UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549

                                   FORM 10-KSB
(MARK  ONE)
    X              ANNUAL  REPORT  UNDER  SECTION  13  OR  15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004
                                       OR
                  TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
           FOR THE TRANSITION PERIOD FROM ____________ TO ____________

                        COMMISSION FILE NUMBER:  0-21802

                        N-VIRO INTERNATIONAL CORPORATION
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

              DELAWARE                                   34-1741211
    (STATE OR OTHER JURISDICTION OF
  INCORPORATION  OR  ORGANIZATION)    (I.R.S. EMPLOYER IDENTIFICATION NO.)

                        3450 W. CENTRAL AVENUE, SUITE 328
                     TOLEDO, OHIO                     43606
           (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)   (ZIP CODE)

        ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE:    (419) 535-6374



   SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE EXCHANGE ACT:  None

  SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:  Common Stock, par
                              value $.01 per share

          Check  whether  the  issuer  (1)  has filed all reports required to be
filed  by  Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to  file  such reports), and (2) has been subject to the filing requirements for
at  least  the  past  90  days.  Yes  X     No  ____
                                     ---

          Check  if there is no disclosure of delinquent filers pursuant to Item
405  of  Regulation S-B contained herein, and will not be contained, to the best
of  registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated  by  reference  in Part III of this Form 10-KSB or any amendment to
this  Form  10-KSB.  [  ]

          State  registrant's  revenues  for  its  most  recent  fiscal  year:
$5,453,000

          The  aggregate market value of the voting stock held by non-affiliates
of  the  registrant,  computed  by  reference to the closing sales price of such
shares  on  the  Over  The  Counter  Bulletin  Board as of February 28, 2005 was
approximately  $5,614,000.

          The  number of shares of Common Stock of the registrant outstanding as
of  February  28,  2005  was  3,448,509.

          The  number of shares of Preferred Stock of the registrant outstanding
as  of  February  28,  2005  was  1.

                       DOCUMENTS INCORPORATED BY REFERENCE
          THE  DEFINITIVE  PROXY  STATEMENT  RELATING  TO  THE  COMPANY'S ANNUAL
MEETING  OF STOCKHOLDERS TO BE HELD ON MAY 19, 2005 IS INCORPORATED BY REFERENCE
IN  PART  III  TO  THE  EXTENT  DESCRIBED  THEREIN.


                                      INDEX


                                                                            PAGE
                                                                            ----

                                     PART I

Item  1.     Business                                                          2

Item  2.     Properties                                                        9

Item  3.     Legal  Proceedings                                               10

Item  4.     Submission  of  Matters  to  a  Vote  of  Security  Holders      10

                                     PART II

Item  5.     Market  for  Registrant's  Common  Equity  and  Related          11
              Stockholder  Matters  and  Small  Business  Issuer  Purchases
              of  Equity  Securities


Item  6.     Management's  Discussion  and  Analysis  or                      12
              Plan  of  Operations

Item  7.     Financial  Statements                                            22

Item  8.     Changes  in  and  Disagreements  with  Accountants               23
              on  Accounting  and  Financial  Disclosure

Item  8A.     Controls  and  Procedures                                       23

Item  8B.     Other  Information                                              23



                                    PART III

Item  9.     Directors  and  Executive  Officers  of  the  Registrant         24

Item  10.     Executive  Compensation                                         24

Item  11.     Security  Ownership  of  Certain  Beneficial  Owners            24
               and  Management  and  Related  Stockholder  Matters

Item  12.     Certain  Relationships  and  Related  Transactions              24

Item  13.     Exhibits                                                        24

Item  14.     Principal  Accountant  Fees  and  Services                      26


<PAGE>
                                     PART I

FORWARD-LOOKING  STATEMENTS

     This  10-KSB  contains statements that are forward-looking. We caution that
words used in this document such as "expects," "anticipates," "believes," "may,"
and "optimistic," as well as similar words and expressions used herein, identify
and  refer  to  statements  describing  events  that may or may not occur in the
future. These forward-looking statements and the matters to which they refer are
subject  to  considerable  uncertainty  that  may  cause  actual  results  to be
materially  different  from  those  described herein. There are numerous factors
that  could  cause  actual  results  to  be  different than those anticipated or
predicted  by  us,  including:  (i)  a  deterioration  in economic conditions in
general;  (ii)  a decrease in demand for our products or services in particular;
(iii)  our  loss  of  a  key  employee  or  employees;  (iv) regulatory changes,
including  changes in environmental regulations, that may have an adverse affect
on  the  demand  for  our  products  or services; (v) increases in our operating
expenses resulting from increased costs of labor and/or consulting services; and
(vi)  a  failure  to  collect  upon or otherwise secure the benefits of existing
contractual  commitments  with third parties, including our customers. This list
provides  examples  of  factors  that  could  affect  the  results  described by
forward-looking  statements  contained in this Form10-KSB; however, this list is
not  exhaustive  and  many  other  factors  could  impact our business and it is
impossible  to  predict with any accuracy which factors could result in negative
impacts.  Although  we  believe that the forward-looking statements contained in
this  Form10-KSB  are  reasonable, we cannot provide you with any guarantee that
the  anticipated  results  will  not be adverse and that the anticipated results
will  be  achieved.  All  forward-looking  statements  in  this  Form10-KSB  are
expressly  qualified in their entirety by the cautionary statements contained in
this  section  and  you  are  cautioned  not  to  place  undue  reliance  on the
forward-looking  statements  contained  in  this  Form10-KSB. In addition to the
risks  listed  above,  other  risks may arise in the future, and we disclaim any
obligation  to  update  information  contained in any forward-looking statement.


ITEM  1.          BUSINESS

GENERAL

     We  were  incorporated  in  Delaware  in  April,  1993, and became a public
company  in  October  1993.  We  own  and license the N-Viro Process, a patented
technology to treat and recycle wastewater sludges and other bio-organic wastes,
utilizing certain alkaline and mineral by-products produced by the cement, lime,
electric  utilities  and  other  industries.  See  "The  N-Viro  Process."

     Our  business  strategy went from being a low cost provider of a process to
marketing  the  N-Viro  Process,  which produces an "exceptional quality" sludge
product,  as  defined  in the 40 CFR Part 503 Sludge Regulations under the Clean
Water Act of 1987 (the "Part 503 Regs"), with multiple commercial uses.  In this
strategy,  the primary focus is to identify allies, public and private, who will
build  and  operate  the  N-Viro facility.  To date, our revenues primarily have
been  derived  from  the  licensing  of  the N-Viro Process to treat and recycle
wastewater  sludges  generated by municipal wastewater treatment plants and from
the  sale to licensees of the alkaline admixture used in the N-Viro Process.  We
have  also  operated N-Viro facilities for third parties on a start-up basis and
currently operate one N-Viro facility on a contract management basis.  There are
currently  over 40 wastewater treatment facilities throughout the world treating
sludge using the N-Viro Process.  We estimate that these facilities are treating
and  recycling  sludge  at an annualized rate of over 140,000 dry tons per year.
There  are  several  licensees  not  currently  operating,  including  both
international  and domestic contractors or public generators, who are developing
or  designing  site-specific  N-Viro  facilities.

     Since  1995,  we  have  marketed licenses for the use of the N-Viro Process
through  our own sales and marketing force in the United States in all 50 states
and  the  District  of  Columbia  and  internationally throughout the world.  In
certain  countries  outside  the  United  States,  we license the N-Viro Process
through  agents.  Typically,  the  agreements  with the agents provide for us to
receive  a portion of the up-front license fees and ongoing royalty fees paid by
the  licensees and a portion of the proceeds from the distribution and resale of
alkaline  admixture  and  the  sale  of  N-Viro  SoilTM.  Agents  have  total
responsibility  and  control  over  the  marketing  and  contracts  for  N-Viro
technology  subject  only  to license models or minimum agreements with us.  The
sales  representative  network  is  the  key  component  of  our  domestic sales
strategy.  We use 11 manufacturer's representatives, who receive a commission on
certain  revenue.

               The  following  table  sets  forth our Agents and the territorial
rights  of  each  Agent:

                                   The Agents
                                   ----------

<TABLE>
<CAPTION>


      Agent                                Territory
----------------------------  ------------------------------------
<S>                           <C>
  Bio-Recycle Pty. Ltd.. . .  Australia, New Zealand and Singapore
  CRM Technologies . . . . .  Eastern Europe
  EIEC . . . . . . . . . . .  Spain
  Esson Technology, Inc. . .  China
  Itico. . . . . . . . . . .  Egypt, North Africa, The Middle East
  Nesher Israel Cement, Ltd.  Israel
  N-Viro Filipino. . . . . .  Philippines
  N-Viro Systems Canada, Inc  Canada
  South Africa N-Viro. . . .  All Africa except North Africa
</TABLE>


     In  their respective territories, the Agents market licenses for the N-Viro
Process, serve as distributors of alkaline admixture, oversee quality control of
the  N-Viro Process and N-Viro Soil, enforce the terms of the license agreements
with  licensees  and market N-Viro Soil (or assist licensees in marketing N-Viro
Soil).  In  general,  the Agents have paid one-time, up-front fees to us for the
rights  to  market  or  use  the N-Viro Process in their respective territories.
Typically, the agreements with the Agents provide for us to receive a portion of
the  up-front  license fees and ongoing royalty fees paid by the licensees and a
portion  of  the proceeds from the distribution and resale of alkaline admixture
and  the  sale  of  N-Viro  Soil.

     Our  principal  facility  is in Toledo, Ohio and is managed by us through a
Contract  Management  Agreement with the City of Toledo.  Revenue generated from
and related to the Toledo operation accounts for about 34% of our total revenue.
We process a portion of Toledo's wastewater sludge and sell the resulting N-Viro
Soil  product.  In 2004, the City exercised its option to renew the contract for
an  additional  five  years  through  2009.  Currently,  the  contract is in its
seventeenth  year of operation.  Our price has been renegotiated and, therefore,
our  relationship  with  the  City  of  Toledo  is  now  satisfactory.

          We  jointly own with VFL Technologies, Inc., or VFL, through a limited
partnership  named  Florida  N-Viro,  L.P.,  or  Florida N-Viro, the Fort Meade,
Florida  facility.  Our loans to Florida N-Viro, totaling $350,000 in unsecured,
demand notes, remain outstanding.  We maintain reserves of approximately $63,000
for the full amount of the accrued interest on all notes.  In 2004, we continued
to  reserve  all  accrued  interest due on the notes, but received approximately
$19,000  in  cash  for accrued interest.  In 2004, Florida N-Viro recorded a net
loss  of  approximately $243,000.  Cash flow from operations is negative, but we
expect  that  Florida N-Viro will continue to provide adequate cash flow to fund
operations  for 2005.  In 2004, VFL was sold to an independent third party.  The
effect  on  us  and  our  investment  in  Florida  N-Viro  is  uncertain.


     EARNINGS  VARIATION  DUE  TO  BUSINESS  CYCLES  AND  SEASONAL FACTORS.  Our
operating  results can experience quarterly or annual variations due to business
cycles,  seasonality  and  other  factors.  Currently,  approximately 34% of our
revenue  is  from  management operations, 63% from other domestic operations, 2%
from  research  and  development  grants  and  the  remaining  1%  from  foreign
operations.  Sales of the N-Viro technology are affected by general fluctuations
in  the  business  cycles  in  the  United  States and worldwide, instability of
economic  conditions  (such as the current conditions in the Asia Pacific region
and  Latin  America) and interest rates, as well as other factors.  In addition,
operating  results  of  some of our business segments are influenced, along with
other  factors  such  as  interest  rates,  by  particular  business  cycles and
seasonality.  See  Notes to the Financial Statements contained in Item 7 hereof.

     RISKS OF DOING BUSINESS IN OTHER COUNTRIES.  We conduct business in markets
outside  the United States, and expect to continue to do so.  In addition to the
risk  of  currency  fluctuations,  the risks associated with conducting business
outside  the  United States include: social, political and economic instability;
slower  payment of invoices; underdeveloped infrastructure; underdeveloped legal
systems;  and  nationalization.  We  have  not  entered  into  any currency swap
agreements  which  may reduce these risks.  We may enter into such agreements in
the  future  if  it  is  deemed  necessary to do so.  We cannot predict the full
impact of this economic instability, but it could have a material adverse effect
on  revenues  and  profits.

THE  N-VIRO  PROCESS

     The N-Viro Process is a patented process for the treatment and recycling of
bio-organic  wastes,  utilizing  certain  alkaline  by-products  produced by the
cement,  lime,  electric  utilities  and  other industries.  To date, the N-Viro
Process  has  been commercially utilized for the recycling of wastewater sludges
from  municipal wastewater treatment facilities.  N-Viro Soil produced according
to  the N-Viro Process specifications is an "exceptional quality" sludge product
under  the  Part  503  Regs.

     The  N-Viro  Process involves mixing the wastewater sludge with an alkaline
admixture  and  then  subjecting  the mixture to a controlled period of storage,
mechanical  turning and accelerated drying in which a blending of the sludge and
the  alkaline  admixture  occurs.  The N-Viro Process stabilizes and pasteurizes
the  wastewater  sludge,  reduces  odors  to  acceptable  levels, neutralizes or
immobilizes  various  toxic  components  and  generates N-Viro SoilTM, a product
which  has  a  granular  appearance  similar to soil and has multiple commercial
uses.  These  uses  include  agricultural lime, soil enrichment, top soil blend,
landfill  cover  and  filter,  and  land  reclamation.

     The  alkaline  admixture  used in the N-Viro Process consists of by-product
dusts  from  cement or lime kilns, certain fly ashes and other products of coal,
coke or petroleum combustion and by-product dusts from sulfuric acid "scrubbers"
used  in acid rain remediation systems and from fluidized bed coal-fired systems
used  in  electric  power  generation.  The  particular  admixture  that is used
usually  depends upon cost and availability in local markets.  In certain cases,
commercial  lime  may  also  be  added  to  the  admixture.

     We  are a distributor of alkaline admixture and are responsible for quality
control  of  the admixture.  We also work with established by-product marketers.
We generally charge a mark-up over our cost for alkaline admixture sold directly
by  us.

     N-Viro  Soil  is  sold  for  agricultural  use as a bio-organic and mineral
fertilizer  with  agricultural  liming  and  nutrient  values, as landfill cover
material,  as  a  topsoil blending ingredient and for land reclamation projects.
We  estimate  that  approximately  twenty percent of the N-Viro Soil produced is
utilized  at  landfills  for  cover  material,  small  amounts are sold for land
reclamation  and similar projects, and a substantial portion of the remainder is
sold  for  agricultural  use  or as a topsoil blend.  Although the use of N-Viro
Soil  is  not  subject  to  any federal regulations or restrictions, each N-Viro
facility  is  typically  required  to obtain a state and/or local permit for the
sale  of N-Viro Soil.  In addition, many states and/or local governments require
site-specific  permits  for  the  use  of  sludge  products  in  bulk  amounts.

RESEARCH  AND  DEVELOPMENT

     In  2004  we  expended  approximately  $16,000  on  research  and  patent
development.  Research  and  development  on  N-Viro  Soil  has  been,  to date,
performed  primarily  by BioCheck Laboratories, a former wholly-owned subsidiary
of  ours,  and Dr. Terry J. Logan, one of our directors, who continues to direct
our  research  and  patent  development  work  under a consulting agreement that
became  effective  July  1,  2004.  All  participants on our technology council,
including  Dr.  Logan  and  the  officers  of  BioCheck, have contracts with us,
protecting  our  rights.

     In  addition,  in  2004  alone,  grants  totaling  $90,000 were secured for
process  and  product  research.  We  continue to investigate methods to shorten
drying  time,  substitute  various other materials for use as alkaline admixture
and  improve  the  quality  and  attractiveness  of  N-Viro Soil to a variety of
end-users.  Several  developments  are  the subject of issued patents, including
the  use  of  carbon  dioxide  in  the  N-Viro  Process as a means to (i) reduce
by-product  carbon  dioxide  emissions from industrial processes by immobilizing
carbon  dioxide  in N-Viro Soil and (ii) improve the quality and value of N-Viro
Soil.  In  addition,  we  have developed a dryer system which reduces processing
time  while  continuing  to  permit  the survival of beneficial microflora.  Our
"BioBlend", which uses N-Viro Soil as a reagent to accelerate and deodorize yard
waste  composting,  is  being utilized to produce topsoil at the Englewood, Ohio
N-Viro  facility  and  at  several  other  licensed  facilities.

     We  applied  for  two  patents  that  were  approved in 2004 for the use of
mineral  by-products  to  enhance  heating,  drying  and disinfection of organic
wastes  under  non-alkaline  conditions.

     Because  of  the joint development of early N-Viro patents with the Medical
College  of  Ohio  ("MCO"), we agreed that the rights of MCO to any intellectual
property  which  is  being  developed,  patentable  or  patented, would generate
royalties  payable by us to MCO.  We and MCO have also agreed that future claims
to  the N-Viro Soil process is  % of technical revenues.  MCO rights to BioBlend
and  other N-Viro technologies range from 2% to 4% of technical revenues derived
from  these  newer  technologies.  Cumulative  royalties expensed to MCO through
December  31,  2004  are  approximately  $61,000.

INDUSTRY  OVERVIEW

     Disposal.  Landfilling,  incineration  and ocean dumping have traditionally
provided  inexpensive,  reliable  methods of sludge disposal.  Ocean dumping was
banned  in  the  United  States  in  December  1992.  Under  the  Part 503 Regs,
landfilling  and  incineration remain permissible sludge management alternatives
but  have  become  subject  to  more  stringent  regulatory standards.  The vast
majority  of  states  have  some site restrictions or other management practices
governing  the disposal of sludge in landfills.  Amendments to the Clean Air Act
governing  incineration  and  disposal  of residual ash also impose stricter air
emission  standards  for  incineration  in general, and the Part 503 Regs impose
additional  specific  pollutant limits for sludges to be incinerated and for the
resulting  air  emissions.

     Surface  disposal of sludge involves the placement of sludge on the land at
a  dedicated  site  for  disposal  purposes.  The  Part 503 Regs subject surface
disposal  to  increased regulation by requiring, among other things, run-off and
leachate  collection  systems, methane monitoring systems and monitoring of, and
limits  on,  pollutant levels.  In addition, sludge placed in a surface disposal
site  is  required  to  meet  certain  standards with respect to pathogen levels
relating  to coliform or salmonella bacteria counts ("Class B" pathogen levels),
levels  of  various  pollutants,  including  metals,  and  elimination  of
attractiveness  to  pests,  such  as  insects  and  rodents.

     Land  Application  for Beneficial Use.  Land application for beneficial use
involves  the  application  of sludge or sludge-based products, for non-disposal
purposes,  including  agricultural, silvicultural and horticultural uses and for
land  reclamation.  Under  the  Part 503 Regs, sludge products that meet certain
stringent  standards  with  respect  to  pathogen  levels  relating to coliform,
salmonella,  enteric  viruses and viable helminth ova counts ("Class A" pathogen
levels),  levels  of  various  pollutants,  including metals, and elimination of
attractiveness  to pests, such as insects and rodents, are considered by the EPA
to  be  "exceptional  quality" sludge products.  The Class A pathogen levels are
significantly  more  stringent  than  the  Class B pathogen levels; for example,
permitted  Class B fecal coliform levels are 2,000 times higher than their Class
A  counterparts.

     "Exceptional  quality" sludge products are treated by the EPA as fertilizer
material,  thereby  exempting  these products from federal restrictions on their
agricultural use or land application.  N-Viro Soil that is produced according to
N-Viro Process specifications meets the pollutant concentration limits and other
standards  set  forth  in  the  Part 503 Regs and, therefore, is an "exceptional
quality"  sludge  product  that  exceeds  the  EPA's  standards for unrestricted
agricultural  use  and  land  application.  Lower  quality  sludges,  including
sludge-based  products  that  meet Class B pathogen levels and certain pollutant
control  and  pest  attraction requirements, may also be applied to the land for
beneficial  use  but  are  subject  to  greater  record  keeping  and  reporting
requirements  and  restrictions  governing,  among  other  items,  the  type and
location  of  application,  the  volume  of application and limits on cumulative
levels  of  metals.  Sludges  applied to the land for agricultural use must meet
Class  B  pathogen  levels  and,  if  applied  in  bulk,  require an EPA permit.

COMPETITION

     We  are in direct and indirect competition with other businesses, including
disposal  and  other  wastewater  sludge treatment businesses, some of which are
larger  and  more  firmly  established  and  may  have  greater  marketing  and
development  budgets  and  capital resources than us.  There can be no assurance
that  we will be able to maintain a competitive position in the sludge treatment
industry.

     We  compete against companies in a highly competitive market and have fewer
resources  than  most  of  those  companies.  Our  business  competes within and
outside  the  United  States  principally on the basis of the following factors:

<TABLE>
<CAPTION>


<S>                 <C>                 <C>                 <C>                <C>

SEGMENT

Management          Other Domestic                           Research &
Operations          Operations           Foreign Operations  Development

COMPETITIVE FACTORS
                                                             Innovative
Price                Price               Price               Technologies

                                         Product quality and
Reliability          Reputation          specifications      Technical support
Product quality and  Product quality
Specifications       and specifications  Custom design       Reputation

Responsiveness to                        Equipment financing Product quality
Customer             Technical support   assistance          and specifications

Technical support    Custom design       Technical support   Custom design

                     Equipment financing                     Equipment financing
Reputation           assistance          Reputation          assistance
</TABLE>

     Competitive  pressures,  including those described above, and other factors
could  cause  us  to  lose  market share or could result in decreases in prices,
either  of  which could have a material adverse effect on our financial position
and  results  of  operations.

     An  EPA  survey  estimated  that  sludge  generators  in  the United States
utilized landfilling, incineration, surface disposal and ocean dumping as sludge
management  alternatives  for  approximately  two-thirds  of  wastewater sludges
generated.  Although  ocean  dumping  has  been  banned, other methods of sludge
disposal  remain  permissible  sludge management alternatives under the Part 503
Regs,  and  in  many  instances  will  be less expensive than treatment methods,
including  the  N-Viro  Process.

     Sludge  treatment  alternatives other than disposal include processes, such
as  aerobic  and  anaerobic  digestion  and  lime  stabilization, that typically
produce  lower  quality  sludge  products,  and  other  processes,  such  as
pelletization,  composting, high heat lime sterilization and high heat en-vessel
lime  pasteurization,  that produce "exceptional quality" sludge products.  Some
of these processes have established a significant market presence, and we cannot
predict  whether  any of such competing treatment processes will be more or less
successful  than  the  N-Viro  Process.


ENVIRONMENTAL  REGULATION

     Various  environmental protection laws have been enacted and amended during
recent  decades  in  response  to  public  concern  over  the  environment.  Our
operations and those of its licensees are subject to these evolving laws and the
implementing regulations.  The United States environmental laws which we believe
are,  or  may  be,  applicable to the N-Viro Process and the land application of
N-Viro  Soil include Resource Conservation and Recovery Act, or RCRA, as amended
by  the Hazardous and Solid Waste Amendments of 1984, or HSWA, the Federal Water
Pollution  Control  Act  of  1972,  or the Clean Water Act, the Clean Air Act of
1970,  as  amended,  or  the  Clean  Air  Act,  the  Comprehensive Environmental
Response,  Compensation,  and Liability Act, or CERCLA, the Pollution Prevention
Act  of  1990  and  the  Federal  Insecticide, Fungicide and Rodenticide Act, or
FIFRA.  These  laws  regulate the management and disposal of wastes, control the
discharge  of  pollutants  into the air and water, provide for the investigation
and  remediation  of contaminated land and groundwater resources and establish a
pollution  prevention  program.  Many  of  these  laws  have  international
counterparts,  particularly  in  Europe  and  elsewhere  in  North  America.  In
addition, various states have implemented environmental protection laws that are
similar  to  the  applicable  federal laws and, in addition, states may require,
among  other  things,  permits to construct N-Viro facilities and to sell and/or
use N-Viro Soil. There can be no assurance that any such permits will be issued.

     The  Part  503  Regulations.  Historically,  sludge management has involved
either  disposal,  principally  by  landfilling, incineration, ocean dumping and
surface disposal, or land application for beneficial use.  Sewage sludge and the
use  and  disposal  thereof is regulated under the Clean Water Act.  On February
19,  1993,  the  EPA  published  the  Part  503  Regs  under the Clean Water Act
implementing  the EPA's "exceptional quality" sludge program.  These regulations
establish  sludge  use and disposal standards applicable to approximately 35,000
publicly  and  privately owned wastewater treatment plants in the United States,
including  approximately  13,000  to  15,000  publicly owned treatment works, or
POTWs.  Under  the  Part  503  Regs, sludge products that meet certain stringent
standards are considered to be "exceptional quality" sludge products and are not
subject  to  any  federal  restrictions on agricultural use or land application.
N-Viro  Soil  produced  according  to  N-Viro  Process  specifications  is  an
"exceptional quality" sludge product.  Lower quality sludges and sludge products
are  subject  to federal restrictions governing, among other items, the type and
location  of  application,  the  volume  of  application  and  the  cumulative
application  levels  for  certain pollutants.  Agricultural application of these
lower quality sludges in bulk amounts also requires an EPA permit.  Agricultural
and  land applications of all sludges and sludge products, including N-Viro Soil
and  other "exceptional quality" sludge products, are typically subject to state
and  local  regulation  and,  in  most  cases,  require  a  permit.

     In order to ensure compliance with the Part 503 Regs, we review the results
of  regular testing of sludges required by the EPA to be conducted by wastewater
treatment  plants, and itself tests N-Viro Soil produced at N-Viro facilities on
a regular basis.  In general, we do not license or permit the ongoing use of the
N-Viro  Process  to  treat  any  sludge  that  may  not  be  processed  into  an
"exceptional  quality"  sludge  product.  In five N-Viro facilities, however, we
have permitted the use of the N-Viro Process to produce a product that is not an
"exceptional  quality"  sludge  product  due to the high pollutant levels of the
resulting product.  This product is not considered to be N-Viro Soil and is used
solely  for  landfill  cover  at  an  adjacent  landfill.  In  addition, we have
previously  licensed  for  use  at  five  treatment facilities an earlier sludge
treatment  process  that is designed to produce a sludge product that meets only
Class B pathogen levels, and therefore does not produce an "exceptional quality"
sludge  product.

     Although  N-Viro  Soil exceeds the current federal standards imposed by the
EPA  for  unrestricted  agricultural  use  and land application, state and local
authorities  are  authorized  under the Clean Water Act to impose more stringent
requirements than those promulgated by the EPA.  Most states require permits for
land application of sludge and sludge based products and several states, such as
Rhode  Island,  Massachusetts  and  New  Jersey, currently have regulations that
impose more stringent numerical concentration limits for certain pollutants than
the  federal  rules.

     The  Resource  Conservation  and Recovery Act. RCRA regulates all phases of
hazardous  waste  generation,  management  and  disposal.  Waste  is  subject to
regulation  as  a hazardous waste under RCRA if it is a solid waste specifically
listed  as  a  hazardous  waste  by  the  EPA  or  exhibits  a defined hazardous
characteristic.  Although  domestic  sewage  and mixtures of domestic sewage and
other  wastes  that  pass  through  a  sewer  system  to a POTW are specifically
exempted  from  the  definition  of  solid  waste, once treated by the POTW, the
sewage  sludge  is  considered a solid waste. However, such sewage sludge is not
considered  a  hazardous  waste  unless  it exhibits a hazardous characteristic.
While  it  is  possible  that  sewage  sludge  could  exhibit  the  toxicity
characteristic,  we  believe that regular tests for hazardous constituent levels
provide  assurance  that  the  sewage sludge used in the N-Viro Process does not
exhibit  the toxicity characteristic. The alkaline admixtures used in the N-Viro
Process  are  specifically exempted from RCRA regulation by the so-called Bevill
Amendments to RCRA. Although the benefit of the exemption provided by the Bevill
Amendments can be lost if the alkaline admixture is derived from or mixed with a
hazardous  waste,  we  have  adopted  and  implemented  policies and operational
controls,  including  review  of  operating  permits  held by alkaline admixture
suppliers  and  periodic testing of such admixtures, to ensure that the alkaline
admixtures  used  in  the N-Viro Process by us and our licensees are not derived
from  or  mixed  with  hazardous  wastes.

     Although  neither the alkaline admixture nor wastewater sludges used in the
N-Viro  Process  are  regulated as hazardous waste under RCRA, states may impose
restrictions that are more stringent than federal regulations.  Accordingly, the
raw  materials  used  in  the  N-Viro  Process may be regulated under some state
hazardous  waste  laws  as  "special wastes," in which case specific storage and
record  keeping  requirements  may  apply.

     The  Clean  Air  Act.  The  Clean Air Act empowers the EPA to establish and
enforce ambient air quality standards and limits of emissions of pollutants from
specific facilities.  The Clean Air Act Amendments of 1990, or the Clean Air Act
Amendments,  impose  stringent  requirements  upon  owners  and  operators  of
facilities  that  discharge  emissions  into  the  air.

     Existing  N-Viro  facilities generally have installed "baghouse" technology
for  alkaline  admixture  storage  and  handling  operations in order to collect
airborne dust.  At present, we do not believe that any N-Viro facilities will be
required to undertake any further measures in order to comply with the Clean Air
Act or the existing Clean Air Act Amendments.  Ammonia odors of varying strength
typically  result from sludge treatment processes, including the N-Viro Process.
A  number  of  N-Viro  facilities  have  installed ammonia "scrubbers" to reduce
ammonia  odors  produced  to  varying  degrees  by  the  N-Viro  Process.  The
installation  of ammonia "scrubbers" is not required by the Clean Air Act or the
existing Clean Air Act Amendments.  However, we or our licensees may be required
under  the  Occupational  Safety  and  Health  Act  and  state  laws  regulating
nuisances,  odors  and air toxic emissions to install odor control technology to
limit  ammonia  emissions  and  odors  produced  during  the  N-Viro  Process,
particularly at N-Viro facilities located near populated residential areas.  The
amount  of  ammonia  gas  produced  is  dependent  upon the type of sludge being
treated  and  the  amount  and  type  of  alkaline  admixture  being  used.

     The Comprehensive Environmental Response, Compensation and Liability Act of
1980.  CERCLA  imposes  strict,  joint  and  several  liability  upon owners and
operators  of  facilities  where a release of hazardous substances has occurred,
upon  parties  who generated hazardous substances into the environment that were
released at such facilities and upon parties who arranged for the transportation
of  hazardous  substances  to  such  facilities.

     We believe that the N-Viro Process poses little risk of releasing hazardous
substances  into  the environment that presently could result in liability under
CERCLA.  Although  the  sewage  sludge and alkaline waste products could contain
hazardous  substances  (as  defined  under  CERCLA),  we have developed plans to
manage  the  risk  of CERCLA liability, including training of operators, regular
testing  of  the  sludge  and  the  alkaline  admixture to be used in the N-Viro
Process  and  reviewing incineration and other permits held by the entities from
whom  alkaline  admixtures  are  obtained.

     Other Environmental Laws.  The Pollution Prevention Act of 1990 establishes
pollution  prevention as a national objective, naming it a primary goal wherever
feasible.  The  act  states  that where pollution cannot be prevented, materials
should  be  recycled  in  an  environmentally  safe manner.  We believe that the
N-Viro  Process  contributes to pollution prevention by providing an alternative
to  disposal.

     The  alkaline  admixtures  used in the N-Viro Process may be required to be
registered  as  pesticides  under  FIFRA because of their effect on pathogens in
sludge.  The  EPA  does  not  currently regulate commercial lime or any alkaline
by-products  under  FIFRA  and  has not attempted to assert such jurisdiction to
date.  In the event the alkaline by-products are required to be registered under
FIFRA,  we  would  likely  be  required  to  submit  certain data as part of the
registration  process  and  might  be  subject  to  further  federal regulation.

     State  Regulations.  State regulations typically require an N-Viro facility
to  obtain  a  permit  for the sale of N-Viro Soil for agricultural use, and may
require a site-specific permit by the user of N-Viro Soil.  In addition, in some
jurisdictions,  state  and/or local authorities have imposed permit requirements
for,  or  have  prohibited,  the  land application or agricultural use of sludge
products,  including  "exceptional  quality"  sludge  products.  There can be no
assurance  that  any such permits will be issued or that any further attempts to
require permits for, or to prohibit, the land application or agricultural use of
sludge  products  will  not  be  successful.

     In addition, many states enforce landfilling restrictions for non-hazardous
sludge.  These  regulations  typically  require  a  permit to sell or use sludge
products  as  landfill  cover  material.  There  can be no assurance that N-Viro
facilities  or  landfill  operators  will  be  able  to obtain required permits.

     Environmental  impact  studies  may  be  required  in  connection  with the
development  of  future  N-Viro  facilities.  Such  studies  are  generally time
consuming  and  may  create  delays  in  the construction process.  In addition,
unfavorable  conclusions reached in connection with such a study could result in
termination  of,  or  expensive  alterations  to,  the  N-Viro  facility  being
developed.

<PAGE>
EMPLOYEES

     As  of  December  31,  2004,  we  had  10 employees who were engaged in the
following  capacities:  three  in  sales  and  marketing;  three  in finance and
administration  and  four  in operations.  We consider our relationship with our
employees  to  be  satisfactory.

     We are a party to a collective bargaining agreement (the "Labor Agreement")
covering  certain  employees  of  National  N-Viro  Tech,  Inc.,  a wholly-owned
subsidiary  of ours.  The employees that are covered by the Labor Agreement work
at  the  Toledo,  Ohio  N-Viro  facility  which  is operated by us on a contract
management  basis  for  the  City of Toledo.  These employees are members of the
International  Brotherhood  of  Teamsters,  Chauffeurs, Warehouseman and Helpers
Local Union No. 20, and we consider our relationship with the organization to be
satisfactory.  The  Labor  Agreement was scheduled to expire on October 31, 2004
but  has  been  extended pending completion of negotiations between us and Local
Union  No.  20.


ITEM  2.          PROPERTIES

     Our executive and administrative offices are located in Toledo, Ohio, under
a  lease  that  was  renewed  in  January 2003 and amended in November 2004.  We
believe  our  relationship  with  our lessor is satisfactory.  The total minimum
rental  commitment  for  the  years  ending  December  31,  2005 through 2006 is
approximately  $37,200  each  year.  The  total  rental  expense included in the
statements  of  operations  for  the  years  ended December 31, 2004 and 2003 is
approximately  $55,400  and  $57,100,  respectively.  We  also  lease  various
equipment  on  a  month-to-month  basis.

     To  date,  we  have  licensed  the  N-Viro Process to municipalities in the
eastern  United  States  principally  for  use  in  municipally-owned wastewater
treatment  plants.  We have also operated, generally on a start-up basis, N-Viro
facilities for municipalities and currently operate one municipally-owned N-Viro
facility  on  a  contract  management basis in Toledo, Ohio.  As of December 31,
2004,  there were more than 35 N-Viro facilities operating throughout the world.

     All  of  the  existing  N-Viro  facilities  are owned and operated by third
parties, with the exception of the Toledo, Ohio facility which has been operated
by  us  on  a  contract  management  basis  since  January  1990.

     Design and construction of a facility using the N-Viro Process is typically
undertaken  by  local  independent  engineering  and  construction  firms.
Construction  of  a  facility  can be completed in approximately six months, but
could  take  substantially  longer,  depending on the size and complexity of the
facility.  A  number  of  N-Viro  facilities,  typically  those  located  near
residential  areas, have installed odor control systems in order to minimize the
release  of  ammonia  odors  resulting from the N-Viro Process.  An odor control
system  can  significantly increase construction time and cost.  Construction of
N-Viro  facilities generally requires state and local permits and approvals and,
in  certain  instances,  may  require  an  environmental  impact  study.

     We  have  previously  licensed  five treatment facilities to use an earlier
sludge treatment process that is designed to produce a sludge product that meets
only  Class  B  pathogen  levels, and therefore does not produce an "exceptional
quality"  sludge  product under the part 503 Regs.  Royalty payments from sludge
processed at the five facilities using such earlier technology currently account
for less than two percent of total royalty payments to us and we do not actively
market  the  use  of  this  process.


ITEM  3.          LEGAL  PROCEEDINGS.

     In May, 2004, the Court of Chancery of the State of Delaware for New Castle
County,  which  we  refer  to  as  the  Court, issued a response to the proposed
settlement  of  the  pending  shareholder  derivative action, or the Lawsuit, in
negotiations between us, certain directors and Strategic Asset Management, Inc.,
or  SAMI,  as  a  result of a hearing with the Court on December 15, 2003.  This
response  was attached to the Form 10-QSB filed on August 16, 2004.  The details
of  this settlement were disclosed in a Form 8-K filed on August 29, 2003.  As a
result  of  this  response, we negotiated a new Settlement Agreement and Release
between  us,  SAMI  and certain directors that was signed by all parties by June
29,  2004.  This  Agreement was also attached to the Form 10-QSB filed on August
16,  2004.  Principal monetary changes to the 2003 settlement agreement were the
removal  of stock warrants to SAMI.  SAMI's costs for the Lawsuit have been paid
in 2004 with $125,000 of cash and by the issuance on December 31, 2004 of 31,200
shares  of  unregistered  common  stock  of  the  Company  valued  at  $39,000.

     On  October  14,  2004, it became known to the Vice Chancellor of the Court
that  the  plaintiff  had transferred to another party all shares of the Company
which  it  had held at the time of the matters complained of in the Lawsuit, the
time  of  filing the Lawsuit and the time of the settlement of the issues raised
by  the  Lawsuit.  Upon  learning  of  the  disposition  of the shares, the Vice
Chancellor indicated that he might be required to dismiss the action for lack of
standing  by  the  plaintiff.  On January 13, 2005, another shareholder, Mark D.
Behringer,  intervened  in  the  case  requesting  to be substituted for SAMI as
plaintiff in the action and requesting the Court to issue an order approving the
settlement.  The  Court  has  not  yet  ruled  on  the  intervenor's  request.

     In  addition  to  the foregoing, from time to time we are involved in legal
actions  arising  in  the  ordinary  course  of business.  With respect to these
matters,  we  believe  we  have adequate legal defenses and/or provided adequate
accruals  for  related  costs  such  that  the  ultimate outcome will not have a
material  adverse  effect  on  our  future  financial  position  or  results  of
operations.


ITEM  4.          SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

     a.          Our  Annual  Stockholders  Meeting  was  held  on May 12, 2004.


     b.     The  members  of  our Board of Directors who were re-elected to fill
vacancies  as  Class II Directors and to serve until the 2006 Annual Meeting and
until  their  successors  are  elected and qualified are Phillip Levin, Terry J.
Logan  and  Michael  G.  Nicholson.

          The  members  of  the  Board  of  Directors  whose term of office as a
director  continued  after the meeting are Brian Burns, Christopher J. Anderson,
Daniel  J.  Haslinger  and  R.  Francis  DiPrete.


     c.          The  following  matters  were  voted  upon  at  the  Annual
Stockholders  Meeting:

          The  proposal  to  approve  our 2004 Stock Option Plan was approved as
follows:

<TABLE>
<CAPTION>

             For      Against     Abstain
           -------    -------     -------
<S>        <C>        <C>         <C>
           1,512,334  117,990     17,937
</TABLE>


          The  proposal  to  ratify  Follmer  Rudzewicz  PLC  as the independent
auditors  for  the  year  2004  was  approved  as  follows:

<TABLE>
<CAPTION>


          For     Against  Abstain
       ---------  -------  -------
<S>    <C>        <C>      <C>
       1,646,868   1,243    150
</TABLE>


                                     PART II

ITEM  5.          MARKET  FOR  REGISTRANT'S  COMMON  EQUITY, RELATED STOCKHOLDER
        MATTERS  AND SMALL  BUSINESS  ISSUER  PURCHASES  OF  EQUITY  SECURITIES

MARKET  INFORMATION

     Our  shares  of  Common  Stock  are traded on the Over The Counter Bulletin
Board under the symbol "NVIC.OB".  The price range per share of the Common Stock
since  January  1,  2003,  was  as  follows:

<TABLE>
<CAPTION>

Quarter           High    Low
                  -----  -----
<S>               <C>    <C>
First 2003.       $1.70  $0.80
Second 2003       $1.01  $0.72
Third 2003.       $2.79  $0.70
Fourth 2003       $3.70  $2.40
First 2004.       $3.92  $2.35
Second 2004       $3.05  $1.30
Third 2004.       $1.96  $0.90
Fourth 2004       $2.51  $1.25
</TABLE>


Our  stock  price  closed  at  $2.05  per  share  on  February  28,  2005.

HOLDERS

     As  of  February  28,  2005,  the number of holders of record of our Common
Stock  was  approximately  210.

DIVIDENDS

     We  have never paid dividends with respect to our Common Stock.  Payment of
dividends  is  within the discretion of our Board of Directors and would depend,
among other factors, on our earnings, capital requirements and our operating and
financial  condition.

SECURITIES  AUTHORIZED  FOR  ISSUANCE  UNDER  EQUITY  COMPENSATION  PLANS

     See  Item  11  of  this  Form  10-KSB  for the information required by Item
201(d)  of  Regulation  S-B.

UNREGISTERED  SALES  OF  SECURITIES

     On  January 9, 2004, we issued 7,329 shares of unregistered common stock to
Phillip  Levin  and Daniel Haslinger, respectively, both members of the Board of
Directors,  in  exchange for services rendered to management incurred from April
through  December,  2003,  in  the amount of $9,000 each, or a total of $18,000.

     From January 12, 2004 through February 17, 2004, we issued 41,500 shares of
unregistered  common  stock  to  some  of our employees and former directors for
stock  options  exercised,  realizing  total  proceeds  to  us  of  $66,117.

     On  January  29, 2004, 50,000 warrants were exercised jointly by J. Patrick
Nicholson and three of his sons, Michael, Robert and Timothy Nicholson, pursuant
to  the  terms  of  an  Agreement  signed in February, 2003 to pledge additional
collateral  in  securing  additional  financing  to  us.  These  warrants  were
exercised at $0.90 per share, and we issued 50,000 unregistered shares of common
stock  in  exchange  for  the  $45,000  in  proceeds.

     On  or  before  February  13, 2004, we issued 72,237 shares of unregistered
common  stock to two trade creditors, eliminating $162,533 worth of debt owed by
us  to  such  creditors.

     On March 17, 2004, an additional 32,760 shares of unregistered common stock
were  issued to current and former members of the Board of Directors, to replace
the automatic awards of stock options which were not granted to the non-employee
directors  after May 10, 2003 as a result of the termination of our 1998 Amended
and  Restated  Stock  Option Plan and the failure of the stockholders to approve
the  proposed  2003  Stock  Option  Plan  at the 2003 annual meeting, at a total
estimated  cost  of  $73,710.

     On  May  20,  2004,  we  contracted with Ophir Holdings, Inc., or Ophir, to
provide consulting services for non-exclusive financial public relations through
December  31,  2004.  In  exchange,  we  issued  a  total  of  50,000  shares of
unregistered  common  stock.  Ophir  was  listed  in  our  2004 Definitive Proxy
statement  filed  in April 2004 as a beneficial owner of 230,472 shares or 7.42%
of  our  common stock as of March 24, 2004.  On May 17, 2004, Ophir filed a Form
13D  stating that it was the beneficial owner of -0- shares of our common stock.

     On  September  1  and  November 1, 2004, we issued 34,211 shares and 37,143
shares,  respectively,  of  unregistered  common stock to our patent law firm in
settlement  of  trade  debt owed.  As part of the settlement, we agreed to issue
the  stock  worth  $130,000  at the time of delivery, in two installments on the
dates issued.  The market price of the September 1 issuance was $1.90 per share,
and  the  price  of  the  November  1  issuance  was  $1.75  per  share.

     In  December,  2004,  we  contracted with Quest Equities, LLC, or Quest, to
provide  non-exclusive  financial  and  business  consulting  services  through
November  2005.  In  exchange,  we  issued  50,000 shares of unregistered common
stock.

     We  are  currently  completing  a  private  placement  of up to $835,188 in
unregistered  shares  of our common stock.  We hope to sell up to 668,151 shares
of  common  stock  at a price per share of $1.25.  As announced in a Form 8-K on
June  18, 2004, this price was lowered from $2.25 per share, the total amount of
the  private  placement  increased from $750,000 and the price of the associated
warrants  decreased to $1.85 from $2.85.  During February and early March, 2004,
we  issued  193,417  shares  for  total  proceeds  of  $435,188.  To reflect the
re-pricing,  in  June,  2004  we  issued  an  additional  154,734  shares for no
additional  proceeds.  During  December,  2004,  we issued an additional 125,200
shares  for  total  proceeds  of $156,500.  We expect to issue additional shares
subsequent  to  the date of the filing of this document during the first quarter
of  2005.

     All  of  the  foregoing issuances were exempt from registration pursuant to
Section  4(2)  of  the  Securities  and  Exchange  Act  of  1933.


ITEM  6.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  OPERATIONS

OVERVIEW
     The  following  is  a discussion of our results of operations and financial
position for the periods described below, and should be read in conjunction with
"Selected  Financial  Data"  and the Financial Statements and Supplementary Data
appearing  elsewhere  in  this  Form  10-KSB.  The  discussion  includes various
forward-looking  statements  about  our  markets,  products,  services  and  our
results.  These  statements  are  based  on certain assumptions that we consider
reasonable.  Our  actual  results  may  differ  materially  from these indicated
forward-looking  statements.

     The  following  table sets forth, as a percentage of total revenues for the
periods  presented,  revenues  related  to  each  of  (i)  technology fees, (ii)
facility  management,  (iii)  products  and  services:

<TABLE>
<CAPTION>

                      FOR  THE  YEAR  ENDED  DECEMBER  31,
                            2004          2003
                           ------        ------
<S>                        <C>           <C>
Technology fees . . .       12.0%         12.6%
Facility management .       25.4%         25.7%
Products and services       62.6%         61.7%
                           ------        ------
Totals. . . . . . . .      100.0%        100.0%
                           ------        ------
</TABLE>

     Technology  fee  revenues  consist  of:  royalty  revenue,  which represent
ongoing  amounts received from licensees for continued use of the N-Viro Process
and  are  typically  based on volumes of sludge processed; license and territory
fees,  which  represent  non-recurring  payments for the right to use the N-Viro
Process  in  a  specified  geographic  area  or at a particular N-Viro facility;
research  & development revenue, which represent payments from federal and state
agencies  awarded  to  us  to  fund ongoing site-specific research utilizing the
N-Viro  technology.

     Facility management revenues are recognized under contracts where we manage
the  N-Viro  Process  ourselves  to  treat  sludge,  pursuant  to  a fixed price
contract.

     Product and service revenues consist of:  alkaline admixture revenue, which
represent ongoing payments from licensees arising from the sale and distribution
of  alkaline  admixture  by us and our Agents to N-Viro facilities;  service fee
revenue  for  the management of alkaline admixture, which represent fees charged
by  us  to  manage  and  sell  the alkaline admixture on behalf of a third party
customer;  N-Viro Soil sales, which represent either revenue received from sales
of  N-Viro  Soil sold by N-Viro facilities, or through sales of N-Viro Soil sold
directly by us;  commissions earned on sales of equipment to an N-Viro facility;
rental  of  equipment  to  a licensee or agent;  testing income, which represent
fees  charged  for  the  periodic  quality  control of the N-Viro Soil produced;
equipment  sales,  which  represent  the  price  charged  for equipment held for
subsequent  sale.

     Our policy is to record the revenues payable pursuant to agency and license
agreements  when  we have fulfilled our obligations under the relevant contract,
except  when it pertains to a foreign license agreement.  In the case of foreign
licenses,  revenue  is recorded when cash is received and when we have fulfilled
our  obligations  under  the  relevant  foreign  agreement.

<PAGE>
RESULTS  OF  OPERATIONS

     The  following  tables  set  forth,  for the periods presented, (i) certain
items  in  the  Combined  Statement of Operations, (ii) the percentage change of
each such item from period to period and (iii) each such item as a percentage of
total  revenues  in  each  period  presented.

<TABLE>
<CAPTION>


                                      Year Ended        Period to Period     Year Ended
                                       December 31,       Percentage         December 31,
                                         2004                Change              2003
                                       ----------         -------------      -----------
<S>                                    <C>                 <C>               <C>

(Dollars in thousands)
-------------------------------------
COMBINED STATEMENT OF
    OPERATIONS DATA:
Revenues. . . . . . . . . . . . . . .  $5,454              1.0%              $ 5,401

Cost of revenues. . . . . . . . . . .   3,941             (0.7%)               3,970

Gross profit. . . . . . . . . . . . .   1,513              5.7%                1,431

Operating expenses. . . . . . . . . .   1,628            (27.7%)               2,253

Operating loss. . . . . . . . . . . .    (115)                *                 (822)

Non-operating income (expense). . . .      43                 *                 (700)

Loss before income tax expense. . . .     (72)                *               (1,522)

Federal and state income tax expense.       0                 *                    0

Net loss. . . . . . . . . . . . . . .  $  (72)                *              $(1,522)
</TABLE>


<TABLE>
<CAPTION>


PERCENTAGE OF REVENUES:
<S>                                    <C>                                    <C>
Revenues. . . . . . . . . . . . . . .  100.0%                                  100.0%

Cost of revenues. . . . . . . . . . .   72.3                                    73.5

Gross profit. . . . . . . . . . . . .   27.7                                    26.5

Operating expenses. . . . . . . . . .   29.8                                    41.7

Operating income (loss) . . . . . . .   (2.1)                                  (15.2)

Non-operating income (expense). . . .    0.8                                   (13.0)

Loss before income tax expense. . . .   (1.3)                                  (28.2)

Federal and state income tax expense.    0.0                                     0.0

Net loss. . . . . . . . . . . . . . .  (1.3%)                                  (28.2%)
</TABLE>



*     Period  to  period percentage change comparisons have only been calculated
for  positive  numbers.

<PAGE>
COMPARISON  OF  YEAR  ENDED  DECEMBER 31, 2004 WITH YEAR ENDED DECEMBER 31, 2003
     Revenues  increased  $53,000,  or approximately 1.0%, to $5,454,000 for the
year  ended  December  31,  2004 from $5,401,000 for the year ended December 31,
2003.  The increase in revenue was due to the following:  revenues from one-time
domestic  license  or international territory fees decreased $34,000, to $72,000
in  2004  from  $106,000  in  2003;  revenues  from  existing on-line facilities
increased  $87,000  to $5,382,000 from $5,295,000 in 2003.  This net increase in
revenue  from  existing  on-line  facilities  was  primarily  from:

     a)  Sales  of  alkaline  admixture  increased  $70,000 from the same period
ended  in  2003;

     b)  Revenue  from the service fees for the management of alkaline admixture
increased  $30,000  from  the  same  period  ended  in  2003;

     c)  Our processing revenue, including facility management revenue, showed a
net  decrease  of  $54,000  over  the  same  period  ended  in  2003;

     d)  Miscellaneous  revenues increased $40,000 from the same period ended in
2003;

     e)  Research  and  development  revenue did not change from the same period
ended  in  2003.

All of the decrease in processing revenue was from decreased sales of the N-Viro
Soil  product.  In July 2004, we altered our revenue and cost system for selling
and trucking the product, concurrently reducing our gross revenue as well as our
cost.  The  net  cost  per  ton  was decreased by this change.  Also, in 2004 we
closed  down  our  off-site  storage  and  blend  site,  which  accounted  for
approximately  one-half  the  decrease  in the N-Viro Soil product revenue.  For
2005,  we  expect  a  decrease  in  facility management revenue from 2004 as the
provisions  of  the  renewed  operating contract require a decrease in the price
charged  to  the  licensee.

     Our  gross  profit  increased  $82,000, or 5.7%, to $1,513,000 for the year
ended  December  31,  2004 from $1,431,000 for the year ended December 31, 2003,
and the gross profit margin increased to 28% from 26% for the same periods.  The
increase  in  gross  profit  is  primarily  due  to  the decrease in the cost of
trucking  the  N-Viro Soil product, partially offset by a decrease in the number
of  ongoing  processing  facilities  generating  profit.  The  increase in gross
profit  margin is also primarily due to the decrease in the cost of trucking the
N-Viro  Soil  product, partially offset by a shift in gross profit away from the
non-privatized  facilities,  who  were  at  a slightly higher margin a year ago.

     Our  operating  expenses  decreased $625,000, or 28%, to $1,628,000 for the
year  ended  December  31,  2004 from $2,253,000 for the year ended December 31,
2003.  The  decrease  was  primarily  due  to  a  net  decrease of approximately
$504,000  in legal, auditing and outside professional fees, $111,000 in employee
payroll,  $50,000 in the allowance for bad debts, $46,000 for office and related
expenses,  $43,000  in  insurance  costs  and  $44,000 in research + development
costs.  These  decreases  were  partially  offset  primarily  by  an increase of
approximately  $138,000  in  consulting  fees  and  expenses  and  $73,000  in
director-related  fees  and  expenses.  Included  in  the  increase  for
director-related costs was $74,000 for the value of unregistered stock issued to
current  and  former  outside  directors  for  board  meeting  compensation.

     Our  nonoperating  income  (expense)  increased  by  $743,000  to income of
$43,000  for  the  year ended December 31, 2004 from expense of $700,000 for the
year ended December 31, 2003.  The increase in nonoperating income was primarily
due to a decrease in the loss of $423,000 in the equity of a joint venture, to a
loss  of  $116,000 in 2004 from a loss of $539,000 in 2003.  Also, we recorded a
one-time  gain  on  the  forgiveness  of  debt  due  our  patent  law  firm  of
approximately  $157,000  (see  further  discussion  under "Liquidity and Capital
Resources")  and  a  decrease  in  interest  expense  of  $165,000.

     We recorded a net loss of approximately $72,000 for the year ended December
31,  2004  compared to a net loss of approximately $1,522,000 for the year ended
December  31,  2003,  a  decrease  in  the  loss  of  approximately  $1,450,000.

     We  incurred  a  loss  of  approximately  $115,000  on our share of Florida
N-Viro, L.P. in 2004, a decrease in loss of $423,000 from 2003.  Included in the
loss for 2003 was approximately $500,000 for an impairment write-down of a group
of  assets  at  one  of Florida N-Viro's operating sites.  Our investment in the
joint venture reflects zero value on our balance sheet, and 2004's loss has been
added  to  the allowance to reserve the Note Receivable due from Florida N-Viro.
Even  though the investment is reflected at zero value, we believe the remaining
operating  assets of Florida N-Viro have value and will be marginally profitable
in 2005.  See the discussion in Liquidity and Capital Resources section later in
this  Item  6.

INFLATION

     We  believe  that  inflation  has  not had a material impact to date on our
operations.

LIQUIDITY  AND  CAPITAL  RESOURCES

     We  had a working capital deficit of approximately $384,000 at December 31,
2004  compared  to  a  deficit of $1,642,000 at December 31, 2003, a decrease of
approximately  $1,258,000.  Current  assets at December 31, 2004 include cash of
$223,000, which is an increase of approximately $100,000 from December 31, 2003,
of  which approximately $76,000 is restricted under our Bank credit agreement to
secure the credit facility.  The increase in working capital was principally due
to  the  private  placement  of  unregistered  common  stock  for  approximately
$592,000,  the issuance of stock for payment of trade payables for approximately
$319,000  and  the exercise of stock warrants and options totaling approximately
$111,000,  offset  by  the  operating  loss  for  the  year.

     In  2004  our  cash  flow  used  by operations was approximately $60,000, a
decrease of approximately $378,000 from 2003.  This decrease was principally due
to  a  decrease  in  both the net loss and the loss from Florida N-Viro totaling
approximately  $1,000,000  and cash received from the issuance of stock for fees
and services of approximately $499,000, reduced by the change in working capital
of  approximately  $1,900,000.

     In  February 2003 we closed on an $845,000 credit facility with Monroe Bank
+  Trust,  or  the  Bank.  This  senior  debt credit facility was comprised of a
$295,000  four  year  term  note  at 7.5% and a line of credit up to $550,000 at
Prime  plus  1.5%  and  secured by a first lien on all our assets .  We used the
funds  to  refinance  our prior debt and to provide working capital.  We were in
violation  of  financial covenants governing the credit facility at December 31,
2003,  but  the Bank waived this violation but required additional consideration
in  exchange  for  this  waiver.  In January 2004, we purchased a certificate of
deposit in the amount of $75,000 from the Bank, and transferred custodianship of
all  of our treasury stock to the Bank.  At the first anniversary of the initial
credit  facility,  the  Bank decreased the maximum amount available to borrow on
the line to $400,000, but also reduced the financial covenants to make it easier
for  us  to maintain the facility.  We currently have renewed the line of credit
through  October  2005, and are not in violation of any financial covenants.  In
February  2005,  the  Bank  amended the facility and released certain additional
collateral  but  required  us  to  provide  an additional $50,000 certificate of
deposit.  At  December 31, 2004, we had $200,000 of borrowing capacity under the
credit  facility.

     The normal collection period for accounts receivable is approximately 30-60
days  for  the  majority  of  customers.  This  is a result of the nature of the
license  contracts,  type  of customer and the amount of time required to obtain
the  information to prepare the billing.  We decreased our reserve for bad debts
in  December  2004  by  approximately $22,000 to reflect the decreased amount of
outstanding  trade  receivables  from  2003.

     During  2004,  our investment in a 47.5% owned partnership, Florida N-Viro,
L.P.,  recorded  a  net  loss  to  us of approximately $115,000.  Cash flow from
operations  of  Florida  N-Viro, L.P. was negative, partially due to the planned
closing  of one of its operating facilities, but we believe Florida N-Viro, L.P.
will  provide  adequate  cash  flow  to  fund  its  operations  for  2005.

     We  are  currently  active  in pursuing a sale of our investment in Florida
N-Viro, L.P., which may provide, in our opinion, additional funds to finance our
cash  requirements. This process has been delayed as a result of a change in the
ownership  of  our  partner,  and there can be no assurance we will successfully
complete  these  negotiations.

     During  the  first  quarter  of 2004, an additional 41,500 shares of common
stock  were  issued  to  some  of  our  employees and former directors for stock
options  exercised,  realizing total proceeds to us of $66,117.  Also during the
first  quarter  of  2004,  50,000  warrants were exercised jointly by J. Patrick
Nicholson and three of his sons, Michael, Robert and Timothy Nicholson, pursuant
to  the  terms  of  an  agreement  signed in February, 2003 and we issued 50,000
shares  of  unregistered  common stock in exchange for $45,000 in proceeds.  The
proceeds of the exercises of both the options and warrants were used for working
capital.

     Also  during  the  first  quarter  of  2004,  we  issued  72,237  shares of
unregistered  common stock to two trade creditors, eliminating $162,533 worth of
debt  owed  by  us to such creditors.  In addition, 7,329 shares of unregistered
common  stock  were  issued to Phillip Levin and Daniel Haslinger, respectively,
both  members  of  the  Board of Directors, in exchange for services rendered to
management  incurred  from  April  through December, 2003, for $9,000 each, or a
total  of  $18,000.

     From  February  to  June  of  2004,  we  issued  348,150  shares in private
placements  for total proceeds of $435,188.  During December, 2004, we issued an
additional  125,200 shares in private placements for total proceeds of $156,500.
We expect to issue approximately 70,000 additional shares subsequent to the date
of  the  filing  of this document in a private placement in the first quarter of
2005.

     On  May  28, 2004, we announced in a Form 8-K that we were renegotiating an
operating  contract  with our largest customer, the City of Toledo (the "City").
On  August  11,  2004,  we announced in a press release that the City approved a
resolution  on  August  10,  2004 to modify and extend our contract for advanced
sewage  sludge  stabilization  treatment  with them for an additional five years
through December 31, 2009.  Modifications to the contract include a reduction in
the  price per ton from $39.60 to $32.00 for the first 35,000 wet tons of sludge
processed,  but  provides  for an additional 3,000 wet tons at $25.00 per ton at
our  discretion.  The addendum also permits either party to re-open negotiations
on  pricing  due  to  increased  fuel  costs.  We  expect  to reduce our cost of
operating  this  contract  to  offset  the  reduction  of  revenue.

     In  June  2004,  we reached settlement on trade debt and a note owed to our
patent  law  firm,  which totalled $470,442 through June 30, 2004.  The law firm
agreed,  in  exchange  for  cash payments totaling $183,268 and our common stock
worth  $130,000  at  the time of delivery, to forgive the balance of $157,174 in
previously  billed  services  and  accrued interest.  The cash payments were due
from  July  14  through  July  31, 2004, and all payments were made timely.  The
stock  was required to be delivered on September 1 and November 1, 2004 in equal
installments, and both installments of stock were issued timely.  Our total cash
saved  as  a  result  of  this  settlement  was  $287,174.

     We  are  currently  in discussions with several companies in the cement and
fuel industries for the development and commercialization of the patented N-Viro
fuel  technology.  There  can  be  no  assurance  that these discussions will be
successful.

     We  continue  to  focus on the development of regional biosolids processing
facilities.  Currently  we  are in negotiations with several privatization firms
to  permit  and  develop  independent,  regional  facilities.

     We  expect  continued  improvements in operating results for 2005 primarily
due  to  lowered  administrative  costs,  along  with  realized and expected new
sources  of  revenue.  Additionally, market developments and ongoing discussions
with  companies  in  the  fuel  and wastewater industries could provide enhanced
liquidity  and  positively  impact  2005  operations.

OFF-BALANCE  SHEET  ARRANGEMENTS

     At  December 31, 2004, we did not have any material commercial commitments,
including  guarantees  or  standby  repurchase obligations, or any relationships
with unconsolidated entities or financial partnerships, including entities often
referred  to  as  structured  finance  or  special  purpose entities or variable
interest  entities,  which  would  have  been  established  for  the  purpose of
facilitating  off-balance  sheet  arrangements  or other contractually narrow or
limited  purposes.

     From  time  to  time,  during  the  normal  course of business, we may make
certain  indemnities,  commitments and guarantees under which we may be required
to  make  payments  in  relation  to  certain  transactions.  These include: (i)
indemnities  to  vendors and service providers pertaining to claims based on our
negligence  or willful misconduct and (ii) indemnities involving the accuracy of
representations  and warranties in certain contracts.  Pursuant to Delaware law,
we  may  indemnify  certain  officers  and  directors  for  certain  events  or
occurrences  while the officer or director is, or was, serving at our request in
such capacity.  We also have director and officer insurance coverage that limits
our  exposure  and enables us to recover a portion of any future amounts that we
may  pay  for  indemnification  purposes.  We  believe  the applicable insurance
coverage  is  generally  adequate to cover any estimated potential liability for
which  it  may  provide  indemnification.  The  majority  of  these indemnities,
commitments  and  guarantees  do  not  provide for any limitation of the maximum
potential  for  future  payments  we  could  be  obligated to make.  We have not
recorded  any  liability for these indemnities, commitments and other guarantees
in  the  accompanying  Consolidated  Balance  Sheets.

CONTRACTUAL  OBLIGATIONS

     The following table summarizes our contractual cash obligations at December
31, 2004, and the effect these obligations are expected to have on liquidity and
cash  flow  in  future  periods:


<TABLE>
<CAPTION>

                                                                         Payments Due By Period
                                                 Total     Less than 1 year   1 - 3 years   4 - 5 years   after 5 years
                                               ----------  -----------------  ------------  ------------  --------------
<S>                                 <C>        <C>         <C>                <C>           <C>           <C>
Purchase obligations . . . . . . .        (1)  $  729,200  $         150,800  $    270,400  $    156,000  $      152,000
Long-term debt obligations . . . .        (2)     205,335             91,072       114,263             -               -
Operating leases . . . . . . . . .        (3)     110,905             48,042        62,863             -               -
Capital lease obligations                               -                  -             -             -               -
Other long-term debt obligations                        -                  -             -             -               -
                                               ----------  -----------------  ------------  ------------  --------------
Total contractual cash obligations             $1,045,440  $         289,914  $    447,526  $    156,000  $      152,000
                                               ==========  =================  ============  ============  ==============
<FN>

(1)  Purchase  obligations  include  agreements  to  purchase  services  that  are  enforceable  and  legally
binding  on  the  Company  and  that  specify  all  significant  terms  and  the  approximate  timing  of  the
transaction.  Purchase  obligations  exclude  agreements  that  are  cancelable  without  penalty.

(2)  Amounts  represent  the  expected  cash  payments  of  our  long-term  obligations.

(3)  Amounts  represent  the  expected  cash  payments  of  our  operating  lease  obligations.
</TABLE>

CRITICAL  ACCOUNTING  POLICIES,  ESTIMATES  AND  ASSUMPTIONS

     In  preparing financial statements in conformity with accounting principles
generally  accepted  in  the  United  States,  management  makes  estimates  and
assumptions  that  affect  the  reported  amounts  of assets and liabilities and
disclosures  of  contingent  assets and liabilities at the date of the financial
statements,  as well as the reported amounts of revenues and expenses during the
reporting  period.  Actual  results  could  differ  from  those  estimates.  The
following  are  the significant estimates and assumptions made in preparation of
the  financial  statements:

     Non-domestic  license  and territory fees -  We do not recognize revenue on
any  non-domestic license or territory fee contracts until the cash is received,
assuming  all  other  tests  of revenue recognition are met.  Canada is excluded
from  this  definition  of  non-domestic.

     Allowance  for  Doubtful  Accounts  -  We estimate losses for uncollectible
accounts  based  on  the aging of the accounts receivable and the evaluation and
the  likelihood  of  success  in  collecting  the  receivable.

     Inventory  -  Inventory is recorded at lower of cost or market and consists
of  N-Viro  soil,  manufactured  by the Company, which is available for sale and
used  in  commercial,  agricultural  and  horticultural  applications.  The
weighted-average  method  is  used  to  value  the  inventory.

     Property  and  Equipment/Long-Lived  Assets  -  Property  and  equipment is
reviewed  for impairment pursuant to the provisions of SFAS No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets."  The carrying amount of an
asset  (group)  is  considered impaired if it exceeds the sum of our estimate of
the  undiscounted future cash flows expected to result from the use and eventual
disposition  of  the  asset  (group),  excluding  interest  charges.  Management
believes  the  carrying  amount is not impaired based upon estimated future cash
flows.

     Equity  Method Investment - We account for our investment in joint ventures
under  the  equity  method.  We  periodically evaluate the recoverability of our
equity  investments  in  accordance  with  APB  No.  18,  "The  Equity Method of
Accounting  for  Investments  in  Common Stock."  If circumstances were to arise
where  a  loss  would  be  considered  other  than  temporary, we would record a
write-down  of  excess  investment  cost.  Management  has  determined  that  no
write-down  was  required  at  December  31,  2004  and  2003.

     Intangible  Assets  - Intangible assets deemed to have indefinite lives are
tested  for  impairment  by  comparing  the  fair value with its carrying value.
Significant  estimates used in the determination of fair value include estimates
of  future  cash flows.  In accordance with SFAS No. 142, we test for impairment
annually.

     Fair Value of Financial Instruments - The carrying amounts of cash and cash
equivalents,  receivables,  accounts payable and accrued liabilities approximate
their  fair  values  because  of  the  short-term  nature  of these instruments.
Management  believes  the  carrying  amounts  of  the current and long-term debt
approximate  their  fair  value  based on interest rates for the same or similar
debt  offered  to  us  having  the  same  or  similar  terms  and  maturities.

     Income  Taxes -  We assume the deductibility of certain costs in income tax
filings  and  estimate  the  recovery  of  deferred  income  tax  assets.

     New  Accounting  Standards  -  The Financial Accounting Standards Board, or
FASB,  has issued the following new accounting and interpretations, which may be
applicable  in  the  future  to  us:

     SFAS  No.  151,  "Inventory Costs - an amendment of ARB No. 43, Chapter 4",
amends  the  guidance  in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify
the  accounting for abnormal amounts of idle facility expense, freight, handling
costs  and  wasted  material.  The  Statement  is  effective  immediately.  The
adoption of this standard had no effect on our financial condition or results of
operations.

     SFAS  No.  153,  "Exchanges  of  Nonmonetary  Assets  - an amendment of APB
Opinion  No. 29", amends the guidance in APB No. 29, "Accounting for Nonmonetary
Transactions,"  to  eliminate the exception for nonmonetary exchanges of similar
productive  assets  and  replace  it  with  a general exception for exchanges of
nonmonetary  assets  that  do  not  have commercial substance.  The Statement is
effective  immediately.  The  adoption  of  this  standard  had no effect on our
financial  condition  or  results  of  operations.

     SFAS  No.  123,  "Accounting  for Stock-Based Compensation", was revised in
December  2004.  This  revision changes the accounting for transactions in which
an  entity  obtains employee services in a share-based payment transaction.  For
Small  Business  issuers,  the Statement is effective as of the beginning of the
first  interim  period or annual reporting period that begins after December 15,
2005.  The adoption of this standard had no effect on our financial condition or
results  of  operations  for  the  current  year,  but it expected to affect our
financial condition and results of operations starting with the first quarter of
2006.

     Actual  results  could differ materially from the estimates and assumptions
that  we  use  in  the  preparation  of  our  financial  statements.

RISK  FACTORS

OUR  LICENSEES  ARE  SUBJECT TO EXTENSIVE AND INCREASINGLY STRICT FEDERAL, STATE
AND  LOCAL  ENVIRONMENTAL  REGULATION  AND  PERMITTING.

     Our  licensees  and  their  operations  are  subject to increasingly strict
environmental laws and regulations, including laws and regulations governing the
emission,  discharge,  disposal  and  transportation  of  certain substances and
related  odor.  Wastewater  treatment  plants  and  other  plants  at  which our
biosolids  products or processes may be implemented are usually required to have
permits,  registrations and/or approvals from state and/or local governments for
the  operation  of  such  facilities.  Some of our licensee's facilities require
air,  wastewater,  storm  water,  biosolids  processing,  use or siting permits,
registrations  or  approvals.  These  licensees  may  not be able to maintain or
renew  their  current  permits  or  registrations  or  to  obtain new permits or
registrations.  The  process  of obtaining a required permit or registration can
be lengthy and expensive.  They may not be able to meet applicable regulatory or
permit  requirements,  and therefore may be subject to related legal or judicial
proceedings  that  could  have a materially adverse effect on our income derived
from  these  licensees.

     Any  of  the  permits,  registrations  or approvals noted above, or related
applications  may be subject to denial, revocation or modification, or challenge
by  a  third  party,  under  various  circumstances.  In  addition,  if  new
environmental  legislation or regulations are enacted or existing legislation or
regulations  are  amended  or  are  enforced differently, these licensees may be
required  to  obtain  additional,  or  modify  existing,  operating  permits,
registrations  or  approvals.

     Maintaining,  modifying  or  renewing  current  permits or registrations or
obtaining  new  permits  or registrations after new environmental legislation or
regulations  are  enacted  or existing legislation or regulations are amended or
enforced  differently may be subject to public opposition or challenge.  Much of
this  public opposition and challenge, as well as related complaints, relates to
odor  issues,  even  when our licensees are in compliance with odor requirements
and  even  though  the  licensees  have  worked hard to minimize odor from their
operations.  Public misperceptions about the business and any related odor could
influence  the governmental process for issuing such permits or registrations or
for  responding  to  any  such public opposition or challenge.  Community groups
could  pressure  local municipalities or state governments to implement laws and
regulations  which  could increase our licensees' costs of their operations that
in  turn  could have a material and adverse effect on our business and financial
condition.

THE  ABILITY  TO  GROW  MAY  BE  LIMITED  BY  COMPETITION.

     We  provide  a variety of technology and services relating to the treatment
of  wastewater  residuals.  We are in direct and indirect competition with other
businesses  that  provide  some  or  all of the same services including regional
residuals  management  companies  and  national  and  international  water  and
wastewater  operations/privatization  companies, technology suppliers, municipal
solid  waste  companies  and  farming operations.  Many of these competitors are
larger  and  have  significantly  greater  capital  resources.

     We derive a substantial portion of our revenue from services provided under
municipal  contracts,  and many of these are subject to competitive bidding.  We
also  intend  to  bid on additional municipal contracts, however, and may not be
the  successful  bidder.  In  addition, some of our contracts will expire in the
future  and  those  contracts  may  not  be  renewed  or  may be renewed on less
attractive  terms.  If  we  are not able to replace revenues from contracts lost
through competitive bidding or from the renegotiation of existing contracts with
other  revenues  within  a reasonable time period, the lost revenue could have a
material  and adverse effect on our business, financial condition and results of
operation.

OUR  CUSTOMER CONTRACTS MAY BE TERMINATED PRIOR TO THE EXPIRATION OF THEIR TERM.

     A  substantial  portion  of  our  revenue is derived from services provided
under  contracts  and  agreements  with  existing  licensees.  Some  of  these
contracts,  especially  those  contracts  with large municipalities, provide for
termination  of  the contract by the customer after giving relative short notice
(in  some  cases  as  little as ten days).  In addition, some of these contracts
contain  liquidated  damages clauses, which may or may not be enforceable in the
event  of early termination of the contracts.  If one or more of these contracts
are  terminated  prior  to  the  expiration  of its term, and we are not able to
replace  revenues  from  the  terminated  contract or receive liquidated damages
pursuant  to  the  terms of the contract, the lost revenue could have a material
and  adverse  effect  on  our  business,  financial  condition  and  results  of
operations.

A  SIGNIFICANT  AMOUNT  OF OUR BUSINESS COMES FROM A LIMITED NUMBER OF CUSTOMERS
AND  OUR REVENUE AND PROFITS COULD DECREASE SIGNIFICANTLY IF WE LOST ONE OR MORE
OF  THEM  AS  CUSTOMERS.

     Our  business  depends  on  provision  of  services  to a limited number of
customers.  One  or  more  of  these customers may stop contracting for services
from us or may substantially reduce the amount of services we provide them.  Any
cancellation, deferral or significant reduction in the services we provide these
principal customers or a significant number of smaller customers could seriously
harm our business and financial condition.  For the year ended December 31, 2004
and 2003, our single largest customer accounted for approximately 34 percent and
35  percent, respectively, of our revenues and our top three customers accounted
for  approximately  63  percent  and  69 percent, respectively, of our revenues.

WE  ARE  AFFECTED  BY  UNUSUALLY  ADVERSE  WEATHER  CONDITIONS.

     Our  business  is  adversely  affected  by  unusual  weather conditions and
unseasonably  heavy  rainfall  which  can temporarily reduce the availability of
land  application  sites  in  close  proximity  to our operations.  In addition,
revenues  and  operational  results  are  adversely  affected  during  months of
inclement  weather  which  limits  the  level  of  land  application that can be
performed.  Long  periods  of  adverse  weather  could  have a material negative
effect  on  our  business  and  financial  condition.

FUEL  COST  VARIATION  COULD  AFFECT  OPERATING  RESULTS  AND  EXPENSES.

     The  price  and  supply  of  fuel  is unpredictable and fluctuates based on
events  outside  our  control, including demand for oil and gas, actions by OPEC
and  other  oil  and gas producers, and war in oil producing countries.  Because
fuel  is  needed  for  the  trucks  that  transport the processing materials and
supplies  for  our  customers,  price escalations or reductions in the supply of
fuel could increase operating expenses and have a negative impact on the results
of  operations.  We  are  not  always  able  to  pass through all or part of the
increased  fuel  costs  due to the terms of certain customers' contracts and the
inability  to  negotiate  such  pass  through  costs  in  a  timely  manner.

WE  ARE  DEPENDENT  ON  THE  MEMBERS  OF  OUR  MANAGEMENT  TEAM.

     We are highly dependent on the services of our management team, the loss of
any  of  whom  may  have a material adverse effect on our business and financial
condition.

     We  have  entered  into  employment  agreements with certain members of our
management  team,  which  contain non-compete and other provisions.  The laws of
each  state  differ concerning the enforceability of non-competition agreements.
We  cannot  predict  with  certainty  whether  or  not  a  court  will enforce a
non-compete covenant in any given situation based on the facts and circumstances
at that time.  If one of our key executive officers were to leave our employ and
the  courts  refused to enforce the non-compete covenant, we might be subject to
increased  competition,  which  could  have a material and adverse effect on our
business  and  financial  condition.

OUR  INTELLECTUAL  PROPERTY  MAY  BE  MISAPPROPRIATED  OR  SUBJECT  TO CLAIMS OF
INFRINGEMENT.

     We  attempt  to  protect  our  intellectual  property  rights  through  a
combination  of  patent,  trademark, and trade secret laws, as well as licensing
agreements.  Our  failure  to  obtain  or  maintain  adequate  protection of our
intellectual property rights for any reason could have a material adverse effect
on  our  business  and  financial  condition.

     Our competitors, many of whom have substantially greater resources and have
made  substantial investments in competing technologies, may have applied for or
obtained,  or may in the future apply for and obtain, patents that will prevent,
limit  or  otherwise  interfere with our ability to offer services.  We have not
conducted  an  independent  review  of  patents  issued  to  third  parties.

     We  also  rely  on  unpatented proprietary technology.  It is possible that
others  will  independently  develop the same or similar technology or otherwise
obtain  access  to  our unpatented technology.  If we are unable to maintain the
proprietary  nature  of  our  technologies,  we  could  be  materially adversely
affected.


<PAGE>
ITEM  7.          FINANCIAL  STATEMENTS






                          INDEX TO FINANCIAL STATEMENTS



                                                                           Page
                                                                           ----

REPORTS  OF  INDEPENDENT  REGISTERED  PUBLIC  ACCOUNTING  FIRMS     F-3  -  F-4

FINANCIAL  STATEMENTS
    Consolidated  balance  sheets                                   F-5  -  F-6
    Consolidated  statements  of  operations                                F-7
    Consolidated  statements  of  stockholders'  equity                     F-8
    Consolidated  statements  of  cash  flows                               F-9
    Notes  to  consolidated  financial  statements                F-10  -  F-27











REPORT  OF  INDEPENDENT  REGISTERED  PUBLIC  ACCOUNTING  FIRM


Board  of  Directors
N-Viro  International  Corporation

We  have  audited  the  accompanying  consolidated  balance  sheet  of  N-Viro
International  Corporation (a Delaware entity), as of December 31, 2004, and the
related  consolidated  statements  of operations, stockholders' equity, and cash
flows  for the year then ended.  These consolidated financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion  on  these  consolidated  financial  statements  based  on  our  audit.

The Company has an investment in Florida N-Vivo, L.P., which is accounted for in
the  accompanying financial statement using the equity method of accounting.  We
did  not  audit  the financial statements of Florida N-Viro, L.P.  The financial
statements  of this partnership were audited by other auditors, whose report has
been  furnished  to us, and in our opinion, insofar as it relates to the amounts
and  information relating to this partnership, is based solely on the reports of
the  other  auditors.

We  conducted  our  audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the
consolidated  financial  statements  are free of material misstatement. An audit
includes  examining,  on  a  test  basis,  evidence  supporting  the amounts and
disclosures  in  the  consolidated 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  audit  provides  a  reasonable  basis  for  our opinion.

In  our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of N-Viro International
Corporation  as  of  December 31, 2004 and the results of its operations and its
cash  flows  for  the  year  then ended in conformity with accounting principles
generally  accepted  in  the  United  States  of  America.




 /s/UHY  LLP
------------
UHY  LLP
Southfield,  Michigan

March  10,  2005






<PAGE>







REPORT  OF  INDEPENDENT  REGISTERED  PUBLIC  ACCOUNTING  FIRM


Board  of  Directors
N-Viro  International  Corporation
Toledo,  Ohio  43606

We  have  audited  the  accompanying  consolidated  balance  sheet  of  N-Viro
International  Corporation (a Delaware entity), as of December 31, 2003, and the
related  consolidated  statements  of operations, stockholders' equity, and cash
flows  for  the year then ended. These consolidated financial statements are the
responsibility  of the Company's management. Our responsibility is to express an
opinion  on  these  consolidated  financial  statements  based  on  our  audit.

The Company has an investment in Florida N-Vivo, L.P., which is accounted for in
the  accompanying financial statement using the equity method of accounting.  We
did  not  audit  the financial statements of Florida N-Viro, L.P.  The financial
statements  of this partnership were audited by other auditors, whose report has
been  furnished  to us, and in our opinion, insofar as it relates to the amounts
and  information relating to this partnership, is based solely on the reports of
the  other  auditors.

We  conducted our audit 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 consolidated
financial  statements  are  free  of  material  misstatement.  An audit includes
examining,  on  a test basis, evidence supporting the amounts and disclosures in
the  consolidated  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
audit  provides  a  reasonable  basis  for  our  opinion.

In  our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of N-Viro International
Corporation  as  of  December 31, 2003 and the results of its operations and its
cash  flows  for  the  year  then ended in conformity with accounting principles
generally  accepted  in  the  United  States  of  America.




 /s/   FOLLMER  RUDZEWICZ  PLC
------------------------------
FOLLMER  RUDZEWICZ  PLC
Southfield,  Michigan
April  1,  2004






<PAGE>


<TABLE>
<CAPTION>

                        N-VIRO INTERNATIONAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 2004 and 2003
                           --------------------------


                                             2004        2003
                                          ----------  ----------
<S>                                       <C>         <C>
ASSETS
----------------------------------------

CURRENT ASSETS
Cash and cash equivalents:
Unrestricted . . . . . . . . . . . . . .  $  147,549  $  123,547
Restricted . . . . . . . . . . . . . . .      75,600           -
Receivables:
Trade, net . . . . . . . . . . . . . . .     578,070     842,583
Stock subscription . . . . . . . . . . .      42,500           -
Notes receivable - current . . . . . . .     112,802      59,017
Related parties. . . . . . . . . . . . .           -      17,000
Prepaid expenses and other assets. . . .     108,732      49,540
Inventory. . . . . . . . . . . . . . . .           -      80,932
                                          ----------  ----------
Total current assets . . . . . . . . . .   1,065,253   1,172,619

PROPERTY AND EQUIPMENT, NET. . . . . . .     360,952     468,497

INVESTMENTS IN AND ADVANCES TO
     FLORIDA N-VIRO L.P.. . . . . . . . . .  186,475     301,924

NOTES RECEIVABLE, NET OF CURRENT PORTION         338      44,324

INTANGIBLE AND OTHER ASSETS, NET . . . .   1,078,771   1,209,825
                                          ----------  ----------


                                          $2,691,789  $3,197,189
                                          ==========  ==========
</TABLE>






   The accompanying notes are an integral part of these financial statements.




<TABLE>
<CAPTION>

                               N-VIRO INTERNATIONAL CORPORATION
                                 CONSOLIDATED BALANCE SHEETS
                                  December 31, 2004 and 2003
                                  --------------------------


                                                                     2004           2003
                                                                 -------------  -------------
<S>                                                              <C>            <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
---------------------------------------------------------------

CURRENT LIABILITIES
Current maturities of long-term debt. . . . . . . . . . . . . .  $     91,072   $    259,782
Line-of-credit. . . . . . . . . . . . . . . . . . . . . . . . .       200,000        398,223
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . .       864,580      1,737,019
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . .       293,201        419,377
                                                                 -------------  -------------
Total current liabilities . . . . . . . . . . . . . . . . . . .     1,448,853      2,814,401

LONG-TERM DEBT, LESS CURRENT MATURITIES . . . . . . . . . . . .       114,263        394,722
                                                                 -------------  -------------

Total liabilities . . . . . . . . . . . . . . . . . . . . . . .     1,563,116      3,209,123

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $.01 par value
Authorized - 7,000,000 shares
Issued - 3,569,693 shares in 2004 and 2,713,833 shares in 2003.        35,697         27,138
Preferred stock, $.01 par value
Authorized - 2,000,000 shares
Issued - 1 share in 2004 and 2003 . . . . . . . . . . . . . . .             -              -
Additional paid-in capital. . . . . . . . . . . . . . . . . . .    14,791,346     13,587,484
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . .   (13,013,480)   (12,941,666)
                                                                 -------------  -------------
                                                                    1,813,563        672,956

Less treasury stock, at cost, 123,500 shares. . . . . . . . . .       684,890        684,890
                                                                 -------------  -------------
Total stockholders' equity (deficit). . . . . . . . . . . . . .     1,128,673        (11,934)
                                                                 -------------  -------------

                                                                 $  2,691,789   $  3,197,189
                                                                 =============  =============
</TABLE>









   The accompanying notes are an integral part of these financial statements.

<TABLE>
<CAPTION>

                             N-VIRO INTERNATIONAL CORPORATION

                           CONSOLIDATED STATEMENTS OF OPERATIONS

                          Years Ended December 31, 2004 and 2003
                          --------------------------------------



                                                                    2004          2003
                                                                 -----------  ------------
<S>                                                              <C>          <C>
REVENUES. . . . . . . . . . . . . . . . . . . . . . . . . . . .  $5,453,493   $ 5,401,048

COST OF REVENUES. . . . . . . . . . . . . . . . . . . . . . . .   3,940,703     3,970,380
                                                                 -----------  ------------

GROSS PROFIT. . . . . . . . . . . . . . . . . . . . . . . . . .   1,512,790     1,430,668

OPERATING EXPENSES
Selling, general and administrative . . . . . . . . . . . . . .   1,591,009     2,209,112
Litigation settlement expense . . . . . . . . . . . . . . . . .      37,100        43,900
                                                                 -----------  ------------
                                                                  1,628,109     2,253,012
                                                                 -----------  ------------

OPERATING LOSS. . . . . . . . . . . . . . . . . . . . . . . . .    (115,319)     (822,344)

NONOPERATING INCOME (EXPENSE)
Interest and dividend income. . . . . . . . . . . . . . . . . .      23,686        25,165
Interest expense. . . . . . . . . . . . . . . . . . . . . . . .      (6,274)     (170,793)
Loss on sale of assets. . . . . . . . . . . . . . . . . . . . .     (15,632)      (15,547)
Loss from equity investment in joint venture. . . . . . . . . .    (115,449)     (538,659)
Gain on legal debt forgiven . . . . . . . . . . . . . . . . . .     157,174             -
                                                                 -----------  ------------
                                                                     43,505      (699,834)
                                                                 -----------  ------------

LOSS BEFORE INCOME TAXES. . . . . . . . . . . . . . . . . . . .     (71,814)   (1,522,178)

Federal and state income taxes. . . . . . . . . . . . . . . . .           -             -
                                                                 -----------  ------------

NET LOSS. . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  (71,814)  $(1,522,178)
                                                                 ===========  ============


Basic and diluted loss per share. . . . . . . . . . . . . . . .  $    (0.02)  $     (0.59)
                                                                 ===========  ============

Weighted average common shares outstanding - basic and diluted.   3,079,216     2,578,871
                                                                 ===========  ============
</TABLE>





   The accompanying notes are an integral part of these financial statements.







<TABLE>
<CAPTION>

                                     N-VIRO INTERNATIONAL CORPORATION

                             CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                  Years Ended December 31, 2004 and 2003
                                  --------------------------------------

                                                     Additional
                                           Common     Paid-in     Accumulated     Treasury
                                            Stock      Capital       Deficit       Stock        Total
                                           --------  -----------  -------------  ----------  ------------
<S>                                        <C>       <C>          <C>            <C>         <C>
BALANCE JANUARY 1, 2003 . . . . . . . . .  $27,010   $13,495,602  $(11,419,488)  $(684,890)  $ 1,418,234

Net loss. . . . . . . . . . . . . . . . .        -             -    (1,522,178)          -    (1,522,178)
Issuance of common stock for options
                         - 12,900 shares.      129        24,482             -           -        24,611
Other . . . . . . . . . . . . . . . . . .       (1)       67,400             -           -        67,399
                                           --------  -----------  -------------  ----------  ------------

BALANCE DECEMBER 31, 2003 . . . . . . . .   27,138    13,587,484   (12,941,666)   (684,890)      (11,934)

Net loss. . . . . . . . . . . . . . . . .        -             -       (71,814)          -       (71,814)
Issuance of common stock for options
                          - 41,500 shares      415        65,429             -           -        65,844
Issuance of common stock - 814,360 shares    8,144     1,122,264             -           -     1,130,408
Other . . . . . . . . . . . . . . . . . .        -        16,169             -           -        16,169
                                           --------  -----------  -------------  ----------  ------------

BALANCE DECEMBER 31, 2004 . . . . . . . .  $35,697   $14,791,346  $(13,013,480)  $(684,890)  $ 1,128,673
                                           ========  ===========  =============  ==========  ============
</TABLE>











   The accompanying notes are an integral part of these financial statements.




<TABLE>
<CAPTION>

                                N-VIRO INTERNATIONAL CORPORATION

                             CONSOLIDATED STATEMENTS OF CASH FLOWS

                             Years Ended December 31, 2004 and 2003
                             --------------------------------------


                                                                         2004          2003
                                                                     ------------  ------------
<S>                                                                  <C>           <C>

Cash Flows From Operating Activities
Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $   (71,814)  $(1,522,178)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . .      232,857       263,834
Provision (credit) for bad debts. . . . . . . . . . . . . . . . . .      (21,946)       15,946
Issuance of stock for debt and services . . . . . . . . . . . . . .      498,543             -
Loss on the sale of fixed assets. . . . . . . . . . . . . . . . . .       15,632        15,547
Loss from investment in Florida N-Viro. . . . . . . . . . . . . . .      115,449       538,658
Changes in Operating Assets and Liabilities
Decrease (increase) in trade receivables. . . . . . . . . . . . . .      279,762       113,339
Decrease (increase) in prepaid expenses and other assets. . . . . .      (75,770)       47,418
Decrease (increase) in inventory. . . . . . . . . . . . . . . . . .       80,932        36,508
(Decrease) increase in accounts payable and accrued liabilities . .   (1,114,030)      808,270
                                                                     ------------  ------------
Net cash provided by (used in) operating activities . . . . . . . .      (60,385)      317,342

Cash Flows From Investing Activities
Reductions to (increases from) restricted cash and cash equivalents      (75,600)      400,000
Purchases of property and equipment . . . . . . . . . . . . . . . .       (3,395)      (21,378)
Proceeds from sale of property and equipment. . . . . . . . . . . .        1,354         8,692
Increase in notes receivable. . . . . . . . . . . . . . . . . . . .            -      (157,636)
Collections on notes receivable . . . . . . . . . . . . . . . . . .       22,000        35,838
Expenditures for intangible assets. . . . . . . . . . . . . . . . .      (25,020)      (65,345)
                                                                     ------------  ------------
Net cash provided by (used in) investing activities . . . . . . . .      (80,661)      200,171

Cash Flows From Financing Activities
Net repayments on line-of-credit. . . . . . . . . . . . . . . . . .     (198,223)     (257,864)
Borrowings under long-term obligations. . . . . . . . . . . . . . .       74,386       369,753
Principal payments on long-term obligations . . . . . . . . . . . .     (317,554)     (528,900)
Issuance of common stock for options exercised. . . . . . . . . . .       69,867        24,610
Issuance of common stock. . . . . . . . . . . . . . . . . . . . . .      548,313            -
Expenditures for private placement of stock . . . . . . . . . . . .      (11,741)       (6,500)
                                                                     ------------  ------------
Net cash provided by (used in) financing activities . . . . . . . .      165,048      (398,901)
                                                                     ------------  ------------

Net Increase in Cash and Cash Equivalents . . . . . . . . . . . . .       24,002       118,612

Cash and Cash Equivalents - Beginning . . . . . . . . . . . . . . .      123,547         4,935
                                                                     ------------  ------------

Cash and Cash Equivalents - Ending. . . . . . . . . . . . . . . . .  $   147,549   $   123,547
                                                                     ============  ============


Supplemental disclosure of cash flows information:
Cash paid during the year for interest. . . . . . . . . . . . . . .  $    49,990   $   100,571
                                                                     ============  ============
</TABLE>





   The accompanying notes are an integral part of these financial statements.

<PAGE>
                        N-VIRO INTERNATIONAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                      F-28
NOTE  1.     OPERATIONS  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

The  following  is  a  summary  of  certain  accounting policies followed in the
preparation  of  these  financial statements.  The policies conform to generally
accepted  accounting  principles  and  have  been  consistently  applied  in the
preparation  of  the  financial  statements:

A.     Nature  of Business - The Company owns and licenses the N-Viro Process, a
patented  technology  to  treat  and  recycle  wastewater  sludges  and  other
bio-organic  wastes,  utilizing  certain  alkaline  by-products  produced by the
cement,  lime, electric utilities and other industries.  Revenue and the related
accounts  receivable  are  due  from  companies  acting as independent agents or
licensees,  principally  municipalities.  Credit  is  generally  granted  on  an
unsecured  basis.  Periodic  credit  evaluations  of customers are conducted and
appropriate  allowances  are  established.

B.     Use  of Estimates - The preparation of financial statements in conformity
with  accounting  principles  generally accepted in the United States of America
requires  management  to make estimates and assumptions that affect the reported
amounts  of  assets  and  liabilities  and  disclosure  of contingent assets and
liabilities  as of the date of the financial statements and the reported amounts
of  revenues  and  expenses  during  the reporting period.  Actual results could
differ  from  those  estimates.

C.     Principles  of  Consolidation  -  The  consolidated  financial statements
include  the  accounts  of  the  Company and its wholly-owned subsidiaries.  All
significant  intercompany  accounts  and  transactions  have  been eliminated in
consolidation.

D.     The  Company  accounts  for  its  investment in a joint venture under the
equity  method.  The  Company  periodically  evaluates the recoverability of its
equity  investments  in  accordance  with  APB  No.  18,  "The  Equity Method of
Accounting  for  Investments  in  Common Stock."  If circumstances were to arise
where  a loss would be considered other than temporary, the Company would record
a  write-down  of  excess  investment  cost.  Management  has determined that no
write-down  was  required  at  December  31,  2004  and  2003.

E.     Fair  Value  of Financial Instruments - The fair values of cash, accounts
receivable,  accounts payable and other short-term obligations approximate their
carrying  values  because  of the short maturity of these financial instruments.
The  carrying  values  of  the Company's long-term obligations approximate their
fair  value.  In  accordance  with  Statement  of Financial Accounting Standards
("SFAS")  No. 107, "Disclosure About Fair Value of Financial Instruments," rates
available  at  balance  sheet dates to the Company are used to estimate the fair
value  of  existing  debt.

F.     Cash  and  Cash  Equivalents  -  The  Company  has cash on deposit in one
financial  institution  which,  at  times,  may  be  in excess of FDIC insurance
limits.

     For  purposes  of  the  statements of cash flows, the Company considers all
certificates  of  deposit  with initial maturities of 90 days or less to be cash
equivalents.

     Restricted  cash  consists  of  a  certificate of deposit which was held as
collateral  against  the  Company's  line-of-credit  as  of  December  31, 2004.

G.     Accounts  receivable  - The Company extends unsecured credit to customers
under  normal  trade agreements, which require payment within 30 days.  Accounts
greater  than  90  days  past  due  amounted  to  $13,553  and  $124,314  of net
receivables  for  the years ended December 31, 2004 and 2003, respectively.  The
Company's  policy  is not to accrue and record interest income on past due trade
receivables.  The  Company  does  bill  the customer finance charges on past due
accounts  and  records  the  interest  income  when  collected.

<PAGE>
                        N-VIRO INTERNATIONAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE  1.     OPERATIONS  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES
(CONTINUED)

     Management  estimates an allowance for doubtful accounts, which was $34,000
and  $55,946  as  of  December 31, 2004 and 2003, respectively.  The estimate is
based  upon  management's review of delinquent accounts and an assessment of the
Company's  historical  evidence  of  collections.

H.     Inventory - Inventory is recorded at lower of cost or market and consists
of  N-Viro  soil,  manufactured  by the Company, which is available for sale and
used  in  commercial,  agricultural  and  horticultural  applications.  The
weighted-average  method  is  used  to  value  the  inventory.

I.     Property  and Equipment - Property, machinery and equipment are stated at
cost less accumulated depreciation.  Depreciation has been computed primarily by
the  straight-line  method  over  the  estimated  useful  lives  of  the assets.
Generally,  useful  lives are five to fifteen years.  Leasehold improvements are
capitalized  and  amortized  over  the  lesser  of  the life of the lease or the
estimated  useful  life  of the asset.  Depreciation expense amounted to $89,303
and  $116,572  in 2004 and 2003, respectively.  Management has reviewed property
and  equipment  for  impairment  when events and circumstances indicate that the
assets  might  be  impaired  and  the carrying values of those assets may not be
recoverable.  Management believes the carrying amount is not impaired based upon
estimated  future  cash  flows.

J.     Intangible  Assets  -  Patent  costs and territory rights are recorded at
cost  and then amortized by the straight-line method over their estimated useful
lives  (periods  ranging  from  four  to  seventeen  years;  weighted-average
amortization  periods  for patents/related intangibles and territory rights were
14.9  years  at  December  31, 2004 and 2003).  Amortization expense amounted to
$143,554  and  $140,558  in  2004 and 2003, respectively; estimated amortization
expense,  based  on  intangible  assets  at  December  31, 2004, for each of the
ensuing  five  years  is  as  follows:  2005 - $144,000; 2006 - $137,000; 2007 -
$123,000;  2008  - $105,000; 2009 - $98,000.  Management has reviewed intangible
assets  for  impairment  when  events and circumstances indicate that the assets
might  be  impaired  and  the  carrying  values  of  those  assets  may  not  be
recoverable.  Management believes the carrying amount is not impaired based upon
estimated future cash flows.  In accordance with SFAS No. 142, the Company tests
for  impairment  annually.

     The Company is also amortizing the capitalized cost of obtaining its credit
facility,  for  the additional collateral required and evidenced by a warrant to
purchase  50,000  shares  of  the Company's common stock.  The Company estimated
this  cost  at  February  26,  2003 to be $30,000, and is amortizing this over 4
years  by  the straight-line method.  Amortization expense amounted to $7,500 in
2004  and  $6,705  in 2003;  estimated amortization expense for each of the next
three  years  is  as  follows:  2005-2006  -  $7,500;  2007  -  $795.

K.     Revenue  Recognition  -  Facility  management  revenue, sludge processing
revenue  and  royalty  fees  are recognized under contracts where the Company or
licensees  utilize  the  N-Viro  Process  to  treat sludge, either pursuant to a
fixed-price  contract  or  based  on  volumes  of  sludge processed.  Revenue is
recognized  as  services  are  performed.

          Alkaline  admixture  sales,  alkaline  admixture  management  service
revenue,  equipment  sales and N-Viro Soil revenue are recognized upon shipment.

          License  and  territory  fees  are  generated  by selling the right to
market or use the N-Viro Process in a specified territory.  The Company's policy
is  to  record  revenue  for  the  license agreements when all material services
relating to the revenue have been substantially performed, conditions related to
the  contract  have  been met and no material contingencies exist.  Research and
development  revenue  is  recognized  as  work  is  performed  and billed to the
contracting  entity  in  accordance  with  the  contract.

          Any  type of revenue generated from international customers (excluding
Canada)  is  recognized  when  the  cash  is  received.


<PAGE>
                        N-VIRO INTERNATIONAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE  1.     OPERATIONS  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES
(CONTINUED)

          The  Company  records the amount of shipping and handling costs billed
to  customers  as revenue.  The cost incurred for shipping and handling has been
included  in  the  cost  of  sales.

L.     Loss  Per  Common  Share - Loss per common share has been computed on the
basis  of  the  weighted-average number of common shares outstanding during each
period  presented.  For  the years ended December 31, 2004 and 2003, the effects
of the stock options granted are excluded from the diluted per share calculation
because  they  would  be  antidilutive.

M.      Stock  Options  -  As  permitted  under  accounting principles generally
accepted  in the United States of America, the Company's present accounting with
respect  to the recognition and measurement of stock-based employee compensation
costs  is  in  accordance with APB Opinion No. 25, which generally requires that
compensation  costs be recognized for the difference, if any, between the quoted
market  price  of the stock at grant date and the amount an employee must pay to
acquire the stock.  No compensation cost was recognized under APB No. 25 for the
years  ended  December  31,  2004  and 2003.  The Company follows the disclosure
provisions  of  SFAS Statements No. 123 and No. 148 which prescribe a fair-value
based  method  of  measurement  that  results  in  the  disclosure  of  computed
compensation  costs  for  essentially  all awards of stock-based compensation to
employees.

<TABLE>
<CAPTION>


                                                2004         2003
                                             ----------  ------------
<S>                                          <C>         <C>
Loss from continuing operations:
Net loss as reported. . . . . . . . . . . .  $ (71,814)  $(1,522,178)
Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards, net
of related tax effects. . . . . . . . . . .    692,284        74,484
                                             ----------  ------------
Pro-forma net loss. . . . . . . . . . . . .   (764,098)   (1,596,662)
Loss from continuing operations per
share (basic and diluted):
As reported . . . . . . . . . . . . . . . .  $   (0.02)  $     (0.59)
Pro-forma . . . . . . . . . . . . . . . . .  $   (0.25)  $     (0.62)
                                             ----------  ------------
</TABLE>



In determining the pro forma amounts above, the value of each grant is estimated
at  the  grant date using the fair value method prescribed in Statement No. 123,
with  the  following  weighted-average  assumptions for grants in 2004 and 2003,
respectively:  no assumed dividend rates for all years; risk-free interest rates
of 4.4% and 4.5%, respectively, on expected lives of 10 years for all years; and
expected  price  volatility  of  237%  and  199%,  respectively.


N.  New  Accounting  Standards - In November 2004, the FASB issued SFAS No. 151,
"Inventory  Costs  -  an  amendment  of ARB No. 43, Chapter 4", which amends the
guidance  in  ARB  No.  43,  Chapter  4,  "Inventory  Pricing,"  to  clarify the
accounting  for  abnormal  amounts  of  idle facility expense, freight, handling
costs and wasted material.  The Statement is effective immediately.  The Company
does  not  expect  the  application  of the provisions of SFAS No. 151 to have a
material  impact on its financial position, results of operations or cash flows.

          In  December  2004,  the  FASB  issued  SFAS  No.  153,  "Exchanges of
Nonmonetary  Assets  -  an  amendment  of  APB Opinion No. 29", which amends the
guidance  in APB No. 29, "Accounting for Nonmonetary Transactions," to eliminate
the exception for nonmonetary exchanges of similar productive assets and replace
it with a general exception for exchanges of nonmonetary assets that do not have
commercial substance.  The Statement is effective immediately.  The Company does
not  expect the application of the provisions of SFAS No. 153 to have a material
impact  on  its  financials  position,  results  of  operations  or  cash flows.

          In  December  2004,  the  FASB  revised  SFAS No. 123, "Accounting for
Stock-Based  Compensation".  This  revision  changes  the  accounting  for
transactions  in  which  an  entity  obtains  employee services in a share-based
payment  transaction.  For Small Business issuers, the Statement is effective as
of  the  beginning  of  the first interim period or annual reporting period that
begins  after December 15, 2005.  The adoption of this standard had no effect on
our  financial  condition  or results of operations for the current year, but it
expected  to  affect  our financial condition and results of operations starting
with  the  first  quarter  of  2006.

O.     Advertising  costs  -  Advertising  costs  are  expensed  as  incurred.

P.     Income  taxes  -  Deferred income tax assets and liabilities are computed
annually for differences between the financial statement and tax bases of assets
and  liabilities that will result in taxable or deductible amounts in the future
based  on  enacted  tax  laws  and  rates applicable to the periods in which the
differences  are  expected  to  affect taxable income.  Valuation allowances are
established  when necessary to reduce deferred tax assets to the amount expected
to  be  realized.  Income  tax  expense is the tax payable or refundable for the
current period plus or minus the change during the period in deferred tax assets
and  liabilities.

<PAGE>
NOTE  2.     BALANCE  SHEET  DATA

NOTES  AND  OTHER  RECEIVABLES:

STOCK  SUBSCRIPTION  RECEIVABLE:

At  December  31,  2004,  the Company had a stock subscription receivable in the
amount  of  $42,500  due  from two related parties, both members of the Board of
Directors,  and  this  amount  was  paid  to  the  Company  in  January  2005.


NOTES  AND  OTHER  RECEIVABLES:

The  Company  had  an  unsecured  receivable from a related party, N-Viro Energy
Systems,  Inc.,  estimated  to  be $17,000 in 2003.  During 2004, the amount due
from  the  related  party has been deemed to be paid as a result of negotiations
between  the  Company  and  the  related party, as part of a settlement with the
Company's  former  Chairman  of  the  Board.

At  December  31, 2004, an unsecured, 6% demand note receivable dated October 1,
2003  is  due from an unrelated third-party licensee, Soil Preparation Inc., for
$110,528.  The  Note  is  for  18  months,  with  principal scheduled to be paid
commencing July 1, 2004 and ending December 1, 2005.  All 6 installment payments
were  unpaid  as  of December 31, 2004, but were paid to the Company in February
2005.

At December 31, 2004, an unsecured, 6% demand note receivable dated December 15,
2003 is due from an unrelated third-party licensee, N-Viro Systems Canada, for a
balance  of  $2,612.  The  Note  was  paid  off  in  February  2005.


<TABLE>
<CAPTION>


                                                                 2004      2003
                                                               --------  --------
<S>                                                            <C>       <C>
Notes receivable - third-party licensees. . . . . . . . . . .   113,140   103,341
                                                               --------  --------
                                                                113,140   103,341
Less current maturities . . . . . . . . . . . . . . . . . . .   112,802    59,017
                                                               --------  --------

                                                               $    338  $ 44,324
                                                               ========  ========
</TABLE>


NOTE  2.     BALANCE  SHEET  DATA  (CONTINUED)

PROPERTY  AND  EQUIPMENT  (AT  COST):


<TABLE>
<CAPTION>


                                                   2004        2003
                                                ----------  ----------
<S>                                             <C>         <C>
Leasehold improvements . . . . . . . . . . . .  $   42,464  $   43,903
Equipment. . . . . . . . . . . . . . . . . . .     861,435     990,267
Furniture, fixtures and computers. . . . . . .     103,029     179,036
                                                ----------  ----------
                                                 1,006,928   1,213,206
Less accumulated depreciation and amortization     645,976     744,709
                                                ----------  ----------

                                                $  360,952  $  468,497
                                                ==========  ==========
</TABLE>


INVESTMENT  IN  FLORIDA  N-VIRO,  L.P.:

Florida  N-Viro,  L.P.  was  formed  in January 1996 pursuant to a joint venture
agreement  between the Company and VFL Technology Corporation (VFL). The Company
owns a 47.5% interest in the joint venture and, as described in Note 1, accounts
for  it's  investment  under the equity method. The Company's has recognized its
share  of  the  joint  venture's  losses  to  the  extent of its investment. Any
additional  losses  passed  through  from  the  joint venture are recorded as an
increase  to  the  allowance  against  the  Note  Receivable.

At  December 31, 2004, unsecured, 9.75% demand note receivable totaling $215,588
(including  accrued interest of $45,587) and unsecured, prime (stated by a local
bank)  plus  %  demand  note  receivable  totaling  $207,733  (including accrued
interest  of  $27,733)  are due from Florida N-Viro, the Company's joint venture
investee.  The  notes  due from Florida N-Viro have been deemed to be noncurrent
by management in the accompanying balance sheets.  The Company recorded interest
income  of  $19,101  in  2004,  which was the amount of interest received on the
notes  due from Florida N-Viro.  During 2004, the Company recorded an additional
allowance of $25,800 for the interest portion of the notes receivable.  In 2004,
an additional $122,148 was recorded to the allowance against the Note, primarily
to  recognize the additional loss in excess of the remaining investment account.
The  Company's  limited  partner interest in the joint venture is reflected at a
-0-  value  as  of December 31, 2004.  Any additional losses passed through from
the  partnership  are  recorded as an increase to the allowance against the Note
Receivable.

<TABLE>
<CAPTION>


                                                                 2004      2003
                                                               --------  --------
<S>                                                            <C>       <C>
Notes receivable - Florida N-Viro, L.P., net of allowance of
236,845 in 2004 and 114,697 in 2003. . . . . . . . . . . . .  $186,475  $301,924
</TABLE>


The  Company  is  currently  actively pursuing sale of its investment in Florida
N-Viro,  L.P.,  which  may provide, in management's opinion, additional funds to
finance  the  Company's  cash  requirements.  Because these efforts are still in
progress, there can be no assurance the Company will successfully complete these
negotiations.

Condensed  financial  information of the partnership as of December 31, 2004 and
2003  is  as  follows:


<TABLE>
<CAPTION>


                          2004         2003
                       -----------  -----------
<S>                    <C>          <C>
Current assets. . . .  $  432,028   $  576,499
Long-term assets. . .     656,843      711,278
                       -----------  -----------

                       $1,088,871   $1,287,777
                       ===========  ===========

Current liabilities .  $1,522,616   $1,464,216
Long-term liabilities           -       14,251
Partners' deficit . .    (433,745)    (190,690)
                       -----------  -----------

                       $1,088,871   $1,287,777
                       ===========  ===========
</TABLE>



NOTE  2.     BALANCE  SHEET  DATA  (CONTINUED)

INVESTMENT  IN  FLORIDA  N-VIRO,  L.P.  (CONTINUED):



<TABLE>
<CAPTION>


           Year Ended December 31,
           ---------------------------------------
                     2004                 2003
           -------------------------  ------------
<S>        <C>                        <C>
Net sales  $              1,894,657   $ 2,458,270
Net loss.                  (243,050)   (1,143,817)
</TABLE>





During  2004  and 2003, the Partnership's largest customer accounted for 25% and
19%,  respectively,  of  its  revenue.  Additionally,  during 2004 and 2003, the
Partnership's  largest  customers  accounted  for  73%  (four customers) and 73%
(three  customers) of total revenue, respectively.  During 2003, the Partnership
recorded  an expense of approximately $500,000 for an impairment write-down of a
group  of  assets  at  one  of  the  Partnership's  operating  sites.


INTANGIBLE  AND  OTHER  ASSETS:

<TABLE>
<CAPTION>


                                                                2004        2003
                                                             ----------  ----------
<S>                                                          <C>         <C>
Patents and related intangibles, less accumulated
amortization (2004 - $569,800; 2003 - $483,900) . . . . . .  $  688,284  $  755,081

Territory rights, less accumulated amortization
(2004 - $314,700; 2003 - $258,800). . . . . . . . . . . . .     371,122     427,091

Loan costs, less accumulated amortization ($14,365 in 2004
and $6,865 in 2003) . . . . . . . . . . . . . . . . . . . .      15,635      23,135

Other . . . . . . . . . . . . . . . . . . . . . . . . . . .       3,730       4,518
                                                             ----------  ----------

                                                             $1,078,771  $1,209,825
                                                             ==========  ==========
</TABLE>





ACCRUED  LIABILITIES:


<TABLE>
<CAPTION>


                     2004      2003
                   --------  --------
<S>                <C>       <C>
Employee benefits  $100,379  $147,758
Sales tax payable   181,670   176,422
Interest payable.    11,152    83,452
Other payable . .         -    11,745
                   --------  --------

                   $293,201  $419,377
                   ========  ========
</TABLE>



NOTE  3.     PLEDGED  ASSETS,  LINE-OF-CREDIT  AND  LONG-TERM  DEBT

In  February  2003 the Company closed on an $845,000 credit facility with Monroe
Bank  + Trust, or the Bank.  This senior debt credit facility was comprised of a
$295,000  four  year  term  note  at 7.5% and a line of credit up to $550,000 at
Prime  plus  1.5%  and secured by a first lien on all the Company's assets.  The
Company  used  the  funds  to  refinance  its  prior debt and to provide working
capital.  The  Company  was  in  violation  of financial covenants governing the
credit  facility  at  December  31, 2003, but the Bank waived this violation but
required additional consideration in exchange for this waiver.  In January 2004,
the Company purchased a certificate of deposit in the amount of $75,000 from the
Bank,  and  transferred  custodianship of all of its treasury stock to the Bank.
At  the first anniversary of the initial credit facility, the Bank decreased the
maximum amount available to borrow on the line to $400,000, but also reduced the
financial  covenants to make it easier for the Company to maintain the facility.
The  Company  currently has renewed the line of credit through October 2005, and
is  not  in  violation  of  any financial covenants.  In February 2005, the Bank
amended the facility and released certain additional collateral but required the
Company  to  provide  an additional $50,000 certificate of deposit.  At December
31,  2004,  the  Company  had  $200,000  of  borrowing capacity under the credit
facility.

Long-term  debt  at  December  31,  2004  and  2003  is  as  follows:

<TABLE>
<CAPTION>


                           2004      2003
                         --------  --------
<S>                      <C>       <C>
Notes payable . . . . .  $205,335  $654,504
Less current maturities    91,072   259,782
                         --------  --------

                         $114,263  $394,722
                         ========  ========
</TABLE>



                        N-VIRO INTERNATIONAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The  notes  payable  are  notes  signed  for  amounts  owed to vendors and other
parties.  The  notes  bear interest ranging from 7.5% to 9.837% (with a weighted
average  interest  rate  of 7.9% as of December 31, 2004) and are due at varying
dates  through  March 2007.  Included in notes payable is $28,372 in installment
notes  secured  by  equipment  and $176,963 secured by the general assets of the
Company.  Aggregate  maturities  of long-term debt for the years ending December
31  are  as  follows:  2005 - $91,072; 2006 - $93,061; 2007 - $21,202.  Interest
paid was approximately $50,000 and $75,300 for the years ended December 31, 2004
and  2003,  respectively.

NOTE  4.     EQUITY  TRANSACTIONS

The  Company  has  authorized  2,000,000 shares of preferred stock, par value of
$.01  per  share, of which one share and -0- shares were outstanding at December
31,  2003 and 2002, respectively.  In 2003, the Board authorized the creation of
a  class  of Series A Preferred Stock of the Company, $0.01 par value, one share
of  which  was  issued  to  Mr.  J.  Patrick  Nicholson,  in connection with the
Settlement Agreement described in Note 6.  The holder of the Preferred Stock has
the right to elect one member to the Board.  The Series A Preferred Stock issued
to  Mr.  Nicholson  is  non-transferable, has a term equal to ten years, and the
right  to  appoint a Director is subject to cancellation if Mr. Nicholson ceases
to  control  at  least  17.5% of the aggregate number of shares of the Company's
voting,  common  stock  issued  and outstanding as a result of his actions.  The
Series  A Preferred Stock does not have a liquidation preference, and was issued
pursuant  to  an  exemption  from  registration  under  to  Section  4(2) of the
Securities  Act  as  a  transaction  not  involving  a  public  offering.

The  Company  has a stock option plan approved in May 2004 for directors and key
officers  under  which  1,000,000  shares  of  common  stock may be issued.  The
options  are  20%  vested on the date of grant, with the balance vesting 20% per
year  over  the  next  four  years,  except  for  directors  whose  options vest
immediately,  but  can not be exercised until six months from the date of grant.
Options  were  granted  in  2004 at the approximate market value of the stock at
date  of  grant,  except  for  grants  to Michael Nicholson, the Company's Chief
Development  Officer  and  a  member  of  the  Board.

<PAGE>
NOTE  4.     EQUITY  TRANSACTIONS  (CONTINUED)

In  May  2004,  50,000  stock  options  granted to Mr. Nicholson pursuant to his
employment agreement dated June 2003.  In the third quarter of 2004, the Company
and  Mr.  Nicholson  renegotiated  primarily  the  stock  option  portion of the
employment  agreement,  and changed the vesting of the 50,000 options as well as
the  pricing.  This  amended agreement states the first 30,000 options are fully
vested  at  an  option price of $0.90, and the balance of 20,000 options vest on
the  third  and  fourth  anniversary of the original agreement, June 6, 2005 and
2006,  but  priced  at  $1.95.  Because these options were priced lower than the
fair  market  value  as  of  the amended agreement date, the Company is taking a
charge  to  earnings  totaling approximately $68,400 ratably through June, 2007,
the ending date of his employment agreement.  For 2004, this charge was $15,947.

In  the  first  quarter  of  2004,  seven  optionees exercised a total of 41,500
options  at  a  weighted  average  option  price  of  $1.59.

The  following  summarizes  the  number  of grants and their respective exercise
prices  and  grant  date fair values per option for the years ended December 31,
2004  and  2003  and  the  number  outstanding  and  exercisable at those dates:


<TABLE>
<CAPTION>


                                              2004                                        2003
                                            ------------------------------------------    ----------------------------------------
                                             Shares   Weighted Average Exercise Price    Shares   Weighted Average Exercise Price
                                            --------  --------------------------------  --------  --------------------------------
<S>                                         <C>       <C>                               <C>       <C>
Outstanding, beginning of year . . . . . .  512,375   $                           2.35  578,025   $                           2.46
Granted. . . . . . . . . . . . . . . . . .  314,450                               2.27        -                                  -
Exercised              . . . . . . . . . .  (41,500)                              1.59  (12,900)                              1.91
Expired during the year. . . . . . . . . .  ( 1,000)                              4.00  (52,750)                              3.73
                                            --------                                    --------
Outstanding, end of year . . . . . . . . .  784,325                               2.39  512,375                               2.35
                                            ========                                    ========

Eligible for exercise at end of year . . .  640,225                                     466,075
                                            ========                                    ========

Weighted average fair value per option for
options granted during the year                       $                           2.50            $                              -
                                                      ================================            ================================
</TABLE>


NOTE  4.     EQUITY  TRANSACTIONS  (CONTINUED)

A  further  summary  of  stock  options  follows:


<TABLE>
<CAPTION>


                            Options Outstanding                                          Options Exercisable
                            ----------------------------------------------------------   -------------------------------------
                                   # O/S         Whtd Ave Remain Life  Whtd Ave Exer $         # Exer.        Wgtd Ave Exer $
                            -------------------  --------------------  ----------------  -------------------  ----------------
<S>                         <C>                  <C>                   <C>               <C>                  <C>
                                           2004
                            --------------------------------------------------------------------------------------------------
Range of exercise prices:
0.90 to $1.45 . . . . . .               52,150                  9.22  $           1.00               35,600  $           0.90
1.50 to $2.43 . . . . . .              532,800                  5.66              2.07              405,250              2.11
2.50 to $3.45 . . . . . .              136,200                  9.37              2.98              136,200              2.98
4.00 to $5.00 . . . . . .               63,175                  4.12              4.88               63,175              4.88
                            -------------------                                          -------------------
                                        784,325                                                      640,225

                                           2003
                            --------------------------------------------------------------------------------------------------
Range of exercise prices:
0.91 to $2.43 . . . . . .              448,200                  5.42  $           1.99              409,900  $           2.03
4.00 to $5.00 . . . . . .               64,175                  5.05              4.87               56,175              4.85
                            -------------------                                          -------------------
                                        512,375                                                      466,075
</TABLE>




<PAGE>
NOTE  5.     REVENUE  AND  MAJOR  CUSTOMERS

Revenues  for  the  years  ended  December  31,  2004  and  2003  consist of the
following:


<TABLE>
<CAPTION>


                          2004        2003
                       ----------  ----------
<S>                    <C>         <C>
Facility management .  $1,386,693  $1,386,720
Technology fees . . .     653,624     681,036
Products and services   3,413,176   3,333,292
                       ----------  ----------

                       $5,453,493  $5,401,048
                       ==========  ==========
</TABLE>





Cost  of  revenues for the years ended December 31, 2004 and 2003 consist of the
following:


<TABLE>
<CAPTION>


                          2004        2003
                       ----------  ----------
<S>                    <C>         <C>
Facility management .  $1,311,501  $1,385,713
Technology fees . . .      97,238     171,728
Products and services   2,531,964   2,412,939
                       ----------  ----------

                       $3,940,703  $3,970,380
                       ==========  ==========
</TABLE>



                        N-VIRO INTERNATIONAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Revenues  for  the  years ended December 31, 2004 and 2003 include revenues from
one  major  customer,  the  City  of  Toledo,  Ohio  (included  in  the facility
management  and  products  and  services  classifications),  which  represented
approximately  34%  and  35%, respectively, of total revenues.  In addition, the
Company  had  another  major  customer,  WeCare Environmental Services, totaling
approximately  14%  and  25%  of total revenues (which is included mainly in the
products  and services classification) for the years ended December 31, 2004 and
2003,  respectively.  The  accounts  receivable  balances  due (all of which are
unsecured) from these customers at December 31, 2004 and 2003 were approximately
$190,000  and  $402,000,  respectively.

A substantial portion of the Company's revenue is derived from services provided
under  contracts  and  agreements  with  existing  licensees.  Some  of  these
contracts,  especially  those  contracts  with large municipalities, provide for
termination of the contract by the customer after giving relatively short notice
(in  some  cases  as  little as ten days).  In addition, some of these contracts
contain  liquidated  damages clauses, which may or may not be enforceable in the
event  of early termination of the contracts.  If one or more of these contracts
are  terminated prior to the expiration of its term, and the Company is not able
to  replace  revenues from the terminated contract or receive liquidated damages
pursuant  to  the  terms of the contract, the lost revenue could have a material
and  adverse  effect  on  its  business  and  financial  condition.


<PAGE>
NOTE  6.     COMMITMENTS  AND  CONTINGENCIES

In  August  2003,  the  Company  entered into a Settlement Agreement with Mr. J.
Patrick  Nicholson  and  negotiated  a new consulting agreement.  The consulting
agreement  will  expire  in  August  2008, and Mr. Nicholson will be required to
provide  future services to be eligible for compensation.  Mr. Nicholson is also
entitled to payments of $48,000 per year for non-competition and $6,000 per year
for  office  space  reimbursement,  in  addition  to  life  and health insurance
coverage  similar  to  the  provision  contained  in  his  1999  employment  and
consulting  agreements.

In June 2003, the Company entered into an Employment Agreement (the "Agreement")
with  Michael  G.  Nicholson,  the Chief Development Officer and a member of the
Board.  The  employment  agreement  will  expire  in  June  2007,  and  future
compensation  amounts are to be determined annually by the Board.  The agreement
was disclosed in a filing on June 10, 2003 on Form 8-K.  In the third quarter of
2004,  the  Company  and  Mr.  Nicholson renegotiated primarily the stock option
portion  of  the  Agreement,  as  detailed in Note 4 previously, and amended the
Agreement.  Because  these  options were priced lower than the fair market value
as  of  that date, the Company is required to take a charge to earnings totaling
approximately  $68,400  ratably  through  June,  2007,  the  ending  date of his
employment  agreement.

On July 1, 2004, the Company completed negotiations and engaged its former Chief
Executive  Officer and a member of the Board of Directors, Terry J. Logan, as an
outside  consultant.  The  consulting  agreement  extends  through June 2006 and
requires  Dr.  Logan  to  provide a minimum of 104 business days annually, to be
paid  at  a  rate  of  $700  per  day  and  1,000  stock  options  per  month.

On  September 27, 2004, the Company executed both a memorandum of employment and
storage  site  agreement  with  a  member  of  the Board of Directors, Daniel J.
Haslinger,  effective August 16, 2004.  Mr. Haslinger was subsequently appointed
Chief  Executive Officer effective January 1, 2005.  Under these agreements, Mr.
Haslinger  is  paid  $1,500 per month as an employee, and, a company co-owned by
him is paid $5,000 per month for the rental of land owned by him.  Both of these
agreements  are  terminable  "at-will".

The  Company  leases  its  executive and administrative offices in Toledo, Ohio,
under  a  lease  that  was renewed in January 2003 and amended in November 2004.
The  Company  believes  its  relationship  with the lessor is satisfactory.  The
total  minimum  rental commitment for the years ending December 31, 2005 through
February  2007  is  approximately  $48,000  each year.  The total rental expense
included  in  the statements of operations for the years ended December 31, 2004
and  2003  is approximately $55,400 and $57,100, respectively.  The Company also
leases  various  equipment  on  a  month-to-month  basis.

The Company operates in an environment with many financial risks, including, but
not  limited  to,  major  customer concentrations, customer contract termination
provisions,  competing  technologies,  infringement  and/or  misappropriation of
intellectual  property  rights,  the  highly competitive and, at times, seasonal
nature  of  the  industry  and  worldwide economic conditions.  Various federal,
state and governmental agencies are considering, and some have adopted, laws and
regulations  regarding environmental protection which could adversely affect the
business  activities of the Company.  The Company cannot predict what effect, if
any,  current  and future regulations may have on the operations of the Company.

The  Company  is  involved in legal proceedings and subject to claims which have
arisen  in  the  ordinary course of business.  These actions, when concluded and
determined,  will  not,  in  the  opinion of management, have a material adverse
effect  upon  the financial position, results of operations or cash flows of the
Company.

<PAGE>

NOTE  7.     INCOME  TAX  MATTERS

The  composition of the deferred tax assets and liabilities at December 31, 2004
and  2003  is  as  follows:


<TABLE>
<CAPTION>


                                               2004          2003
                                           ------------  ------------
<S>                                        <C>           <C>
Gross deferred tax liability, property
And equipment . . . . . . . . . . . . . .  $   (28,200)  $   (33,900)
Gross deferred tax assets:
Loss carryforwards. . . . . . . . . . . .    5,034,400     4,881,700
Patent costs. . . . . . . . . . . . . . .      131,100       207,600
Florida N-Viro asset impairment . . . . .      200,000       200,000
Allowance for doubtful accounts . . . . .       13,600        22,400
Allowance for notes receivable. . . . . .       29,300        45,900
Litigation settlement - cost of warrants.            -        17,600
Other . . . . . . . . . . . . . . . . . .       10,500        18,600

Less valuation allowance. . . . . . . . .   (5,390,700)   (5,359,900)
                                           ------------  ------------

                                           $         -   $         -
                                           ============  ============
</TABLE>





The  income  tax  provisions  differ from the amount of income tax determined by
applying  the  U.S.  Federal  income  tax rate to pre-tax income from continuing
operations  for  the  years ended December 31, 2004 and 2003 and are as follows:


<TABLE>
<CAPTION>


                                                  2004        2003
                                                ---------  ----------
<S>                                             <C>        <C>
Computed "expected" tax (credits). . . . . . .  $(24,400)  $(517,500)
State taxes, net of federal tax benefit. . . .    (2,100)    (45,500)
(Decrease) increase in income taxes resulting
from:
Change in valuation allowance. . . . . . . . .    30,800     518,800
Other. . . . . . . . . . . . . . . . . . . . .   ( 4,300)     44,200
                                                ---------  ----------

                                                $      -   $       -
                                                =========  ==========
</TABLE>





The net operating losses available at December 31, 2004 to offset future taxable
income  total  approximately  $12,600,000 and expire principally in years 2009 -
2024.


<PAGE>

NOTE  8.     CASH  FLOWS  INFORMATION

Information relative to the statements of cash flows not disclosed elsewhere for
the  years  ended  December  31,  2004  and  2003  follows:


<TABLE>
<CAPTION>


                                                         2004     2003
                                                       --------  -------
<S>                                                    <C>       <C>
Stock warrants issued as part of debt refinancing . .  $      -  $30,000
                                                       ========  =======

Fixed asset purchases financed with notes payable . .  $      -  $34,000
                                                       ========  =======

Cost of warrants issued for SAMI settlement . . . . .  $      -  $43,900
                                                       ========  =======

Conversion of accounts receivable to notes receivable  $      -  $97,448
                                                       ========  =======

Issuances of stock for debt and services. . . . . . .  $498,543  $     -
                                                       ========  =======

Loan forgiveness on office equipment purchase . . . .  $      -  $ 5,165
                                                       ========  =======
</TABLE>


The  Company  issued 7,329 shares of unregistered common stock to members of the
Board  of  Directors,  in  exchange  for  services rendered to management in the
amount  of  $9,000  each,  or  a  total  of  $18,000.

The  Company  issued  72,237  shares  of  unregistered common stock to two trade
creditors,  eliminating  $162,533  worth  of  debt owed by us to such creditors.

The  Company  issued  32,760  shares of unregistered common stock to current and
former  members of the Board of Directors, to replace stock options not granted,
at  a  total  estimated  cost  of  $73,710.

The  Company  issued  34,211  shares  and  37,143  shares,  respectively,  of
unregistered  common  stock  to  our patent law firm in settlement of trade debt
owed.  As part of the settlement, we agreed to issue the stock worth $130,000 at
the  time  of  delivery,  in  two  installments  on  the  dates  issued.

The  Company  contracted  with  Quest  Equities,  LLC  to  provide non-exclusive
financial  and  business  consulting  services  and  we  issued 50,000 shares of
unregistered  common  stock  at  an  estimated  cost  of  $75,300.

The Company issued 31,200 shares of unregistered common stock to Strategic Asset
Management,  Inc., for payment of a proposed settlement of a pending shareholder
derivative  action,  totaling  $39,000.



<PAGE>
NOTE  9.     SEGMENT  INFORMATION

The Company has determined that its reportable segments are those that are based
on  the Company's method of internal reporting, which segregates its business by
product  category  and  service lines.  The Company's reportable segments are as
follows:

Management Operations - The Company provides employee and management services to
operate  the  Toledo  Wastewater  Treatment  Facility.

Other Domestic Operations - Sales of territory or site licenses and royalty fees
to  use  N-Viro  technology  in  the  United  States.

Foreign  Operations - Sale of territory or site licenses and royalty fees to use
N-Viro  technology  in  foreign  operations.

Research and Development - The Company contracts with Federal and State agencies
to  perform  or  assist in research and development on the Company's technology.

The  accounting policies of the segments are the same as those described in Note
1  which  contains  the Company's significant accounting policies.  Fixed assets
generating  specific  revenue  are  identified with their respective segments as
they  are  accounted  for as such in the internal accounting records.  All other
assets, including cash and other current assets, and all long-term assets, other
than  fixed assets, are identified with the Corporate segment.  The Company does
not  allocate  any  selling, general and administrative expenses to any specific
segments.  All  of  the  other  income  (expense)  costs  or  income  are
non-apportionable and not allocated to a specific segment.  The Company accounts
for  and  analyzes  the  operating data for its segments generally by geographic
location,  with  the  exception  of  the  Management Operations and Research and
Development  segments.  These  segments  represent  both a significant amount of
business  generated  as  well as a specific location and unique type of revenue.

The next two segments are divided between domestic and foreign sources, as these
segments  differ in terms of environmental and municipal legal issues, nature of
the  waste  disposal infrastructure, political climate and availability of funds
for  investing  in  the  Company's  technology.  These  factors have not changed
significantly  over  the  past three years and are not expected to change in the
near  term.

The  last  segment  is  the  Research  and Development segment.  This segment is
unlike  any other segment in that revenue is generated as a result of a specific
project  to  conduct  initial  or additional ongoing research into the Company's
emerging  technologies.


<PAGE>
NOTE  9.     SEGMENT  INFORMATION  (CONTINUED)

The  table  below  presents  information  about  the segment profits and segment
identifiable  assets  used by the chief operating decision makers of the Company
as of and for the years ended December 31, 2004 and 2003 (dollars in thousands).

<TABLE>
<CAPTION>


                                     Other
                     Management    Domestic      Foreign     Research &
                     Operations   Operations   Operations   Development   Total
                     -----------  -----------  -----------  ------------  ------
<S>                  <C>          <C>          <C>          <C>           <C>
2004
--------------------------------------------------------------------------------
Revenues. . . . . .  $     1,845  $     3,465  $        52  $         92  $5,454
Cost of revenues. .        1,216        2,668            -            57   3,941
Segment profits . .          629          797           52            35   1,513
Identifiable assets          287           63            -             -     350
Depreciation. . . .           62           18            -             -      80

2003
--------------------------------------------------------------------------------
Revenues. . . . . .  $     1,880  $     3,378  $        51  $         92  $5,401
Cost of revenues. .        1,385        2,503            -            82   3,970
Segment profits . .          495          875           51            10   1,431
Identifiable assets          353           83            -             -     436
Depreciation. . . .           64           42            -             -     106
</TABLE>




<PAGE>
NOTE  9.     SEGMENT  INFORMATION  (CONTINUED)

A  reconciliation of total segment profits, identifiable assets and depreciation
and  amortization  to  the  consolidated  financial statements as of and for the
years  ended  December  31,  2004  and  2003  follows  (dollars  in  thousands):


<TABLE>
<CAPTION>


                                                  2004      2003
                                                --------  --------
<S>                                             <C>       <C>
Segment profits:
Segment profits for reportable segments. . . .  $ 1,513   $ 1,431
Corporate selling, general and administrative
expenses and research and development costs. .   (1,628)   (2,253)
Other income (expense) . . . . . . . . . . . .       44      (700)
                                                --------  --------
Consolidated earnings before taxes . . . . . .  $   (71)  $(1,522)
                                                ========  ========

Identifiable assets:
Identifiable assets for reportable segments. .  $   350   $   436
Corporate property and equipment . . . . . . .       11        32
Current assets not allocated to segments . . .    1,065     1,173
Intangible and other assets not allocated to
segments . . . . . . . . . . . . . . . . . . .    1,266     1,556
Consolidated eliminations. . . . . . . . . . .        -         -
                                                --------  --------
Consolidated assets. . . . . . . . . . . . . .  $ 2,692   $ 3,197
                                                ========  ========

Depreciation and amortization:
Depreciation for reportable segments . . . . .  $    80   $   106
Corporate depreciation and amortization. . . .      150       157
                                                --------  --------
Consolidated depreciation and amortization . .  $   230   $   263
                                                ========  ========
</TABLE>



                        N-VIRO INTERNATIONAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  10.     401(K)  PLAN

     The  Company  has  a 401(k) plan covering substantially all employees which
provides  for  contributions  in  such  amounts  as  the  Board of Directors may
determine  annually.  Participating  employees  may also contribute a portion of
their  annual  compensation.  There were no employer contributions for the years
ended  December  31,  2004  and  2003.


NOTE  11.     GAIN  ON  LEGAL  DEBT  FORGIVEN

     The  Company reached settlement on trade debt and a note owed to its patent
law firm which totalled $470,442at the time of settlement.  The law firm agreed,
in  exchange  for cash payments totaling $183,268 and registered common stock of
the  Company  worth  $130,000 at the time of delivery, to forgive the balance of
$157,174  in  previously  billed  services  and accrued interest.  The stock was
required  to  be  delivered  on  September  1  and  November  1,  2004  in equal
installments.  Our total cash saved as a result of this settlement was $287,174.



<PAGE>
ITEM  8.          CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON
                         ACCOUNTING  AND  FINANCIAL  DISCLOSURE

     On  August  1,  2004,  the  partners  of Follmer Rudzewicz PLC, or Follmer,
announced  that  they  were  joining  UHY  LLP,  a newly-formed New York limited
liability partnership, or UHY, that is separate from Follmer.  Follmer ceased to
provide  audit  services,  and  accordingly,  has  resigned  as  our independent
auditors.  On  October  15,  2004,  we were informed of this event.  None of the
reports  of  Follmer on our financial statements for either the past one year or
subsequent  interim  periods  contained  an  adverse  opinion  or  disclaimer of
opinion,  or  was  qualified  or  modified  as  to  uncertainty,  audit scope or
accounting  principles.  The  decision  to  change  principal  accountants  was
approved  by  our  Audit  Committee  on  October  18,  2004.

     During  our  most  recent  fiscal  year and any subsequent interim periods,
there  were  no disagreements between us and Follmer on any matter of accounting
principles  or  practices,  financial statement disclosure, or auditing scope or
procedure,  which disagreements, if not resolved to the satisfaction of Follmer,
would  have  caused  it  to  make  reference  to  the  subject  matter  of  the
disagreements  in connection with its report.  We requested that Follmer deliver
a  letter  to  us  addressed  to  the  SEC  stating  whether  it agrees with the
statements made by the Company in response to Item 304(a) of Regulation S-B, and
if  not,  stating the respects in which it does not agree.  A copy of the letter
of Follmer is filed as Exhibit 16 to the Form 8-K, as filed on October 19, 2004.

     On  October  19,  2004, we engaged UHY as our independent public accountant
for  our  fiscal  year ending December 31, 2004 and the interim periods prior to
such year-end.  During our most recent fiscal year or subsequent interim period,
we  have  not  consulted  with  UHY  regarding  the  application  of  accounting
principles  to a specific transaction, either completed or proposed, or the type
of audit opinion that might be rendered on our financial statements, nor did UHY
provide  advice  to  us,  either  written  or oral, that was an important factor
considered  by  us  in  reaching  a  decision  as to the accounting, auditing or
financial  reporting  issue.  Further,  during  our  most  recent fiscal year or
subsequent  interim  periods,  we have not consulted with UHY on any matter that
was  the  subject  of  a  disagreement  or  a  reportable  event.


ITEM  8A.          CONTROLS  AND  PROCEDURES

     As of December 31, 2004, under the direction of our Chief Executive Officer
and  Chief  Financial  Officer, we evaluated the effectiveness of the design and
operation  of  our disclosure controls and procedures, as defined in Rules 13a -
15(e)  and  15d  -  15(e)  under the Securities Exchange Act of 1934, as amended
("the  Act").  We  concluded  that  our  disclosure controls and procedures were
effective  as  of  December  31,  2004, such that the information required to be
disclosed  in  our  SEC  reports is recorded, processed, summarized and reported
within  the  time  periods  specified  by  the  SEC's  rules  and  forms, and is
accumulated  and  communicated  to  management,  including  our  Chief Executive
Officer  and  Chief  Financial Officer, as appropriate to allow timely decisions
regarding  required  disclosure.

     There  were  no  changes  in our internal controls over financial reporting
during  the  year  ended December 31, 2004 that have materially affected, or are
reasonably  likely  to  materially  affect, our internal controls over financial
reporting.

ITEM  8B.     OTHER  INFORMATION

     None

<PAGE>
                                    PART III

ITEM  9.          DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT

     The  information  required by this Item is incorporated by reference to the
information under the heading "Election of Directors" and "Executive Officers of
the  Company"  in  the  definitive  proxy  statement of the Company for the 2005
Annual  Meeting  of  Stockholders.


ITEM  10.          EXECUTIVE  COMPENSATION

     The  information  required by this Item is incorporated by reference to the
information  under  the heading "Executive Compensation" in the definitive proxy
statement  of  the  Company  for  the  2005  Annual  Meeting  of  Stockholders.


ITEM 11.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND  RELATED  STOCKHOLDER  MATTERS

     The  information  required by this Item is incorporated by reference to the
information  under  the heading "Security Ownership of Directors and Management"
in  the definitive proxy statement of the Company for the 2005 Annual Meeting of
Stockholders.


ITEM  12.          CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

     The  information  required by this Item is incorporated by reference to the
information under the heading "Certain Relationship and Related Transactions" in
the  definitive  proxy  statement  of the Company for the 2005 Annual Meeting of
Stockholders.


ITEM  13.     EXHIBITS

Exhibit
No.     Description
---     -----------

3.1     Amended  and  Restated Certificate of Incorporation, dated June 17, 1998
(incorporated  by  reference  to Exhibit 3.2 to Form 10-K filed April 14, 2004).

3.2     Amendment  to  the  Certificate  of  Incorporation of the Company, dated
November  13,  2003 (incorporated by reference to Exhibit 3.4 to Form 10-K filed
April  14,  2004).

3.3     Amended  and  Restated  By-Laws  of the Company, dated November 13, 2003
(incorporated  by  reference  to Exhibit 3.7 to Form 10-K filed April 14, 2004).

4.1     Certificate of Designation of Series A Redeemable Preferred Stock, dated
August  27,  2003  (incorporated  by reference to Exhibit 3.3 to Form 10-K filed
April  14,  2004).

4.2     The  N-Viro  International  Corporation  2004  Stock  Option  Plan
(incorporated  by  reference  to  Form  S-8  filed  December  20,  2004).*

4.3     The  Amended  and Restated N-Viro International Corporation Stock Option
Plan  (incorporated  by  reference  to  Form  S-8  filed  May  9,  2000).*

10.1     Employment Agreement, dated June 14, 1999, between N-Viro International
Corporation  and  Terry  J. Logan (incorporated by reference to Exhibit 1 to the
Form  8-K  filed  June  30,  1999).*

10.2     Amended  and Restated Employment Agreement, dated June 6, 2003, between
N-Viro  International  Corporation  and  Michael  G.  Nicholson (incorporated by
reference  to  Exhibit  99.1  to  the  Form  8-K  filed  June  9,  2003).*

10.3     Business  Loan  Agreement  dated  February  26,  2003,  between  N-Viro
International Corporation and Monroe Bank + Trust;  letter of credit enhancement
dated  February 25, 2003 between N-Viro International Corporation and Messrs. J.
Patrick  Nicholson,  Michael  G.  Nicholson,  Robert P. Nicholson and Timothy J.
Nicholson  (all  incorporated  by reference to Exhibits 99.1 through 99.3 to the
Form  8-K  filed  March  3,  2003).

10.4     Settlement  Agreement  and Release dated August 29, 2003 between N-Viro
International  Corporation  and  Strategic  Asset  Management, Inc.;  Consulting
Agreement  dated August 28, 2003 between N-Viro International Corporation and J.
Patrick Nicholson (all incorporated by reference to Item 5 of the Form 8-K filed
August  29,  2003).

10.5     Security Units Purchase Agreement dated January 30, 2004 between N-Viro
International Corporation and Ophir Holdings, Inc. (incorporated by reference to
Exhibit  99.1  to  the  Form  8-K  filed  February  5,  2004).

10.6     Memorandum  of  Employment  Agreement  and  Storage  Site  Agreement,
respectively,  both  dated  September  27,  2004,  between  N-Viro International
Corporation  and,  Daniel  J. Haslinger and Micro Macro Integrated Technologies,
Inc.,  respectively (incorporated by reference to Exhibit 10.1 of Form 8-K dated
October  1,  2004).*

14.1     Code  of  Ethics  ##

21.1     List  of  subsidiaries  of  the  Company.#

23.1     Consent  of  Follmer  Rudzewicz  PLC.

23.2     Consent  of  UHY  LLP.

31.1     Certification of Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley  Act  of  2002.

31.2     Certification of Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley  Act  of  2002.

32.1     Certification of Chief Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley  Act  of  2002.

32.2     Certification of Chief Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley  Act  of  2002.


               #     Only  included in Form 10-KSB filed electronically with the
Securities  and  Exchange  Commission.

               ##     To  be  filed  as  an  exhibit  to  the  definitive  proxy
statement  of  the  Company  for  the  2005  Annual  Meeting  of  Stockholders.

               *     Indicates  a  management  contract  or compensatory plan or
arrangement.


ITEM  14.          PRINCIPAL  ACCOUNTANT  FEES  AND  SERVICES

     The  information  required by this Item is incorporated by reference to the
information  under  the  heading  "Independent Auditors" in the definitive proxy
statement  of  the  Company  for  the  2005  Annual  Meeting  of  Stockholders.


<PAGE>

                                   SIGNATURES


     Pursuant  to  the  requirements of Section 13 or 15(d) of the Exchange Act,
the  registrant  has  duly  caused this report to be signed on its behalf by the
undersigned,  thereunto  duly  authorized.

     N-VIRO  INTERNATIONAL  CORPORATION
Dated:  March  31,  2005

     By:  /s/  Daniel  J.  Haslinger  *
        -------------------------------
          Daniel  J.  Haslinger,  Chief  Executive  Officer  and  President
          (Principal  Executive  Officer)


                                POWER OF ATTORNEY

     Know  all  persons  by  these  presents,  that  each person whose signature
appears  below  constitutes  and  appoints James K. McHugh his attorney-in-fact,
each  with the power of substitution, for him in any and all capacities, to sign
any  amendments  to  this Form 10-K, and to file the same, with exhibits thereto
and  other  documents  in connection therewith, with the Securities and Exchange
Commission,  hereby  ratifying  and  confirming  all  that  each  of  said
attorneys-in-fact,  or  his  substitutes,  may  do or cause to be done by virtue
hereof.

     Pursuant  to  the  requirements  of  the Exchange Act, this report has been
signed  below  by  the  following persons on behalf of the registrant and in the
capacities  and  on  the  date  indicated.

Dated:  March  31,  2005

/s/  Daniel  J.  Haslinger*                               /s/  James  K.  McHugh
---------------------------                               ----------------------
Daniel  J.  Haslinger,  Chief  Executive  Officer,             James  K.  McHugh
President and Director          Chief Financial Officer, Secretary and Treasurer
(Principal  Executive  Officer)                  (Principal  Financial  Officer)


/s/  Michael  G.  Nicholson*                                /s/  Phillip  Levin*
----------------------------                                --------------------
Michael  G. Nicholson, Chief Development Officer     Phillip Levin, Director and
                                                        Chairman  of  the  Board
and  Director


/s/  Terry  J.  Logan*                                /s/  R.  Francis  DiPrete*
----------------------                                --------------------------
Terry  J.  Logan,  Director                      R.  Francis  DiPrete,  Director


/s/  Christopher  Anderson*                                   /s/  Brian  Burns*
---------------------------                                   ------------------
Christopher  Anderson,  Director                         Brian  Burns,  Director


/s/  Joseph  Scheib*                                         /s/  Carl  Richard*
--------------------                                         -------------------
Joseph  Scheib,  Director                               Carl  Richard,  Director