Edgar Filing: MIRENCO INC

From 10-QSB

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-QSB

(Mark One)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE

EXCHANGE ACT

For the transition period from to

Commission file number 333-41092

Mirenco, Inc.

(Exact name of small business issuer as specified in its charter)

Iowa		39-1878581
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

206 May Street, P.O. Box 343, Radcliffe, Iowa 50230

(Address of principal executive offices)

(515) 899-2164

(Issuer’s telephone number)

(Former name, former address and former fiscal year, if changed since last report)

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be filed by Section l2, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes ¨ No ¨ Not applicable

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 13,284,687 shares of no par value common stock as of September 30, 2002.

Transitional Small Business Disclosure Format (Check one): Yes ¨ No x

Cautionary Statement on Forward-Looking Statements.

The discussion in this Report on Form 10-QSB, including the discussion in Item 2 of PART I, contains forward-looking statements that have been made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations, estimates and projections about the Company’s business, based on management’s current beliefs and assumptions made by management. Words such as “expects”, “anticipates”, “intends”, believes”, “plans”, “seeks”, “estimates”, and similar expressions or variations of these words are intended to identify such forward-looking statements. Additionally, statements that refer to the Company’s estimated or anticipated future results, sales or marketing strategies, new product development or performance or other non-historical future results, sale or marketing strategies, new product development or performance or other non-historical facts are forward-looking and reflect the Company’s current perspective based on existing information. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results and outcomes may differ materially from what is expressed or forecasted in any such forward-looking statements. Such risks, and uncertainties include those set forth below in Item 1 as well as previous public filings with the Securities and Exchange Commission. The discussion of the Company’s financial condition and results of operations included in Item 2 of PART I should also be read in conjunction with the financial statements and related notes included in Item 1 of PART I of this quarterly report. These quarterly 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 10K filed on April 1, 2002. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

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PART I – Financial Information

Item I. Financial Statements

MIRENCO, Inc.

(a development stage company)

BALANCE SHEETS

(unaudited)

	September 30, 2002			September 30, 2001
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	2,225,942		$	3,623,337
Accounts receivable		5,665			22,685
Inventories		188,094			111,580
Other		46,338			65,181

Total current assets		2,466,039			3,822,783

PROPERTY AND EQUIPMENT, net		1,352,517			1,360,731

PATENTS AND TRADEMARKS, net of accumulated amortization of $3,430 and $2,368 in 2002 and 2001, respectively		6,370			7,432

OTHER ASSETS		—			11,542
TOTAL ASSETS	$	3,824,926		$	5,202,488


LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts payable	$	33,621		$	67,750
Notes payable-current portion		17,705			—
Accrued liabilities		2,276			16,625

Total current liabilities		53,602			84,375

COMMITMENTS AND CONTINGENCIES
Notes payable-long term portion		19,257			—

STOCK SUBJECT TO RESCISSION OFFER
Common stock, no par value; 1,508,908 shares issued and outstanding		7,544,540			7,544,540

STOCKHOLDERS’ DEFICIT
Common stock, no par value; 30,000,000 shares authorized,11,775,779 and 11,765,779 shares issued and outstanding at September 30, 2002 and 2001, respectively		760,010			751,010
Additional paid-in capital		1,714,954			1,714,954
Deficit accumulated during development stage		(6,267,437	)		(4,892,391	)

		(3,792,473	)		(2,426,427	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	3,824,926		$	5,202,488

MIRENCO, Inc.

(a development stage company)

STATEMENTS OF OPERATIONS

(unaudited)

	Nine months ended September 30, 2002			Nine months ended September 30, 2001			Period from February 21, 1997 (inception) to September 30, 2002
Sales	$	77,957		$	62,526		$	513,325

Cost of sales		46,308			25,993			493,689

Gross profit		31,649			36,533			19,636

Salaries and wages		520,669			541,551			1,986,566
Stock-based compensation		9,000			—			1,942,054
Royalty expenses		2,334			1,876			26,501
Marketing and advertising		66,770			319,173			526,381
Other general and administrative expenses		482,014			594,401			2,322,891

		1,080,787			1,457,001			6,804,393

Loss from operations		(1,049,138	)		(1,420,468	)		(6,784,757	)

Other income (expense)
Interest income		59,644			186,023			532,905
Interest expense		(555	)		—			(15,585	)

		59,089			186,023			517,320

NET LOSS	$	(990,049	)	$	(1,234,445	)	$	(6,267,437	)

Net loss per share available for common shareholders—basic and diluted	$	(0.07	)	$	(0.09	)

Weighted-average shares outstanding— basic and diluted		13,281,390			13,266,410

MIRENCO, Inc.

(a development stage company)

STATEMENTS OF OPERATIONS

(unaudited)

	Three months ended September 30,2002			Three months ended September 30, 2001
Sales	$	18,840		$	19,454

Cost of sales		11,862			2,191

Gross profit (loss)		6,978			17,263

Salaries and wages		184,563			191,728
Stock-based compensation		—			—
Royalty expenses		561			584
Marketing and advertising		35,831			80,644
Other general and administrative expenses		171,261			181,396

		392,216			454,352

Loss from operations		(385,238	)		(437,089	)

Other income (expense)
Interest income		16,206			43,587
Interest expense		(320	)		—

		15,886			43,587

NET LOSS	$	(369,352	)	$	(393,502	)

Net loss per share available for common shareholders—basic and diluted	$	(0.03	)	$	(0.03	)

Weighted-average shares outstanding— basic and diluted		13,281,390			13,266,410

MIRENCO, Inc.

(a development stage company)

STATEMENTS OF CASH FLOWS

(unaudited)

	Nine months ended September 30, 2002			Nine months ended September 30, 2001			February 21, 1997 (inception) to September 30, 2002
Cash flows from operating activities
Net loss	$	(990,049	)	$	(1,234,445	)	$	(6,267,437	)
Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities:
Stock-based compensation		9,000			—			1,942,054
Depreciation and amortization		67,445			42,095			149,678
(Increase) decrease in assets:
Accounts receivable		6,190			17,682			(5,665	)
Inventories		(23,564	)		(19,079	)		(188,094	)
Other		11,287			102,579			28,512
Increase (decrease) in liabilities:
Accounts payable		(13,842	)		48,391			33,621
Accrued liabilities		(10,890	)		(33,926	)		2,276

Net cash used in operating activities		(944,423	)		(1,076,703	)		(4,305,055	)

Cash flows from investing activities
Purchase of property and equipment		(68,396	)		(750,043	)		(1,498,765	)
Purchase of patents and trademarks		—			—			(9,800	)

Net cash used in investing activities		(68,396	)		(750,043	)		(1,508,565	)

Cash flows from financing activities
Issuance of notes payable		36,962			—			36,962
Proceeds from sale of stock, net of offering costs		—			19,720			8,504,500
Refund of common stock in rescission offer		—			(261,700	)		(261,700	)
Distribution to stockholders		—			—			(240,200	)

Net cash provided by (used in) financing activities		36,962			(241,980	)		8,039,562

Change in cash and cash equivalents		(975,857	)		(2,068,726	)		2,225,942

Cash and cash equivalents, beginning of period		3,201,799			5,692,063			—

Cash and cash equivalents, end of period	$	2,225,942		$	3,623,337		$	2,225,942

Supplementary disclosure of cash flow information:
Cash paid during the year for:
Interest	$	555		$	14,990

MIRENCO, Inc.

(a development stage company)

NOTES TO FINANCIAL STATEMENTS

September30, 2002 and 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 global marketing company that performs testing services and distributes a variety of automotive and aftermarket products for which they have exclusive licensing rights. The products primarily reduce emissions and increase vehicle performance.

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.

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 are amortized on the straight-line method over their remaining legal lives of approximately 7 years. The company recorded amortization expense of $735 and $504 for the nine months ended September 30, 2002 and 2001, respectively.

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.

MIRENCO, Inc.

(a development stage company)

NOTES TO FINANCIAL STATEMENTS—CONTINUED

September 30, 2002 and 2001

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued

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 nine months ended September 30, 2002 and 2001 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.

13. Advertising

Advertising costs are charged to expense as incurred and were $66,770 and $319,173 for the nine months ended September 30, 2002 and 2001, respectively.

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 $126,054 and $97,588 for the nine months ended September 30, 2002 and 2001, respectively.

MIRENCO, Inc.

(a development stage company)

NOTES TO FINANCIAL STATEMENTS—CONTINUED

September 30, 2002 and 2001

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued

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 accounting principles generally accepted in the United States of America, 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.

19. 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 10K filed on April 1, 2002.

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. As a result, the Iowa-Only Offering Shares, 1,561,248 shares, in the amount of $7,806,240, were classified as temporary equity.

Once approved for distribution, the Rescission Offer was outstanding from January 26, 2001 to February 26, 2001. During this period Iowa-Only Offering Stockholders had the option to reject the Rescission Offer formally in writing, to take no action within the thirty days, thereby retaining their outstanding Iowa-Only Offering Shares, or to accept the Rescission Offer formally in writing. Seventy-one formal rescission acceptances representing 52,340 shares were received from Iowa-Only Offering Stockholders, resulting in a total of $276,690 being paid in cash to these stockholders for the return of their original investment plus $14,990 in interest at 8% annually.

As a result of the Rescission Offer, the Company 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. The Company believes that Iowa-Only Offering Stockholders are estopped from arguing injury now that the Iowa-Only Offering is closed. However, the Company will continue to be contingently liable to such stockholders during the statute of limitations, a period of three years from the date of the original sale of Iowa-Only Offering Shares. The Company is unable to quantify the amount of such contingent liability because 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 to be remote. The Company will continue to assess the effect of this contingent liability on its financial statements during the three-year period.

During the three-year period that the Company continues to be contingently liable, to the extent that any of the Iowa-Only Offering Stockholders 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.

MIRENCO, Inc.

(a development stage company)

NOTES TO FINANCIAL STATEMENTS—CONTINUED

September 30, 2002 and 2001

NOTE C—STOCK WARRANTS

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 were originally exercisable at any time prior to June 15, 2002. Total shares issued were 66,979, which resulted in proceeds of $334,895. At June 30, 2002 and 2001, the Company had 267,916 outstanding warrants. On April 24, 2002 the Company’s Board of Directors voted to extend the expiration date for these warrants to 5:00 PM Central Daylight Savings Time (“CDST”) on June 24, 2004.

NOTE D—STOCK COMPENSATION

On April 25, 2002, directors, Jerrold Handsaker and Donald Williams, were each granted 5,000 shares of common stock as compensation for their past service to the Company as directors since February, 1997. In conjunction with the issuance of the shares, the Company recorded compensation expense of $9,000, which approximated the fair market value of the shares at the time of issuance. There was no stock-based compensation during the nine months ended September 30, 2001.

NOTE E—LONG-LIVED ASSETS

In August 2001, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 supercedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of”. SFAS No. 144 establishes a single accounting model for long-lived assets to be disposed of by sale and requires that those long-lived assets be measured at the lower of carrying amount or fair value less cost to sell, whether reported in continuing operations or in discontinued operations. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. The Company is in the process of assessing the impact that the adoption of this standard will have on its financial position and results of operations. As part of the assessment process an appraisal of the corporate headquarters building is currently in progress and should be completed by year-end.

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Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General and Background

We have incurred annual losses since inception while developing and introducing our original products and focusing management and other resources on capitalizing the Company to support future growth. DriverMax^® accounts for approximately 73% of our product sales during our development stage, being the most readily marketable of our fully developed products. HydroFire^® accounts for the remainder. No sales have been conditioned on other performance or approval. Relatively high management, personnel, consulting and marketing expenditures have been incurred since inception in preparation for the commercialization of our products.

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 52,340 shares or $261,700, incurring interest expense of $14,990. As a result, at September 30, 2002, 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. Now that the Rescission Offer is closed, management believes that Iowa-Only Offering Stockholders are estopped from alleging injury. However, we will continue to be contingently liable to such stockholders during the statute of limitations, a period of three years from the date of the original sale of Iowa-Only Offering Shares. We are unable to quantify the amount of any such contingent liability because the claim must be brought through individual lawsuit, which we would vigorously defend with valid defenses, and we consider the probability of any obligation under such contingent liability to be remote. We will continue to assess the effect of this contingent liability on our financial statements during the statute of limitations.

Liquidity and capital resources

Cash and Equivalents are currently the Company’s only source of liquidity. On July 29, 2002 the company purchased four vehicles which had previously been leased from the majority stockholder for approximately 18 months under an open-ended rental arrangement. To complete the transaction the company signed a two-year promissory note with Randall-Story State Bank in the amount of $19,385 for the assumption of two vehicle notes previously held in the majority stockholder’s name. In addition the company signed another two-year promissory note with the majority stockholder in the amount of $20,615 for the purchase of the two remaining fleet vehicles at fair market value. The Company is currently researching options with regard to its land lease which could result in a re-negotitation of the current lease or a purchase of the land from the majority shareholder. In conjunction with this process, an appraisal of the corporate headquarters building and the land underneath is currently in progress and should be completed by year-end. The changes in Cash and Equivalents for the three months ended September 30, 2002 and 2001 can be reviewed in the Statements of Cash Flows in PART I Item 1 above. While the amount is difficult to predict, management still anticpates that some revenue will be realized by year-end from the arrangement with the Iowa Foundation for Educational Administration, Inc. for emissions testing services being conducted on the Iowa School Bus fleet.

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 Stockholders who have accepted, rejected, or failed to respond to the Rescission Offer retain any rights of claim they may have under federal securities laws. Any subsequent claims by an Iowa-Only Offering Stockholder are 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 sale (or three years from the date of the original sale of Iowa-Only Offering Shares). 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.

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.

Results of Operations

Gross sales for the nine months ended September 30, 2002 were $15,431 or 24% greater than gross sales for the same time frame one year ago. Increased DriverMax^® sales account for 78% of the total increase in gross revenue with the remaining increase attributable to Hydrofire^® Fluid sales and other maintenance revenue. Cost of sales for the nine months ending September 30, 2002 includes labor allocation adjustments which were not included in the 2001 cost of sales until the fourth quarter of 2001. The remaining direct cost of sales were 25% higher during the nine months ended September 30, 2002 than the nine months ended September 30, 2001 directly corresponding to the increase in gross sales for the same time frames. Management continues to search for effective methods of selling and distributing our products and services.

A total of 15 individuals were employed with the Company at September 30, 2002 compared to 16 at September 30, 2001 causing a decrease of $20,882 in salaries and wages expense for the nine months ended September 30, 2002 over the same period a year ago. In order to more aggressively promote our services and products, two additional employees were hired in mid July, 2002, who will serve as officers of the Company. As an incentive, these individuals will be paid sales commissions in addition to regular salaries. These personnel changes will likely cause salaries and wages expense to meet or exceed 2001 year-end levels.

Royalty expense for the nine months ended September 30, 2002 and 2001 was 3% of sales calculated per the patent purchase agreement with American Technologies.

Marketing and advertising expenses have been significantly lower during the nine months ended September 30, 2002 compared to the same period a year ago due to the high cost of advertisements placed in the Wall Street Journal and USA Today publications in May, 2001 announcing Mirenco Inc.’s entrance onto the Over-the-Counter Bulletin Board (OTCBB) at an approximate cost of $210,000. Additional costs of approximately $109,000 were incurred during the nine months ended September 30, 2001 related to newsletters and other correspondence sent to shareholders and individuals on our mailing list keeping them informed of our progress with several projects. During the nine months ending September 30, 2002 the Company has incurred product related advertising expenses of approximately $26,000 for ads placed in three major transportation, fleet maintenance and Original Equipment Manufacturers (OEM) publications. In addition, approximately $40,000 has been spent on advertising relative to the Iowa School Bus Emissions Testing project.

A comparative breakdown of “Other general and administrative expenses” per the Statements of Operations included in PART I Item 1above is as follows:

	Nine months ended September 30,2002		Nine months ended September 30, 2001		Note
Depreciation and amortization	$	67,445	$	42,095	1
Insurance		38,991		11,483	2
Professional fees		95,356		239,577	3
Office expenses		44,339		96,606	4
Research and development		126,054		97,588	5
Travel		64,645		64,195
Utilities		45,184		42,857	1

Total general and administrative expenses	$	482,014	$	594,401

1 The corporate headquarters facility, valued at $1,226,292 was placed into service during the second quarter of 2001, which explains the material increase in depreciation and amortization expense for the nine months ended September 30, 2002 compared to the same three-month period a year ago. Since this facility is larger than the former headquarters location, utilities expenses are also slightly higher in 2002 compared to 2001.

2 The increase in insurance expense is primarily due to a rise in premium rates for directors’ and officers’ liability coverage. Rates for this type of coverage have increased nationwide over the past year.

3 The legal and accounting expenses incurred during the first quarter of 2001 were related to the rescission offer described above. More one-time legal and accounting expenses were incurred during the second quarter of 2001 with the filing of formal documents necessary to become listed on the OTCBB. The expenses recorded for the nine months ending September 30, 2002 in this category relate to ordinary audit and legal expenses associated with public filings and normal business operations.

4 During the first half of 2001 regular periodic mailings were being prepared and sent to all shareholders for the purpose of keeping them informed of corporate progress. Once the Company was listed on the OTCBB, these mailings ceased. All press releases are now done electronically, thereby reducing the cost of office supplies and postage.

5 An outside consultant was hired during June of 2001 for the purpose of developing our EconoCruise^® product line resulting in project payments of $54,147 and $26,465 for the nine months ended September 30, 2002 and 2001, respectively. Adjustments for obsolete inventory totaling $37,584 were made during the 3^rd quarter of 2002. The final payment of $25,000 was made on May 24, 2001 to Honeywell’s Kansas City Plant for the Mirenco Product Development project, which also relates to the EconoCruise^® product line. The remaining research and development expenses for the nine months ended September 30, 2002 and 2001 relate to in-house testing of the DriverMax^® product line.

Interest income continues to decline with decreasing Cash and Equivalent balances and low certificate of deposit interest rates.

Interest expense for the nine months ending September 30, 2002 relates to the financing of the purchase of Company vehicles from the majority shareholder as described above under Liquidity and capital resources. There was no interest expense for the nine months ending September 30, 2001.

Recent Accounting Pronouncements

Item 3.

CONTROLS AND PROCEDURES

An evaluation of the Company’s disclosure controls and procedures and internal controls and procedures was performed on November 1, 2002. Based on that review, management concludes that the Company’s disclosure controls and procedures adequately ensure that information required to be disclosed by the Company in the reports that it files or submits under the Act is recorded, processed, summarized and reported, within the time periods specified in the commission’s rules and forms. There have been no significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the evaluation date. There have been no corrective actions with regard to significant deficiencies and material weaknesses since the evaluation date.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 2. Changes in Securities

None

Item 3. Defaults upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

The 2002 Annual Meeting of Shareholders of Mirenco, Inc. was held at the Ames Auditorium on August 24, 2002 for the purpose of electing directors and reappointing Grant Thornton LLP as the Company’s certified public accountants for the fiscal year ending December 31, 2002. Balloting results are summarized in the table below. All directors’ terms will expire on the date of the 2003 Annual Meeting which has not yet been determined.

	Number of Votes Cast		Abstentions	Number of Broker Non-Votes
Matter Voted Upon	For	Against or Withheld	Abstentions	Number of Broker Non-Votes

Election of Dwayne Fosseen as Chief Executive Officer, Chairman of the Board of Directors, and Treasurer	9,437,130	1,000	45,202	174,699

Election of J. Richard Relick as Chief Executive Officer, Director, and Secretary	9,438,130	0	45,202	174,699

Election of Don D. Williams as Director	9,437,130	1,000	45,202	174,699

Election of Jerrold Handsaker as Director	9,438,130	0	45,202	174,699

Election of Greg DeJong as Director	9,437,130	1,000	45,202	174,699

Appointment of Grant Thornton, LLP as the Company’s Certified public accountants for the fiscal year ending December 31, 2002	9,436,730	0	46,602	174,699

Item 5. Other Information

None

[Balance of page left intentionally blank]

Item 6. Exhibits and Reports on Form 8-K

Exhibits



3.1		Certificate of Incorporation of Registrant (incorporated by reference to the Company’s Registration Statement filed on July 10, 2000).

3.2		Certificates of Amendment to the Certification of Incorporation (incorporated by reference to the Company’s Registration Statement filed on July 10, 2000).

3.3		Bylaws of Registrant (incorporated by reference to the Company’s Registration Statement filed on July 10, 2000).

10.2(d)		Stock Option Agreement between Registrant and Betty Fosseen (incorporated by reference to the Company’s Registration Statement filed on July 10, 2000).

10.2(f)		Stock Option Agreement between Registrant and J. Richard Relick (incorporated by reference to the Company’s Registration Statement filed on July 10, 2000).

10.3		American Technologies LLC, Fosseen Manufacturing & Development, Mirenco, Inc., Ethaco Agreements to Terminate Prior Agreements and Transfer License, respectively (incorporated by reference to the Company’s Registration Statement filed on July 10, 2000).

10.4		Purchase Agreement Between Registrant and American Technologies, LLC (incorporated by reference to the Company’s Registration Statement filed on July 10, 2000).

10.5		Environmental Regulatory Approvals with the U.S. Environment Protection Agency and California Air Resources Board (incorporated by reference to the Company’s Registration Statement filed on July 10, 2000).

10.6		Summary of Patents and Associated Service Marks (incorporated by reference to the Company’s Registration Statement filed on July 10, 2000).

10.7		Copies of U.S. and Canadian Patents Issued to Dwayne L. Fosseen (incorporated by reference to the Company’s Registration Statement filed on July 10, 2000).

10.8		Summary of Mexican Patents and Associated Protections Issued to Dwayne L. Fosseen (incorporated by reference to the Company’s Registration Statement filed on July 10, 2000).

10.9		Rental Agreement Between Registrant and Fosseen Manufacturing & Development, Inc (incorporated by reference to the Company’s Registration Statement filed on July 10, 2000).

10.10		March 31, 2000 Warrant Agreement between Registrant and Duncan, Blum & Associates (incorporated by reference to the Company’s Registration Statement filed on July 10, 2000).

10.13(a)		Lease for Land (incorporated by reference to the Company’s Registration Statement Amendment filed on April 17, 2001).

10.13(b)		Stock Option Agreement between Registrant and Betty Fosseen (incorporated by reference to the Company’s Registration Statement Amendment filed on April 17, 2001).

10.14		2001 Common Stock Compensation Plan (incorporated by reference to the Company’s 10KSB for the fiscal year ended December 31, 2001).

10.15		Cooperative Agreement between registrant and Iowa Foundation for Educational Adminstration, Inc. (Incorporated by reference to the Company’s 10QSB for the quarter ended June 30, 2002 filed on August 14, 2002).

*10.16		Vehicle Purchase Agreement between registrant and Fosseen Manufacturing Co., Inc.

*10.17		Bank Note between registrant and Randall-Story State Bank.

*99.1		Dwayne Fosseen’s Certification dated November 14, 2002 pursuant to 18 U.S.C. SECTION 1350, as adopted pursuant to SECTION 906 of the Sarbanes-Oxley Act of 2002

*99.2		Debbie L. Pickard’s Certification dated November 14, 2002 pursuant to 18 U.S.C. SECTION 1350, as adopted pursuant to SECTION 906 of the Sarbanes-Oxley Act of 2002

Filed herewith

Reports on Form 8-K

There were no reports filed on Form 8-K during the three months ended September 30, 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MIRENCO, INC.

Date: November 14, 2002	By:	/s/ Dwayne Fosseen
		Dwayne Fosseen Chairman and Chief Executive Officer

Date: November 14, 2002	By:	/s/ Debbie L. Pickard
		Debbie L. Pickard Chief Financial Officer

I, Dwayne Fosseen, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Mirenco, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4. The small business issuer’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures and internal controls and procedures for financial reporting (as defined in Exchange Act Rules 13a-14 and 15d-14) for the small business issuer and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal controls and procedures for financial reporting, or caused such internal controls and procedures for financial reporting to be designed under their supervision, to provide reasonable assurances that the small business issuer’s financial statements are fairly presented in conformity with generally accepted accounting principles;

c) Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and internal controls and procedures for financial reporting as of the end of the period covered by this report (“Evaluation Date”);

d) Presented in this report our conclusions about the effectiveness of the disclosure controls and procedures and internal controls and procedures for financial reporting based on our evaluation as of the Evaluation Date;

e) Disclosed to the small business issuer’s auditors and the audit committee of the board of directors (or persons fulfilling the equivalent function):

(i) All significant deficiencies and material weaknesses in the design or operation of internal controls and procedures for financial reporting which could adversely affect the small business issuer’s ability to record, process, summarize and report financial information required to be disclosed by the small business issuer in the reports that it files or submits under the Act (15 U.S.C. 78a et seq.), within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms; and

(ii) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal controls and procedures for financial reporting; and

f) Indicated in this report any significant changes in the small business issuer’s internal controls and procedures for financial reporting or in other factors that could significantly affect internal controls and procedures for financial reporting made during the period covered by this report, including any actions taken to correct significant deficiencies and material weaknesses in the small business issuer’s internal controls and procedures for financial reporting.

Date: November 14, 2002

/s/ Dwayne Fosseen

Dwayne Fosseen

Chief Executive Officer

I, Debbie L. Pickard, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Mirenco, Inc.;

e) Disclosed to the small business issuer’s auditors and the audit committee of the board of directors (or persons fulfilling the equivalent function):

Date: November 14, 2002

/s/ Debbie L. Pickard

Debbie L. Pickard

Chief Financial Officer