conceptual stage and is currently under
development from both the software intelligence perspective as well as the
physical design for installation on existing vehicles. The technology was proven
and demonstrated in August of 1999 in a publicized demonstration using a
cross-country truck on route from Des Moines, Iowa, to Kansas City, Missouri.
The route was first driven by a driver skilled at fuel efficiency; his actions
were programmed into a prototype EconoCruise(R) unit and then re-run by an
average driver, yielding approximately 20% fuel savings across the route.

Having worked through the early design and proving phases of
EconoCruise(R), we have executed a "Funds-in Work For Others Agreement" with the
DOE's Kansas City plant, whereby industry procures unique services from
government laboratories to build the product. We anticipate both the physical
product will be marketable to the population of existing vehicles and that
rights to the patented technology and proprietary design work will be marketable
to automakers.

Future applications of the patents are being investigated in respect to
production costs, market size, and opportunity. Examples of a potential product
include a "Teenage DriverMax(R)" where, for example, young drivers could be
limited in their ability to go from zero to sixty in less than 10 seconds.
Currently, our products are designed for diesel engines and are being adapted to
gasoline engines. This adaptation will open a considerably larger market for us.
Additionally, for example, using Global Positioning System technology, city
vehicles could be automatically changed into a throttle mode producing fewer
emissions when inside a programmed radius of the center of the city. Given that
overacceleration generates waste and excessive emissions, more "intelligent"
management of the throttle holds the benefit of both an economic and
environmental impact, globally. With our patented technology, the future
"intelligence" of the throttle is now only limited by what can be programmed
into a small on-board computer, and, as provided by Mirenco, will be broadly
branded "SmartFoot(TM)" technology.

Product Market

We have built our market strategy on two marketable assets:

(1) Licensing the patents; and
(2) Product sales

Patent licensing is targeted to automakers. We have identified two
dozen major automakers whose markets include the three countries in which we
hold patents: the U.S., Mexico, and Canada. We intend to license our patents to
as many of these automakers as possible for a relatively nominal license fee and
per vehicle royalty, which we believe will have a negligible effect on the
retail price of new autos. Our intent is to provide nonexclusive

licensing of the patented technology, so that automakers will install the
technology in an effort to reduce emissions, save fuel, and decrease maintenance
on all their newly manufactured vehicles.

We are optimistic that, presuming a significantly affordable licensing
fee is charged, automakers will choose to license the technology and avoid the
possibility of future patent infringement legal action. We will use the proceeds
of these license fees to build and execute our business into the in-service
vehicle aftermarket. We envision that automakers will take the lead in producing
more efficient and cleaner vehicles using our technology, while we will work to
help clean up emissions and save fuel in the market of vehicles already in
service.

We plan to introduce our current products into a variety of markets
including:

(1) Inner and inter-city transit authorities;
(2) Waste disposal fleets (e.g., trash trucks);
(3) School buses;
(4) Low-floor buses (e.g., rental car buses used for airport
customer pick up);
(5) Commercial fleet owners and operators (e.g., Federal Express,
UPS, Coke, etc.); and
(6) Manufacturers and maintenance organizations specializing in
the above segments.

We believe the market for our products extends globally, beyond the
borders of our patented technology in the U.S., Mexico and Canada. European and
Middle Eastern countries, for example, pay approximately two to three times the
U.S. cost of fuel.

The macro-perspective market for our products includes all internal
combustion vehicles. Our initial products were designed for a segment of this
population specifically defined by diesel-burning, electronic engines (i.e.,
effectively all diesel-burning vehicles built after 1990). We have now created a
modification to the initial products that opens the market to both electronic
and mechanical engines, thereby increasing the potential market size
dramatically by including older vehicles. In fact, many foreign countries are
experiencing severe pollution problems and high fuel costs while using a
majority of older vehicles which are the worst emissions producers and the least
fuel efficient. This product modification also allows the products to be
marketed into traditional gas-powered passenger vehicles.

The U.S. and global population of in-service vehicles is enormous.
According to the 1999 U.S. Department of Energy Transportation Data Book, there
are approximately 125,000,000 automobiles and 76,000,000 trucks in the U.S.
These figures represent 26.7% and 41.3% of the world's automobile and bus/truck
registrations, respectively. The average age in the U.S. is 8.7 and 8.3 years
for cars and trucks, respectively. With age and natural deterioration and
degradation of the combustion process, these vehicles are less efficient, burn
more fuel, and produce more emissions; thus they can realize significantly
better environmental and economic benefits from our technologies.

Vehicles classified as "heavy" represent an immediate market for our
DriverMax(R) product as well as our new EconoCruise(R) technology. There are
approximately seven million vehicles classified as "heavy" in the U.S.,
averaging between six and seven miles per gallon. These vehicles are virtually
all professional, business-related vehicles and regularly experience extremely
high fuel expense. Consequently, we believe that this particular segment of the
vehicle population will be sensitive to higher fuel prices and be eager to adopt
new technologies that not only save fuel but also reduce emissions and decrease
maintenance expenses.

A subset of the "heavy" classification is school buses. There are
approximately 500,000 school buses in the U.S., carrying over 23 million
students. These school buses alone represent a tremendous market for our
DriverMax(R) technology today, given their high frequency start-stop routes and
non-highway mileage.

According to compilations derived from various sources, including the
U.S. Department of Energy Transportation Data Book and Polk, at current rates of
production, approximately 400,000,000 new vehicles will be manufactured
world-wide during the next ten years. With an estimated scrap rate and the
existing number of vehicles, at the end of the next ten years, there will be
approximately 1.4 billion vehicles on Earth. Our intent is to license our
technology for installation in as many of the 400,000,000 new vehicles as
possible over the next ten years while we market and sell into the existing
after market.

We believe that Mirenco can be a significant factor in a total market
exceeding $2 billion, based upon a 1998 University of Northern Iowa market
research and analysis survey which considered only early models of DriverMax(R).
This survey was conducted prior to our introduction of our EconoCruise(R)
technology.

Sales and Marketing

Our philosophy is to drive our cost of goods down far enough that the
suggested retail price of our products can be lowered to the point where the
payback in fuel savings is measured within one year. Consequently, our intent is
to build a streamlined sales and marketing operation and offer the products at
the lowest suggested retail price possible while maintaining an appropriate
gross profit per product.

We intend on utilizing various sales methods including distributors,
original equipment manufacturers, regional commissioned salespeople and
independent mechanics. All of the potential sales models will be tested and
utilized to varying degrees. The independent mechanic model is targeted directly
towards mechanics and engine repair shops that can serve as both installation
service sites and retail outlets.

We currently have existing contacts and prospective distributors and
regional commissioned salespeople throughout the U.S., Canada and Mexico.
Furthermore, the Des Moines Area Community College offers one of a number of
certified mechanics schools around the U.S., and has expressed an interest in
becoming a certified Mirenco training center for Mirenco-certified independent
mechanics.

To date, we have consciously limited our sales efforts and
intentionally selected prospects that would help in building the proof and
customer foundation that will be leveraged in future sales. These sales began as
initial conversations regarding the benefits of our products and led to
installation and testing of several demonstration units. Once the technology was
proven, our customers worked through their signature approval process, leading
to purchase orders and full installation of sold units. We intend to use
testimonials and real-world performance data from these customers to decrease,
or eliminate, demonstration trials and evaluations from future customers'
decision-making and acquisition processes. Existing customers, installations,
and evaluations include Louisville; Cedar Rapids; Grand Canyon; Overland Custom
Coach (a Canadian bus manufacturer); Memphis; Iowa Department of Transportation;
Ann Arbor; Coke; Chicago; Pepsi; Mexico City; St. Louis; Sioux City; and the
Steve Forbes Presidential Campaign Bus.

We are hopeful that the licensing of our products to automakers will
result in increased consumer and user awareness of our products. We will
additionally use aggressive sales and marketing programs, including
participation in appropriate domestic and international trade shows and major
print media.

The overall market for our products continues to become more accepting
and fertile as environmental regulatory and oversight agencies like the U.S.
Environmental Protection Agency continue to create more stringent compliance
standards for transportation. Similarly, the California Air Resource Board is
generally regarded as the most stringent state environmental agency in the
United States. We have obtained a California Air Resource Board exemption number
and approval to sell within California. This exemption number is displayed on
our DriverMax(R) product.

Production Suppliers

Our production has been outsourced to a firm with extensive experience
in the field of computerization and production of high performance, tolerance
and precision equipment. We are dependent upon outside entities and market
conditions for our revenues. I.C.E. Corp., an FAA certified electronic
manufacturing company located in Manhattan, Kansas, has been contracted to
produce our DriverMax(R)and possibly other electronic products which we
distribute. We are reliant on I.C.E. Corp. to provide electronic product-quality
protection for our products, sales of which will generate revenues during our
early stage product distribution. Nonperformance by, or poor service from,
I.C.E. Corp. could have a damaging effect on our relationships with our
customers.

Our formal relationship with I.C.E. Corp. is an arm's-length
arrangement whereby we provide detailed production specifications and I.C.E.
Corp. produces products to those specifications in the quantities ordered.
Generally, all materials required to manufacture and assemble our product line
are readily available and are shelf items. Orders are typically manufactured and
delivered within, at most, a ten-week time frame. Payment terms are

standard for the industry. We are not required to order or accept delivery of
any product based on a predetermined time schedule, and production unit costs
decrease with increasing quantities.

At the present time, we intend to continue having our current and
future products manufactured by outside companies that can meet our
specifications for high quality and reliability. Based on our knowledge of
various manufacturers, we believe that, if the need ever arose, we could develop
alternative suppliers with production capabilities to assure a continuing output
of product. Our management has contacted other companies capable of producing
our products if the current supplier is unable to produce our anticipated volume
levels.

Competition

The market for our products and services is characterized by rapid
technological developments, frequent new product introductions and evolving,
varying industry and regulatory standards. The emerging character of these
products and services and their rapid evolution will require us to effectively
use leading technologies, continue to develop our technological expertise,
enhance our current products and services, and continue to improve the
performance, features and reliability.

We believe, considering the proprietary nature of our current
DriverMax(R) and HydroFire(R) control system and our new products utilizing
Global Positioning System technology, there is no other known automotive
retrofit device that can compete with our current or contemplated spectrum of
offerings. If there are products that perform the same functions as our
products, we believe our products are among the most economical, effective
options available for buyers of retrofit emission reduction devices.
Furthermore, if substitute products are introduced by competitors that infringe
on the patents, we will vigorously defend our rights.

Certain identified competitive products include: portable fuel cells
that combine hydrogen, which can be obtained from methanol, natural gas or
petroleum, and oxygen from air without combustion to generate electricity;
biofuels that use crops, corn stalks and trees to make cleaner, renewable fuels
for cars and buildings; cleaner burning gasoline engine cars; hybrid
electric/gasoline motors and electric vehicles. However, many, if not all, of
these alternatives, are considered years away; expecting for example that it may
take decades before a mass-marketable car using fuel cell technology is
available. Also, these alternatives may create a potential solution for
emissions and fuel economy but do not yet address the power, convenience and
reliability needs of automobile drivers.

In consideration of perceived competition, it is important to note that
Mirenco's technologies do not technically compete with most, if not all, of
their respective solutions. Mirenco's technologies and solutions target the
wasted fuel and excess emissions produced as a result of continuous,
unrecognized over throttling of vehicles under varying conditions. Alternate
(i.e., "competitive") solutions generally work to either filter emissions and/or
assist the engine in burning more of the excess fuel directed to the engine as a
result of over throttling. With this understanding and distinction, we intend to
make the industry aware that our products are not competitive to, but in fact
cooperate with other solutions.

Potential competitors include engine makers and auto manufacturers such
as Navistar (NYSE: NAV) and Detroit Diesel (NYSE: DDC) who are working to make
more efficient, cleaner engines; future technology researchers and manufacturers
such as FuelCell Energy (NasdaqNM: FCEL) and Ballard Power Systems (NasdaqNM:
BLDP) who are working to advance the newest technologies of electrical power
generation from hydrogen; physical and chemical exhaust screens, such as
KleenAir Systems (OTCBB: KAIR) NOxMaster that injects an ammonia-based product
into the exhaust; entirely new fuel mixtures such as that being developed by
Clean Diesel Technologies (OTCBB: CDTI); and various forms of air mixture
devices, magnets and engine add-ons. It is important to note that our solution
is based on a completely different paradigm from that of these potential
competitors in that we work to more precisely deliver an appropriate amount of
fuel to the engine for the operator's desired vehicle movement. In other words,
our competitors generally seek solutions after the fuel is burned, while we work
to solve the emissions problem before it happens.

Distribution

We currently utilize independent representatives and organizations for
the delivery of our products as well as for direct sales and marketing. We
believe that various methods will be employed for varying markets, and we will
utilize the most economical means available as our development continues. As
part of the anticipated use of proceeds detailed in our Iowa-Only Offering, we
intend to construct a state-of-the art distribution and warehousing

facility for our products. The facility will include sufficient office space to
accommodate our management, sales support, and expected growth in staff. We have
sought and received preliminary approval for economic development assistance
from the state and county for this proposed facility.

We intend to utilize technology wherever possible to drive an in-house
sales operation focused on large fleet owners, transit authorities, licensing
opportunities, and the federal government. Smaller fleets and international
sales will be managed indirectly through one of a number of distribution
arrangements.

Government Regulation

As public concern over air quality grows, we believe the marketplace
grows more fertile for our technologies. In the U.S., the EPA, under the Clinton
Administration, has created tighter emissions regulations that affect fuel
suppliers, automakers and operators. As President Clinton stated in his January
2000 State of The Union Address, "In the new century, innovations in science and
technology will be the key not only to the health of the environment, but to
miraculous improvements in the quality of our lives and advances in the
economy." We believe that we are one of the companies to lead the way in
providing new technologies to assist in the national and international effort to
deliver a cleaner environment to future generations.

The U.S. is not alone in its efforts to combat pollution. For example,
Canada's air quality regulatory agency has recognized a growing air quality
concern and is mandating similar regulations and standards to those being
promoted within the U.S. Mexico is currently experiencing tremendous air quality
problems in its highly populated areas. Mexico City officials work to regulate
heavy emissions-producing vehicles by not allowing them to operate on
consecutive days unless they pass emissions standards tests. We installed
DriverMax(R) on a large truck in Mexico City and were able to pass the tests,
thereby permitting the daily use of the vehicle for its inner city commercial
delivery route.

Developed nations around the world are working to promote a healthy
environment by identifying and taking action on sources of pollution.
Furthermore, based on our direct experience in Mexico City, feedback from
potential overseas distributors and management opinion, many of these countries
allow longer useful lives for their vehicles than we accept in the U.S.
Consequently these vehicles are likely to emit more smoke and polluting elements
and burn excessive amounts of fuel. As their government air quality officials
continue to recognize and act on vehicle emissions, the market for our products
becomes easier to penetrate.

Currently, all conventional vehicles, as well as most alternate fuel
vehicles and certain retrofit technologies legally sold in the United States,
must be "certified" by the EPA to qualify for the "Low Emission Vehicle" ("LEV")
classification necessary to meet federal fleet-vehicle conversion requirements.
Our products have met, and management believes the products will continue to
meet, these certification requirements. However, since this is an area in which
the government is continually updating and legislating or mandating new
requirements, we are uncertain whether our products will continue to be
certified. Whenever possible, we intend to maintain our certification.

We are aware that countries outside the U.S. are considering their own
regulatory requirements in the area of clean air and engine emissions. In order
to improve the marketability of our products in those countries, we will conform
our products to these regulations if it is economically feasible to do so.

We believe our products to be "retrofit devices" as defined under EPA
regulations. We are, however, subject to the regulatory risk that EPA may
construe distribution of the products to be also governed by "fuel additive"
regulations. These more stringent regulations sometimes require scientific
testing for both acute and chronic toxicity, which is not required for approval
of pollution control products deemed as "retrofit devices." Although scientific
testing would be facilitated by the fact that alcohol is a substance used in the
transportation and many other industries and about which a great deal is already
known concerning toxicity, additional regulatory compliance could substantially
lengthen the period of time before HydroFire(R) could be widely commercialized.
We believe the EPA "fuel additive" regulations do not apply to our DriverMax(R)
products, since our product does not involve the introduction of additives into
the engine air intake system, as those terms are defined in EPA regulations and
generally understood in the automotive engineering community. However, it is
possible that a competitor who manufactures fuel additives that are subject to
the more stringent "fuel additive" regulations may raise the issue with the EPA
in order to interfere with or delay the commercialization of competing with our
technology.

We are not aware of any proposed regulatory changes that could have a
material adverse effect on our operations and/or sales efforts. Further, we have
not been required to pay any fines for and are not aware of any issues of
noncompliance with environmental laws.

Patents and Trademarks

Effective April 30, 1999, we executed an agreement to transfer the
ownership of the patents and trademarks from American Technologies to us. Our
founder and principal shareholder, Dwayne Fosseen, owns 49.9% of American
Technologies, as discussed under the heading "Certain Relationships and Related
Transactions." We will pay American Technologies a 3% royalty of annual gross
sales for a period of 20 years, beginning November 1, 1999. The agreement
required the payment of $25,000 at the time we met the Iowa-Only Offering
$500,000 minimum offering. Approximately one-half of the amount due was paid on
December 13, 1999 and the other one-half was paid on February 15, 2000, being
distributed to Mr. Fosseen. A $225,000 payment became due American Technologies
per the agreement once we had raised $5,000,000 in the Iowa-Only Offering. The
$225,000 was paid in August 2000. Prior to the purchase of the patents at
November 1, 1999, we paid royalties to American Technologies for the use of and
opportunity to market the patents and trademarks. The payments were calculated
from January 1 through October 31, 1999 as the greater of 3% of actual sales or
3% of sales calculated at an established unit price ($495) and minimum
quantities (40 to 80 units per month). We paid royalties in 1998 and earlier at
the unit price of $950 and minimum quantities of 20 to 40 units per month. This
means of calculating royalties was terminated with our purchase agreement of
November 1, 1999.

We believe the execution of this purchase agreement, with the
associated transfer of ownership to us, will eliminate any uncertainty that may
have existed in ensuring our exclusive distribution and manufacturing rights.
While we do have a right of first refusal to purchase any additional patents
from American Technologies as they become available, we do not anticipate that
any patents will be so forthcoming and that we do not need any other patents to
implement our business plan. The patents covered by the above referenced
agreement are:

1. United States Patent Number 4,958,598, issued September 25, 1990, entitled
"Engine Emissions Control Apparatus Method."
2. United States Patent Office, 5315977, "Fuel Limiting Method and Apparatus
for an Internal Combustion Vehicle" issued May 31, 1994.
3. Canadian Patent Number 1,289,430, issued September 24, 1991, entitled
"Engine Modification Apparatus Fuel."
4. Mexican Patent Number 180658, "Fuel Limiting Method and Apparatus (Staged
Fueling). Registration date January 17, 1996.
5. A Canadian patent application filed on April 13, 1992 is still pending. The
patent application is entitled "Fuel Limiting Method and Apparatus for an
Internal Combustion Vehicle."

In addition, we have filed for and obtained the following Registered
Trademarks:

(1) HydroFire(R) Fluid (5) EconoCruise(R)
(2) HydroFire(R) Injection (6) "SmartFoot(TM)"
(3) HydroFire(R) Lubricant (7) "Satellite-to-Throttle(TM)"
(4) DriverMax(R)

Employees and Consultants

We currently have ten full-time employees, with no part-time employees.
There have been no management-labor disputes, and we are not a party to any
collective bargaining agreement. Employees currently have minimal
Company-provided employee benefits. In order to attract the appropriate
personnel to assist the company in our future growth, we are analyzing
additional benefits and improvements to our existing benefits program. With the
conclusion of the Rescission Offer and the unrescinded $7,544,540, we are in the
process of establishing appropriate incentive compensation programs which are
currently being reviewed and approved by our Compensation Committee and/or our
Board of Directors.

Facilities; Description of Property

We currently do not own any properties for the running of our business.
However, we have executed a one (1) year lease with Fosseen Manufacturing
requiring monthly payments of $1,200 for the use of 2,400 square feet of
facilities for our offices and operations. Upon completion of the contemplated
distribution center, the lease will be terminated and all employees will be
housed in a combination 21,600 square foot office, warehouse and distribution
facility. As discussed at "Certain Relationships and Related Transactions," the
1.2 acres of land for the construction, located in Radcliffe, Iowa, is owned by
Dwayne Fosseen, principal shareholder of Mirenco. We are leasing the land for
the new facility on a perpetual term at zero monthly rent. Our Board of
Directors unanimously approved the lease. Mr. Fosseen recused himself from the
vote. As a means to protect the Company assets from unknown possible litigation
relating to future business opportunities, the lease was structured so that the
lease can be terminated in the event of our bankruptcy or other default. In the
unlikely event of termination, we must vacate the property. At the decease of
Mr. Fosseen, we have the option to purchase the land at the then undeveloped
fair market value.. Construction of the distribution center began in August 2000
and is expected to be complete by May 2001.

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